What is a professional clearance letter when changing auditors?
It is a written request from the incoming auditor to the existing auditor, asking whether there is any professional reason not to accept the appointment. It comes from professional ethics rules, based on the international Code that MIA's By-Laws follow, not from the Companies Act.
What it is. Before accepting an audit appointment from a company that already has an auditor, the incoming accountant is expected to communicate with the existing auditor. This is called professional clearance. The incoming auditor asks whether there are professional reasons, such as unpaid fees, concerns about integrity or a disagreement, that should affect acceptance.
Where the rule comes from. MIA's By-Laws (ethics section on changes in a professional appointment), not the Companies Act 2016. The Companies Act deals with the separate legal steps: appointment, removal, resignation, and notifying SSM.
What the ethics code requires. The IESBA Code (Section 320), on which MIA's By-Laws are based, requires an accountant asked to take over an audit to ask the existing auditor for any known facts that bear on acceptance. The client's permission is usually needed first, preferably in writing. If the client refuses, the existing auditor must tell the incoming auditor so, and the incoming auditor must weigh that refusal. If the incoming auditor cannot communicate with the existing one, they must take other reasonable steps to learn about possible threats. Ask the incoming auditor which MIA procedure and timeframes they follow.
What the owner should know
- The company must usually give the existing auditor permission to discuss its affairs.
- The existing auditor can be asked to hand over relevant information once cleared.
- Clearance is about the professional relationship; it does not decide whether members may remove the auditor (they can, under section 276).
- Outstanding fees can complicate matters, so settle disputes early.
Separate legal duties. A resigning or removed auditor must still send the Registrar their statement (section 284), and the company must notify SSM (sections 278 and 282).
Legal basis
- MIA By-Laws (professional clearance)
- Companies Act 2016, ss.276, 278, 282, 284
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 can shareholders remove a company's auditor?Members can remove an auditor at any time by ordinary resolution at a general meeting, on special notice. The company must send the notice to the auditor and SSM, the auditor may make written representations, and the company must tell SSM within 14 days of the resolution.
- What happens when an auditor resigns from a Sdn Bhd?The auditor gives written notice to the company's registered office, and resignation takes effect after 21 days or a later date stated. The company must send a copy of the notice to SSM within seven days, and the auditor must also send the statement of circumstances to SSM.
- How do I change auditors for my Sdn Bhd?Pick the new auditor, who must contact the existing one for professional clearance, then replace the old auditor by resolution (members) or fill the vacancy (board). Notify SSM of removal within 14 days or resignation within seven. A written resolution replacing an auditor needs 28 days.
- 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.