Malaysia

The statutory framework for corporate financial reporting in Malaysia is principally set out in the Companies Act 2016 and the Financial Reporting Act 1997, with additional sector-specific requirements under the Central Bank of Malaysia Act 2009, the Financial Services Act 2013, the Islamic Financial Services Act 2013, and the Securities Commission Act 1993. The Companies Act 2016 requires companies to keep proper accounting records and prepare financial statements, while the Financial Reporting Act 1997 establishes the Malaysian Accounting Standards Board as the authority responsible for issuing approved accounting standards in Malaysia. Financial statements prepared or lodged under laws administered by the Securities Commission, Bank Negara Malaysia, or the Registrar of Companies must comply with standards issued by the Malaysian Accounting Standards Board.

In Malaysia, financial reporting standards for entities other than private entities are the Malaysian Financial Reporting Standards, which are issued by the Malaysian Accounting Standards Board and are maintained as word-for-word IFRS Accounting Standards. Private entities may apply either the Malaysian Financial Reporting Standards or the Malaysian Private Entities Reporting Standard. The Malaysian Private Entities Reporting Standard is based on the IFRS for SMEs Accounting Standard, with limited modifications, including for property development activities and certain terminology.

The Companies Act 2016 provides the legal basis for statutory audits. Public companies are subject to audit requirements and private companies are generally required to appoint an auditor, although the Registrar may exempt certain private companies from audit in accordance with prescribed criteria. In December 2024, the Companies Commission of Malaysia issued Practice Directive No. 10/2024, introducing revised audit exemption criteria for certain private companies for financial periods beginning on or after January 1, 2025. Audits are performed in accordance with the Malaysian Approved Standards on Quality Management, Auditing, Review, Other Assurance and Related Services issued by the Malaysian Institute of Accountants.

Additional reporting requirements apply to regulated sectors. Bank Negara Malaysia has issued policy documents on Financial Reporting, Financial Reporting for Islamic Banking Institutions, and Financial Reporting for Takaful Operators, which apply to licensed financial institutions, Islamic banking institutions, and takaful operators under its supervision. Entities regulated by the Securities Commission are also subject to the applicable requirements of Malaysia’s capital market regulatory framework.

In Malaysia, the accountancy profession is regulated through a shared framework involving the Malaysian Institute of Accountants (MIA), the Securities Commission Malaysia (SC), the Audit Oversight Board (AOB), the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia, SSM), and professional accountancy organizations such as the Malaysian Institute of Certified Public Accountants (MICPA).

The Accountants Act 1967 establishes MIA as the statutory body responsible for regulating the practice of the accountancy profession in Malaysia. Under the Act, no individual may practice or hold themselves out as a Chartered Accountant or licensed accountant unless registered with MIA. Membership with MIA is therefore mandatory for individuals who wish to practice in the jurisdiction. The Act authorizes MIA to determine qualifications for admission, establish and supervise education and training requirements, approve and regulate the MIA Qualifying Examination, and regulate professional practice. It also provides the legal basis for MIA to establish ethical requirements, an investigative and disciplinary system, and a quality assurance review mechanism through its By-Laws. Admission to MIA generally requires completion of recognized professional qualifications together with at least three years of relevant practical experience, or membership in a recognized body listed under the Act.

The SC, established under the Securities Commission Act 1993, is responsible for regulating and developing Malaysia’s capital market. Under Part IIIA of the Act, the AOB operates as the independent audit oversight authority for auditors of Public Interest Entities and schedule funds. The AOB is responsible for the registration, inspection, and enforcement oversight of auditors of these entities, including compliance with auditing and ethical standards. While the AOB has legislative authority to establish or adopt auditing and ethical standards applicable to auditors under its oversight, this standard-setting function is exercised through directions to MIA, which issues the applicable standards in Malaysia.

MICPA, established in 1958 and incorporated under the Companies Ordinances, is a voluntary professional accountancy organization. It confers the Certified Public Accountant designation, establishes ethical requirements for its members, provides technical support to regulatory bodies, and operates an investigative and disciplinary system under its By-Laws. Entry into MICPA membership generally requires completion of the MICPA qualification program and a minimum of three years of relevant practical experience.

SSM, established in 2002, is the statutory body responsible for administering and enforcing the Companies Act 2016 and related corporate legislation. In relation to the profession, SSM oversees the registration of audit firms, monitors changes in auditors and audit firms, and supervises matters relating to the resignation and removal of auditors. It also has enforcement powers over companies, directors, and auditors for non-compliance with the corporate legal framework.

Part IIIA of the Securities Commission Malaysia Act 1993 establishes the Audit Oversight Board (AOB) as the independent audit oversight authority in Malaysia. The AOB operates under the Securities Commission Malaysia and is responsible for regulating auditors of Public Interest Entities (PIEs) and schedule funds, as well as persons who prepare reports relating to the financial information of these entities in connection with capital market activities.

The key responsibilities of the AOB include the registration of auditors of PIEs and schedule funds; the establishment or adoption of auditing and ethical standards applicable to auditors under its oversight; the conduct of inspections and monitoring programs to assess compliance with applicable standards; the conduct of inquiries and the imposition of sanctions for non-compliance; and cooperation with relevant domestic and international authorities to strengthen audit quality and confidence in financial reporting.

The AOB has authority to impose a range of sanctions, including reprimands, monetary penalties, suspension, and prohibition from accepting or auditing PIEs and schedule funds, including permanent prohibitions in serious cases.

The AOB is a member of the International Forum of Independent Audit Regulators (IFIAR).

The Malaysian Institute of Accountants (MIA)

The Malaysian Institute of Accountants is the statutory body established under the Accountants Act 1967 to regulate and develop the accountancy profession in Malaysia. Under the Act, MIA is empowered to determine the qualifications for admission as members; provide education and training for persons practicing or intending to practice the profession; approve and regulate the MIA Qualifying Examination; regulate professional practice; promote the interests of the profession; provide assistance to members and their dependents; and undertake any activities necessary to achieve these objectives.

The Accountants Act stipulates that no person may practice or hold themselves out as a Chartered Accountant or licensed accountant unless registered with MIA. Accordingly, MIA confers the Chartered Accountant Malaysia (C.A. (M)) designation, and membership is mandatory for individuals wishing to practice as professional accountants in Malaysia.

In addition to being a member of IFAC, MIA is also a member of the ASEAN Federation of Accountants (AFA).

The Malaysian Institute of Certified Public Accountants (MICPA)

The Malaysian Institute of Certified Public Accountants is a voluntary professional accountancy organization established in 1958 and incorporated under the Companies Ordinances. MICPA confers the Certified Public Accountant (Malaysia) [CPA (M)] designation, establishes ethical requirements for its members, provides technical advice to regulatory and standard-setting bodies, and operates an investigative and disciplinary system under its By-Laws.

Membership in MICPA is voluntary. The Institute administers professional qualification pathways, including its joint qualification program with Chartered Accountants Australia and New Zealand, and requires candidates to complete relevant practical experience requirements prior to admission to membership. MICPA maintains a close working relationship with MIA on professional and technical matters, including joint initiatives related to financial reporting and professional development. In addition to being a member of IFAC, MICPA is an Associate member of AFA.

In Malaysia, the Audit Oversight Board (AOB) and the Malaysian Institute of Accountants (MIA) share responsibility for establishing and operating the quality assurance (QA) review system in the jurisdiction.

Under Part IIIA of the Securities Commission Malaysia Act 1993, the AOB is responsible for conducting QA reviews of audit firms registered with the AOB that audit Public Interest Entities (PIEs) and schedule funds. The AOB conducts inspections and may undertake enforcement actions, including sanctions, against audit firms and auditors for non-compliance with applicable auditing and ethical standards.

Under Section B250 of the MIA By-Laws (On Professional Ethics, Conduct and Practice), MIA is responsible for the surveillance and review of audit firms registered with MIA through its Practice Review Framework. This framework is mandatory for all audit firms registered with MIA and is designed to operate in line with the requirements of SMO 1.

Malaysia has adopted the International Standards on Quality Management (ISQM 1 and ISQM 2), together with ISA 220 (Revised), with an effective date of 15 December 2022. These standards replaced the previous ISQC 1 framework and are applicable to all firms performing audits and other assurance engagements in the jurisdiction.

Although the AOB is responsible for the oversight of auditors of PIEs and schedule funds, MIA continues to operate its practice review system for firms registered with the Institute and may conduct reviews where appropriate.

The QA review system is operational and incorporates the requirements of SMO 1 for all mandatory audits.

Current Status: Adopted

In Malaysia, Initial Professional Development (IPD) and Continuing Professional Development (CPD) requirements for professional accountants are established independently by the two professional accountancy organizations in the jurisdiction: the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA).

Under the Accountants Act 1967, MIA is responsible for establishing IPD and CPD requirements for Chartered Accountants in Malaysia. MIA has established education, practical experience, assessment, and continuing professional development requirements that are aligned with the International Education Standards (IES).

The MIA Education Board is responsible for accrediting accounting degree programs and professional pathways for admission as Chartered Accountant (Malaysia) [C.A. (M)]. MIA’s Competency Framework (MIA CFM) is calibrated against the IES and incorporates IES 1 through IES 8, including the three proficiency levels of Foundation, Intermediate, and Advanced.

Under its By-Laws, MICPA administers the MICPA x Chartered Accountants Australia and New Zealand (CA ANZ) Qualifying Programme, including the Malaysia-specific taxation component. MICPA also establishes practical experience and CPD requirements for its members, which it reports are aligned with the IES.

Accordingly, the requirements for entry-level, initial, and continuing professional development for professional accountants in Malaysia are aligned with the International Education Standards.

Current Status: Adopted

The Companies Act 2016 requires statutory audits for public companies and for private companies that do not qualify for audit exemption under the applicable requirements of the Companies Commission of Malaysia.

Under Part IIIA of the Securities Commission Malaysia Act 1993, the Audit Oversight Board (AOB) has legislative authority to establish or adopt auditing standards applicable to auditors of Public Interest Entities (PIEs) and schedule funds. This standard-setting responsibility is exercised through the Malaysian Institute of Accountants (MIA).

MIA’s Auditing and Assurance Standards Board (AASB) adopts the pronouncements issued by the International Auditing and Assurance Standards Board (IAASB) as the Malaysian Approved Standards on Quality Management, Auditing, Review, Other Assurance and Related Services, without modification.

The AASB reviews and incorporates new and revised IAASB pronouncements on an ongoing basis as they are issued and made effective internationally. Malaysia therefore applies International Standards on Auditing as issued, including the standards contained in the 2025 IAASB Handbook, for all mandatory audits within the scope of the jurisdiction.

MIA has also participated in consultations and stakeholder discussions regarding the IAASB’s International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE); however, formal jurisdiction-level adoption of ISA for LCE could not be confirmed as of the time of assessment.

ISA in effect as of the time of the assessment are adopted and applied in all mandatory audits.

Current Status: Adopted

In Malaysia, ethical requirements for professional accountants are established by the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA).

Under the Accountants Act 1967, MIA is authorized to establish ethical requirements for its members. MIA’s Ethics Standards Board (ESB) issues the MIA By-Laws (On Professional Ethics, Conduct and Practice), which are legally binding on all members and member firms.

The By-Laws are substantially based on the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA) and are updated on an ongoing basis to incorporate revisions to the international Code.

MIA has continued to incorporate revisions to the IESBA Code, including the revised definitions of Listed Entity and Public Interest Entity, effective 15 December 2024, and the tax planning standards, effective 15 July 2025. The current update cycle demonstrates alignment with the 2025 IESBA Handbook.

MIA states that the IESBA Code has been fully incorporated into the MIA By-Laws.

Accordingly, the International Code of Ethics in effect as of the time of the assessment is adopted for professional accountants regulated by MIA and MICPA.

Current Status: Adopted

The Department of the Accountant General of Malaysia is responsible for public sector accounting functions for the federal and state governments in Malaysia.

The Government Accounting Standards Advisory Committee, established under the Accountant General’s Department, is responsible for developing the Malaysian Public Sector Accounting Standards (MPSAS).

MPSAS are accrual-basis national public sector accounting standards adapted from and substantially aligned with the International Public Sector Accounting Standards (IPSAS). Malaysia has issued a comprehensive MPSAS Handbook 2023, covering the principal standards applicable to public sector entities.

MPSAS are applied by federal and state government entities and are based on the IPSAS framework, with adaptations for local legal and public sector requirements.

As public sector accounting standards in Malaysia are based on national standards with reference to IPSAS, rather than IPSAS adopted in their entirety, the jurisdiction is assessed as Partially Adopted.

Current Status: Partially Adopted

In Malaysia, the two professional accountancy organizations, the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA), are responsible for the investigation and discipline (I&D) of their respective members. In addition, regulators, including the Audit Oversight Board (AOB), the Companies Commission of Malaysia (SSM), the Securities Commission Malaysia, Bursa Malaysia, and Bank Negara Malaysia, may undertake disciplinary and enforcement actions where professional accountants contravene applicable laws and regulatory requirements.

Under the authority of the Accountants Act 1967, MIA has established an I&D mechanism to investigate formal complaints and cases of unprofessional conduct by its members and to refer matters to a Disciplinary Committee, where appropriate. Investigation and disciplinary proceedings are carried out in accordance with the Malaysian Institute of Accountants (Disciplinary) (No. 2) Rules 2002. MIA reports that its I&D system is aligned with the requirements of SMO 6.

Under its By-Laws, MICPA has also established an I&D mechanism for its members and reports that its system incorporates the requirements of SMO 6.

Under Part IIIA of the Securities Commission Malaysia Act 1993, the AOB provides independent oversight of auditors of Public Interest Entities (PIEs) and schedule funds. The AOB conducts inspections, inquiries, and enforcement actions, including sanctions, against registered auditors for non-compliance with applicable auditing and ethical standards.

However, because investigation and disciplinary responsibilities are distributed across multiple regulatory and professional bodies in the jurisdiction, it could not be fully confirmed that all jurisdiction-level systems collectively incorporate every element of SMO 6, including consistent alignment in areas such as linkage between quality assurance findings and disciplinary processes, appeals mechanisms, public interest considerations, and transparency of sanctions across all subsystems.

Accordingly, while robust I&D mechanisms are established and operational in the jurisdiction, full alignment with all SMO 6 requirements at the jurisdiction level could not be fully demonstrated.

Current Status: Partially Adopted

Under the Financial Reporting Act 1997, the Malaysian Accounting Standards Board (MASB) was established as an independent authority to develop and issue accounting standards for the preparation of financial statements in Malaysia.

Accounting standards for entities other than private entities are the Malaysian Financial Reporting Standards (MFRS), while private entities apply the Malaysian Private Entities Reporting Standard (MPERS).

The MFRS Framework is maintained as word-for-word identical to IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) and is updated on an ongoing basis to incorporate all new and amended IFRS Accounting Standards.

The IFRS Foundation jurisdictional profile for Malaysia confirms that the jurisdiction has adopted IFRS Accounting Standards, that MFRS is word-for-word in agreement with IFRS Standards, and that financial statements prepared under the MFRS Framework must include an explicit and unreserved statement of compliance with IFRS Accounting Standards.

Accordingly, IFRS Accounting Standards in effect as of the time of the assessment are adopted and required for all domestic publicly accountable entities in consolidated general purpose financial statements.

Current Status: Adopted

Relevant Organizations

• Audit Oversight Board (AOB)
• Malaysian Institute of Accountants (MIA)
• Malaysian Institute of Certified Public Accountants (MICPA)
• Malaysian Accounting Standards Board (MASB)
• Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia, SSM)
• Department of the Accountant General of Malaysia

Relevant Legislation

• Accountants Act 1967
• Companies Act 2016 (Act 777)
• Financial Reporting Act 1997 (Act 558)
• Malaysian Institute of Accountants (Disciplinary) (No. 2) Rules 2002
• MIA By-Laws (On Professional Ethics, Conduct and Practice)
• MIA By-Laws (Updated November 2024, effective 15 December 2024)
• Securities Commission Malaysia Act 1993

Relevant Publications

• Accountant General’s Department, MPSAS Handbook 2023
• IFRS Foundation, “IFRS Application Around the World: Jurisdictional Profile – Malaysia”
• MIA, By-Laws and Circular Updates (including 2025 updates)
• MIA, Practice Review Programme / Annual Report
• MICPA, Annual Report and Integrated Report 2024
• MICPA, ISQM 1 Guide and Implementation Resources