EXTRACT FROM MALAYSIA INSTITUTE OF MALAYSIA

BY LAW : PHRASE 6

Recommended Audit Fee in Malaysia

The Malaysian Institute of Accountants (“MIA”), had in 2010, issued a Recommended Practice Guide 7 (Revised) on the charging
of audit fees. This is a replacement to the earlier practice guide issue in 2007. All auditors in Malaysia are required to abide by
this practice guide.

Purpose

The MIA issued this Practice Guide because of the following reasons:-

1. Increased in compliance burden due to higher auditing standards requirements

2. Increased in operating costs, mainly salaries
3. To ensure auditors professionalism are not affected due to “price wars” among auditors

Audit fee rates computation

The general method of determining audit fees is based on either Turnover or Total Assets. Methods used are according to nature of
business. Example, for a trading company will use Turnover as audit fees, whereas an asset based company will use the Total
Assets method.

(i) Gross Turnover or Total Assets Basis

Cumulative
Gross Assets or Turnover Rate Fees Cumulative Fees
Amounts
(RM) (%) (RM) (RM)
(RM)
The first 100,000 100,000 1.000% 1,000 1,000
The next 150,000 250,000 0.438% 657 1,657
The next 250,000 500,000 0.313% 783 2,440
The next 500,000 1,000,000 0.188% 940 3,380
The next 1,500,000 2,500,000 0.125% 1,875 5,255
The next 2,500,000 5,000,000 0.100% 2,500 7,755
The next 5,000,000 10,000,000 0.094% 4,700 12,455
1,000 for every RM1,000,000
10,000,000 to 20,000,000 increase of a fraction thereof
up to RM20,000,000
Negotiable (but should not be
Above 20,000,000 less than RM20,000 per
assignment)

In cases where the above methods are not practical to be used, the method below will be applied instead. An example where a
company has Turnover of RM10 million, Total Assets of only RM5,000, and operating expenses of RM2 million.

(ii) Total Operating Expenditure Basis

Cumulative
Gross Assets or Turnover Rate Fees Cumulative Fees
Ringgit
(RM) (%) (RM) (RM)
(RM)
The first 50,000 50,000 2.500% 1,250 1,250
The next 150,000 200,000 1.250% 1,875 3,125
The next 800,000 1,000,000 0.625% 5,000 8,125
The next 1,000,000 2,000,000 0.250% 2,500 10,625
Above 2,000,000 0.125%

Lastly, the Practice Guide also mentioned specifically that the audit fee for a Dormant Company shall be a minimum of RM1000.