How are revenue and total assets measured for the audit exemption test?
Revenue means revenue received and receivable in the year, excluding reversals, tax entries, reversed provisions and gains on disposal of property, plant, equipment and investment property. Total assets are all current and non-current assets as defined by the applicable accounting standards.
Practice Directive 10/2024 defines these terms in paragraph 6.
Annual revenue
- Includes revenue received and receivable during the year, so unpaid invoices raised in the year count.
- Does not include: credit entries that merely reverse earlier accounting entries; accounting entries related to taxation; reversals of provisions made earlier; and gains on derecognising property, plant and equipment or investment property shown in the statement of comprehensive income.
So a one-off gain from selling a machine does not push you over the revenue limit, but normal sales do.
Total assets
- Means assets as defined by the approved accounting standards that apply to the company.
- Includes both current assets (cash, receivables, stock) and non-current assets (equipment, property, long-term investments).
It is the total on the statement of financial position, not net assets after liabilities. A company funded by debt can therefore have large total assets despite small equity.
Reminder. Each measure is tested for the current year and two prior years against the phase limit. For example, Phase 2 uses RM2,000,000.
If an unusual item could change the answer, document your treatment and discuss it with your accountant before relying on the exemption.
Legal basis
- SSM Practice Directive 10/2024, paras 5-6
Sources
Applies to Financial periods commencing on or after 1 January 2025 (thresholds phased 2025-2027) · 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 the 2025 to 2027 phases for audit exemption work?Practice Directive 10/2024 raises the audit exemption limits in three steps, based on when the financial period starts: 2025, 2026, and 2027 onwards. The final limits are RM3,000,000 revenue, RM3,000,000 total assets and 30 employees, reached for periods starting from 1 January 2027.
- 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.