COMMENT Most countries are associated with an Office of the Auditor General to ensure that the public sector or government departments are audited to ensure that these agencies are practising and conducting their operations fairly and in accordance with legislation.

However, it is important for countries to optimise the AG reporting process, by ensuring action is taken to close the gaps from the AG report findings.

Need for clarity of roles, objectives and outcomes: UK and Australia examples.

In the UK, the National Audit Office (NAO) serves three roles - to scrutinise public spending for Parliament, hold government departments and bodies accountable for how much public money is used, and help public service managers improve performance and service delivery, nationally and locally.

The objectives surround five dimensions:

  • Financial audits - provides an independent opinion to ensure that accounts are true and fair, properly prepared (in accordance with the relevant Accounting Framework) and regular (no irregularities in income or expenditure with Parliamentary intention);
  • Value for money studies - to hold government accountable for how public money is spent. The purpose for this audit is to conclude whether value for money has been secured;
  • Investigations and insights - investigations are carried if an area of concerned is raised by Members of the Parliament or members of the public. This includes in-depth analysis into the systematic issues faced across government such as the effective use of information and ICT, and good practice in financial management;
  • Support to Parliament - supports the PAC, other select committees from both Houses and individual MPs in scrutinizing public spending and service delivery; and,
  • International role - The credibility of the NAO is tested through the Public Accounts Commission, which consists of a committee of MPs. This commission approves the NAOs budget, scrutinizes the costs and performances, appoints external auditors to audit NAO, and commissions value-for-money studies of the NAOs work.

Similarly, In Victoria state, Australia, the Auditor General (AG) plays a role to ensure proper management of resources within the public sector.

The AG does so by providing assurance to Parliament on the accountability and performance of the Victorian public sector. Audit findings and recommendations usually address:

- The degree to which value-for-money has been achieved for taxpayers' dollar;

- The effectiveness of organisations in meeting government objectives

- The quality of management and use of resources;

 - Improvements in management practices and systems of government organisations ;

- The fair presentation of annual financial statements prepared by agencies; and,

 - Compliance with legislative and other requirements.

The types of audits performed by the AG are financial statement audits and performance audits. As in Victoria, Australia, the financial statement audits assure Parliament and the community that financial statements of public sector entities are presented fairly in accordance with Australian accounting standards and applicable legislation.

The performance audits on the other hand, are performed to measure if an organization or government program is achieving its objectives effectively, and doing so economically and efficiently, and in compliance with all relevant legislation.

As with most countries, the AG does not have the authority to implement recommendations, as that is the role of the government.

The tabling of AG reports in Parliament generates considerable parliamentary and community debate, as it highlights issues of importance to Parliament and to the government.

Similarly, in the UK the standard process involves:

Parliament granting funds to government;

-Comptroller and Auditor General (C&AG) auditing accounts, examining government spending and reporting to Parliament;

 -Committee of Public Accounts (PAC) meets to discuss NAO report and makes recommendations; and,

-Government responds to PAC recommendations.

AG Report follow ups in UK, Australia

However, the key question is how does a country address the gaps highlighted in the AG report?

As evident in the UK process, it is the responsibility of the government to ensure proper steps are taken towards the proposed recommendations.

In Canada, typically an action plan is required to address the gaps identified in an AG report. The process that is practised in Western Australia includes planning, execution, agency reporting, tabling in Parliament, quality review where self assessment of audit engagement quality are done and follow-up audits performed base on a stipulated period to continuously assess the performance since the last audit.

The follow-up ensures that the AG report is acted upon to improve the performance from the last audit.

Besides requiring a government to take action and draft an action plan, a review and follow-up is just as important to measure the success of the action plan.

An AG's report is only effective this way and serves its true purpose of addressing and highlighting key issues to ensure that the public sector or government departments are practising and conducting their operations fairly and in accordance with legislation.

Malaysia's case, way forward

In Malaysia, audit corrective actions are not clear to the public. However, there are obvious steps that can be taken to ensure that follow up to the reports takes place.

Once mechanism is to ensure that there is strong purpose and drive by the KSN (Ketua Setiausaha or Secretary-General to the goverment) to the respective KSUs (Ketua Setiausaha -chief secretaries of the respective ministries) to scrutinize and prepare action plans to rectify leakages. This can be done at the yearly meetings between the KSN and KSUs.

The meetings should establish a committee or task force at the ministry level, headed by the respective KSUs, and set targets to remove procurement wastages.

The committee's scope would include identifying and closing the gaps in terms of reducing redundant processes, increasing efficiency of the system with the outcome of closing systemic opportunities for possible leakages.

Government departments are to review the Level of Authorities, and re-define the level of empowerment and responsibilities at the various authority levels.

Guidelines or the governance document that governs the workings and processes for each ministry must be reviewed to include the lowest level of authority to ensure that gaps are effectively addressed.

The results are then measured against the targets set earlier. These results must then be presented in parliament by the respective ministers held accountable for the targets, with the KSN responsible. The results are then publicized for scrutiny.

Pakatan would be able to implement a similar mechanism at the state level. But more importantly, we need to ensure that at the federal level, these steps are taken up seriously and immediately, as the sheer wastage is too much to bear for the ordinary rakyat.

RAJA AHMAD SHAHRIR is a research associate at Institute Rakyat, a think-tank affiliated with PKR