AUDITOR GENERAL S REPORT

Transcription

1 AUDITOR GENERAL S REPORT SYNOPSIS ON PUBLIC ACCOUNTS STATEMENT AND FINANCIAL MANAGEMENT OF FEDERAL GOVERNMENT MINISTRIES/DEPARTMENTS 2007

2 PREFACE 1. Article 106 and 107 of the Federal Constitution and Audit Act 1957 require the Auditor General to audit the Federal Government Public Accounts Statement and activities and submit its report to the King who will then direct it to be tabled in Parliament. To fulfil this responsibility, the National Audit Department has undertaken 3 types of audits as follows : Attestation Audits to give an opinion as to whether the Federal Government Public Accounts Statement for the year concerned shows a true and fair view as well as its accounting records have been maintained properly and up-to-date Compliance Audits to determine whether financial management at Ministries/Departments have been carried out in accordance with relevant financial laws and regulations Performance Audits to ascertain whether Government activities have been carried out efficiently, economically and achieved its desired objectives/goals. 2. My Report on the Public Accounts Statement 2007 and Financial Management of the Federal Government was prepared separately from the Report on the activities of the Federal Government Ministries/Departments and management of the Federal Government companies. This is for easy reference and to have better impact on the issues raised. My Report on the Public Accounts Statement and Financial Management of the Federal Government 2007 include the following matters :- Part I : Certification on The Federal Government Public Accounts Statement For The Year Ended 31 December 2007 Part II : Financial Management Of The Federal Government Part III : Involvement Of The National Audit Department In Various Activities To Enhance Public Fund Management And Accountability Part IV : General Matters 3. The audit on The Federal Government Public Accounts Statement 2007 revealed that the statement as a whole reflected a true and fair view of the financial position of the Federal Government for the year ended 31 December The accounting records had been kept properly and up-to-date. With regard to the financial management, there were still some financial regulations not followed. Among others the weaknesses were due to 1

3 insufficient manpower and training in financial management; lack of close supervision and continuous monitoring. 4. All matters reported had been brought to the attention of the respective Controlling Officers/Heads of Departments for their confirmation. The National Audit Department has also undertaken various efforts and initiatives to enhance financial management accountability by assisting the Ministries/Departments to take corrective actions on weaknesses in financial management. Among the measures taken are as follows : The implementation of an objective and transparent star rating system that formed the basis of the Accountability Index will evaluate 6 main elements by providing scores and rating on how the Ministries/Departments perform the best practices principles in financial management elements The National Audit Department had also published the booklet on Excellent Financial Management From the Perspective of the National Audit Department. This booklet is one of the proactive steps introduced to enhance financial management. It is hoped that the Heads Of Departments/Agencies will be induced to get good assessment and rating under the Accountability Index System by highlighting examples of common weaknesses identified during the course of audit. 4.3 Treasury Instructions require the Heads Of Departments to ensure officers be responsible to safeguard public money, stamps or other valuable items in safety boxes, vaults, cash boxes, drawers and others. Heads Of Departments should also ensure complete and updated records be maintained and checked by senior officers periodically. Starting from 2007, the National Audit Department carries out surprise checks in 51 Federal Departments/Offices consisting of 15 Immigration Offices, 23 Management Institutions, 10 District Education Offices, 1 Custom Office, 1 Road Transport Office and District Police Headquarters respectively The Adopted Agency Programme was introduced in Under this programme, selected offices with weaknesses in financial management were given guidance and advice by the National Audit Department to assist them in rectifying weaknesses especially with regard to the maintenance of accounting records. In 2007, the National Audit Department had implemented the Adopted Agency Programme in 12 offices. Generally, financial management at the selected Adopted Offices have improved and showed positive changes The National Audit Department has carried out special evaluations on the financial management performance of the Ministries/Departments and Agencies under the control of Premier Grade Officers for the confirmations in their respective posts. From January 2007 to May 2008, evaluations had been carried out on financial management involving 103 Heads of Departments. These evaluations have indirectly contributed towards the enhancement of the financial management as promotion of 2

4 Heads Of Departments would only be considered by the Public Services Department after the National Audit Department had confirmed that the officers had taken corrective action on the weaknesses on financial management To enhance the functions of the Internal Audit Units (IAU), it is important that the officers in the IAUs must have knowledge and experience in auditing field. The Central Agency had agreed to the proposal of the National Audit Department that the IAUs are headed by auditors from the National Audit Department with cadet posts. To enable the internal auditors to assist Ministries/Departments to enhance the financial management performance, the National Audit Department will continue its efforts to give training in the field of auditing Officers from the National Audit Department had participated in discussions on the development of computerized systems at various Ministries/Departments to ensure internal controls were adequate to safeguard the integrity of data and reliability of the systems. It is felt that such involvement is necessary as huge expenditure has been spent in developing computerized systems. Thus, it is appropriate that these systems should be implemented properly to meet the desired objectives. 5. I wish to express my thanks to all the officers in the various Ministries/ Departments who have given their cooperation to my officers during the course of audit work. I also wish to record my appreciation and thanks to my officers who have worked diligently and gave total commitment to complete this Report. (TAN SRI DATO SETIA HAJI AMBRIN BIN BUANG) Auditor General Malaysia Putrajaya 16 June

5 SYNOPSIS PART I - CERTIFICATION OF THE FEDERAL GOVERNMENT PUBLIC ACCOUNTS STATEMENT FOR THE YEAR ENDED 31 DECEMBER The Federal Government Public Accounts Statement for the year ended 31 December 2007 as a whole reflected a true and fair view of the financial position of the Federal Government and the accounting records were also properly maintained and kept up-to-date. PART II - FINANCIAL MANAGEMENT OF THE FEDERAL GOVERNMENT Overall Financial Management Performance 2. For the year 2007, the Government had spent RM billion (98.8%) out of an allocation of RM billion approved for operating expenditure. Whereas a total of RM40.56 billion (88.9%) was spent out of RM45.60 billion approved for development allocation. The Government had received revenue totalling RM billion as compared to RM billion in the year There were 57 Federal Ministries/ Departments with arrears of revenue totalling RM14.08 billion and of which, RM9.48 billion (67.3%) had been outstanding for more than 3 year. Financial Management At Federal Ministries And Departments Level 3. The National Audit Department had carried out an audit at 28 Ministries and 31 Federal Departments in the year 2007 in order to ascertain whether financial management at these Ministries and Departments was carried out according to established laws and financial regulations. The results of the audit showed that a few of the Ministries and Federal Departments are not serious in improving their financial management performance even though such weaknesses had been repeatedly brought up to their attention by the National Audit Department. As an effort to motivate the Ministries and Federal Departments to improve and strengthen their financial management performance, the National Audit Department has introduced the Accountability Index of Financial Management to evaluate the financial management performance. The Ministries and Federal Departments rated as excellent can become a role model to others. From the assessment carried out, financial management performance at 1 Ministry and 5 Departments were rated as excellent; 22 Ministries and 4

6 20 Departments as good and the remaining 5 Ministries and 6 Departments as satisfactory. 4. The Controlling Officers/Heads Of Department must ensure that the responsible officers have kept all public money, stamps or other valuables of any kind safely in cash boxes, strong rooms, drawers or other receptacles as stated under the Treasury Instructions. The Controlling Officers/Heads Of Department must also ensure that all records are properly maintained, up-to-date and examined by senior officers occasionally. In order to ensure that such duties are being carried out by the Controlling Officers/Heads Of Department, the National Audit Department had carried out surprise examinations at 51 Federal Departments which consisted of 15 Immigration Departments, 23 Teaching Institutes, 10 District Education Offices, 1 Custom Department, 1 Road Transport Department and 1 District Police Headquarters. As a result of these examinations, it was revealed there were few cases where the public money and other valuable items were not safely kept, collections were bank-in late and balances of cash in hand differed as recorded in the books. 5. Besides conducting mandatory audits as provided under the laws, the National Audit Department also implements Adoption Programmes and special evaluations on the financial management performance of the Ministries/Departments/ Agencies under the control of the Premier Grade Officers. In year 2007, the National Audit Department had carried out 12 Adoption Programmes. From January 2007 to May 2008, a total of 103 Premier Grade Officers had been evaluated. 5