Audit and Compliance: How to Manage Rising Costs Without Sacrificing Quality

In Malaysia, an audit is essential as it fulfils statutory requirements under the Companies Act 2016 while enhancing the credibility and reliability of a company’s financial statements. 

An independent audit protects shareholders’ interests, strengthens corporate governance, and promotes transparency and accountability by providing assurance that financial information presents a true and fair view. 

This is fundamental to corporate governance and market confidence, particularly as businesses grow in size and complexity. However, as the scope and expectations of audit continue to expand, driven by stricter regulations, heightened risk awareness, and increased stakeholder scrutiny, the effort required to deliver meaningful assurance has also increased. 

As a result, audit procedures have become more extensive and specialised, contributing to a steady rise in audit and compliance costs. Yet, reducing compliance spending indiscriminately can expose organisations to significant security, regulatory, and reputational risks. 

This creates a critical question for boards, management, and finance leaders:

How can organisations manage audit and compliance costs without sacrificing security or assurance quality?

This article explores practical strategies to control costs while maintaining robust audit and compliance, supported by effective audit and assurance and auditing and assurance services frameworks.

Why Audit and Compliance Costs Are Rising

Across industries in Malaysia, organisations today are facing a shared challenge of rising audit and compliance costs. 

Due to the increasing regulatory complexity and reporting requirements, audit and compliance costs are rising. Organisations must comply with evolving accounting standards, tax regulations, sustainability and ESG reporting requirements and many more. 

Understanding the drivers behind rising costs is the first step toward managing them effectively. 

The key cost drivers include:

• More stringent regulatory and reporting requirements
• Expansion into new markets and jurisdictions
• Increased reliance on technology and data
• Higher expectations around governance, risk, and controls
• Greater scrutiny from regulators, investors, and boards

For Malaysian organisations, these pressures are amplified by evolving regulatory standards and growing emphasis on risk management and transparency.

The Risk of Cost-Cutting Without Strategy

As costs continue to rise, some organisations might consider reducing audit and compliance expenses to manage overall operational efficiency and protect profitability. However, attempting to reduce audit and compliance costs without a structured approach can lead to:

• Weakened internal controls 
• Increased audit inspection findings
• Regulatory non-compliance
• Data security vulnerabilities
• Loss of stakeholder trust

Companies should realise that effective cost management is not about doing less,it is about doing things smarter.

Reframing Audit and Compliance as a Value Driver

Rather than focusing on cutting audit and compliance costs, organisations should recognise their strategic importance. 

Forward-looking organisations no longer see audit and compliance purely as a cost centre; instead, they view it as a value-preserving and risk-mitigating function that supports sustainable growth and strengthens governance.

A well-designed audit and compliance framework provides multiple strategic benefits. It can:

• Prevent costly compliance failures by ensuring that regulatory requirements are consistently met
• Identify operational inefficiencies, enabling organisations to optimise workflows and resource allocation
• Strengthen governance and support informed decision-making
• Enhance confidence among investors and regulator

This perspective shift is essential to managing costs sustainably.

Strengthening the Audit and Assurance Foundation

Having a strong audit and assurance framework allows organisations to focus resources where they matter most.

Grant Thornton Malaysia’s Audit and Assurance services emphasise:

• Risk-based audit planning
• Scalable audit methodologies
• Alignment with business objectives

Organisations can learn more about a robust audit and assurance approach.

Practical Strategies to Manage Audit and Compliance Costs

1. Adopt a Risk-Based Compliance Approach

Not all compliance risks carry the same impact. A risk-based approach prioritises high-risk areas by identifying where the potential impact and likelihood of issues are greatest. It also reduces unnecessary controls in low-risk areas to avoid inefficiencies and over-compliance. Lastly, it focuses audit effort where exposure is highest, enabling organisations to allocate resources more effectively while strengthening overall risk management and control.

2. Improve Internal Controls to Reduce External Audit Effort

Strong internal controls reduce the need for audit rework by minimising errors and inconsistencies. Having improved internal controls lower substantive testing requirements as auditors can place greater reliance on well-designed and effectively operating controls. It also reduces follow-up audit procedures, resulting in a more efficient and streamlined audit process overall.

3. Leverage Internal Audit as a Cost-Control Tool

An effective internal audit function plays a key role in managing audit and compliance costs.

Organisations can strengthen their approach through professional internal audit services. Internal audit helps by identifying control weaknesses early, which can help reducing year-end audit surprises. It also improves governance and risk oversight. A strong internal audit function reduces reliance on reactive, costly external remediation.

4. Reduce Duplication Between Assurance Activities

Many organisations experience duplication across:

• Internal audit
• External audit
• Compliance reviews
• Risk assessments

Aligning scopes and sharing insights between assurance functions can significantly reduce duplicated effort and cost.

5. Use Technology to Streamline Compliance Processes 

Digital tools can automate:

• Control testing
• Documentation
• Monitoring and reporting
• Evidence collection

When implemented correctly, technology reduces manual effort while improving consistency and audit trails—supporting both cost efficiency and security.

6. Enhance Documentation and Audit Readiness

Having an enhanced documentation process could prevent extended audit timelines, additional audit procedures which results an increase in fees.:

Thus, improving documentation quality and maintaining audit readiness throughout the year can significantly reduce audit costs.

Balancing Cost Efficiency With Security

Cost management should never compromise security. Effective audit and compliance ensures:

• Data integrity
• Protection against fraud
• Regulatory compliance
• Business continuity

The goal is not to reduce assurance, but to optimise how assurance is delivered.

The Role of Audit and Assurance Services in Cost Management

Professional auditing and assurance services support cost management by:

• Applying scalable audit methodologies
• Tailoring audit scope to risk
• Providing insights beyond compliance
• Supporting long-term governance improvements

When audit is aligned with business strategy, it becomes a tool for smarter resource allocation.

Governance and Board Oversight

Boards and audit committees play a critical role by:

• Setting risk appetite
• Challenging inefficient compliance practices
• Ensuring alignment between cost and risk
• Monitoring audit effectiveness

Clear oversight ensures cost decisions do not undermine assurance quality.

Common Mistakes Organisations Should Avoid

Organisations should avoid cutting audit scope without a proper risk assessment, which can leave significant exposures unidentified, underinvesting in internal controls and thereby increasing the likelihood of errors and inefficiencies, and treating compliance as a checklist exercise rather than an ongoing risk management process. 

Organisations also often fail to address the root causes of audit findings, leading to repeated issues year after year, and view audit as a one-off annual event instead of an ongoing mechanism to strengthen governance, controls, and business performance.

Avoiding these pitfalls is essential to maintaining security while managing costs.

How Grant Thornton Malaysia Supports Sustainable Compliance

Grant Thornton Malaysia helps organisations:

• Design efficient audit and compliance frameworks
• Strengthen internal audit capabilities
• Apply risk-based audit methodologies
• Integrate assurance with business strategy

Learn more about Grant Thornton Malaysia’s broader capabilities.

Conclusion

Rising audit and compliance costs are a reality for organisations in Malaysia but they do not have to come at the expense of security or assurance quality.

By adopting risk-based approaches, implementing strong internal controls, maintaining an effective internal audit function, and coordinating audit and assurance services, organisations can control costs while strengthening governance, resilience and trust.