The audit request list is not administrative. Every item exists to support a specific assertion about a balance or transaction — existence, completeness, valuation, rights, cut-off or disclosure. Prepare it by cycle rather than by document type, and clear the three items that reliably delay a Malaysian audit first: intercompany reconciliations, related-party identification for MFRS 124 disclosure, and supporting documents for director's account movements.
- Every PBC item maps to an assertion — knowing which one tells you what a substitute document has to prove
- Bank confirmations are signed by you but sent and received by the auditor, so authorise them in week one
- Unreconciled intercompany balances are the most common cause of a stalled group audit
- MFRS 124 related-party disclosure is a completeness problem, not a presentation problem — it fails because parties were never identified
- Director's account movements need authorisation evidence, not just a ledger printout
- s.245 of the Companies Act 2016 requires entries within 60 days of the transaction and retention for seven years, independent of the audit
- The statutory registers are audit evidence, not company secretarial housekeeping
Who this applies to: Finance managers, accountants and company secretaries preparing a Malaysian Sdn Bhd for its statutory audit.
On this page
The request list looks like an administrative document. It is not. It is the audit plan, translated into things you have to produce, and every line on it exists to support one specific claim the financial statements are making.
Once you can see which claim, you stop arguing about documents and start supplying the ones that actually work.
The six assertions everything maps to
| Assertion | The claim being tested | Typical evidence |
|---|---|---|
| Existence | The asset or transaction is real | Physical inspection, third-party confirmation |
| Completeness | Nothing has been left out | Search for unrecorded liabilities, supplier statements, reconciliations |
| Valuation | The amount is right | Costing, ageing, impairment and recoverability analysis |
| Rights and obligations | The company owns it, or owes it | Title documents, agreements, charge register |
| Cut-off | It belongs in this period | Transactions either side of the year end |
| Presentation and disclosure | It is described correctly in the notes | Related-party analysis, commitments, contingencies |
Completeness is the hard one, because your own records cannot prove it. That is why the auditor keeps asking for things generated outside the company.
Before anything else — the three that blow deadlines
1. Intercompany balances that do not agree. Every intercompany balance has a mirror in another entity’s ledger. If they differ by so much as a cheque in transit, consolidation cannot proceed and the elimination will not clear. Reconcile them with the counterparty and get the counterparty to sign the reconciliation, before fieldwork. In a group with a foreign subsidiary, allow for time zones and different closing calendars.
2. Related parties that were never identified. MFRS 124 fails at the identification stage, not the disclosure stage. Build the list from the source: the register of directors, the register of members, directors’ declarations of interest, and a direct conversation with the shareholders about what else they own. A company controlled by a director’s spouse is a related party. So is one controlled by a shareholder’s adult child. Arm’s length pricing does not remove the disclosure.
3. Director’s account movements with no support. A director’s current account that moves through the year with nothing but journal entries behind it will be questioned as a matter of course. What is needed is authorisation — board minutes, loan agreements where relevant, evidence of what the payment was for, and the tax treatment considered. This is simultaneously an audit issue, a disclosure issue and a tax issue, and it produces more late adjustments than any other single item.
The checklist, by cycle
General ledger and statutory records
| Item | Assertion served |
|---|---|
| Final trial balance, locked, agreeing to the draft financial statements | All |
| Prior year signed financial statements and audit adjustments | Opening balances |
| General ledger detail and journal listing for the year, including all manual journals | Completeness, occurrence |
| Minutes of directors and members meetings for the whole year and up to the report date | Rights, subsequent events, disclosure |
| Register of members, register of directors, register of charges, beneficial ownership register | Rights, presentation |
| Constitution and any amendments | Presentation |
Statutory registers get treated as company secretarial housekeeping. In an audit they are evidence, and s.266(2)(b) requires the auditor to form an opinion on whether proper accounting and other records, including registers, have been kept as the Act requires.
Revenue and receivables
| Item | Assertion served |
|---|---|
| Aged receivables listing agreeing to the ledger control account | Existence, valuation |
| Sales invoices and delivery documents for the last and first two weeks either side of year end | Cut-off |
| Credit notes issued after year end | Occurrence, valuation |
| Expected credit loss computation and its basis | Valuation |
| Receipts after year end, matched to year-end balances | Existence, valuation |
| Signed authorities for customer confirmation requests | Existence |
Purchases and payables
| Item | Assertion served |
|---|---|
| Aged payables listing agreeing to the ledger | Completeness |
| Supplier statements for the largest balances, reconciled | Completeness |
| Payments made after year end with the invoice they settled | Completeness, cut-off |
| Goods received notes either side of year end | Cut-off |
| Accrual schedule with the basis for each accrual | Completeness, valuation |
Inventory
| Item | Assertion served |
|---|---|
| Written count instructions, issued before the count | Existence |
| Final count sheets, signed and pre-numbered | Existence |
| Costing basis and a sample of cost build-ups | Valuation |
| Net realisable value analysis, selling prices after year end | Valuation |
| Slow-moving and obsolescence analysis with the provision policy | Valuation |
| Goods in transit, consignment and third-party locations | Existence, rights |
Fixed assets
| Item | Assertion served |
|---|---|
| Fixed asset register reconciled to the ledger | Existence, completeness |
| Invoices for additions and evidence of disposals | Rights, occurrence |
| Depreciation computation and policy | Valuation |
| Title documents, and hire purchase or lease agreements | Rights |
| Impairment indicators considered, in writing | Valuation |
Cash and borrowings
| Item | Assertion served |
|---|---|
| Bank reconciliations for every account, including dormant ones | Existence, completeness |
| Signed bank confirmation authorities, issued in week one | Existence, rights |
| Loan and facility agreements, including covenants | Presentation, going concern |
| Charges registered with SSM, agreed to the register of charges | Rights, disclosure |
| Repayment schedules split between current and non-current | Presentation |
Payroll and statutory deductions
| Item | Assertion served |
|---|---|
| Payroll summary reconciled to the ledger | Accuracy |
| EPF, SOCSO, EIS and PCB remittance evidence reconciled to the payroll | Completeness |
| Directors remuneration analysis, split by category | Disclosure |
| Leave, bonus and other provision computations | Completeness, valuation |
Tax
| Item | Assertion served |
|---|---|
| Prior year tax computation and the assessment or notice received | Valuation |
| Current year draft computation with the deferred tax working | Valuation, presentation |
| CP204 and CP204A filings with the payment record | Completeness |
| Capital allowance schedule agreed to the fixed asset register | Valuation |
Related parties and disclosure
| Item | Assertion served |
|---|---|
| Complete related-party listing with the basis of the relationship | Completeness, disclosure |
| Transactions and balances with each, and the pricing basis | Disclosure |
| Key management personnel compensation, by category | Disclosure |
| Directors declarations of interest under s.221 | Completeness |
| Commitments, guarantees and contingent liabilities | Disclosure |
| Solicitors details for confirmation requests | Completeness |
For the close
| Item | Assertion served |
|---|---|
| Board paper on going concern, with the cash flow forecast behind it | Going concern |
| Events after the reporting period, with the treatment applied to each | Subsequent events |
| Draft directors report covering the Fifth Schedule requirements | Presentation |
| Signed management representation letter, dated no later than the report date | Evidence, ISA 580 |
Things that are not on the list but should be
A locked trial balance. Every movement after fieldwork starts invalidates work already done. Agree a lock date and hold it.
One point of contact. Audit queries routed through several people produce inconsistent answers, and inconsistent answers produce more queries.
A shared query log. Open point, owner, date raised, date cleared. Most audit delay is not difficulty; it is queries sitting unanswered in an inbox.
Last year’s audit adjustments, actually posted. Adjustments agreed at the clearance meeting and never booked reappear as prior-year differences, and the same conversation happens twice.
The statutory floor underneath all of this
Section 245 of the Companies Act 2016 requires accounting and other records that sufficiently explain the transactions and financial position, kept so they can be conveniently and properly audited. Two clocks inside it are frequently missed: entries within 60 days of the completion of the transaction, and retention for seven years. Contravention carries a fine up to RM500,000 or three years imprisonment, on the company and every officer.
None of that depends on there being an audit. It is the reason a company that took audit exemption still has to keep the same records.
Common mistakes
- Producing documents instead of reconciliations. A ledger printout is not a reconciliation and does not answer a completeness question.
- Leaving bank and solicitor confirmations to the auditor’s follow-up. You cannot speed them up in week six.
- Identifying related parties from the ledger. They are identified from the registers and from the shareholders, then traced to the ledger.
- Treating the director’s account as a plug. It is the first place a reviewer looks.
- Moving the trial balance during fieldwork.
- Preparing the going concern paper after the auditor asks for it, which is the point at which it stops looking like the board’s own assessment.
- Assuming the auditor will draft the disclosure notes. Preparing the financial statements is the directors’ duty under s.244 and s.248, whoever types them.
What’s next
The adjustments that come out of this process do not stop at the financial statements — audited profit is the starting point for the tax computation, and a late adjustment moves the tax number too.
What does PBC mean?
Prepared by client. It is the list of schedules, reconciliations and supporting documents the audit team needs before and during fieldwork. A good list arrives at planning, is organised by cycle, and states the year end date for every schedule so that what you produce ties to the trial balance.
Why does the auditor want supplier statements when I already gave them the ledger?
Because the ledger cannot prove completeness. A liability that was never recorded does not appear in your own records. The supplier statement is third-party evidence, and the search for unrecorded liabilities using post-year-end payments does the same job from another direction.
Do I have to give the auditor access to the minute book and registers?
Yes. Section 266(4) of the Companies Act 2016 gives the auditor a right of access at all reasonable times to the accounting and other records including registers. Section 266(12) makes obstructing or delaying an auditor an offence punishable by up to three years imprisonment or a fine up to RM500,000.
What is a related party under MFRS 124?
It reaches further than most finance teams expect — the parent, subsidiaries and fellow subsidiaries, associates and joint ventures, key management personnel and their close family members, and entities controlled or jointly controlled by any of those people. A company owned by a director's spouse that buys from you is a related party, and the transaction is disclosable even at arm's length.
How far in advance should I start preparing?
Reconciliations and schedules should be complete within three to four weeks of the year end. Anything requiring a third party — bank confirmations, solicitors letters, intercompany agreement with a fellow subsidiary in another country — should be initiated in week one, because those are measured in weeks and are outside your control.
Can I give the auditor management accounts instead of a trial balance?
No. Fieldwork is performed against a locked trial balance. If the trial balance keeps moving, every schedule already tested has to be re-agreed, and that is the fastest way to convert a two-week fieldwork into a six-week one.
The following are deliberately unstated or described only qualitatively until confirmed by a subject-matter expert:
- Confirm the current MFRS 124 disclosure requirements and any amendments effective for the relevant financial year against the MASB published standard
Sources
- Companies Act 2016 (Act 777), reprint as at 1 August 2022 — SSM
- AAPG 1 — Auditors report on financial statements prepared in accordance with the MFRS framework and Companies Act 2016 — MIA
- Malaysian Accounting Standards Board — approved accounting standards — MASB
- ISA 580, Written Representations — MIA
Change history
| Version | Date | Change | By |
|---|---|---|---|
| 01.00 | 20 Jul 2026 | Approved and published. | — |