Can your company skip the audit? SSM's new thresholds explained (2025–2027)

The answer: you may well qualify, but you still have to keep your books. Let us go through it step by step.

First, two terms. An audit is when an independent licensed auditor examines the company's financial statements and issues an audit report. Audit exemption means the company meets SSM's conditions and can skip hiring an auditor, lodging unaudited financial statements instead.

What are SSM's new audit exemption thresholds?

The thresholds rise in three stages: RM1 million / RM1 million / 10 employees in 2025, RM2 million / RM2 million / 20 employees in 2026, and RM3 million / RM3 million / 30 employees in 2027. SSM set these thresholds in Practice Directive 10/2024, and which stage applies depends on the start date of your company's financial period.

For example, if your financial year runs from 1 January to 31 December 2026, the second stage applies: revenue of RM2 million, total assets of RM2 million and 20 employees.

What does "meet 2 of 3 criteria" mean for audit exemption?

It means any two of the three criteria must be within the threshold. You do not need to meet all three. This is the point people most often miss.

Back to the furniture factory in Batu Pahat. Say its revenue for financial year 2026 is RM2.3 million, above RM2 million. But its total assets are only RM800,000 and it has 15 employees. It fails on revenue, but meets the total assets and employee criteria, so for that year it counts as "meeting 2 of 3".

On the other hand, if a trading company has revenue of RM1.5 million, but warehouse stock and receivables bring its total assets to RM2.6 million, and it has 25 employees, it meets only 1 criterion and cannot be exempt from audit.

Why does SSM audit exemption look at three consecutive years?

Because the rule requires you to qualify in the current year and the two previous years, SSM looks back three years. If you qualify this year but failed in one of the previous two years, you still cannot be exempt this year.

Say that two years ago a batch of export orders pushed your revenue and headcount up, so you met only one of the three criteria. Then you still need an audit this year, and must wait until you have qualified for three years in a row.

SSM's guidance explains which stage's thresholds apply to the previous two years and how companies under three years old are assessed. The safest approach is to put the past three years' revenue, total assets and employee numbers into one table, and have your accountant check each year against the official guidance.

What do you still need to do after your company is audit exempt?

You must still keep complete accounting records, prepare unaudited financial statements and lodge them with SSM, and file Form C as usual. The only thing an exemption saves is hiring an auditor to audit your accounts.

Unaudited financial statements are a company's annual financial statements prepared according to accounting standards but not audited by an auditor.

The quality of your day-to-day bookkeeping actually matters more now. In the past, the auditor acted as a checkpoint: if the books were a bit messy, the audit would pick it up and get it corrected. Without that checkpoint, whether your statements are accurate depends on how well your books are kept during the year.

If your books have been left for a year or two, now is a good time to catch up. Start with what to do when your books are years behind, or read about our catch-up bookkeeping service.

If your company qualifies for exemption, should you keep having an audit?

It depends on your plans for the next year or two. In some situations, continuing with an audit is worth it.

For example, if you plan to apply for a bank loan or overdraft facility, the bank may ask for audited statements. Some government or large-company tenders may also require an audit report. If you are looking for investors, or the company has several shareholders, they may also want the accounts checked by a third party.

Another case is when the company plans to sell or merge. During due diligence, buyers usually want to see several years of audit reports. If there has been no audit for those years, the buyer may ask you to have one done or may negotiate the price down.

When shareholders get along well, nobody cares about the audit. But when someone wants to exit and the company needs to be valued, a set of statements reviewed by a third party can prevent a lot of disputes.

What can business owners do now to confirm whether they can be exempt?

There are three things you can do now. First, gather the figures for the past three years and confirm which stage applies to your company and whether it qualifies. Second, even if you are exempt, make sure someone keeps your monthly books accurately. Third, agree a timeline with your accountant for the unaudited statements and Form C.

To see how monthly bookkeeping is priced, visit the pricing page. The Starter plan starts from RM280 a month, and the final fee follows your quotation. Tax filing is handled by partner licensed tax agents; see our tax filing support service.