Internal audit in the state and local governments of Malaysia (original) (raw)
Related papers
Internal audit in the state and local governments of Malaysia: problems and solutions
International Journal of Accounting and Finance, 2010
In Malaysia, a growing catalogue of organisational failures and mismanagement in both the public and private sectors highlights the need for effective internal audit. Interviews conducted with internal auditors working in State and Local Governmental Bodies (SLoGBs) located in Peninsular Malaysia highlighted numerous problems faced by the audit function. The problems range from staff, skills and training shortages to premeditated obstruction of the auditors in their attempts to perform their duties, and are similar to what is found in many other countries. The way forward towards an improved internal audit function begins with having the right kind of organisational head in the organisations. Other moves include the setting up of audit committees in the organisations and an internal audit monitory body at either the state or the federal level. Improvement in the audit function may also
… of Accountability and …, 2009
Internal audit is supposed to help members of organizations to improve their business activities. But the findings from in-depth interviews with internal auditors from a total of 40 federal government ministries, departments and agencies in Malaysia, conducted in the middle of 2004, have revealed a number of serious shortcomings. Most notable of these shortcomings are that many internal audit units have a shortage of staff, and that the audit staff lack internal audit skills. In addition, a majority of the audit units still employ outdated audit practices, and have failed to get the right level of support and assistance from the Treasury. Worse still, their operational effectiveness and efficiency is threatened by the high-handed conduct of the National Audit Department which arbitrarily and unilaterally shuffles staff between the body and internal audit units. With national and pubic sector surrounding leaving much to be desired for in regard to transparency and public accountability of the major actors and the fact that Malaysia is a large power distance society, it may not be too far fetch to expect the internal audit quagmire to continue to take place into the foreseeable future.
This paper is part of the third and final study conducted on the state of internal audit in the public sector of Malaysia. The first study was concerned with the internal audit operations in the state and local governments found in Peninsular Malaysia (Azham et al 2007a), while the second study was concerned with internal audit in the nation"s federal government ministries, departments and agencies . This third study covers 47 organizations at the federal government level, comprising 27 statutory bodies and 20 government-linked companies. From the face-to-face interviews conducted with internal auditors over the three year period 2005 to 2007, several notable audit features emerged as common to all 47 organizations. Some are depressing, while a few others are encouraging. All in all, however, the internal audit function in a majority of the organizations still leaves much to be desired. Also, it is notable that these findings are very much like those of the previous two internal audit studies , and to make sense of the dismal state of the internal audit function in the public organizations, there is perhaps a need to look at the bigger context within which the internal audit function is found.
The effectiveness of internal audit in Malaysian public sector
Internal audit in Malaysian public and private sector organizations underwent a steady organic growth since gaining a foothold in the management process in the 1970s. The management of the Malaysian public sector is continuously maturing in facilitating foreign input in national development, echoing similar advances expounded by the internal audit units of private sector organizations. The main difference being the public sector addresses the interest of a much wider group of stakeholders. Rapid development in infrastructures and industries positioned Malaysia on the fringes of globalization and the world market. This enlarges the crucial role of internal auditing to ensure transparency, integrity, quality and improved service delivery; among myriad positive aims, remain the end point of any process area. This study explored the significance of internal auditing in the Malaysian public sector, and its subsequent extent and influence in public sector hierarchy and decision making. Data was collected from responses to a questionnaire distributed to head of internal auditors, internal auditors and other staff of internal audit departments from various categories of public sector departments and agencies in Malaysia. The study concluded that the internal audit function in the public sector in Malaysia is curtailed by understaffing and hampered by inadequate support from top management while, the auditors seldom extend their full cooperation. The auditors themselves lack appropriate knowledge and training on effective auditing approaches. The negative perception accorded to internal audit led to inaction by management on recommended remedies which only serve to nullify the positive contribution internal audit potentially holds to elevate the service delivery quality of the public sector.
2018
The recurring issues of corruption, malpractices, poor public service delivery, financial irregularities and fraud always attract widespread attention. Unfortunately, although many policies and regulations have been implemented, these issues are still ongoing which make the efficacy of internal audit in the government sector even more critical than before. However, to date, it is still questionable whether this audit is efficient and effective due to the increasing trend in reported frauds in government departments. The objective of this paper is to examine the scope of audit that is associated with the effectiveness of internal audit. The uniqueness of this paper is to examine a new determinant, namely the practice of whistleblowing, on its effect in mediating the effectiveness of internal audit. The usefulness of this paper is to overcome the increasing rate of fraud in Malaysian public sector and encourage the whistleblowing practice in public sector agencies. It is undeniably ve...
Development of Auditing in Malaysia: Legal, Political and Historical Influences
SSRN Electronic Journal, 2007
This work investigates the role and contribution of external auditing as practised in the Malaysian society during the forty year period from independence in 1957 to just before the onset of the Asian Financial Crisis in 1997. It applies the political economic theory introduced by Tinker (1980) and refined by Cooper & Sherer (1984), which emphasises the social relations aspects of professional activity rather than economic forces alone. In a case study format where qualitative data was gathered mainly from primary and secondary source materials, the study found that the function of auditing in the Malaysian society in most cases is devoid of any essence of mission; instead it is created, shaped and changed by the pressures which give rise to its development over time. The largely insignificant role that it serves is intertwined within the contexts in which it operates.
2018
This study examines the effectiveness of an Audit Committee (AC) operating in a large government statutory body in an emerging economy, namely the Inland Revenue Board of Malaysia (IRBM). This study is timely, as previous studies focussing on AC effectiveness in relation to the public sector are sparse. Data collection was through in-depth interviews with key individuals involved in the IRBM governance process, including AC members, senior management and external auditors. The study finds existence of a weak AC governance function that inadequately oversees financial reporting and internal control systems. We find the independence of AC members questionable, as a communication gap exists between AC members and the external auditor. In particular, the study highlights that top management should ensure that its AC fulfils its assigned role and that urgent attention is given to issues on composition, appointment and diligence of its AC members. We conclude that the IRBM should consider improving independence by appointing an external independent AC member(s) from either the big four or an influential industry expert to provide the necessary input and expertise to ensure that public confidence continues.
Assessment of Accountability Practices in the Public Sector of Malaysia
Asia-Pacific Management Accounting Journal, 2018
Ensuring accountability in the public sector is a very crucial issue as it could lead to failures in governance, fraud, inefficacy, corruption as well as weak financial management. This study evaluated the state of present accountability practices among public sector employees from various Malaysian service schemes. Primary data were collected, using a questionnaire survey approach with 194 heads of departments in the Malaysian federal ministries. Data was collected in accordance with the perspective of 12 factors in accountability practices, using a five-point Likert scale. Factor analysis and descriptive statistics were utilized for data analysis. In addition, data reliability was checked by Cronbach’s alpha test; data normality was examined by Skewness and Kurtosis tests, and data validity was tested by using Kaiser-Meyer Olkin test and Barlett’s test. The findings show that 94.9% of the participants reported that they practised accountability within their departments. Nevertheless, the priority for these accountability factors varied according to the service schemes. In general, the perceived accountability practice was the highest within the group of the administrative scheme and the lowest among the employees under the accounting scheme. Moreover, the perceived accountability practice of the audit scheme was below the general average level. This findings of the study would help policy makers to take necessary steps to improve the practices of accountability in the public sector for creating a more dependable and efficient public sector in Malaysia.
Does Audit Quality Matters in Malaysian Public Sector Auditing?
International Journal of Financial Research
Auditors play a key role in contributing to the credibility of the financial statements on which they are reporting. High-quality audits support financial stability. The responsibility for performing quality audits of financial statements rests with the auditors. However, audit quality is best achieved in an environment where there is support from and appropriate interactions among participants in the financial reporting supply chain. Most prior studies look into audit quality from the perspective of private sector however this study focus on the quality of public sector auditing in Malaysia. There are three independent variables being investigated in this study that are the auditor’s independence, auditor’s competency and auditor’s workload. Data were collected through the distribution of questionnaires to 114 samples of auditors involved in public sector audit in Malaysia. The data were analysed using correlation test and regression test. The findings of this study show that there...