Who prepares and approves a company's financial statements?
Directors are legally responsible for the financial statements. An in-house accountant or external firm often drafts them, but the board approves them by resolution and signs a directors' statement. The statements are then presented to the members.
The Companies Act 2016 places the duty to prepare financial statements on the directors. In practice:
- Preparation: a finance team, bookkeeper, accountant or external firm drafts them from the ledgers
- Review: directors check that the numbers make sense and that the accounting standard is applied
- Approval: the board approves them by resolution; the directors sign the statement on the true and fair view
- Declaration: the officer primarily responsible for financial management signs a statutory declaration that the statements are correct
- Audit: where an audit applies, a licensed auditor reports on them, separately from the company's own team
- Circulation and lodgement: they are sent to members and lodged with SSM within the deadlines
A director cannot avoid responsibility by saying the accountant did it. Ask questions, understand the main figures and keep a record of the approval.
Note that bookkeeping, preparation and audit must be kept apart in role: the person who prepares the accounts should not be the auditor of the same accounts.
Legal basis
- Companies Act 2016, s.248
- Companies Act 2016, s.251
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- How long must a Malaysian company keep its accounting records?A company must keep accounting records for seven years after the transactions they record were completed. For tax, documents must be kept for seven years from the end of the relevant year of assessment. Use whichever period ends later.
- How soon must transactions be recorded in the books?Under section 245 of the Companies Act 2016, entries must be made in the accounting records within 60 days after the transaction is completed. Leaving the books for a full year-end rush is therefore not compliant.
- What do a company's financial statements contain?A company's financial statements normally include a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity, a statement of cash flows and notes with accounting policies. The set must give a true and fair view.
- What is the difference between MPERS and MFRS?MFRS is the full set of Malaysian standards, aligned with IFRS, used by listed and regulated entities. MPERS is a shorter, simplified framework based on the IFRS for SMEs standard, designed for private entities. Both give a true and fair view; MPERS has fewer disclosures and simpler rules.
- Who must use MFRS, and who can use MPERS?A private company that is not required to file financial statements under Securities Commission or Bank Negara law, and is not a subsidiary or associate of, or jointly controlled by, an entity that is, is a private entity and may use MPERS or full MFRS. Other entities must use MFRS.