What are the new audit exemption thresholds under PD 10/2024?

The new thresholds are phased over 3 years. Phase 1 (2025): Revenue ≤ RM1M, Assets ≤ RM1M, Employees ≤ 10. Phase 2 (2026): Revenue ≤ RM2M, Assets ≤ RM2M, Employees ≤ 20. Phase 3 (2027+): Revenue ≤ RM3M, Assets ≤ RM3M, Employees ≤ 30. Companies must meet at least 2 of the 3 thresholds.

Free Tool PD 10/2024

Audit Exemption Eligibility Checker

Check if your Malaysian Sdn Bhd qualifies for audit exemption under the new Practice Directive 10/2024 framework.

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Company Name

Date of Incorporation

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Disclaimer: While this tool helps you understand the general rules, every company's situation is different. We'd always recommend confirming your eligibility with a qualified auditor or accountant — or reach out to us and we'll point you in the right direction.

About the Audit Exemption Framework

Key information about PD 10/2024 and how it affects your Sdn Bhd

2 of 3

Thresholds must be met
(revenue, assets, employees)

3 years

Current + 2 past financial
years must all qualify

3 phases

Thresholds increase
progressively 2025 – 2027

New Thresholds (3-Phase Approach)

Companies must meet at least 2 out of 3 for the current and immediate past 2 financial years

Criteria	Phase 1 FY starting 2025	Phase 2 FY starting 2026	Phase 3 FY starting 2027+
Revenue	≤ RM 1,000,000	≤ RM 2,000,000	≤ RM 3,000,000
Total Assets	≤ RM 1,000,000	≤ RM 2,000,000	≤ RM 3,000,000
Employees	≤ 10	≤ 20	≤ 30

Who is Excluded?

Subsidiaries of public companies
Exempt private companies that lodge an EPC certificate
Foreign companies (Specific entity type)

What Must You Still Lodge?

Unaudited financial statements
Directors' report
Certificate of compliance (within 30 days of circulation)

Frequently Asked Questions

What is audit exemption for Malaysian companies?

Audit exemption allows eligible private companies (Sdn Bhd) to opt out of having their financial statements audited by an auditor. This reduces costs while still requiring companies to prepare and lodge unaudited financial statements with SSM.

What are the new thresholds under PD 10/2024?

Thresholds increase progressively over 3 phases. Companies must meet at least 2 of 3 criteria:

	Revenue	Assets	Employees
Phase 1 (2025)	≤ RM 1M	≤ RM 1M	≤ 10
Phase 2 (2026)	≤ RM 2M	≤ RM 2M	≤ 20
Phase 3 (2027+)	≤ RM 3M	≤ RM 3M	≤ 30

Which companies are excluded from audit exemption?

Subsidiaries of public companies, exempt private companies that lodge an EPC certificate instead of financial statements, and foreign companies are excluded.

When does PD 10/2024 take effect?

The new criteria apply to financial statements with annual periods commencing on or after 1 January 2025. PD 3/2017 continues to apply for financial statements commencing on or before 31 December 2024.

Do I need to apply for audit exemption?

No, you do not need to apply with SSM. A company is eligible for audit exemption if it satisfies the criteria set in PD 10/2024 and elects to do so. The company can always choose to appoint an auditor if needed.

How do I count my number of employees?

Count the number of full-time employees at the end of each relevant financial year. Full-time means working at least 6 hours/day for at least 20 days/month, or at least 120 hours/month. This includes local, foreign, and contract workers (including those on probation), but excludes directors, shareholders, and unpaid family members who also work in the company.

Does audit exemption affect income tax requirements?

The audit exemption under PD 10/2024 is under the Companies Act 2016. The requirement for audited accounts by LHDNM is under the Income Tax Act 1967. However, LHDNM has announced that if a company is not required to submit audited accounts to SSM, then subsection 77A(4) of the ITA would not apply.

Can dormant companies qualify for audit exemption?

Yes. Companies that have been dormant since incorporation, or dormant in the current financial year and the immediate past financial year, qualify for audit exemption. A dormant company is one that has had no business transactions — excluding payments for company secretary fees, accounting fees, SSM filing fees, and other compliance-related costs.

What happens if a company loses its eligibility for exemption?

If a company no longer meets the criteria, it will lose its eligibility to adopt the audit exemption framework for future financial years. However, the company shall remain exempt for the qualifying years in which it was eligible.

Is PD 3/2017 still relevant after PD 10/2024?

Yes. PD 3/2017 continues to apply for financial statements commencing on or before 31 December 2024. PD 10/2024 does not have a retrospective effect — it only applies to financial years starting on or after 1 January 2025. Companies that qualified for audit exemption under PD 3/2017 remain exempted for those financial years.

Does a company still need to file financial statements if exempt from audit?

Yes. The company is still required to prepare and circulate financial statements within the time period stated in the Companies Act 2016. It must then lodge unaudited financial statements, a directors' report, and a certificate of compliance with SSM within 30 days after circulation. The financial statements must comply with the applicable approved accounting standards.

Can an associate of a public company adopt PD 10/2024?

Yes. A private company which is an associate of a public company is eligible to adopt PD 10/2024 if it fulfils all the relevant criteria. However, a private company which is part of a public company either as a subsidiary or through joint control is not eligible. Note that an audit is still required if the company receives a notice in writing from members or the Registrar requiring an audit.

Is a newly incorporated non-dormant company eligible immediately?

No. Under PD 10/2024, eligibility for audit exemption requires a company to meet the thresholds for the current financial year and have financial information for the immediate past 2 financial years. Since a newly incorporated company that is not dormant does not have 2 preceding years of financial data, it does not qualify for audit exemption until it has completed at least 3 financial years.

See the official SSM FAQ (Item 27) →

Can a holding company and its subsidiaries qualify individually?

Yes. The eligibility criteria are applied to the financial results of each company at company level, not at group level. A private holding company and its private subsidiaries can each individually qualify for audit exemption if they meet the thresholds on their own, even if the consolidated financial statements at group level exceed the thresholds.