SECTION 262: DEFINITION OF “OUTGOING AUDITOR”
For the purpose of this Subdivision, “outgoing auditor” means an auditor whose term of office has expired or is about to expire.
SECTION 263: COMPANY AUDITORS TO BE APPROVED BY MINISTER CHARGED WITH RESPONSIBILITY FOR FINANCE.
(1) Any person may apply to the Minister charged with the responsibility for finance to be approved as a company auditor for the purpose of this Act.
(2) The Minister may, if he is satisfied that the applicant is of good character and competent to perform the duties of an auditor under this Act, upon payment of the prescribed fee, approve the applicant as a company auditor.
(3) Any approval granted by the Minister under subsection (2) may be made subject such limitations or conditions as he thinks fit and may be revoked at any time by him by the service of a notice of revocation on the approved person.
(4) Every approval under this section including a renewal of approval of a company auditor shall be in force for a period of two years after the date of issue unless sooner revoked by the Minister.
(5) The Minister may delegate all or any of his powers under this section to any person or body of persons charged with the responsibility for the registration or control of accountants in Malaysia.
(6) Any person who is aggrieved with any decision of the Minister or with the decision of any person or body of persons to whom such Minister has delegated all or any of his power under this section may appeal to the Court.
(7) For the purposes of this section “person” means a chartered accountant as defined under the Accountants Act 1967.
SECTION 264: COMPANY AUDITORS.
(1) A person shall not-
(a) Knowingly consent to be appointed as an auditor for any company.
(b) Knowingly act as an auditor for any company
(c) Prepare, for or on behalf of a company, any report required by this Act to be prepared by an approved company auditor if-
(i) He is not an approved company auditor
(ii) He is indebted to the company or to a corporation that is deemed to be related to that company by virtue of section 7 in an amount exceeding twenty-five thousand ringgit.
(iii) He is-
(A) Or his spouse is an officer of the company.
(B) A partner, employer or employee of an officer of the company.
(C) A partner or employee of an employee of an officer of the company
(D) A shareholder or his spouse is a shareholder of a corporation whose employee is an officer of the company.
(iv) He is responsible for or if he is the partner, employer or employee of a person responsible for the keeping of the register of members or the register of member or the register of debenture holders of the company
(v) He is an undischarged bankrupt within or outside Malaysia except with leave of the Court
(vi) He has been convicted of any offence involving fraud or dishonesty punishable with imprisonment for three months or more.
(2) For the purposes of subparagraph (1)(c)(iii), a person shall be deemed to be an officer of a company if he is an officer of a corporation that is deemed to be related to the company by virtue of section 7 if he has been an officer or promoter of the company or such a corporation at any time within the preceding period of twelve months, unless the Minister directs otherwise.
(3) For the purposes of this section, a person shall not be deemed to be an officer by reason only of him having been appointed as an auditor of a corporation.
(4) A firm of auditors shall not knowingly consent to be appointed, and shall not knowingly act, as an auditor for any company and shall not prepare, for or on behalf of a company any report required by this Act to be prepared by an approved company auditor unless-
(a) All the partners of the firm resident in Malaysia are approved company auditors and here,the firm is not registered as a firm under any law for the time being in force, a return showing the full names and addresses of all the partners of the firm has been lodged with the Registrar.
(b) No partner of the firm is disqualified under subsection
(1) From acting as the auditor of the company.
(5) A company shall not appoint a person or a firm as an auditor unless prior to the appointment-
(a) That person has consented in writing to act as the auditor
(b) In the case of a firm, at least one partner of the firm has consented in writing.
(6) The appointment of a firm in the name of the firm as auditors of a company shall take effect as an appointment as auditors of the company of the persons who are partners of that firm at the time of the appointment.
(7) The appointment of a firm in the name of the limited liability partnership or foreign limited liability partnership as auditors of a company shall take effect as an appointment as auditors of the company as if-
(a) The partners of the limited liability partnership, whether the partners at the time the limited liability partnership was appointed as auditor or later
(b) Employees of the limited liability partnership who are approved company auditors in that limited liability partnership, whether employed at the time the limited liability partnership was appointed as auditor or later, are appointed as auditors of the company.
(8) Any person who is or any firm which is appointed as an auditor contravenes subsection (1) or (4) respectively commits an offence and shall, on conviction, be liable to fine not exceeding one hundred thousand ringgit.
SECTION 265: REGISTRATION OF FIRMS OF AUDITORS
(1) A new firm of auditors shall notify the registrar the following particulars within thirty days from the date of commencement of business:
(a) The name of the firm
(b) The firm number
(c) The address of the principal place of business and the address of each other’s place of business, if any.
(d) The date of commencement of business
(e) The full names, addresses, approval numbers and other particulars of all the partners
(f) Such other particulars as the Registrar think appropriate.
(2) The notification in subsection (1) shall be in the form as determined by the Registrar.
(3) The Registrar shall cause a register of firms of auditors to be kept and shall cause to entered in the register in relation to a firm of auditors the particulars referred to in subsection (1)
(4) Where a firm of auditors is reconstituted by reason of retirement, withdrawal or death of a partner or by reason of the admission of new partner or where there is a change in any particulars relating to the firm or its partners, a notification shall be lodged with the Registrar indicating the relevant alteration and the date of the alteration within thirty days of such alteration.
(5) A report or notice that purports to be made or given by a firm appointed as an auditor of a company shall not be taken to be duly made or given unless-
(a) It is signed in the name of the firm and in his own name by a partner of the firm who is an approved company auditor.
(b) The firm number and the approval number of the partner is legibly written or printed either under or beside the signature of the firm and the partner respectively.
(6) For the purposes of this section-
(a) “approval number”, in relation to an auditor, is the number allocated to that person on the approval granted by the Minister charged with responsibility for finance.
(b) “firm number”, in relation to a firm of auditors, is the number allocated by the Registrar to a firm of auditors in the notification under subsection (1)
(c) “partner”, in relation to a firm of auditors, includes a sole proprietor of a firm.
SECTION 266: POWERS AND DUTIES OF AUDITORS.
(1) Every auditor of a company shall report to the members on the financial statements and on the company’s accounting and other records relating to those financial statements and if it is a holding company for which consolidated financial statements are prepared shall also report to the members on the consolidated financial statements, and the report shall be-
(a) In the case of a public company, laid before the company at its annual general meeting
(b) In the case of a private company-
(i) Circulated to its member
(ii) Laid before the company at a meeting of members.
(2) An auditor shall, in a report under this section, state-
(a) Whether the financial statements and, if the company is a holding company for which consolidated financial statement are prepared, the consolidated financial statements are in his opinion properly drawn up-
(i) So as to give a true and fair view of the matters required by section 248 to be dealt with in the financial statement and, if there are consolidated financial statements, in the consolidated financial statements.
(ii) In accordance with this Act so as to give a true and fair view of the company.
(iii) In accordance with the applicable approved accounting standards, or in the case where financial statements are required to be prepared for or lodged with the authorities referred to in section 26D of the Financial Reporting Act 1997, such financial statements shall be made in accordance with the applicable approved accounting standards subject to any specifications,guidelines or regulations as may be issued by such authorities.
(b) If in his opinion the financial statements and where applicable the consolidated financial statements, have not been drawn up in accordance with a particular applicable approved accounting standard-
(i) Whether in his opinion the financial statements or consolidated financial statements, as the case may be, would , if drawn up in accordance with that approved accounting standard, have given a true and fair view of the matters required under section 248 to be dealt with in the financial statements or consolidated financial statements.
(ii) If in his opinion the financial statements, as the case may be, would not, if so drawn up, have given a true and fair view of those matters, his reasons for holding that opinion.
(iii) If the directors have given the particulars of the quantified financial effect under section 244, his opinion concerning he particulars
(iv) In a case to which neither subparagraph (ii) or (iii) applies, the particulars of the quantified financial effect on the financial statements or consolidated financial statements of the failure to so draw up the financial statements or consolidated financial statements as the case may be.
(c) In the case of consolidated financial statements, the names of the subsidiaries, if any, of which he has not acted as auditor.
(d) Any defect or irregularity in the financial statements or consolidated financial statements and any matter not set out in the financial statements or consolidated financial statements without regard to which a true and fair view of the matters dealt with by the financial statements or consolidated financial statements would not be obtained
(e) If he is not satisfied as to any matter referred to in paragraph (a), (b) or (c), his reasons for not being so satisfied.
(3) An auditor of a company shall have a duty to form an opinion to each of the following matters:
(a) Whether he has obtained all the information and explanations that he required.
(b) Whether proper accounting and other records, including registers, have been kept by the company as required by this Act.
(c) Whether the returns received from branch offices of the company are adequate
(d) Whether the procedures and methods used by a holding company or a subsidiary in arriving at the amount taken into any consolidated accounts were appropriate to the circumstances of the consolidation, and the auditor shall state in his report the particulars of any deficiency, failure or shortcoming in respect of any matter referred to in this subsection.
(4) An auditor of a company has a right of access at all reasonable times to the accounting and other records, including registers of the company and is entitled to require from any officer of the company and any auditor of a related company such information and explanations as he desires for the purposes of audit.
(5) An auditor of a holding company for which consolidated financial statements are required-
(a) Has s right of access at all reasonable times to the accounting and other records, including registers, of any subsidiary.
(b) Is entitled to require from any officer or auditor of any subsidiary included in the consolidated financial statements, at the expense of the holding company, such information and explanations in relation to the affairs of such subsidiaries included in the consolidated financial statement.
(6) The auditor’s report shall be attached to or endorsed on the financial statements or consolidated financial statements and shall, if any member so requires, be read before the company in general meeting and shall be open for inspection by any member at any reasonable time.
(7) An auditor of a company or his agent authorized by him in writing is entitled to attend any general meeting of the company and to receive all notices of, and other communications relating to any general meeting which a member is entitled to receive,and to be head at any general meeting which he attends on any part of the business of the meeting which concerns the auditor in his capacity as auditor.
(8) If an auditor, in the course of the performance of his duties as auditor of a company, is satisfied that-
(a) There has been a breach or non-observance of any of the provisions of this Act.
(b) The circumstances are such that in his opinion the matter has not been or will not be adequately dealt with by comment in his report on the financial statements or consolidated financial statements or by bringing the matter to the notice of the directors of the company or, if the company is a subsidiary, of the directors of its holding company, he shall forthwith report the matter in writing to the Registrar.
(9) In addition, to subsection (8), if an auditor in the course of the performance of his duties as an auditor of a public company or a company controlled by a public company is of the opinion that a serious offence involving fraud or dishonesty is being or has been committed against the company or this Act by officers of the company, he shall forthwith report the matter in writing to the Registrar.
(10) No duty to which an auditor of a company may be subjected to shall be regarded as having been contravened by reason of his reporting the matter referred to in subsection (9) in good faith to the Registrar.
(11) For the purposes of subsection (9)-
(a) A company is presumed unless the contrary is established, to be controlled by a public company if the public company is entitled to exercise or control the exercise of not less than twenty per centum of votes attached to the voting shares of the company
(b) “a serious offence involving fraud or dishonesty” means an offence that is punishable by imprisonment for a term that not less than two years or the value of the assets derived or likely to be derived or any loss suffered by the company, member or debenture holder from the commission of such an offence exceeds two hundred and fifty thousand ringgit and includes offences under sections 591, 592, 593, 594 and 595.
(12) An officer of a corporation who refuses or fails without lawful excuse to allow an auditor of the corporation, or an auditor of a corporation who refuses or fails without lawful excuse to allow an auditor of its holding company.
(a) To have access to any accounting and other records, including registers of the corporation in his custody or control.
(b) To give any information or explanation as and when required under this section.
(c) Otherwise hinders, obstructs r delays an auditor in the performance of his duties or the exercise of his power. Commits an offence and shall on conviction, be liable to imprisonment for a term not exceeding three years or to a fine not exceeding five hundred thousand ringgit or to both.
(13) Any auditor who contravenes subsection (8) or (9) commits and offence and shall, on conviction, be liable to imprisonment to term not exceeding five years or to a fine not exceeding three million ringgit or to both.
SECTION 267: APPOINTMENT AUDITORS OF PRIVATE COMPANY.
(1) A private company shall appoint an auditor for each financial year of the company.
(2) Notwithstanding subsection (1), the Registrar shall have the power to exempt any private company from the requirement stated in that subsection according to the conditions as determined by the Registrar
(3) The Board shall appoint an auditor of the company-
(a) In the case of newly incorporated companies, at least thirty days before the end of the period for the submission of the first financial statements to the Registrar.
(b) To fill casual a casual vacancy in the office of auditor.
(4) The members shall appoint an auditor by ordinary resolution-
(a) In the case of subsequent years following the submission of its first financial statements, during the period for appointing auditor
(b) If the Board fails to appoint an auditor under subsection (3)
(5) An auditor of a private company shall only be appointed in accordance with subsection (3) or (4).
(6) For the purposes of subsection (4) the period for appointing auditors means the period of thirty days-
(a) Before the end of the period allowed for the lodgement of the previous year financial statements with the Registrar under subsection 259(1)
(b) If the previous year financial statements were lodged earlier, before the day on which financial statements were lodged with the Registrar.
(7) The company and every director of the company who contravene this section commit an offence.
SECTION 268: POWER OF REGISTRAR TO APPOINT AUDITORS OF PRIVATE COMPANY.
If a private company fails to appoint an auditor, the Registrar may appoint one or more auditors upon application writing from any member of the company.
SECTION 269: TERM OF OFFICE OF AUDITORS OF PRIVATE COMPANY.
(1) An auditor of a private company shall hold office in accordance with the terms of his appointment, provided that auditor cease to hold office, unless he is the first auditor of the company.
(a) He ceases to hold office thirty days from the circulation of the financial statements to the members unless he re-appointed.
(2) Notwithstanding paragraph (1)(a), an auditor may take office before the previous auditor ceases office in the following circumstances:
(a) Where the previous auditor is not the sole auditor.
(b) Where he is appointed as an additional auditor.
(3) Where the office of an auditor becomes vacant under paragraph (1)(b) and no auditor who holds office immediately before the vacancy shall be deemed to be re-appointed,unless-
(a) He was appointed by the Board
(b) The constitution require actual re-appointment
(c) The deemed re-appointment is prevented by the members under section 270
(d) The members have resolved that he should not be reappointed
(4) Subsection (3) is without prejudice to the provisions of this Subdivision as to removal and resignation of auditors.
SECTION 270: PREVENTION BY MEMBERS OF DEEMED RE-APPOINTMENT OF AUDITOR.
(1) An auditor of a private company shall not be deemed to be re-appointed under subsection 269(3) if the company has received notice under this section from members representing at least five
SECTION 276: RESOLUTION TO REMOVE AUDITOR FROM OFFICE.
Section 276(1) – Resolution to remove auditor from office
(1) The members of the company may remove an auditor from office at anytime-
(a) by ordinary resolution at a general meeting
(b) in accordance with section 277
(2) This section shall not be taken as depriving the person removed of the compensation or damages payable to him in respect of the termination of his appointment as an auditor.
(3) An auditor may not be removed from office before the expiration of his term of office except by resolution under this section.
SECTION 277: SPECIAL NOTICE REQUIRED FOR RESOLUTION TO REMOVE AUDITOR FROM OFFICE.
277(1) A special notice shall be required for a resolution to remove an auditor from office at a general meeting of a company.
(2) Upon receipt of the special notice of such intended resolution, the company shall immediately send a copy of the notice to the auditor proposed to be removed and the Registrar.
(3) The auditor may make a representation in writing not exceeding a reasonable lenght to the company within seven days from the receipt of the special notice and may request that prior to the meeting at which the resolution is to be considered, a copy of the representation be circulated by the company to every member of the company to whom notice of the meeting is sent.
(4) Upon request of the auditor referred to in subsection (3), the company shall send a copy of the representation to every member of the company to whom notice of the meeting is sent.
95) If a copy of the representation is not sent as required under subsection (4), the auditor may, without prejudice to his right to be heard orally, require that the representation be read out at the meeting.
(6) A copy of the representation need not be circulated and representation need not to be read at the meeting if, on the application either of the company or of any other person claiming to be aggrieved, the Court is satisfied that the auditor is using this section to secure needless publicity or the matter is defamatory or some other grounds that the Court thinks reasonable.
SECTION 281: RESIGNATION OF AUDITOR.
281910 An auditor of a company may resign his office by giving a notice in writing to that effect to the company at its registered office.
(2) A notice of resignation under subsection (1) shall bring the auditor’s term of office to an end after twenty-one days from which the notice is given or from the date as may be specified in the notice.
SECTION 281: NOTICE OF RESIGNATION OF AUDITOR TO REGISTRAR.
282(1) Where an auditor resigns his office, the company shall send a copy of the notice to the Registrar within seven days from receiving of a notice of resignation.
(2) The company and every officer who contravene this section commit an offence.