Chapter 2

STATUTORY AND
REGULATORY
REQUIREMENT

© 2017 McGraw-Hill Education (Malaysia) Sdn Bhd

 COMPANY ACT 2016
REQUIREMENTS
 Appointment of auditor for private company (Section 267 CA
2016)
- Auditor shall be appointed for each financial year of the
company.
- Appointment of first auditor must be done at least 30 days
before the end of the period for the company to submit its
first financial statements.

 Appointment of auditor for public company (Section 271 CA

2016)
- Auditor shall be appointed for each financial year of the
company.
- Appointment of first auditor must be done at any time before
the company’s first AGM (The first AGM must be held within
18 months of the company’s incorporation).
© 2017 McGraw-Hill Education (Malaysia) Sdn Bhd
 COMPANY ACT 2016
REQUIREMENTS
 Removal of auditor from office
- Auditor can only be removed from office before his term
expires by an ordinary resolution at a general meeting
(Section 276 (1) CA 2016).
- Special notice of the resolution must be given at least 28 days
before the meeting convenes (Section 277 (1) CA 2016).
- The company must send a copy of the notice of removal to
the auditor (Section 277 CA 2016)
- The auditor is allowed to provide his representation regarding
his removal to the members; may request the written
representation to be sent to all the members that are entitled
to receive the notice of the meeting.
- The auditor may request the representation to be read put at
the meeting and has the right to be heard orally at the
meeting.
© 2017 McGraw-Hill Education (Malaysia) Sdn Bhd
 COMPANY ACT 2016
REQUIREMENTS
 Resignation of auditor from office

- An auditor may resign by giving notice of his intention to

resign to the company – effective 21 days after the notice is
given to the company or from the date as may be specified in
the notice (Section 281 CA 2016)
- The company must submit a copy of his resignation to the
Registrar within 7 days of receiving the notice (Section 282 CA
2016).

© 2017 McGraw-Hill Education (Malaysia) Sdn Bhd

 AUDITOR’S RIGHT

- Rights of access to the accounting records and other records

of the company/subsidiary company (Section 266 (4) CA 2016)
- Rights to require from any officer of the company and any
auditor of related company such information and explanation
for the purpose of audit (Section 266 (4)/266(5) CA 2016)
- Rights to attend a general meeting of the company and to
receive notice of any general meeting; has the right to
appoint an agent in writing to attend the meeting and to be
heard at the general meeting on any part of the business that
is relevant and concerns to him as an auditor.
- The auditor shall attend every AGM where the financial
statements are to be laid and must respond according to his
knowledge and ability to any question relevant to the audit of
the financial statements; failure to attend is an offence.
© 2017 McGraw-Hill Education (Malaysia) Sdn Bhd
 AUDITOR’S DUTIES

 Duty to report breach of CA 2016

- Auditor to notify Registrar in writing when there is a
reasonable grounds to suspect that a contravention of CA
2016 has occurred (Section 266(8) CA 2016).

 Duty to members
- To review and detect errors and discrepancies in the
company’s accounts and to report to members on the
company’s account; must state whether his opinion a true and
fair view is given about the company’s affairs.

© 2017 McGraw-Hill Education (Malaysia) Sdn Bhd

 AUDITOR’S DUTIES

 Duty of care and skill

- Auditors owe a duty of care and skill at common law to the
company. Auditors must demonstrate a reasonable standard
of care and skill in performing the audit which a reasonably
competent, careful and cautious auditor would use.
- Auditors have a guideline on accounting standards and
professional code of conduct. Failure to follow these
guidelines may lead to professional misconduct.

© 2017 McGraw-Hill Education (Malaysia) Sdn Bhd