Top Guide: Construction Accounting Malaysia with AutoCount – 2025 Compliance Tips & Entries

Why Construction Accounting Demands Special Attention?

Construction accounting is fundamentally different from other industries due to its project-based natureextended timelines, and complex billing structures.

In Malaysia, contractors face additional challenges with:

This comprehensive 4,000+ word guide offers a detailed, step-by-step breakdown of construction accounting processes, specifically designed for AutoCount users in Malaysia.

Understanding Construction Accounting Frameworks in Malaysia

Welcome to the detailed guide on Construction Accounting Frameworks! This document will explore important principles such as MFRS 15 for revenue recognition and provide insights into retention accounting practices.

1.1 Revenue Recognition: MFRS 15 Deep Dive

MFRS 15 requires construction companies to recognize revenue based on performance obligations rather than cash receipts.

Key Concepts:

  • Output Methods: Recognize revenue based on milestones (e.g., completion of foundation, structure)
  • Input Methods: Recognize revenue based on costs incurred (% of completion)

Practical Example

A RM1,000,000 project with RM600,000 costs incurred (60% complete):

Revenue to Recognize  = Contract Value × % Complete 

= RM1,000,000 × 60%

= RM600,000

AutoCount Implementation:

  • Create a custom field for “% Completion” in project records
  • Set up automated revenue recognition rules
  • Generate MFRS 15-compliant reports

1.2 Retention Accounting: Legal & Operational Guide

Retention money serves as quality assurance, typically:

  • 5% for private projects
  • 10% for government contracts
Type Account Classification When to Recognize
Client Retention Current Asset Upon billing
Subcontractor Holdback Current Liability Upon certification

Statutory Requirements:

LHDN:Retention is taxable upon billing (not release)

SOCSO:Must be disclosed in financial statements

AutoCount Journal Entries - Detailed Breakdown

2.1 Progress Billing with Retention (Step-by-Step)

Scenario: Bill RM100,000 with 5% retention

Journal Entry:

Account Type Debit Credit Explanation
Accounts Receivable Current Asset 95,000 Net receivable after retention
Retention Receivable Current Asset 5,000 Amount withheld by client
Construction Revenue Income 100,000 Total contract value

AutoCount Configuration:

  • Navigate to Settings > Chart of Accounts
  • Create “Retention Receivable” (Account Code: 1205) as Current Asset
  • In Invoice Template, add retention as a deduction line item

2.2 Receiving Payment (Excluding Retention)

Scenario: Bill RM100,000 with 5% retention

Journal Entry:

Account Type Debit Credit
Bank Account Current Asset 95,000
Accounts Receivable Current Asset 95,000

Reconciliation Process:

  • Match payment to original invoice
  • Flag unpaid retention in aging report

2.3 Subcontractor Payments with Retention

Scenario: RM100,000 certified payment with 10% retention

Journal Entry:

Account Type Debit Credit Notes
Subcontractor Expense Cost of Sales 100,000 Full certified amount
Accounts Payable Current Liability 90,000 Net payable
Retention Payable Current Liability 10,000 Held back

AutoCount Workflow:

  • Create subcontractor ledger with retention tracking
  • Set up auto-reminders for retention release dates

Advanced AutoCount Configuration

3.1 Project Costing Module Setup

  • Go to Modules > Job Costing
  • Activate “Track by Job” option

Create Cost Categories:

Category Account Code
Materials 5001
Labor 5002
Equipment 5003

Assign Costs to Projects:

Project: KL Tower (Job Code: J-2024-01)

Cost Type Amount (RM) Account Code
Materials 50,000 5001
Labor 30,000 5002

3.2 WIP Reporting Configuration

Navigate to Reports > Custom Reports

Build WIP template with key fields:

E-Invoicing & Compliance in Malaysia

4.1 Overview

Effective from 1 January 2024, the Malaysian government mandates e-invoicing for all registered businesses. AutoCount allows integration via XML / API for seamless submission.

4.2 AutoCount E-Invoice Setup

  • Go to Settings > E-Invoice
  • Activate e-invoice submission mode
  • Upload digital certificate from MOF

4.3 E-Invoice Submission Workflow

  1. Create invoice as usual in AutoCount
  2. Validate invoice against MOF XML schema
  3. Submit via AutoCount API
  4. Download signed XML receipt for your records

Manage Your Construction Projects with Ease

Don’t let complex accounting entries slow you down. Upgrade to AutoCount and ensure compliance with the latest accounting standards.

Explore AutoCount solutions that make your business run smoothly

Payroll / HRM Solutions

Paying your workers easy! With AutoCount, you can simplify how you give out salaries and employee benefits.

POS System Solutions

Selling things easy! Use our strong cash register system to handle sales quickly. This is super important for stores!

E-Commerce Solutions

Sell things online easily! With AutoCount, you can handle online sales and process orders smoothly using our e-commerce solutions.

Mobile App Business Solutions

Manage your business data on-the-go with AutoCount's mobile solutions. Handle your information conveniently from your phone.

Accounting Solutions

Money tasks easy! Use AutoCount to write down and see how your money is doing, from the start to the reports.

F&B Solutions

Get special help for food and drinks! We have solutions that take care of orders, keeping track of food, and selling things – perfect for restaurants and cafes!

Customized Accounting Software

Make your own special money program! AutoCount can create customized accounting software just for you, addressing exactly what you need.

Discover more AutoCount modules and enhance your inventory management!

Leave a comment

Your email address will not be published. Required fields are marked *