Ng said the government should instead allow such exercise to be carried out on a voluntary basis.
KUCHING (March 3): An association has made a call for the government to exempt small and medium enterprises (SMEs) from compulsory audit.
In voicing this out, Small and Medium Enterprises Association of Malaysia (Samenta) president Datuk William Ng said the government should instead allow such exercise to be carried out on a voluntary basis.
“Presently, dormant companies and companies with revenue below RM100,000, assets below RM300,000 and with fewer than five employees, are exempted from audit.
“This is miniscule, compared to Singapore, where companies with revenue and assets less than SG$10 million are exempted from compulsory audit.
“In Australia, the threshold is even higher where SMEs with revenue and assets less than AU$50 million and AU$25 million, respectively, are exempted from audit,” said Ng in a statement.
Adding on, he said Samenta concurred with the Companies Commission of Malaysia (SSM)’s proposal of changing the qualifying criteria for audit exemption to RM3 million in revenue and assets, and a worker’s headcount of 30.
“Any company meeting two out of three of these criteria (revenue, assets and headcount) should no longer be required to hire an external auditor to audit their accounts, but would still be required to prepare financial statements for taxation and financial planning purposes.
“Should this proposal be accepted, up to 77.4 per cent of all companies would no longer need to go through expensive and time-consuming audits,” he said, adding that they would instead have the freedom to decide based on their business requirements.
“For example, a company may only decide to have an audit performed if they are applying for a government grant or to obtain a bank loan.”
Ng opined that the proposal, if given the greenlight, would not only save micro-SMEs considerable costs and time, but would also promote greater efficiency at all levels of the economy.
According to him, in almost all micro-SMEs, the directors and shareholders are the same.
“In this respect, it serves no purpose to mandate auditing (on SMEs and micro-SMEs).
“Should this proposal be carried out by SSM, Samenta would be engaging with Bank Negara Malaysia and other financial institutions to speed up the adoption of alternative credit scoring and to exempt the requirement of audited financial reports from micro and small enterprises for micro-financing,” added Ng.