Mention the word “Auditor” and most people would cringe in
fear or anxiety. Auditors have been
given a bad name since time immemorial because of what they do – audit company
finances, or nosing into your money would be how some people would look at
it. But an audit, which is an official
scrutiny of accounts, is necessary as a check-and-balance system for sound
financial management or good governance.
Realistically, auditors are needed to ensure that
companies or organizations keep good records of their financial spending. This is especially important when dealing
with government agencies or public listed companies where large amount of
public funds is involved, and the financial performance of these organizations
could invariably impact economic development of the country.
For the year ended 2003, loans provided by the Malaysian
Federal Government to States, which involved government agencies and private
sector, amounted to RM3.1 billion as compared to RM2.7 billion in 2001. State Governments were found to have arrears
ranging from RM19.57 million to RM512.52 million. In order for government to have enough funds for nation building,
steps must be taken to put due diligence on future financial management.
One such step is changing the image of public auditors who
play a critical role as watchdogs in the world of financial management. Times are changing and this can be seen with
the recent television campaign of Dato’ Seri Abdullah Ahmad Badawi, Prime
Minister of Malaysia – Fast Forward, with the slogan “Work With Me, Not For
Me”. This is the emerging scenario of
society today – working together to achieve a common goal.
The traditional role of public auditors as ‘fault finders’
is being transformed into that of ‘advisors’.
The “working together” relationship is being achieved by shifting from
an inflexible and impersonal audit report to a more flexible and personal
auditing process.
Sarawak is a financially sound state. It was awarded a clean certificate in 2003,
for the second consecutive year, after achieving strong financial management in
the previous year’s accounts. According
to the Auditor-General, the state would probably be awarded a clean certificate
for 2004 as well given its strong financial position in terms of assets and
borrowings. Sarawak could easily pay off its total loan amount of RM1.3 billion
from the Federal Government as its many assets are worth more than RM3 billion
by 2005. The State is an example of a financially well-managed state, which
includes Penang, Selangor and Malacca.
To further enhance the positive shift in the auditing
process, the National Audit Department (NAD) established adoption programmes
whereby senior auditors would adopt different government departments to assist
in training the selected officers in proper record keeping, financial
management and so on for a year. This
is to minimize repetitive mistakes made by some departments due to the
ignorance of officers.
Other achievements of the NAD are the establishment of a
corporate unit and a statutory bodies unit within the department to provide
better focus in these areas; and the set up of a National Audit Academy
targeted to begin operations this year.
The academy serves to provide team building and training for NAD staff
as well as staff from various departments.
Courses offered at the RM45 million academy located on an 8 ha site in
Labu would include accountancy, auditing, management and ICT. The academy would be able to accommodate 100
participants per course.
Auditor-General
The Auditor-General is appointed by the Yang di Pertuan
Agong on the advise of the Prime Minister and after consultation with the
Conference of Rulers. He serves the
legislature and is granted unimpeded right to audit and report directly to the
legislature. The staff of the National
Audit Department (NAD) discharges the audit on behalf of the Auditor-General.
He is entitled to have unimpeded access to all records,
vouchers, documents, cash, stamps, securities, stores and other properties
subject to his audits. The
Auditor-General may call upon any person under oath to furnish any explanation
or information, which he may require, and any person called upon is legally
bound to furnish information or explanation required in his examination.
His primary responsibility is to audit and certify the
appropriation and other accounts of the government, and to report the
examination result to the Yang di Pertuan Agong, State Sultans or Yang di
Pertua Negeri who will then cause it to be laid in Parliament or State
Legislatures.
The Auditor-General is responsible for auditing the
accounts of the following:
- Federal Government – Ministries/ Departments (30)
- Federal Statutory Bodies & Miscellaneous Funds (96)
- State Governments (13)
- State Statutory Bodies & Miscellaneous Funds (137)
- Local Authorities (146)
- Islamic Religious Councils – Federal and State Levels (16)
Types of Audit
There are three types of audit carried out by the NAD as
prescribed by the Audit Act, namely:
- Financial Audit – the purpose of conducting financial
audit is to provide an opinion whether the annual financial statement shows a
true and fair view of the financial position.
The NAD personally audits 5 major agencies – Bank Negara, Tabung Haji,
SOCSO, EPF and Lembaga Tabung Angkatan Tentera.
- Compliance Audit – the NAD is responsible for conducting
cyclical compliance audit, which includes the inspection and evaluation on
activities of the ministries, departments and agencies to determine whether
laws and regulations are fully complied.
This is where the staff goes down to the ground, study the Treasury Instructions
(TI) and analyze the respective department’s financial management.
- Performance Audit – the performance audit involves the
study and evaluation of specific programmes or activities of ministries,
departments and agencies to determine whether the objective of the programmes
or activities are achieved, and whether the implementation of the programmes or
activities was carried out in an economical, efficient and effective
manner. This will be the core business
of NAD in the future. It is where NAD
could see how projects and activities are implemented by observing three
components – project planning, project implementation and project monitoring.
