Private companies in Malaysia sometimes ask whether an annual statutory audit is still necessary. Under the revised SSM audit-exemption framework, the answer depends on the financial period, revenue, total assets, employee numbers and other eligibility conditions — not simply whether the company is small.
Reviewed 3 November 2026: The relevant framework is SSM Practice Directive 10/2024, with phased implementation. The requirements below summarise the 2026 phase rather than every possible exception.
2026: the phase-two thresholds
For qualifying financial periods commencing on or after 1 January 2026 and up to 31 December 2026, SSM’s phase-two threshold table states:
| Criterion | 2026 phase-two threshold |
|---|---|
| Annual revenue | RM2 million |
| Total assets | RM2 million |
| Number of employees | 20 |
The basic framework requires a private company to satisfy at least two of three criteria. The rules also examine the current and immediate past two financial years, and SSM prescribes other conditions and exclusions.
For comparison, the framework has different thresholds for qualifying financial periods beginning in 2025 and 2027. Do not apply the RM3 million phase-three threshold to a 2026 period.
What does exemption actually mean?
Audit exemption is an exemption from appointing an auditor for the relevant year where the company qualifies. It does not mean the company can stop maintaining records, preparing financial statements or fulfilling its SSM obligations.
Directors remain responsible for company accounting records and financial reporting. Audited or non-audited financial statements may still need to be prepared and lodged in the applicable format.
Why might a company still want an audit?
Even if exemption is available, external parties may ask for audited statements. Common examples include a bank financing application, investor due diligence, shareholder agreement, or a group-reporting requirement.
A company should check these commercial requirements before deciding not to appoint an auditor. An audit may also uncover accounting issues that are not obvious from basic bookkeeping reports.
Practical steps before claiming exemption
- Identify the exact financial period start date and applicable phase.
- Obtain current-year and comparative revenue and total asset figures.
- Confirm the relevant full-time employee numbers under SSM’s definitions.
- Consider group structure, exclusions and other directive conditions.
- Confirm the financial statement preparation and SSM filing steps that remain applicable.
- Check whether lenders or stakeholders separately require audited statements.
For preparation support, see our accounting services and audit coordination services. Statutory audits and audit opinions are performed by the independent approved audit firm appointed for that engagement.
Unsure whether your Sdn. Bhd. qualifies? Contact us with your financial year, turnover, assets and employee count for a preliminary discussion.