SSM Is Not Your Auditor.
SSM Is Not IRB
But SSM Can Still Inspect Your Accounting Records.

Last week, we posted:
“SSM Just Asked My KTP Company For Four Years’ Accounts. Yours Could Be Next.”

After that, many SME clients asked us :
“Boss, SSM can audit my accounts meh?”

Let’s clarify.

SSM is not coming to perform your statutory audit like auditor.
SSM is not coming to perform your tax audit like IRB.

But SSM can inspect whether your company keeps proper accounting records under Section 245 of the Companies Act 2016.

That is a different matter.
And for directors, it can become a serious matter.

Imagine SSM asks for your accounting records tomorrow.

You ask your accounts staff.
She says,
“Some documents are with the outsourced account lady.”

You call the outsourced account lady
She say,
“I am still waiting for the bank statements.”

You ask your admin.
She says,
“Some invoices are inside WhatsApp.”

Everyone has one part.
Nobody has the complete set.

This is quite common in SMEs.
The accounts may look complete.
The financial statements may look presentable.

But underneath…

Missing invoices.
Unreconciled bank balances.
Incomplete ledgers.
Supporting documents kept inside WhatsApp.
And nobody knows where the original documents are.

Under Section 245, the company, its directors and managers must keep accounting records that can :

Explain the company’s transactions.
Show its financial position.
Allow true and fair financial statements to be prepared.
And allow the records to be properly audited.
Accounting entries should also be made within 60 days after the transactions are completed.

The records must generally be retained for seven years.
This includes more than the final audited financial statements.

It includes the documents behind the numbers.
Invoices.
Receipts.
Payment vouchers.
Bank statements.
Ledgers.
Reconciliations.
Agreements.
And other supporting records.

A beautiful set of financial statements cannot save a koyak set of accounting records.

Some SME owners may say:
“My company is audit-exempt.”

Audit exemption does not mean accounting-record exemption.
Section 245 still applies.

Others may say:
“My account lady handles everything.”

Operationally, yes.
Legally, the responsibility remains with the company and its officers.

A director cannot simply say:
“My bookkeeper never informed me.”
“My accounts staff resigned.”
“My outsourced account lady lost the documents.”

Under Section 245, the company and every director who contravenes the section commit an offence.

On conviction, the penalty can be a fine of up to RM500,000, imprisonment of up to three years, or both.

SSM’s operasi is not new.
It has been inspecting accounting records for years.
Section 245 is also not new.
Maybe the only new thing is…
More SME directors are finally noticing it.

Read the full content in our blog
https://lnkd.in/gd6XeEks