How are audit fees calculated in Malaysia? As a secretary always ask by our new clients. Actually, as refer to Malaysia Institute of Accountants (MIA) has recommended Practice Guide (RPG) 7 for Audit Fee Charge (New Audit Fee) by Audit Firm for providing auditing services in Malaysia with effect from 1 March 2010.
The intention was to provide a basis for establishing a reasonable level of remuneration, commensurate with the provision of professional audit services at an acceptable standard. It is not mandatory and serves as a recommended guide only for practitioners who need guidance in estimating the professional fee for statutory audit services.
In consideration of the Competition Act (CA) 2010, the MIA decided to withdraw Recommended Practice Guide (RPG) 7: A Guide to Charging for Professional Assurance Services, with effect from 1 June 2015 in order to uphold the spirit of the CA 2010 and not breach any of its provisions.
Although the RPG 7 was removed by the Council from the website in order to uphold the spirit of the Competition Act (CA) 2010 and not breach any of its provisions, yet it will still become part of professional accountants (Auditors) guideline in establishing their audit fees
Audit Fee Schedule & Table
The Practice Guide also mentioned specifically that the audit fee for a Dormant Company shall be a minimum of RM800.
(a) Gross Turnover or Total Assets Basis
|Gross Assets |
|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 |
|1,000 for every RM1,000,000 increase of a |
fraction thereof up to RM20,000,000
|Above 20,000,000||Negotiable (but should not be |
less than RM20,000 per assignment)
(b) Total Operating Expenditure Basis
|Gross Assets |
|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|
Audit fees are proportional to the number of days necessary to conduct an audit – from the planning to the report writing. Mostly auditors charges an overhead on the fees that auditors are paid, mostly on Lead auditor’s fees.
There are two bases for computation of fee, i.e. Time-based and Value-based.
|Time-based Principle |
E.g. Time-based billing pre-supposes all information and knowledge is of equal value to all clients. It also discounted the value of research needed to satisfactorily discharge an assignment and the knowledge accumulated by the firm.
| Value-based Principle |
E.g. Value-based billing takes cognizance of the knowledge and skills that a practitioner brought to bear on the assignment and the professional judgment that he was called upon to make. At the same time, the client who derived a certain value, be it functional value or emotional value, must be reflected by a fair and equitable fee payable.
Audit fees shall generally be based upon the degree of responsibility, risk and skill involved and the time necessarily occupied on the work.
What a Secretary can help you?
The Company Secretary has the responsibility to acts as the official liaison party for the company to communicate with auditors ensure the company is compliant with legislation as in Companies Act. Do you want to know more Audit Fee calculated and actual quotation of the fees? Call us now to find out more!