Does your Sdn. Bhd. still need an auditor? Three years, three minutes.
v3
27-Aug-26
LTTcfo_KiraKiraAuditExemption-v3-260827.html
LTT Outsourced CFO Sdn. Bhd.
The company
Only matters for periods before 2019, when the old directive phased in.
The three financial years
Every test looks at the current year and the two before it.
Enter each period separately — short first periods and changed year ends are common, and they matter.
Tick first year on the earliest year the company actually had.
Accounting period
Year 1current
Year 2previous
Year 3the one before that
Opening date
Closing date
First year since incorporation
The numbers
Measure
Year 1
Year 2
Year 3
RevenueCalled annual income in PD 10/2024. RM
Total assetsPer the statement of financial position, RM
EmployeesHeadcount at the year end
Accounting transactionsWhat went through the books in the year
Why that last row. A company is dormant when it carries on no business and has no accounting
transaction — ignoring what the law obliges it to pay, such as SSM fees, and the cost of complying.
A dormant company is exempt whatever its size, so this row can decide the answer on its own.
Revenue excludes reversals of earlier entries, tax entries, reversals of provisions, and gains
on derecognition of property, plant and equipment or investment property. The cost of merely keeping the company
alive is disregarded when judging whether revenue is nil.
What overrides size
Any single Yes here rules the exemption out, however small the
company is. Most checkers skip these; they are the ones that get missed.
Exempt, but think first
These change nothing that SSM allows. Each is a reason companies that
could stop auditing choose not to.
Take it away
Everything you type stays in this browser. Nothing is uploaded, nothing is counted, and we never
see it. The page remembers your answers on this device so you can come back to them.
A free tool from LTT Outsourced CFO Sdn. Bhd. ·
more KiraKira tools ·
ltt@lttcfo.com
General information based on SSM Practice Directive 3/2017 and Practice Directive 10/2024.
Not advice on your company.
The rule behind this check
Audit exemption in Malaysia: does your Sdn. Bhd. still need an auditor?
Since 2017 a small private company has been able to lodge unaudited accounts if
it qualifies. The criteria changed for financial periods beginning on or after 1 January 2025,
and they are being phased in over three years. The single thing that decides which set applies
to you is the date your financial period begins — not the year end, and
not the year you are filing in.
Rules as at September 2026 · SSM Practice Directive 3/2017 and Practice
Directive 10/2024 · Companies Act 2016
The mistake that costs the most. The new RM1m–RM3m thresholds do not
reach backwards. A financial year that started before 1 January 2025 — a
31 December 2024 year end, or a 31 March 2025 year end that began on 1 April 2024 — is
still on Practice Directive 3/2017's much tighter limits of RM100,000 revenue, RM300,000
total assets and 5 employees.
Periods beginning before 1 January 2025 — PD 3/2017
There are three separate routes, and a company needs to satisfy only one of them. Each is
tested across the current financial year and the two years before it.
Route
What it requires
Dormant
Dormant since incorporation, or dormant throughout the current year and the year
immediately preceding it
Zero-revenue
No revenue at all and total assets not exceeding RM300,000, in the current
year and the two before it
Threshold-qualified
Revenue not exceeding RM100,000 and total assets not exceeding RM300,000
and not more than 5 employees — all three, in each of the three years
Periods beginning on or after 1 January 2025 — PD 10/2024
The new test is any two of three, still measured across the current year and
the two preceding ones, with the limits stepping up by the year the period begins:
Period begins
Revenue
Total assets
Employees
During 2025
RM1,000,000
RM1,000,000
10
During 2026
RM2,000,000
RM2,000,000
20
On or after 1 Jan 2027
RM3,000,000
RM3,000,000
30
Dormancy continues to exempt a company on its own, without reference to the size tests.
The exclusions that override size entirely
Some companies must appoint an auditor no matter how small they are. Nothing in either
directive helps if you are:
an exempt private company that lodges a certificate under section 260 of the Companies
Act 2016;
a private company that is a subsidiary of a public company;
a foreign company.
Two further overrides can arrive from outside. Members holding at least 5% of the shares
— or at least 5% of the members eligible to vote — may require an audit by written
notice given during the financial year and at least one month before the year end. The
Registrar may also direct a company to audit its accounts.
If you are exempt, you still have to file
Audit exemption removes the auditor, not the accounts. A qualifying company must still:
prepare and lodge unaudited financial statements, with the directors'
report, the statement by directors and the statutory declaration required by sections 251
and 252;
circulate them to members within six months of the financial year end
(section 258);
sign the Appendix I audit exemption certificate within 30 days of circulation,
and lodge with the Registrar within 30 days of circulation (section 259).
A worked example
A company with a 30 June year end is looking at the year ended 30 June 2026. That period
began on 1 July 2025, so it falls under PD 10/2024 at the 2025 step: RM1,000,000
revenue, RM1,000,000 total assets, 10 employees, any two of the three, across FY2024, FY2025
and FY2026.
Year
Revenue
Total assets
Employees
FY2024
RM780,000
RM1,240,000
8
FY2025
RM910,000
RM1,310,000
9
FY2026
RM960,000
RM1,405,000
9
Revenue is under RM1m in all three years and headcount is under 10 in all three. Total assets
fail in all three — but only two of the three criteria have to be met, so the company
qualifies.
Look one year back and the same company gets a different answer. Its previous financial year
ended 30 June 2025, which means it began on 1 July 2024 — before 1 January 2025
— so that year was tested under PD 3/2017, where the threshold route needs revenue under
RM100,000, assets under RM300,000 and no more than 5 employees, all three, in all
three years. On these figures it failed comfortably and needed an audit. Nothing about the
business changed; the directive it falls under did.
How this checker helps
Enter three financial periods with their own opening and closing dates. The tool reads the
regime off the first period's opening date, applies the right thresholds for the year that
period begins, tests the exclusions before it looks at size at all, and works out the section
258 and 259 deadlines. It prints an assessment working paper and a draft Appendix I
certificate. Exact figures are kept rather than banded, because bands produce nothing you can
file. Everything runs in your own browser — no company figures are uploaded.
Common questions
Do I have to apply to SSM for audit exemption?
No. It applies automatically if the company qualifies. There is no application and no
approval — but you must lodge unaudited financial statements together with the
Appendix I certificate, and you carry the risk if the assessment was wrong.
My year end is 31 March 2025. Which directive applies?
PD 3/2017, because that period began on 1 April 2024. The test is the date the period
begins, not the year end and not the filing date.
Is it two out of three, or all three?
It depends on the regime. Under PD 10/2024 it is any two of revenue, total assets and
employees. Under PD 3/2017's threshold route it is all three, and the limits are far lower.
Does the test look at one year or three?
Three — the current financial year and the two immediately preceding it. A single good
year does not qualify a company, and a single bad year can disqualify it.
We are dormant. Do we need an audit?
A dormant company is exempt under both directives without reference to the size tests,
provided it has been dormant since incorporation or throughout the current and immediately
preceding financial year. It still has to prepare, circulate and lodge unaudited accounts.
Can a shareholder force an audit anyway?
Yes. Members holding at least 5% of the shares, or at least 5% of the members eligible to
vote, can require one by written notice given during the financial year and no later than one
month before the year end. The Registrar can also direct an audit.
How many employees counts, and when?
Employee numbers are assessed at the end of each financial year, and the count has to hold
for each of the three years being tested.
Sources: SSM Practice Directive 3/2017 and Practice Directive 10/2024 (Qualifying
Criteria for Audit Exemption for Certain Categories of Private Companies); Companies Act 2016
sections 251, 252, 258, 259 and 260. This page is general information, not an audit
exemption opinion for your company. Group structures, a change of financial year end, and
companies close to a threshold are worth checking properly before you file unaudited.
Talk to LTT.
