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    Country by Country Financial Reporting and Auditing Framework

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    Malaysia – Crowe Horwath AF1018 (prepared February 2015)

    Preparation and Filing of Statutory Financial Statements

    All companies incorporated under the Companies Act 1965 in Malaysia ("CA") shall submit audited financial statements annually, regardless of the size of the company.


    A business registered as a sole proprietor or partnership doing business in Malaysia is not required by law to have its financial statements audited annually.


    Every company shall, at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calendar year at intervals of not more than fifteen months, lay before the company at its annual general meeting, an annual audited financial statements for the period since the preceding financial period (or since the incorporation of the company) made up to a date not more than six months before the date of the annual general meeting ("AGM").


    Public listed entities are required to lodge unaudited results with Bursa Malaysia Securities Berhad ("Bursa Malaysia") 2 months after the end of the financial year/period. These include results for the interim 4th quarter as well as the annual results for the full year/period. The annual audited results and full financial statements must later be lodged with Bursa Malaysia at 4 months after year-end or period-end.


    Financial Reporting Framework

    All Malaysian companies must comply with approved accounting standards in Malaysia, namely Malaysian Financial Reporting Standards. These are fully compliant with International Financial Reporting Standards (IFRS) and contain only a small number of additional requirements specific to Malaysia.


    The Malaysian Private Entities Reporting Standard ("MPERS") is word-for-word the IFRS for SMEs issued by the International Accounting Standards Board ("IASB") in July 2009 except for the requirements on income tax and property development activities.  The IASB is currently undertaking a review of the IFRS for SMEs and has issued an Exposure Draft of proposed amendments in October 2013. The Malaysian Accounting Standards Board will update the MPERS requirements with that of the revised IFRS for SMEs, if any. All private entities shall apply the MPERS for their financial statements beginning on or after 1 January 2016.


    Statutory Requirements

    Statutory reports for all companies mentioned above are required to be lodged annually to the Registrar of Companies. All companies are to lodge the annual return within one month of the AGM and shall include:

    • A copy of the last audited financial statements comprising the balance sheet and profit and loss accounts certified by a director, manager or secretary of the company (including every document required to be attached thereto); and
    • A certified copy of the auditor's report.

    For an exempt private company which is solvent, the attachment of the audited financial statements may be substituted by a certificate signed by a director, a company secretary and auditor stating that:

    • The company is an exempt private company;
    • The audited financial statements in compliance with the provisions of the CA, has been tabled in the company's AGM; and
    • The company is able to meet it liabilities as and when they fall due as at the date of the audited financial statements.

    An exempt private company is a private company having not more than 20 members (or shareholders), none of whom are corporations having direct or indirect interest in its shares.


    Audit Appointments, Rotation and Joint Audits

    Auditors in Malaysia normally hold office until the next AGM of their client company. They may be appointed or removed at any time; however, if done outside of the AGM, the Company must hold an Extraordinary General Meeting of shareholders. 


    Malaysia does not have any rules relating to mandatory rotation of audit firms but there are guidelines within the ethical standards regarding the senior personnel rotation for the public interest entities. In accordance with the By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ("MIA") ("By-Laws"), in respect of an audit of a public interest entity, an individual shall not be a key audit partner for more than five years and after such time, the individual shall not be a member of the engagement team or key audit partner for the client for two years.


    Whilst not prohibited, joint audits are quite rare in Malaysia.


    Auditing Standards

    All auditing standards in Malaysia are undertaken by the MIA and Malaysia has fully adopted the International Standards on Auditing of the International Auditing and Assurance Standards Board, published by the International Federation of Accountants ("IFAC"), effective for audits of financial periods beginning on or after 1 January 2010.


    Malaysian auditors are also required to fully comply with International Standards on Quality Control 1 ("ISQC 1") on the system of quality control. 


    Ethical Framework

    The By-Laws are substantially based on the Code of Ethics for Professional Accountants of the International Ethics Standards Board of Accountants, published by the IFAC in April 2010, which came into effect on 1 January 2011 unless otherwise stated therein, with some additional local requirements specific to Malaysia. 


    Auditor Registration

    The Minister of Finance Malaysia ("Minister"), or any person or body of persons charged with the responsibility for the registration or control of accountants in Malaysia, may approve the applicant as a company auditor, if he is satisfied that the applicant is of good character and competent to perform the duties of an auditor under the CA, upon payment of the prescribed fee.


    Every approval including a renewal of approval of a company auditor shall be in force for a period of two years after the date of issue thereof unless sooner revoked by the Minister.


    Auditors of public-interest entities ("PIEs") in Malaysia need to also register with the Audit Oversight Board ("AOB"). The PIEs are defined as:

    • Public-listed companies and corporations listed on Bursa Malaysia;
    • Licensed financial institutions;
    • Insurance companies; and
    • Holders of the Capitals Markets Services License for the carrying on of the regulated activities of dealing in securities, derivatives and fund management.

    The registration of auditors of PIEs would ensure that only fit and proper auditors are involved in auditing the financial statements of the PIEs. 

    Auditor Regulations

    Crowe Horwath Malaysia is subject to annual regular inspections by the AOB on PIE audit engagements. Reports on individual firms are not publicly available, however the annual AOB report on their inspection programme, summarising their findings across the profession as a whole, is available from their website.


    Crowe Horwath Malaysia may be subject to review by professional bodies such as MIA or other regulators such as the Public Company Accounting Oversight Board.

    Internal Monitoring

    We have established a formal monitoring and peer review process which allows us to gain assurance that:

    • Our firm's system of quality control are operating effectively;
    • The firm and its personnel comply with professional standards and applicable legal and regulatory requirements; and
    • Reports issued by the firm or engagement partners are appropriate in the circumstances.

    The review comprises of reviews of the compliance with the Firm's policies and procedures in accordance with ISQC 1 and also a selection of the engagement partners' audit files. Each partner will be selected at least once in every three years or more frequently when the outcome of the preceding review is unsatisfactory.

    Contact Us
    David Chitty - Audit
    London, United Kingdom
    +44 20.7842.7292

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