Audit FAQ

How do a company appoint its first auditors?

At any time before the first annual general meeting of a company, the directors of the company may appoint, or (if the directors do not make an appointment) the company at a general meeting may appoint, a person to be the auditor of the company, and any auditor so appointed shall hold office until the conclusion of the first annual general meeting.

How much does an external audit cost normally?

External audit fees are based upon the degrees of responsibility and skill involved and the time necessarily occupied on the work. There are no standard fees on audit fees, but you can estimate your audit fee based on Recommended Practice Guide 7 (Withdrawn with effect from 1 June 2015) issued by Malaysian Institute of Accountant.

What are our responsibilities as external auditors?

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

What is an external audit?

External audit is a periodic or specific purpose audit conducted by external (independent) qualified accountant. Its objective is to determine, among other things, whether

(a) the accounting records are accurate and complete

(b) prepared in accordance with the provisions of Generally Accepted Accounting Principles (GAAP)

(c) the statements prepared from the accounts present fairly the organization’s financial position, and the results of its financial operations

What is the difference between External Audit and Internal Audit?

External auditors represent third-party users and most often perform financial audits; internal auditors are employees of the organization, they assist management and, for the most part, perform operational audits.

When should the company perform its audit?

Audit report will be presented in AGM (Annual General Meeting) normally and submitted to Companies Commission of Malaysia together with the company annual return. Thus a company (Sdn. Bhd. Or Bhd) financial statement should be audited every year.

Who receives the external audit report?

Our report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia.

Why the company need audit service?

In Malaysia, every Companies incorporated under the Companies Act 1965 are required to conduct audit every year and submit their audit report to Companies Commission of Malaysia (CCM). It is to enhance the reliability and creditablity of the financial report prepared by the company directors, in which various stakeholders used it as a source for reference.

In additions, audit will also help in detecting the company internal control weaknesses, if such weaknesses come to our notice during the course of our audit, which we think should be brought to the Board of Directors or Audit Committee (listed company) attention, we will report and suggest recommendations to them.

Auditors’ reports have been widely used as a reference to apply bank loans facilities, license (e.g. Licensed manufacturing warehouse) renewal and project tendering as it is certified by an independent third party. The reliability is more than management accounts as it might has certain manipulation in general or errors due to incompetent account executives.