AUDIT REGULATION:

The Companies Act 2016

AUD349 Accounting Information System Auditing
TOPIC OUTCOME

Student able to understand the

relevant regulators, authorities,
and professional bodies.

Student able to understand the

relevant statutory and
regulatory requirements in
Malaysia
 TOPIC CONTENTS
1. Sec. 261 Auditor’s statement
2. Sec. 263 Company Auditors (Qualification)
3. Sec. 264 Company auditors (Disqualification)
4. Sec. 266 Duties of auditors
(1) – (3)
5. Sec. 266 Powers of auditors
(4) – (7)
6. Sec. 267 Appointment of auditors of private company
7. Sec. 271 Appointment of auditors of public company
8. Sec. 274 Fixing of auditor’s remuneration
9. Sec. 281 Resignation of auditors
10. Sec. 282 Notice of resignation of auditor to Registrar
11. Sec. 283 Rights of resigning auditor of a public company

12. Sec. 276 Resolution to remove auditor from office

13. Sec. 277 Special notice required for resolution to remove auditor from
office
Sec. 261 : Auditor’s Statement

A company that is
not required by this (a) stating whether the company has in his opinion
Act to lodge
Financial kept proper accounting records and other books
Statements with the during the period covered by those accounts;
Registrar shall
lodge with the
Registrar a
statement relating
to the FS of the (b) stating whether the FS have been audited in
company required
to be circulated to
accordance with this Act
its members, signed
by the auditor of
the company –
Sec. 261 : Auditor’s Statement

A company that is
not required by this (c) stating whether the auditor's report on the FS was made
Act to lodge subject to any qualification or opinion under any applicable
Financial auditing standards, or included comment made under
Statements with the
Registrar shall subsection 266(3) and, if so, particulars of the qualification or
lodge with the comment, and;
Registrar a
statement relating
to the FS of the
(d) stating whether as at the date to which the Financial
company required Statements has been made up, the company appeared to
to be circulated to have been able to meet its liabilities as and when the liabilities
its members, signed
by the auditor of
fall due.
the company –
Sec. 261 : Auditor’s Statement

A company that is
not required by this (c) stating whether the auditor's report on the FS was made
Act to lodge subject to any qualification or opinion under any applicable
Financial auditing standards, or included comment made under subsection
Statements with the
Registrar shall lodge
266(3) and, if so, particulars of the qualification or comment, and;
with the Registrar a
statement relating
to the FS of the (d) stating whether as at the date to which the Financial Statements
company required to
has been made up, the company appeared to have been able to
be circulated to its
members, signed by meet its liabilities as and when the liabilities fall due.
the auditor of the
company –
 Sec. 263 : Company
Auditors (Qualification)
❑ Sec 263 (1) Any person may apply to the
Minister charged with the responsibility for
1 finance to be approved as a company auditor
for the purposes of this Act.
❑ Sec 263 (2) The Minister may, if he is satisfied
that the applicant is of good character and
2 competent to perform the duties of an
auditor under this Act, upon payment the
prescribed fee, approve the applicant as a
company auditor.
❑ Sec 263 (7) for the purpose of this section,
“person” means a chartered accountant as
defined under the Accountant Act 1967
•Extract of Accountant Act 1967…..
•15. Membership as chartered accountants
•An applicant shall, before admission as a chartered
accountant, satisfy the Council that-- 3
(a) he has passed any of the final examinations
specified in Part I of the First Schedule and has
not less than three years' practical accounting
experience in the service of a chartered 4
accountant or in a Government department, bank,
insurance company, local authority or other
commercial, financial, industrial or professional
organisation or other undertaking approved by the
Council;
(b) he is a member of any of the recognised bodies
specified in Part II of the First Schedule; 5
Sec. 264 : Company Auditors
(Disqualification)

❑ Sec 264 (1) ( c ) A person shall not prepare, for or on behalf of

a company, any report required by this Act, to be prepared by
an approved company auditor if :
i. he is not an approved co auditor;
ii. if he is indebted to the company amount exceeding
RM25,000
iii. he is:
A. or his spouse is an officer of the co. ;
B. a partner, employer/employee of an officer of the co.
C. a partner or employee of an employee of an officer of
the co. ; or
D. a shareholder or his spouse is a shareholder of a
corporation whose employee is an officer of the
company;
Sec. 264 : Company Auditors
(Disqualification)

iv. responsible for the keeping of the register of

the member or register of the debenture
holders of the company
v. he is undischarged bankrupt within or outside
Malaysia
vi. has been convicted of any offense involving
fraud or dishonesty with imprisonment of 3
months or more
❑ Sec 264 (2) ( c ) For the purposes of subparagraph
(1)(c)(iii), A person shall deem to be an officer of a
company if he is an officer of a corporation that is
deemed to be related to the company by virtue of
section7 if he has been an officer or promoter of
the company or such a corporation at any time
within the preceding period of 12 months , unless
the Minister directs otherwise.
Sec 264(2)

(1) Mai works as an accountant in

ABC Company

(2) Mai resigns as accountant

(4) After 12 months, Mai can

be the auditor of ABC
Company
(3) Mai takes a
licence to become
an auditor
 Sec. 266 (1) – (3) :
Duties Of Auditors
Sec 266 (1): shall report to
the members on the
Financial Statement and on
the company accounting
and other records related to
the Financial Statement.
he obtained all the info
Sec 266 (2): state whether
the Financial Statement are
properly drawn up in
accordance with the Sec 266 (3): form an
Approved Accounting opinion whether
Standard, given a true &
fair view, and to report any
defect or irregularities.
proper accounting and whether the consolidation
return received from
other records have been methods taken were
branches are adequate
kept appropriate.
Sec. 266 (4) – (7) :
Powers Of Auditors
Sec 266 (4): right of access to the
accounting books and other
records including registers of the co
and entitled to require information
and explanation as he desires for
the purpose of the audit from any
officer of the co and auditor of
related co.
Sec 266 (5): auditor for holding co
may access the accounting books
and other records of its subsidiary
and right to require information
and explanation form any officer or
auditor from subsidiary
Sec. 266 (4) – (7) : ❑ Sec 266 (6): the auditor’s report shall be attached to
the Financial Statement or Consolidated Financial
Powers Of Auditors Statement, and be read at the general meeting
❑ Sec 266 (7): shall entitled to attend any general
meeting, and to receive notices and any other
communications in relation to the general meeting.
Auditor also entitled to be heard (due to removal) at
any general meeting.
Sec. 267 : Appointment Of Auditors Of
Private Company
Sec 267 (1) A private company shall appoint an
auditor for each financial year

Sec 267(3) Appointment by directors

• at least 30 days before the end of submission of the 1st A public company is listed
Financial Statement to the Registrar, in the stock-exchange.
• to fill the casual vacancy in the office of the auditor Private firm is not listed in
a stock-exchange and it is
Sec 267(4) Appointment by members held privately buy the
member of the company
• at each subsequent years following the 1st submission of
Financial Statement.
BHD is suffix which is used in
• when the board fails to appoint under sec 267 (3)
Malaysia to identify a public
limited company, while suffix
Sec 268 Appointment by Registrar/CCM Sendirian Berhad denotes that
it is a private firms
• If a company does not appoint an auditor as required under
the Act, the Registrar may make the appointment upon
writing application by the members of the company
 Sec 271 (1) A public company shall appoint an auditor for each financial
year

Sec 271(2) Appointment by directors

Sec. 271 :
• at any time before the 1st Annual General Meeting (AGM),
Appointment • to fill the casual vacancy in the office of the auditor
Of Auditors • the auditor shall office until the conclusion of the next AGM

Of Public Sec 271(4) Appointment by members

Company • at the AGM
• when the board fails to appoint under sec 271 (2)

Sec 272 Appointment by Registrar/CCM

• If a company does not appoint an auditor as required under the Act,

the Registrar may make the appointment upon writing application
by the members of the co
Sec. 274 : Fixing ❑ Sec 274 (1) : Remuneration of the auditor shall be
✓ fixed by the Members by ordinary resolution,
Of Auditor’s or
Remuneration ✓ fixed by the Board, (if not fixed by the
company) or
✓ fixed by the Registrar (if the company fail to
do so)
Sec. 281 : ❑ Sec 281 (1): An auditor may resign by giving a
written notice to the office at the registered office.
Resignation Of ❑ Sec 281 (2): The notice under sec 281 (1) shall
Auditors bring the end of the auditor’s office after 21
days of the date of the notice.
❑ Sec 282 (1): The company shall send a copy of the
notice to the Registrar within 7 days from the
received date.
Sec. 283 : Rights ❑Sec 283 (2): The auditor may give the notice of
resignation (sec 281) and request the directors to
Of Resigning immediately convene a general meeting for the
purpose of receiving and considering explanation.
Auditor Of A
Public Company ❑Sec 283 (4)
✓ The company shall state the notice has been received
and send the copy to every member of the company.
✓ Shall hold the general meeting within 28 days from
the date of the notice.
Sec. 276 : ❑ Sec 276 (1) The company may removed the auditor
at any time by ordinary resolution at a general
Resolution To meeting

Remove Auditor ❑ Sec 276 (3) The auditor may not be removed from
From Office office before the expiration of his term of office
except by resolution
Sec. 277 : Special ❑Sec 277 (1): Special notice shall be required for a
resolution to remove auditor from office at general
Notice Required meeting

For Resolution To ❑Sec 277 (2): Upon receipt of the special notice, the
company shall send a copy to the Registrar
Remove Auditor ❑Sec 277 (3): The auditor may make a representation in
writing within 7 days from the receipt of the special
From Office notice
Thank You
Amizahanum Adam
amiza592@uitm.edu.my