There has been calls by local small medium business players for the government to exempt them from compulsory audit, and instead allow these audits to be done on a voluntary basis.
Presently, dormant companies as well as companies with revenue below RM 100,000, with assets below RM 300,000 and has 5 of less employees are exempted from audit. This it said is miniscule, compared to Singapore, where companies with revenue and assets less than S$ 10 million are exempted from compulsory audit. In Australia, the threshold is even higher, where SMEs with revenue and assets less than A$ 50 million and A$ 25 million respectively are exempted from audit.
The Small Medium Enterprise Association said it agrees with the Companies Commission of Malaysia (SSM)’s proposal to change the qualifying criteria for audit exemption to RM 3 million in revenue and assets or a headcount of 30. Any company meeting 2 out of three of these criteria (revenue, assets or headcount) should no longer be required to hire an external auditor to audit their accounts but will still be required to prepare financial statements for taxation and financial planning
purpose.
If this proposal is accepted, up to 77.4 percent of all companies will no longer need to go through expensive and time-consuming audits, and instead have the freedom to decide based on their business requirements. For example, a company may only decide to have an audit performed if they are applying for a government grant or to obtain a bank loan.
It also added theta the proposal not only saves micro and small enterprises considerable costs and time, it promotes greater efficiency at all levels of the economy. In almost all micro and small enterprises, the directors and shareholders are the same, so it serves no purpose to mandate auditing.
To keep accountability and transparency, there can be a proposal for an alternative credit scoring system which can assess their credit worthiness.
