This guide summarises Malaysia’s audit exemption rules and explains what has changed under the new regime effective from 1 January 2025.
1. What is Audit Exemption?
Audit exemption allows eligible private companies to file unaudited financial statements with SSM. Companies remain responsible for maintaining proper accounting records and ensuring financial statements give a true and fair view.
2. Old Rules (Before 2025)
To qualify, a private company had to meet ALL of the following for the current and previous two financial years:
– Revenue ≤ RM100,000
– Total assets ≤ RM300,000
– Employees ≤ 5
Dormant companies or companies with zero revenue and assets ≤ RM300,000 could also qualify.
3. New Rules (From 1 January 2025)
Under Practice Directive No. 10/2024, companies only need to meet ANY TWO of the following three criteria for the current and previous two financial years:
Phased thresholds:
• FY 2025: Revenue ≤ RM1,000,000 | Assets ≤ RM1,000,000 | Employees ≤ 10
• FY 2026: Revenue ≤ RM2,000,000 | Assets ≤ RM2,000,000 | Employees ≤ 20
• FY 2027 onwards: Revenue ≤ RM3,000,000 | Assets ≤ RM3,000,000 | Employees ≤ 30
4. Companies Not Eligible
– Public companies (including listed companies)
– Subsidiaries of public companies
– Foreign companies
– Companies that elect to have their accounts audited
5. Key Difference at a Glance
Old regime: Very low thresholds, must meet ALL criteria.
New regime: Higher thresholds, phased over time, and only TWO out of three criteria required.
Note: Audit exemption is optional. Companies may still opt for an audit for banking, investor, or regulatory purposes.