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:-
- Increased in compliance burden due to higher auditing standards requirements
- Increased in operating costs, mainly salaries
- 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
|
Gross Assets or Turnover (RM) |
Cumulative Amounts (RM) |
Rate (%) |
Fees (RM) |
Cumulative Fees (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 |
| 10,000,000 to 20,000,000 |
1,000 for every RM1,000,000 increase of a fraction thereof up to RM20,000,000 |
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| Above 20,000,000 |
Negotiable (but should not be less than RM20,000 per assignment) |
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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
|
Gross Assets or Turnover (RM) |
Cumulative Ringgit (RM) |
Rate (%) |
Fees (RM) |
Cumulative Fees (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 RM800.
