Who can legally be the auditor of a Sdn Bhd in Malaysia?
Only an approved company auditor, approved under section 263 of the Companies Act 2016, or a firm whose resident partners are all approved company auditors. The person must also pass the independence and disqualification tests in section 264.
Approved company auditor. Section 264(1) prohibits a person from knowingly consenting to be appointed, or acting, as auditor of any company unless they are an approved company auditor. Section 263 says the Minister of Finance approves company auditors, and approvals can be delegated (the Accountant General's Department handles applications).
Firms (section 264(4)). A firm can act only if all its partners resident in Malaysia are approved company auditors and no partner is disqualified. Reports must be signed in the firm's name and by an approved partner, with the firm number and approval number shown (section 265(5)).
A written consent from the auditor is required before appointment (section 264(5)).
Disqualifications (section 264(1)) include being:
- indebted to the company or a related company by more than RM25,000;
- an officer of the company, or married to one, or a partner, employer or employee of an officer;
- responsible for the company's register of members or debenture holders;
- an undischarged bankrupt (without court leave); or
- convicted of fraud or dishonesty carrying imprisonment of three months or more.
Penalty. An unqualified person or firm that acts commits an offence, with a fine up to RM100,000 (section 264(8)).
Check before appointing. Ask for the auditor's approval number and firm number, and confirm the approval is current.
Legal basis
- Companies Act 2016, s.263
- Companies Act 2016, s.264
- Companies Act 2016, s.265
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 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.