AUDIT REPORT The National Audit Department has identified weaknesses in the management of the cooking oil stabilisation scheme (COSS), causing the government to overpay by RM2.92 million.

COSS is a funding scheme to subsidise refineries on a monthly basis.

It was implemented by the ministry due to higher crude palm oil prices in the second quarter of 2006 and early 2007.

According to the 2015 Auditor-General's Report (Series 2) tabled in Parliament today, the total subsidy approved by the Ministry of Plantation Industries and Commodities from 2013 to April 2016 for 25 refineries and 241 packaging companies was RM2.388 million.

However, the audit conducted between April to July 2016 identified a number of weaknesses in the implementation of the scheme.

"Hence, there was an increase in the government's subsidy expenditure, estimated to be RM2.92 million," read the report.

'Not supported by study'

The weaknesses identified included:

1. COSS' quota set at 2.5kg per capita consumption was high and not supported by the study of actual needs of Malaysians;

2. Five (31.3 percent) out of 16 companies with an approved quota of more than 500 metric tonnes per month were having lower paid-up capital compared to the limit set by the ministry;

3. One (20 percent) of those five companies was ineligible to be considered for the distribution of quotas due to its paid-up capital condition;

4. Seven quota holders were given permission to appoint a third party to carry out cooking oil packaging activities, even though this was not in compliance with the standard operating procedures;

5. Temporary packaging quotas were given to 10 refineries and eight packaging companies without complying with the standard operating procedures, and it was prolonged between nine to 12 months

6. As at April 2016, temporary packaging quota approval has resulted in excess maximum quota limit of between 64 and 464 metric tonnes per month.

However, the department was satisfied with the verification process used in ensuring the fairness and accuracy of subsidy claims by refineries.

The audit report urged the ministry to revise calculations used for the COSS quota by studying the actual household needs.

"COSS' claim procedure, which was solely based on documentation, should be improved," the auditor-general's report recommended.