Audit Firm in Malaysia
Updated on Tuesday 12th January 2021
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An audit firm in Malaysia is incorporated for the purpose of providing audit services to other businesses operating in this country, in accordance with the regulations of the accounting legislation. In Malaysia, certain types of companies are legally required to appoint an auditor who will have the right of verifying all the financial documents of a legal entity.
The audit firm in Malaysia can conduct its business activities through persons who have gained their qualification in the field of audit. As a general rule, an audit firm has the ability of providing its services to all business sectors, but it must be noted that in some cases, certain audit firms will offer their services only to specific industries.
If you need audit services for your company, you can rely on our team of consultants in company formation in Malaysia. Our team can also help you incorporate an audit firm in Malaysia, if you want to activate in this industry and here, our specialists can offer the necessary legal advice on any incorporation aspect.
What types of audit are prescribed in Malaysia?
Businessmen interested in opening a company in Malaysia that operates as an audit company should know that the legislation applicable here prescribes several types of audit procedures. First, the legislation distinguishes between internal audit and external audit. Internal audit is performed by a person who is part of the permanent staff of a company, whose responsibility is to observe if the financial records of the company comply with the applicable regulations.
An internal audit specialist also acts as an adviser to the Board of Directors of the company, and as a general rule, this activity is necessary in large companies. On the other hand, the external audit must always be done by an audit firm in Malaysia or by a representative of an audit company.
The external audit is known as statutory audit, which is regulated by the Companies Act. Through this law, corporate entities in Malaysia, meaning companies that have legal personality, must appoint an auditor to review their financial documents at the end of the financial year.
The Malaysian legislation also recognizes the due diligence audit, a procedure used at the moment when an investor is interested in purchasing a company or when he or she wants to invest in the said company. The due diligence audit will reveal information on the current financial situation of the company and will provide the investor with the necessary data on whether the investment should be done or not.
Another area of law is the forensic audit, which is necessary in cases related to fraud or mismanagement. If you need further information, we invite you to address to our team of consultants in company registration in Malaysia, who can offer an extensive presentation on the legislation regulating audit procedures.
What should one know on the audit industry in Malaysia?
Those interested in opening an audit firm in Malaysia must know that this type of entity falls under the regulations of the Malaysian Institute of Accountants (MIA). Also, an auditor in Malaysia has to comply with the regulations of multiple rules of law, such as the Companies Act 2016 or the Financial Reporting Act 1997. Other important aspects are the following:
- an auditor can be any person who was approved to develop this activity as per the regulations of the Section 263, Companies Act 2016;
- any person registering an audit firm in Malaysia will have to comply with the regulations of MIA, prescribed by the Section 550 of the MIA bylaws;
- a company can be exempt from requesting audit services from an audit firm in Malaysia if it is a dormant/ 0 revenue/ threshold-qualified company in certain conditions that can be presented by our experts;
- MIA is represented by more than 35,500 members at a national level;
- starting with 2018, accounting and audit in Malaysia procedures are done in accordance with the IFRS.
Persons who want to become employees of an audit firm in Malaysia or those who want to start their own business have to be aware that they need to be licensed with a license issued by the Ministry of Finance and that they will also have to become members of the MIA.
As a general rule, an auditor will provide his or her services to corporate entities; in Malaysia, sole traders and partnerships are not required to perform an audit on their financial documents. If you need more details on how to set up an audit firm in Malaysia, please contact our specialists. Our team can help you obtain the necessary business licenses and register with the required institutions and, overall, ease the process of starting a business here.