Previously, the Malaysian Institute of Accountants (MIA) issued a Recommended Practice Guide (RPG) 7 which included recommended audit fee scales. This guide helped establish minimum audit fees based on a company’s revenue, total assets and total expenditures.
It was commonly used by auditors as a benchmark, especially for small and medium-sized companies.
Why Was the Audit Fee Guide Abolished?
The MIA withdrew RPG 7, with effect from 1 June 2015 in response to:
1. Competition Law Concerns
- The Malaysia Competition Commission (MyCC) viewed recommended pricing as a potential anti-competitive practice.
- Setting a “minimum fee” could be interpreted as price-fixing, which is prohibited under the Competition Act 2010.
2. Market-Driven Environment
- MIA aligned with international best practices, moving toward a market-based approach.
- The profession was encouraged to let supply and demand dictate fees based on complexity, scope, risk, and company size.
How Are Audit Fees Determined Now in Malaysia?
Though RPG 7 is abolished, some practitioners and companies still refer to it informally, especially for internal budgeting or pricing reference. Currently, there is no official fee schedule, but audit fees are typically based on a combination of factors. Key factors influencing audit fees:
- Size of the company (Revenue, total assets)
- Complexity of operations
- Number of transactions/accounts
- Industry (specialised vs regulated vs non-regulated)
- Risk level & internal controls
- Audit firm’s reputation & location
- Deadline pressures
- Special reporting needs (consolidation, group audits, MPERS/MFRS/IFRS, etc)