What are the types of audit opinion in Malaysia and what do they mean?
There are four: unmodified (clean), qualified (accounts fair except for a specific matter), adverse (accounts materially misstated overall) and disclaimer (the auditor could not get enough evidence to give any opinion). The last three are called modified opinions.
The auditor's report states whether the financial statements give a true and fair view and comply with the Act and approved accounting standards (section 266(2)). International auditing standards (ISA 705) set the types of opinion.
Unmodified (clean). The statements are fairly presented in all material respects. This is what owners want.
Qualified ("except for"). The statements are fairly presented except for one specific matter that is material but not pervasive. Examples: a stock count could not be observed, or one balance is misstated.
Adverse. The misstatements are material and pervasive, so the statements do not give a true and fair view.
Disclaimer. The auditor could not obtain enough appropriate evidence, and the possible effects are both material and pervasive, so no opinion is given.
Modified opinion is the umbrella for qualified, adverse and disclaimer.
Not an opinion type. Emphasis of matter and material-uncertainty paragraphs draw attention to a disclosed matter without changing the opinion (see next question).
Other reporting. Section 266(3) also requires the auditor to report on whether they got all information and explanations, and whether proper records were kept, stating any deficiency. SSM can be informed of a company's breaches under section 266(8).
A modified opinion does not itself stop lodgement, but it is visible to banks, SSM and other readers. See the question on its effects.
Legal basis
- Companies Act 2016, s.266(2)-(3)
- ISA 700, 705 (Revised)
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.