ACCOUNTS

& AUDIT
TOPIC 7
FINANCIAL STATEMENTS AND REPORT:
Compliance with approved accounting standards

Sec. 244(2)
• Requires directors to
ensure FS and consolidate
FS are prepared in
accordance to approved
accounting standards (Eg:
MFRS)
Non-compliance to
Tabled FS approved accounting
standards – Directors shall:
• Public company – AGM • Disclose in the notes to
• Private company – the account – the reason
meeting of members for non-compliance
• Give details in the notes
of financial effect on the
FS or CFS if the relevant
standards are complied

**If a conflict/inconsistency arises between provisions of an applicable Approved Accounting Standard

(AAS) and the Act, in their respective applications to the FS – the provisions of the AAS shall prevail
 FINANCIAL STATEMENTS AND REPORT:
Accounts to Be Kept - sec. 245

Reasons for Records keep The power of

The records
keeping: outside Malaysia Court – s245(8)
To sufficiently explain Court may order the
Transaction entries Must send and keep in
the transactions and accounting and other
must be recoded within Malaysia – open for
financial position of the records to be disclosed
60 days of the inspection
company to the Auditor – unless
completion directors applied in
To enable true and fair writing to not to
of FS and any The registrar may disclose the
The records must be require the company to information to the
documents to be
kept for 7 years produce the records – auditors
prepared
To enable the to determine the type Default penalty – sec.
accounting and other and manner the 245(9)
Keep at the registered records to be kept in
records to be office – open for • Fine <RM500,000
conveniently and Malaysia
inspection • Imprisonment < 3
properly audited
years
• Both
 FINANCIAL STATEMENTS AND REPORT:
Accounts To Be Kept - sec. 245

Shall have reasonable Shall have reasonable internal control system:

internal control system: To enable true and fair vie of the FS and CFS, the
Assets transactions
ASSETS - are safeguard to
avoid losses from Properly authorised
• unauthorised use
• Disposition Recorded as necessary

Default penalty – sec246(2)

must properly account • Fine <RM1m
• Imprisonment < 3 years
• Both
 ACCOUNTING PERIODS OF COMPANIES WITHIN
THE SAME GROUP – SEC. 247

OTHER THAN FOREIGN • New corporate subsidiary – financial period = holding – directors of holding company
must ensure in 2 years
COMPANY
• Unless directors of holding in the opinion, the subsidiary should not have the same
DIFFERENT financial period – submit APPLICATION FOR APPROVAL FOR DIFFERENT ACCOUNTING
PERIODS FOR COMPANIES IN THE SAME GROUP + statement from directors for the
ACCOUNTING PERIOD reason – to the Registrar (S247(3))

• Registrar may require operating information from the holding and subsidiary
companies
• The Registrar may request Auditor to investigate and report on the application – any

APPLICATION expenses incurred will be borne by the holding company

• Registrar may:

PROCESS • Grant the application

• Reject the application
• The aggrieved company with the Registrar’s decision – appeal to the Minister –
within 2 months
DIRECTORS SHALL PREPARE
FINANCIAL STATEMENTS – SEC.248
INCORPORATION
• FS within 18 months from the date of its incorporation

SUBSEQUENT
• FS within 6 months of its financial year end

AUDITED FS
• FS shall be duly audited before sent to every member and laid before AGM

DEFAULT PENALTY – SEC. 248(3)

• On conviction – fine < RM500,000
• Imprisonment < 1 year
• both
 GENERAL REQUIREMENTS FOR FS
• Financial position
True and fair view - FS • Financial performance

• Financial position – holding and subsidiaries – as a whole

True and fair view - CFS • Financial performance – holding and subsidiaries – as a whole

• the director’s remuneration

• The director’s retirement benefit
Notes to the statement – • Compensation to directors for loss of office
information required by • Loans, quasi-loans and other dealings in favor of directors
the Registrar • The total of the amount paid to or receivables by the auditors as remuneration for
their services – fees, wages, other payments – by or from holding and subsidiary

• Must include all subsidiaries

Consolidated FS
Subsidiary outside Malaysia
• If subsidiary not included – disclose by way of a note on the FS – statement of
reason
• Sufficient by providing separate of FS in such form and reported upon by the
auditors
• Include particulars and documents required by the place it is incorporated
 FINANCIAL STATEMENTS TO BE
APPROVED BY THE BOARD – SEC. 251
State the opinion
Accompanied of the Board that Default penalty –
FS approved Signed by:
with the FS are sec 251(4)
prepared:
statutory In accordance If > 2 director- On conviction
by the board declaration by to approved
- At least 2 – fine
with a accounting
directors <RM500,000
director/perso standards
n responsible
Give true and If 1 director – Imprisonment
resolution
fair view the director < 1 year

both
 DIRECTORS’ REPORT
Approved Contents
SEC. 252 by the – sec. The name of the directors
Directors – Board Signed by sole 253(1)
• During the financial year
Prepare report – director or at • During the period commencing
attached to FS least 2 directors from the end of the financial year
• Ending on the date of the report

Default penalty Default penalty The principal activities of the

– sec. 252(4) – sec. 252(4) company in the course of
• Fine <RM500,000 • Fine <RM20,000 the financial year including
• Imprisonment <1 its subsidiaries
year
• Both
Tabled in
AGM/sent to The matters set out in the 5th
members schedule (Directors’ report)
• State the name of of the Act
person who
signed the report
RELIEF FROM REQUIREMENTS TO
FORM AND CONTENT OF FS AND
DIRECTORS’ REPORT
Registrar will decide S256 - Power of Registrar to
Submit to which he thinks fit require a Statement of Valuation
APPLICATION to impose either: of assets
FOR RELIEF • Grant
FROM THE FORM • Unconditionally
AND CONTENT
• Condition Registrar, with notice in writing,
OF FS AND
• Reject may require the directors to
• If it is inconsistent
DIRECTORS’ with the approved provide a statement of valuation
REPORT to the accounting at current value of assets and
standards
Registrar liabilities within the time
specified in the notice
 • Must send to the last know address provided to the company:

FINANCIAL STATEMENTS DUTY TO • Every member of the company

• Every person who entitled to receive notice of GM
CIRCULATE • Every auditor of the company
• Every debenture holder – on request to the company for free
COPIES OF FS & • (Copies of the FS and reports shall be sent to the last known address
provided to the company)(
REPORTS (S257) • (S252(5) – default penalty, on conviction – fine not more than
AND REPORTS
RM50K)

• S258 – circulation of FS and Report:

TIME ALLOWED • Private company – within 6 months after year end
• Public company – at least 21 days before AGM
TO SEND OUT • (S258(3) – default penalty, on conviction – fine not more than RM50k –
continuing offence, RM500 / day

• S259 – company shall lodge with Registrar each FY of the FS + R

• Time-frame
• Private company – 30 days from the date of circulation to members
• Public company – within 30 days from its AGM
LODGE TO THE • Time extension
• NOTICE OF EXTENSION OF TIME TO LODGE FS AND REPORTS –
REGISTRAR submit before time-frame expired
• Registrar may extend the period specified in the notice if he thinks
fit
• Currency – RM
• Language – BM/BI
 S260
Submit Signed by –
LODGEMENT director,
OF auditor and CS
Exemption to
CERTIFICATE The company is an exempt company – all time
submit FS and
reports RELATING TO
AN EXEMPT
PRIVATE To confirm: Audited FS has sent to the members
EXEMPT PRIVATE

COMPANY
COMPANY

As at the date of FS made up – able to meet the liabilities

w/in 30 days when due
from the
WHEN?
circulation of
FS and reports
The company has kept proper accounting records and
Lodge to the books
AUDITOR’S Registrar
REPORT The FS have been audited
Signed by the The contents of
auditor statement:
His opinion is based on qualification of auditing standards

As at that date – able to meet its liabilities when due

… to be continued with - AUDITOR