Clinical coding creates a rich database that can be used for administrative functions including planning for health service programmes and preparing budget of hospitals with appropriate use of disease and procedure classification system. Clinical coding errors may occur in the diagnoses or procedure codes. The errors can be happen at any of the digits use in the classification codes. Errors in clinical coding can give a huge implication on hospital’s income if the coding system is used for reimbursement. This study aims to determine incidence of clinical coding errors among 464 patient’s medical records (PMR). An independent senior coder was appointed to review the selected PMRs and the clinical codes. Post-audit evaluation shows that 89.4%(415/464) of the records contained at least one coding error in the assignment of diagnosis or procedure codes. Error in secondary diagnosis code was the highest comprising 81.3% (377/464) of the records. Coding errors were particularly found in O&G discipline comprising 94.8% (110/116) of the selected records. These errors caused a potential loss of RM 666,461 for the hospital. The highest pre-and post audit variance of potential income was RM 568,403 for paediatric discipline. The hospital should carry out regular monitoring of quality of clinical coding in order to prevent loss of income in the future when the reimbursement of services is linked to coding of diagnosis and procedures.