Maintaining proper accounts and bookkeeping is a mandatory legal requirement for all companies in Malaysia, primarily governed by the Companies Act 2016 (CA 2016) and the standards set by the Malaysian Accounting Standards Board (MASB).
Here is a summary of the core compliance duties, accounting standards, and the recent changes to audit exemption criteria.
1. Statutory Bookkeeping and Record Keeping
The CA 2016 places the responsibility for proper record-keeping on the company directors and managers.
Proper Records: Companies must keep accounting and other records that accurately explain the transactions and financial position, enabling the preparation of "true and fair" financial statements.
Time Limit for Entries: Appropriate entries must be made in the records within 60 days of the completion of the relevant transactions.
Retention Period: All accounting records and supporting documents (invoices, receipts, bank statements) must be retained for a minimum period of seven years after the completion of the transactions.
Location: Records must be kept at the company's registered office or another place in Malaysia, which must be notified to the Companies Commission of Malaysia (SSM).
2. Malaysian Accounting Standards Framework
Companies must prepare their financial statements in compliance with one of the two accounting standards issued by the MASB:
| Standard | Applicable To | Nature |
| Malaysian Financial Reporting Standards (MFRS) | Public Interest Entities (PIEs), such as listed companies, banks, and their subsidiaries. | Fully converged with International Financial Reporting Standards (IFRS). Requires extensive disclosures and complex accounting treatments. |
| Malaysian Private Entities Reporting Standard (MPERS) | Private Entities (Sdn Bhd) not required to report under Securities Commission or Bank Negara Malaysia laws. | Simplified version based on IFRS for SMEs, intended to reduce the cost and complexity of compliance for smaller companies. |
Private entities have the option to choose either MFRS or MPERS but must apply the chosen standard in its entirety.
3. Financial Statements and Filing Deadlines
Company directors must ensure financial statements are prepared and lodged with the SSM in the following timeframe:
| Event | First Financial Year | Subsequent Financial Years |
| Preparation | Within 18 months of incorporation. | Within 6 months after the Financial Year End (FYE). |
| Lodgement | Within 30 days after the statements are circulated to members. | Within 30 days after the statements are circulated to members. |
Lodgement must be done electronically through the Malaysian Business Reporting System (MBRS) using the XBRL format.
4. Audit Exemption for Private Companies
While statutory audits are generally mandatory, certain private companies may be exempted under the criteria set by the SSM (Practice Directive No. 10/2024, effective for financial years beginning on or after January 1, 2025).
A. Exempt Categories (Regardless of Size)
Dormant Company: Has been dormant since incorporation, or was dormant during the current and immediate past financial year.
Zero-Revenue Company: Currently not applicable under the new 2025 criteria, as the framework shifts to threshold-based criteria.
B. Threshold-Qualified Company (New Phased Criteria - Effective 2025)
The exemption will be phased in over three years. To qualify for the audit exemption, a private company must not be a subsidiary of a public company, a foreign company, or an exempt private company that opted to file an Exempt Private Company certificate.
A company must meet at least two (2) of the following three criteria for the current financial year and the immediate past two financial years.
| Phase | Financial Year Start Date | Annual Revenue (Maximum) | Total Assets (Maximum) | Employees (Maximum) |
| 1 (2025) | On or after Jan 1, 2025 | RM1,000,000 | RM1,000,000 | 10 |
| 2 (2026) | On or after Jan 1, 2026 | RM2,000,000 | RM2,000,000 | 20 |
| 3 (2027) | On or after Jan 1, 2027 | RM3,000,000 | RM3,000,000 | 30 |
Note: The audit exemption is automatic if the company meets the criteria; no formal application is required. However, the company must file unaudited financial statements and a director's certificate with the SSM.
