Internal auditing mechanisms within government bodies must be strengthened to prevent or reduce the recurrence of misuse and mismanagement of public funds, said the Public Accounts Committee (PAC).

PAC chairperson Shahrir Samad said this was among the main lessons to be gleaned from the Auditor-General's (AG) 2006 report on the financial position of federal ministries, departments and agencies and the state of their financial management.

"Our intention is to see action against those who committed acts that are wrong or who did not follow procedures. There has to be action," he told a press conference after chairing a meeting on the report with officials from the AG's department and Finance Ministry.

However, while PAC will deliberate further and submit its recommendations to the government on what action should be taken against errant officials of ministries, departmental or other government agencies, preventive action must also be taken to ensure they do not happen again.

"For that, we have to look at the procedures, we have to look at the system, we have to look at (internal auditing) capacity and strengthening (of that capacity)," said Shahrir.

"Right now the government enforces the laws and rules on the private sector for good corporate governance. But the question is, the government itself must improve its own public governance.

"If there had been (stronger) internal auditing, the story would have been different. That is why we want to see an improvement in internal auditing capacity," he added.

Numerous anomalies

The AG Report 2006 released three weeks ago detailed a litany of mismanagement of public funds by a number of ministries.

The Youth and Sports Ministry, in particular, came under intense public glare after it was disclosed that many items and equipment had cost more than triple their market price.

Among other anomalies, it was widely reported that the ministry had paid RM8.4 million more than the market price for 13 items included in its budget - everything from screwdrivers to crane towers.

The ministry's secretary-general was also reported to have signed, on behalf of the government, 11 contracts worth RM8 million to RM74 million pertaining to the National Skills Training Institute.

Addressing this today, Shahrir said PAC will schedule a briefing on Oct 4 by the Youth and Sports Ministry to obtain its input on the matter. This will be followed by more meetings and other efforts by the committee to tackle the issues raised in the AG report.

OPV scandal

Among other matters that Shahrir said PAC is interested in is the RM6.75 billion scandal of six Offshore Patrol Vessels (OPV) that have either not been delivered or not operational.

He also said PAC regarded positively the suggestion that ministries and other government bodies be made to use the services of auditors from the AG's department in order to ensure auditing standards are uniform.

Presently, government bodies are free to engage outsiders to serve in auditing bodies, even those without recognised auditing qualifications.

Responding to calls for the AG to be given greater powers in order to punish errant government officers, Shahrir said steps should be taken to explore the possibilities of strengthening current mechanisms and process rather than devising new ones or revamping the system.

"At the moment, let's see how far we can go and based on the evidence collected by the auditor-general and whether we can, in fact, find or point to an action that can be undertaken by the relevant enforcement agencies.

"So if we can see an improvement in the internal process, then the AG's report may get smaller and smaller, and then PAC will be able to look at other issues, current issues, and so on," he added.