Can the firm that does my bookkeeping also be my statutory auditor?
The Companies Act bars auditors who are officers of the company or partners, employers or employees of officers, and those owed or owing over RM25,000. Whether a firm may both keep your books and audit them depends on professional ethics rules, which allow only routine or mechanical bookkeeping for most private-company audit clients, with safeguards.
What the Act prohibits (section 264(1)). A person cannot act as auditor if they:
- are an officer of the company, or their spouse is;
- are a partner, employer or employee of an officer;
- are in debt to the company or a related company for more than RM25,000;
- are responsible for the company's register of members or debenture holders; or
- are an undischarged bankrupt or were convicted of fraud or dishonesty carrying three months' imprisonment or more.
A person who was an officer or promoter in the last 12 months is treated as an officer (section 264(2)).
Bookkeeping by the auditor. The Act does not mention bookkeeping. Independence for professional accountants is governed by MIA's By-Laws, which are based on the international (IESBA) Code of Ethics. Under that Code, keeping the books of an audit client creates a "self-review" threat. For a client that is not a public interest entity, the firm may do so only if the services are routine or mechanical, it takes on no management responsibility and it addresses the remaining threats, for example by using staff who are not on the audit team. For listed and other public interest entities, the Code prohibits these services. MIA's By-Laws may add local requirements, so ask the firm which rules it applies.
Practical guidance for owners
- Ask the audit firm in writing what other services it provides and how it manages independence.
- Many owners use one firm for bookkeeping and another for audit to keep the check independent.
- The directors, not the auditor, are responsible for the books and the financial statements (sections 245 and 248).
Never appoint someone who works for you or is a family member of a director.
Legal basis
- Companies Act 2016, s.264(1)-(2)
- MIA By-Laws (ethics and independence)
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
- Does every Sdn Bhd in Malaysia need to be audited?Not every one, but audit is the default. Section 267(1) of the Companies Act 2016 requires a private company to appoint an auditor for each financial year, unless it qualifies for and elects the audit exemption set by SSM's Practice Directive 10/2024.
- What is audit exemption for private companies in Malaysia?Audit exemption lets an eligible private company choose not to appoint an auditor for a financial year. It rests on section 267(2) of the Companies Act 2016 and SSM Practice Directive 10/2024. The company still prepares and lodges unaudited financial statements.
- What are the audit exemption thresholds for a Sdn Bhd in 2026?For financial periods starting 1 January to 31 December 2026 (Phase 2), a private company must meet at least two of three tests: revenue up to RM2,000,000, total assets up to RM2,000,000, and no more than 20 employees. Each test covers the current and past two years.
- How do I check if my Sdn Bhd qualifies for audit exemption?Pass at least two of three tests (revenue, total assets, employees) for the current financial year and the past two, using the limits for the phase your period falls in. Also confirm you are not an excluded company type, such as a subsidiary of a public company.
- Is a dormant company exempt from audit in Malaysia?Yes, if it has been dormant since incorporation or was dormant in both the current and immediately preceding financial year. A company is dormant when it carries on no business and has no accounting transaction, ignoring payments it must legally make.