Unaudited Financial Statements: What You Actually Lodge When Exempt

Qualifying for audit exemption feels like the end of a compliance problem. It is the start of a different one, because the filing duty does not move.

Paragraph 15 of Practice Directive 10/2024 is explicit: a company that elects audit exemption must lodge its unaudited financial statements with the Registrar accompanied with the required certificate, in compliance with sections 258 and 259 of the Companies Act 2016.

Same sections. Same clocks. Same penalties.

The deadline is unchanged

Because s.258 and s.259 apply on their own terms, an exempt private company runs the identical two-step sequence as an audited one:

1. Circulate the financial statements and reports to members within six months of financial year end — s.258(1)(a).
2. Lodge with SSM within 30 days from the date of circulation — s.259(1)(a).

There is no relaxation for exempt companies. If anything the risk is higher, because removing the auditor removes the external party who used to drive the timetable. The full mechanics, including a worked financial year end, are in circulating and lodging financial statements.

What goes in the lodgement

Practice Directive 10/2024 sets out the package:

Component	Basis
Unaudited financial statements complying with approved accounting standards	para 16, s.244(1) — MFRS or MPERS
Directors’ report	para 17
Statement by directors	para 17
Statutory declaration	para 17
Lodgements required under ss.251 and 252	para 17
Audit exemption certificate	paras 18 and 19, Appendix 1

The point people miss is the first row. Unaudited does not mean informal: the statements must still comply with the approved accounting standards issued by MASB under s.244(1) — in practice MPERS for most private entities. A management account exported from accounting software is not a set of financial statements.

The audit exemption certificate

This is the document that distinguishes a compliant exempt lodgement from an incomplete one, and it is short. Appendix 1 of Practice Directive 10/2024 requires it to state:

• that members have not requested an audit of its accounts for that year
• that the directors acknowledge their responsibilities under the Companies Act 2016 for accounting records and the preparation of the financial statements
• that the financial statements have been prepared in accordance with the applicable approved accounting standards issued by MASB — the Appendix names MPERS — and comply with the Companies Act 2016

It must also record the date the statements were circulated to members. That date is the evidence of when the s.259(1)(a) clock started.

Paragraph 19 requires the certificate to be signed by a director, certifying that the company is entitled to exemption under s.267(2). Where the signing director is not primarily responsible for the financial management of the company, the name of the person who is must also be stated.

The section 260 route is a different thing entirely

An exempt private company has an alternative under s.260(1): it may lodge a certificate as to its EPC status in lieu of the s.259(1)(a) requirement, within 30 days from circulation. That certificate must be signed by a director, the auditor and the secretary, confirming that the company has at all relevant times been an exempt private company, that duly audited financial statements have been circulated to members, and that the company appeared able to meet its liabilities as they fall due.

The two routes are mutually exclusive. Paragraph 12(a) of Practice Directive 10/2024 states that audit exemption does not apply to an exempt private company which has opted to lodge the s.260 certificate — the reason is visible in the certificate itself, which requires an auditor’s signature and asserts that audited statements were circulated. EPC certificate means audited accounts; audit exemption means unaudited accounts lodged in full.

Failing to lodge the s.260 certificate when that route is taken is an offence under s.260(3), carrying a fine up to RM20,000 plus up to RM1,000 for each day the offence continues.

Filing format

Unaudited financial statements, and exempt private company certificates, were in the first MBRS 2.0 mandatory phase on 1 December 2024 — earlier than audited statements, which came in under Phase 3 on 1 June 2025. The lodgement fee is RM20, against RM50 for audited statements.

Common mistakes

• Reading exemption as a filing exemption. Paragraph 15 says the opposite.
• Lodging management accounts. The statements must comply with approved accounting standards under s.244(1).
• Omitting the audit exemption certificate, which makes the lodgement incomplete even if the accounts are fine.
• Signing the certificate without naming the person responsible for financial management, where the signing director is not that person.
• Confusing the s.260 EPC certificate with the audit exemption certificate. Different documents, different signatories, mutually exclusive routes.
• Losing the timetable once the auditor is gone. The six-month circulation deadline still runs, and nobody outside the company is watching it.

What’s next

Confirm you actually qualify before relying on the exemption — the thresholds are phased and the test is at least two of three criteria, not all three. Then put the circulation date in the calendar yourself.