KUALA LUMPUR: The National Audit Department (NAD) will audit 2,000 government-linked companies (GLCs) from next year in a bid to create a new era of enhanced governance in the country.
The move comes following the approval of the amendment bill for the Audit Act 1957 in July.
The amendment provides that the Auditor General’s (AG) authority be significantly broadened for a more comprehensive oversight of public spending.
AG Datuk Wan Suraya Wan Mohd Radzi said the exercise would be conducted “full-force” with a more innovative approach that would integrate technology.
“Our audit findings will be fully digitalised next year, especially in terms of the way we conduct our audits and data analytics, and this is not only to keep up with the current trend, but because we have a wider pool of auditees – and the better option to do that is to utilise technology.
“Hence, we are currently working with some of our stakeholders to understand this new technology to get a better understanding of how it is being done from a private sector level,” she said during a fireside chat session at the Institute of International Auditors Malaysia National Conference 2024 here yesterday.
On confidentiality, Wan Suraya said the department is also working with its auditors to ensure the data obtained from sources is within the parameters of new technologies.
“This is an interesting time for us because next year we will be introducing a new approach to ensure that all 2,000 gazetted GLCs are audited.
“No entity will be left behind. Everybody will be audited during the first round,” she said.
This will be followed by some screening to identify lower-risk entities, and after that by a more detailed analysis to ensure that governance and accountability are continuously improved.
She said NAD would be working closely with IIAM and the Malaysian Institute of Accountants (MIA) as well as other entities involved in the audit sector to achieve the goal.
Through these efforts, it seeks to enhance public trust in the country’s institutions by ensuring transparency and accountability in financial management
She explained that when working on audit reports, they have to be fully prepared and supported, as well as being confidential.
“The institution of NAD is clearly prescribed under the constitution and the line of reporting is very clear.
“The amendment seems simple but is actually a game changer,” Wan Suraya pointed out.
Among the new rules are government guarantees, “follow the public money” audit mechanism, “follow-up” audit as well as a new guideline procedure.
On the “follow the public money” audit mechanism, she said there were certain occasions where there was uncertainty about where the money provided through government grants for projects had gone to.
“But with the amended Act and approval, NAD will be able to identify how public money is spent and that everything is accounted for,” she said.
The follow-up mechanism was an essential aspect highlighted by both NAD and IIAM.
NAD had launched the AG Dashboard platform in November 2023, which allowed the public to access up-to-date issues and feedback from the AG report.
It is a key performance indicator for all ministries to conduct follow-up audits if necessary, according to Wan Suraya.
Meanwhile, IIAM president Mohd Khaidzir Shahari said the adoption of the refreshed Global Internal Audit Standards, which is set to take effect on Jan 9, is expected to boost Malaysia’s competitiveness.
“Malaysia can step up its position, from where it is currently ranked fifth out of 12 Asia-Pacific markets in the recent Corporate Governance Watch 2023 report, as companies commit to adopting the refreshed global standards,” he said during a media roundtable in conjunction with the conference yesterday.
The global standards provide an opportunity for board members, management, and other functions to collaborate with internal auditors as transformation partners, in addressing emerging threats and embracing new opportunities.
“Internal audits should now be conducted alongside management, advising the chief executive officer and the board when risks arise within the company.
“These advisory role that internal auditors have to play are clearly defined in the new standards,” he added.
Since 2008, the government has mandated public-listed companies to implement internal audit functions, aiming to increase transparency through corporate governance.
However, adherence to global standards of internal audit is voluntary, leaving many organisations exposed to undesirable risks and unrealised value.
He added that the new global standards set out the minimum requirements for internal audits to behave, whether they are in commercial or public sectors, and whether they are from big or small organisations.
In a keynote address, deputy minister of Finance Lim Hui Ying said the future of governance lies within collaboration between government bodies, private organisations, and audit professionals.
“We need to work together to build a governance model that is adaptable, accountable, and prepared for the challenges of tomorrow.
“By integrating sustainability principles, leveraging technology, and fostering transparency, we can create a governance framework that serves not only our current needs but those of generations to come,” Lim said.
