(Audit Update) Audit Exemption: Should Your Sdn Bhd Skip the Full Audit?
The Companies Commission of Malaysia’s Practice Directive No. 10/2024 introduces updated criteria for private companies to qualify for audit exemptions.
At first glance, this may seem like a welcome relief for many small and medium-sized companies (SMIs).
However ... before deciding to forgo audits, it is essential to consider the broader implications and the long-term value that audits can bring to your business.
Audited financial statements are more than just a compliance exercise. They are a mark of credibility. They demonstrate that your company’s finances are transparent, reliable, and trustworthy.
This credibility can strengthen relationships with banks, investors, and suppliers, providing access to better loan terms, attracting potential investors, and fostering more robust business partnerships.
Additionally, while audit exemptions may apply, there are still scenarios where audited financials remain necessary.
Banks and financial institutions often require audited statements for loan and credit applications. Regulatory frameworks, such as those for tax incentives from MIDA, may also mandate audited accounts.
Audits also play a critical role in minimizing risks. Unaudited financial statements may overlook errors or irregularities, increasing the chances of penalties from tax authorities or heightened scrutiny from the Inland Revenue Board (IRB).
Inaccurate financial data could lead to disputes with stakeholders, creating additional complications for your business.
Beyond risk management, audits support your company’s growth and expansion. Reliable financial statements instill confidence in investors, which can be a decisive factor in securing funding or partnerships.
Furthermore, if your business has ambitions for an IPO, merger, or acquisition, a track record of audited accounts is essential to meet these future requirements.
PS : Authored by Mr Koh Teck Peng, the Group Principal, in his personal LinkedIn posting https://bit.ly/408RHY1