(TAX UPDATE) SSM Just Asked for Four Years of Our Accounts. Here Is What a Section 245 Inspection Really Means.

Introduction

The email arrives without warning. It is polite. It is in Bahasa Malaysia. It gives you a deadline that is only days away.

SSM wants our Trial Balance, our Income Statement, our Balance Sheet, our General Ledger, and our audited financial statements. Not for one year. For 2020, 2023, 2024 and 2025, plus the monthly Trial Balance for January, February and March 2026.

The first batch goes out by email in PDF. The original supporting documents, meaning our invoices, payment vouchers, receipts, bank statements and bills, we carry in by hand on the day of inspection.

If you have received a letter like this, your first instinct is probably to ask two questions. Why me, and how much trouble am I in.

Let us walk through it calmly.

What Section 245 actually says

The inspection is being carried out under Section 245 of the Companies Act 2016. This is the provision that requires every company, together with its directors and managers, to keep and maintain accounting and other records that sufficiently explain the transactions and financial position of the company.

Three points in Section 245 matter for you right now.

First, entries must be made within sixty days of the completion of the transaction they relate to. Records that are perpetually six months behind are not a filing inconvenience. They are a compliance gap.

Second, the records must be retained for at least seven years. This is why SSM can reach back to your 2020 accounts and expect them to still exist. The four year gap between 2020 and 2023 in the request does not mean 2021 and 2022 are safe to discard. Everything within the seven year window must be available.

Third, "accounting records" is defined widely. It expressly includes invoices, receipts, vouchers, cheques and other documents of prime entry, along with the working papers needed to explain how the accounts were prepared. This is the reason the officer is asking for original supporting documents and not just the polished financial statements.

Why the request is structured the way it is

Read the document list again and you will see the logic.

The Trial Balance, Income Statement, Balance Sheet and General Ledger are the accounting spine. Together they show whether your books actually reconcile and whether the numbers flow cleanly from ledger to statement.

The audited financial statements for 2020, 2023, 2024 and 2025 are the certified output. SSM will test whether what was filed and audited agrees with the underlying ledger you produce.

The original supporting documents are where the real inspection happens. This is where an officer checks whether the entries in your General Ledger are backed by genuine source documents, or whether they are numbers with nothing standing behind them.

The monthly Trial Balance for early 2026 tells the officer one more thing. It tells them whether your bookkeeping is current, or whether you only assemble your accounts once a year under pressure.

The number that should focus your attention

Section 245 carries teeth. Where a company and its officers contravene the section, on conviction they are liable to a fine not exceeding RM500,000 or imprisonment for a term not exceeding three years, or both.

Separately, destroying or concealing records that you are required to keep is treated far more seriously again, and courts have been willing to draw an adverse inference against directors who cannot produce the documents that should exist.

The practical lesson is simple. Cooperate, produce what you have, and do not attempt to fill gaps after the fact. An honest incomplete record is a very different problem from a record that looks reconstructed.

How to respond in the days you have

Confirm the deadline first. In the notice we are describing, documents one, two, three, four and six are due by email in PDF on or before the stated date, and the original supporting documents under item five are brought on the inspection day itself. Missing the email deadline is an easy and avoidable mistake.

Then take these steps in order.

Inform your directors immediately. The officer has asked that the directors be told, and the statutory duty sits with them, not with your bookkeeper.

Pull the audited financial statements for all four requested years and confirm they match your signed copies on file.

Extract the Trial Balance, Income Statement, Balance Sheet and General Ledger for each year, and the monthly Trial Balance for the early 2026 months, and check that they reconcile before you send anything.

Assemble the original supporting documents in the same order as your ledger so that any entry the officer picks can be traced to its source within seconds. An inspection goes smoothly or badly depending almost entirely on how quickly you can produce the document behind a given number.

Where you find a genuine gap, note it honestly and be ready to explain it. Do not manufacture a replacement.

Finally, loop in your auditor or tax agent before you respond, not after. A short review of the pack before it leaves your office is far cheaper than explaining a discrepancy after it has been sent to a regulator.

KTP's View

A Section 245 inspection is not, by itself, an accusation. It is a records test. The companies that struggle are rarely the ones with something to hide. They are the ones whose books were never kept current, whose source documents were never filed in a way anyone could follow, and who now have a few days to reconstruct four years of order.

The best defence was built long before the letter arrived. Keep your entries current within the sixty day window. Keep seven years of records where you can find them. File your supporting documents so that any ledger entry can be traced in under a minute. Do those three things as routine, and a notice like this becomes a morning of retrieval rather than a crisis.

If a letter of this kind has landed on your desk and the deadline is close, that is precisely the moment to bring in professional help rather than to work through it alone. Our company is an Approved Auditor and Licensed Tax Agent firm, and we help companies respond to SSM Section 245 inspections, reconcile their records, and prepare a clean, traceable pack before it reaches the regulator.

This article is general information on the Companies Act 2016 and is not advice on any specific company or set of facts. It does not create a client relationship. Please obtain professional advice on your own circumstances before acting.

This content was prepared and reviewed by a qualified person at KTP before publication.

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