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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 under the Auditor-General,
Tan Sri Dr. Hadenan Abdul Jalil. The working together relationship
is being achieved by shifting from an inflexible and impersonal audit report to
a more flexible and personal auditing process. When government agencies
are found to have exceeded their expenditures, we give them the opportunity to
explain, said Tan Sri Dr. Hadenan Abdul Jalil.
He added, In the implementation of the Exit Conference, departments
and agencies no longer sign agreements after being audited. Now, financial directors
and chief executive officers are required to meet the Auditor-General. For
Federal account, the Accountant-General has to meet with the Auditor-General,
while for State accounts, it is the financial officer and treasury.
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 years 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:
1. 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.
2. 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 departments financial management.
3. 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.
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