Académique Documents
Professionnel Documents
Culture Documents
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Preface 3
Part I - Certification Of The Federal Government’s Financial Statement 6
For The Year Ended 31 December 2008
Part II - Financial Management Of The Federal Government 6
Preface 11
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MINISTRY OF RURAL AND REGIONAL DEVELOPMENT
- Management Of Infodesa Programme 18
MINISTRY OF WORKS
- Construction Of The Federal Government Administrative 19
Centre, Muadzam Shah, Kedah
Public Works Department Sabah
- Construction Of Sapulut - Kalabakan Road, Sabah 20
MINISTRY OF TRANSPORT
- Electrified Double Track Project Between Rawang And Ipoh 20
MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION
- Management Of Human Capital Development Programme In 21
Science, Technology And Innovation
MINISTRY OF FEDERAL TERRITORY
City Hall Kuala Lumpur
- Enforcement Of Trading Activities, The Department Of Safety 22
And Enforcement
MINISTRY OF EDUCATION MALAYSIA
- Maintenance Of School Buildings 23
- Project To Supply Clean Water To Rural Schools In Sabah 24
MINISTRY OF HEALTH MALAYSIA
- Construction Of Pekan Hospital, Pahang 24
- Management Of Prevention And Control Of Dengue Fever 25
- Management Of Harm Reduction Programme 26
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Royal Malaysian Police
- Management Of Red Light Surveillance Camera System And 32
The Issuance Of Summons
VARIOUS MINISTRIES AND DEPARTMENTS
- Management Of Emolument For Civil Servants 33
iii
SYNOPSIS
1. Article 106 and 107 of the Federal Constitution and Audit Act 1957 require the
Auditor General to audit the Federal Government’s Financial Statement, financial
management as well as its activities and submit his Reports to the King and obtain his
consent before tabling the Audit Reports in Parliament. To fulfil these responsibilities,
the National Audit Department needs to carry out 3 types of audits as follows:
2. Similar to the year 2007, audit findings on the Federal Government’s Financial
Statement and financial management are reported separately from the audit findings on
the activities of the Federal Ministries/Departments as well as management of
Government companies. This separation allows easy reference and to ensure a greater
impact on the issues raised as each has a different scope of objective and management
technique. My Report on the Federal Government’s Financial Statement and financial
management for the year 2008 includes the followings:
3. The audit on the Federal Government’s Financial Statement for the year ended 31
December 2008 revealed that the Statement generally reflects a true and fair view on
the financial position of the Federal Government, operational outputs and cash flow for
the year concerned as well as accounting records were maintained properly and
updated accordingly. As for the financial management of the Federal Government,
3
auditing revealed the non-compliance of various financial regulations. Several
weaknesses due to insufficient manpower, lack of training in financial management,
inadequate supervision and lax of monitoring continue to occur.
4. All matters reported had been brought to the attention of the respective Controlling
Officers/Heads of Department for confirmation. The National Audit Department has
taken various measures to assist the Federal Ministries/Departments in rectifying the
weaknesses in financial management. Among the measures taken were as follows:
4.1. Implementing the star rating system based on the Accountability Index.
Through this system, marks will be given for compliance of regulations of 6 main
elements in financial management. The 6 elements are management control,
budgetary control, revenue control, expenditure control, management of trust funds
and deposits as well as management of assets and stores. The Federal
Ministries/Departments rated as excellent can become a role model to others. This
would motivate Federal Ministries/Departments to diligently improve to enhance their
financial management.
4.2. Published the book “Excellent Financial Management From The Perspective
Of The National Audit Department”. This is one of the proactive steps introduced to
enhance Government’s financial management. Therefore, it is hoped that the Heads
of Department/Agency will be guided by examples of common weaknesses
identified during the course of audit in order to achieve an excellent rating under the
Accountability Index System. It is also hoped that the book will be used as a
reference in Government training institutes and public institutions of higher learning.
4.4. The Agency Adoption Programme was introduced in 2003. Under this
programme, selected offices with weaknesses in financial management were given
continuous guidance and advice to assist them in rectifying weaknesses especially
with regard to the maintenance of accounting records. In 2008, this programme was
implemented in 5 Government offices. Generally, financial management at the
selected offices have improved and showed significant positive results.
4
management as promotion of Heads of Department would only be considered by the
Public Services Department after the National Audit Department had confirmed that
the officers had taken corrective actions on the weaknesses on financial
management.
4.6. Officers from the National Audit Department have participated in discussions
on the development of computerised systems at various Federal
Ministries/Departments to ensure internal controls were adequate to safeguard the
integrity of data and reliability of the systems. It is felt that such involvement is
necessary as huge expenditure has been spent in developing computerised
systems. Thus, it is appropriate that these systems should be implemented properly
to meet the desired objectives.
Putrajaya
17 June 2009
5
SYNOPSIS
1. The Federal Government’s Financial Statement for the year ended 31 December
2008 as a whole reflected a true and fair view of the financial position of the Federal
Government and the accounting records were also properly maintained and kept up-to-
date.
2. For the year 2008, the Government had approved RM152.01 billion for operating
expenditure in the government sector. However, a total of RM153.50 billion was spent
during the year whereby exceeding approved allocation amounting to RM1.49 billion.
Nine Ministries had spent more than the approved allocation for emolument, services
and supplies, acquisition of capital assets, subsidies and fixed charges. Whereas a total
of RM42.85 billion (91.2%) was spent out of RM46.98 billion as approved under the
development allocation for the implementation of 1,111 projects. The Government had
received revenue totalling RM159.79 billion as compared to RM139.89 billion for the
year 2007. There were 56 Federal Ministries/Departments with arrears of revenue
totalling RM23.19 billion for the year 2008 as compared to RM14.08 billion for the year
2007. The significant increase was due to the requirement in the Treasury Circular No. 3
Year 2008 which was issued in the beginning of the year 2008 by the Ministry of
Finance whereby all outstanding loan and other debts should be considered as
Receivable Account.
3. The National Audit Department had carried out audits in 27 Federal Ministries
and 33 Departments in the year 2008 in order to ascertain whether financial
management at these Ministries and Departments were being managed according to
established laws and financial regulations. The result of the audit showed that some of
the Federal Ministries and Departments were not serious to improve their performance
in financial management even though such weaknesses had been repeatedly reported
and brought up to their attention by the National Audit Department. As an effort to
motivate the Federal Ministries and Departments to further improve and strengthen their
performance in financial management, the National Audit Department has introduced
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the Accountability Index for financial management. Federal Ministries and Departments
rated as excellent can become a role model to others. From the assessments carried
out, the financial management performance of 4 Ministries and 2 Departments were
rated as excellent; 20 Ministries and 10 Departments as good and the remaining 3
Ministries and 10 Departments as satisfactory. Besides that, the Headquarters and 14
state branches of the Royal Malaysian Customs Department as well as 11 Malaysian
Representative Offices abroad under the Ministry of Foreign Affairs were also audited.
5. Besides conducting mandatory audits as provided under the laws, the National
Audit Department also implements the Adoption Programme and special evaluations on
the financial management performance of Premier Grade Officers from various
Ministries/Departments/Agencies. In 2008, the National Audit Department had carried
out the Adoption Programme at 5 Federal Department whereas from January 2008 to
May 2009, a total of 92 Premier Grade Officers had been evaluated.
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SYNOPSIS
1. Article 106 and 107 of the Federal Constitution and Audit Act 1957 require the
Auditor General to audit the Federal Government’s Financial Statement, financial
management as well as its activities and submit his Reports to the King and obtain his
consent before tabling the Audit Reports in Parliament. To fulfil these responsibilities,
the National Audit Department needs to carry out 3 types of audits as follows:
3. Section 6(d) Audit Act 1957 requires the Auditor General to conduct audits to
ascertain whether Government activities have been managed efficiently, economically
and in accordance with the objectives of these activities. The audits were conducted on
various activities among others, project constructions, maintenance works, law
enforcements, procurements, asset management, taxations as well as social economy
enhancement programmes. This Report contains matters observed from the audits on
32 activities/projects undertaken by various Ministries/Departments/Government
companies. Generally, the Ministries/Departments/Government companies have
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planned well for the implementation of these activities/projects. However there were
several weaknesses in the execution of these activities/projects due to shortage of
manpower and expertise, insufficient funds, lack of close supervision and ineffective
monitoring.
4. As in previous years, auditing had also been carried out on companies which
Government owned more than 50% equity. This is to ascertain whether the respective
company have carried out its activities effectively, prudently and in accordance with its
established objectives. This Report comprises the analysis of financial performance of
48 Government companies based on their Financial Statements for the year 2007 and
matters observed from the audits on the management of activities carried out by 6
Government companies. Audit analysis revealed that 27 of these companies reported a
profit before tax amounting to RM78 billion for the year 2007 whereas 21 companies
had incurred losses totalling RM0.87 billion. However, only 14 out of the 27 profitable
companies paid dividends totalling RM72.21 billion to the Government and taxes
amounting to RM24.37 billion were collected from 30 companies. Generally, the audit
on the management of activities by the companies revealed that the activities were well
planned. However, there were several weaknesses in the execution of these activities
that needs to be rectified especially those related to internal controls on financial
management.
Putrajaya
17 June 2009
12
SYNOPSIS
• Ensure work processes involving civil and criminal cases are completed by
SLAO within the time frame as stipulated in the High Court Rules 1980,
Subordinate Court Rules 1980 and Limitation Act 1953. As for work processes
without a stipulated time frame, the Attorney General’s Chambers should
determine the time frame and ensure all SLAO complies with it.
MINISTRY OF FINANCE
- Public Infrastructure Maintenance Programme, Basic Infrastructure
Programme And Parliamentary Constituency Rural Development Projects
From 2005 to November 2008, a total of 92,687 projects under the Public Infrastructure
Maintenance Programme, Basic Infrastructure Programme and Parliamentary
Constituency Rural Development Projects involving RM4.59 billions were implemented.
Generally, the audit revealed that certain programmes/projects were not satisfactorily
implemented such as delays in project completion, work done not in accordance with
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the original scope of works, increased project cost due to the inclusion of procurements
of equipment and asset in the scope of works, unutilised facilities upon completion,
improper payment made for works not done and shortages of officers in project
supervision. To ensure the objectives of these programmes/projects are achieved and
Government gets value for money, it is recommended that the Federal Treasury,
Implementation and Coordination Unit (ICU) in the Prime Minister's Department and
State Development Offices (SDO)/District Offices consider the following matters:
• The Letter of Offer should clearly state the date of commencement and
completion of works and also the provisions relating to penalties for delays so
that SDO/District Offices can initiate action against contractors who failed to
execute their works accordingly.
• ICU should ensure each and every project is implemented as planned and
utilised optimally to avoid wastage of public funds.
• The SDO of the Federal Territory of Kuala Lumpur should investigate improper
payments and if there are any irregularities, appropriate actions must be taken
against those involved.
• The Federal Treasury should review the post of technicians and assistant
technicians emplaced at each SDO by taking into account the present workload.
SDO should then ensure specific trainings to be given to enable them to carry
out their duties efficiently and effectively.
MINISTRY OF FINANCE
Inland Revenue Board
- Management Of Individual Tax Assessment For Salaried Income Under Self
Assessment System
The Self Assessment System is based on ‘Assess, Pay and File’ concept where a
taxpayer is required to make his/her own assessment/tax computation by referring to
guidelines/regulations issued, make payment and submit Income Tax Form (BE Form)
to Inland Revenue Board (IRB). Generally, the audit revealed that the Self Assessment
System for salaried income is useful as it reduces the workload of IRB officers. However,
there were some weaknesses in its implementation that could cause non/under
collection of income tax. Among the weaknesses were BE Forms could not be sent to
taxpayers, non/late submission of BE Forms by taxpayers and no penalties imposed,
mistakes/inaccurate information in BE Forms as well as Tax Deduction Schedules were
not prepared by employers and notices not issued by IRB to employers to deduct
employees salary with tax arrears. The IRB must immediately solve the problems
regarding BE Forms as it can affect the collection of Government revenue. As such, IRB
is advised to take the following actions:
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• For cases to be audited by the Desk Audit Unit (Salaried Income), all supporting
documents must be obtained from taxpayers and filed accordingly.
MINISTRY OF FINANCE
Inland Revenue Board
- Management Of Refunds For Overpaid Income Tax
In accordance with Section 111 Income Tax Act 1967, the Inland Revenue Board (IRB)
is responsible to refund overpaid income tax to taxpayers. Auditing on samples of
refund of overpaid income tax involving RM648.70 million revealed that majority of the
refunds were delayed between 10 days to 2 years for manual cases and up to a year for
e-Filing cases. Among the reasons for the delay were due to the implementation by
stages of the Self Assessment System, incomplete/doubtful information/document
submitted by taxpayers and the incapability of IRB to solve this problem as responsible
officers were required to manage other assignments. In addition, some of the overpaid
income taxes were not refunded correctly resulting in losses to the Government. As the
collection of income tax is of uttermost importance to Government revenue, it is
recommended that IRB considers and takes immediate actions on the following matters:
• To enhance its delivery system, the IRD should comply with the time frame for
repayment of overpaid income taxes as stipulated in the Client Charter.
• The Client Charter on repayment of overpaid income taxes should be clearly and
specifically stated. In relation to this, taxpayers need to be informed of their
responsibility in ensuring the correctness of income tax assessment information
for all the relevant years of assessment, the original dividend vouchers attached
are complete, overpaid income tax for the concerned assessment year to be
offsetted with the income tax due from other years of assessment, outstanding
real property gains tax and debts due to Government for companies if the
Compared Total exceeds the Compared Aggregate for purpose of dividend
payment.
• Simplify the tax payment codes through discussion with the Federal Treasury.
This is important to prevent taxpayers from filling the wrong transaction code due
to the confusion over the numerous existing codes which have resulted in
payment transactions been recorded in the unrelated assessment year.
15
• Review the manpower requirement in every Collection Branch/Unit by taking into
consideration the existing workload.
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compatible with the heavy workload and to reduce classification and valuation
errors of imported goods. In addition, approved posts should be filled
immediately.
• Carry out surprise checks and enforce disciplinary action to ensure proper
management of declaration forms and to prevent any infringement.
• Ensure the integrity of data in the Customs Information System and the system
is able to interface with the Gate Control System to substantiate payment of
import duties/taxes. For cases whereby Gate Control System does not work, the
Customs Officers stationed at check points should inspect documents and goods
physically.
• Prepare annual training programme to ensure each and every officer attends
course/training for at least 7 days a year as stipulated under Service Circular No.
6 of 2005 in order to increase his/her skill and efficiency especially related to
their line of work.
As at December 2008, the Government has incurred a total of RM182.93 million to carry
out the Infrastructure Development Programme For Crop Diversification. Generally, the
implementation and monitoring of constructing agricultural infrastructure were
satisfactory whereby 92.5% of the projects were implemented as planned. However,
there were weaknesses in maintaining the completed infrastructure and implementation
of agricultural activities. To ensure continuous benefit on the implementation of this
programme, it is recommended that the Ministry consider the following matters:
• Take immediate action to complete the abandoned project in order to benefit the
project participants as planned.
• Prepare a periodical maintenance plan and provide sufficient allocation for such
maintenance.
• Ensure areas chosen are suitable before approving a project so that agricultural
activities can be carried out throughout the year.
• Apart from close monitoring and continuous guidance, prepare a strategic plan
to assist farmers to market their crops as this is crucial in encouraging them to
actively cultivate the crops.
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MINISTRY OF AGRICULTURE AND AGRO-BASED INDUSTRY
- Construction Of Tanjung Manis Integrated Deep Sea Fishing Port, Mukah,
Sarawak
The construction of Tanjung Manis Integrated Deep Sea Fishing Port, Mukah, Sarawak
was implemented at a cost of RM313.62 million. The audit revealed several
weaknesses such as project delay, unsatisfactory work quality and some basic facilities
were not constructed or completed. Thus the main objective of the project could not be
completely achieved. To overcome these weaknesses and also to prevent the
recurrence of the same weaknesses in other projects, it is recommended that the
Ministry of Agriculture and Agro-based Industry, the Ministry of Finance, Public Works
Department and Fisheries Development Authority of Malaysia consider the following
matters:
• The contractor should not be allowed to postpone any repair works until the
completion of phase 3 of the project as damages/defects can become more
serious if immediate remedial actions are not taken.
• For a fast track project implemented by design and build concept and approval
by the Ministry of Finance on a multi-phase contract price, the Ministry of
Finance should approve the contract price for each phase in sequence to the
implementation stages as suggested by the Ministry/Department concerned.
This is vital to prevent disruption of the implementation of the project.
• The Ministry of Finance should approve sufficient allocation to complete all basic
facilities/components of the project to ensure a fully functional Integrated Deep
Sea Fishing Port and thus ensure the achievement of its objective.
• As this is a costly programme that has been implemented since the Eighth
Malaysia Plan, the Ministry should create a permanent post for MID managers to
facilitate the appointment process and ensure the MID managers’ commitment.
• Ensure that each MID establishes a Management Board to assist in its functions.
As District Officers are too busy to chair the board meeting, a representative
from the District Office could be appointed as chairman.
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• Close monitoring of projects to ensure they are implemented within the
stipulated time frame. In this regard, the implementing agency should submit
monthly progress report and to clarify if any delays were to occur.
• Ensure MID managers abide all financial rules and regulations on procurement
and management of assets. Related records and registers should be maintained
and updated regularly. The Ministry must also conduct regular spot checks on
MID to confirm compliance with the related rules and regulations. To ensure MID
managers perform their responsibility competently and effectively, management
training including financial management should be given.
• Increase the number of computer users in MID to ensure ICT equipments are
used optimally and to achieve the objective of bridging the digital divide between
urban and rural communities. For this purpose, the Ministry should increase
awareness among the local and neighbouring communities of the facilities
available in MID.
• Ensure all MID project sites are registered in the name of the Federal Land
Commissioner in order to continue its activities even if a change of the ruling
party of the state Government occurs.
MINISTRY OF WORKS
- Construction Of The Federal Government Administrative Centre, Muadzam
Shah, Kedah
As at 31 December 2008, 95% of the Federal Government Administrative Centre,
Muadzam Shah, Kedah project was completed and a total of RM243.53 million was
spent. The audit revealed several weaknesses such as the appointment of the
contractor and project implementation method that caused project delay, unsatisfactory
contract management, delay/not occupying completed building and poor quality
construction works. This complex could have been utilised earlier if effective co-
ordination between the Prime Minister’s Department, Public Works Department (PWD)
and other involved agencies exist and efficient consultants were appointed. To
overcome these problems, it is recommended that PWD as the Project Superintending
Officer and user departments/agencies consider the following matters:
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• User requirements should be considered during the design stage to prevent a
completed building being left unoccupied for not fulfilling their needs and
additional cost for renovations.
• Ensure the contractor repairs damaged road and drains as well as slope failures
to prevent the situation from getting worst until the whole road gets damaged
before the expiry of the Defects Liability Period and thus putting road users' lives
at risk.
• Enhance monitoring to ensure the contractor carries out quality maintenance
according to schedule and stipulated terms and conditions of the contract.
• Apply sufficient allocation under the Tenth Malaysia Plan to pave the road.
• Ensure adequate soil investigations are carried out by responsible parties for
future road construction projects so that a suitable design can be prepared
before commencement of the project.
MINISTRY OF TRANSPORT
- Electrified Double Track Project Between Rawang And Ipoh
The Electrified Double Track Project Between Rawang And Ipoh was implemented at a
cost of RM5.77 billion through 2 packages namely the Infrastructure Package and
System Package. The main contractor for the Infrastructure Package is DRB-Hicom
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Berhad (DRB-Hicom) while Mitsui-MTS Konsortium (Mitsui) is the contractor for the
System Package. The audit revealed the objective of the project was not fully achieved
due to several weaknesses such as delay in project completion that resulted in an
estimated cost overrun of RM1.43 billion, procurement of excess equipments and non-
coordination of train procurement with infrastructure development. In addition, there is a
possibility of the Government bearing part of the losses estimated at RM1.14 billion.
This is due to a maximum liability of RM257.99 million that could be claimed from the
contractor as stipulated in terms and conditions of the contract between DRB-Hicom
(original contractor) and the Government. To ensure Government gets value for money
and also to prevent the recurrence of the same weaknesses in other projects, it is
recommended that the Ministry of Transport (Ministry), Keretapi Tanah Melayu Berhad
(KTMB) and related central agencies consider the following matters:
• Five sets of Automatic Fare Collection System which are still kept in the store
should be distributed to commuter stations that require them to avoid wastage.
• The Ministry/KTMB should ensure all defects are rectified by contractors during
the Defects Liability Period so that the Government will not incur additional cost
for repairs.
• Procurements of related equipments and facilities should be synchronized with
the infrastructure and system development. In this regard, equipments and
facilities should be procured when the progress of construction work achieved
80% so that the infrastructure could be fully utilised upon completion.
• As stipulated in terms and conditions of the contract, the Ministry should report
to the Ministry of Finance to terminate the service of the project manager who
failed to perform.
• Central Agencies should allocate sufficient funds to procure equipments/facilities
that are components of the project to enable a completed project to function
according to plan.
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• Intensify publicity of the Human Capital Development Programme especially
among students/lecturers of institutions of higher learning and also officers of
Ministry/agencies involved in the field of science and technology.
• Ensure all important elements are included in the contract such as the
requirement for all recipients to submit examination results/research progress
reports and to present oneself after the end of the study/research. In addition,
monitoring should also be carried out by the Ministry to ensure that the above
terms and conditions are fully complied with and to impose penalties on those
who fail to comply.
• Evaluate the Human Capital Development Programme to ascertain whether the
programme has achieved its intended objective and consequently take remedial
actions on any weaknesses that could affect the achievement of its objective.
• Ensure the Enforcement Action Report is prepared in consistent with the related
Yearly Performance Target to enable evaluations be carried out on the
performance of the enforcement activities by the Department of Safety and
Enforcement.
• The Work Procedure Manual and the Client Charter for enforcement of trading
activities need to be concise and clear. As such, City Hall needs to determine
the time frame for carrying out follow-up action after issuance of Notice of
Offence/informing verbally to the petty traders to remove the chairs and tables
that caused obstruction. In addition, the time frame for managing the public
complaints as stated in the Work Procedure Manual and the Client Charter
should be standardized. City Hall also needs to maintain a comprehensive and
up-to-date Record of Complaints for the purpose of monitoring and enhancing its
efficiency on delivery system.
22
• Reduce time frame for claiming back confiscated goods from 3 months to 1
month to enable earlier action to write-off the confiscated goods and thus
overcome the problem of storage congestion and further depreciation of its value.
• Prepare a clear and measurable scope for maintenance/repair works for easy
reference by contractors and officers who supervise the related works.
• Take appropriate actions against those who were proven to have certified works
as completed which actually has not been completed or not done at all as this is
an improper payment. If the certification was done by a public officer, disciplinary
action or surcharge must be imposed. If this involved a consultant, the company
concerned should be blacklisted and the offence reported to the relevant
professional bodies for further action.
23
• Restructure the various divisions responsible for maintenance of school
buildings by placing them under one unit to ensure maintenance/repair works
could be planned and managed efficiently and effectively.
• SPT should closely monitor the work carried out by contractors and ensure
periodical maintenance of the pipe water system is carried out. In this regard, the
school authorities, the Ministry, SPT and the contractors should coordinate by
having regular meetings to discuss and overcome maintenance problems of this
project.
• The Ministry should allocate funds for maintenance of the project after the expiry
of the Defects Liability Period for its continuous benefits.
• SPT should ensure school authorities obtain approval before modification works
are carried out so that the said modification would not affect the function of the
water tank.
• SPT should determine total penalties that could be imposed on contractors and
ensure that they settle the amount concerned.
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even though certain portion of the works had not been completed and equipments not
fully supplied by the contractor, delays in project completion resulting in cost overrun,
unsuitable/poor quality construction works and equipments/facilities not been used
optimally. To rectify the weaknesses, the Ministry of Health (Ministry) and the Public
Works Department (PWD) need to consider the following matters:
• PWD should not issue CPC before completion of project and all equipments are
supplied by contractor.
• The Ministry should ensure the 2 years warranty period for equipments received
after the issuance of CPC is set from the actual date of equipments received and
not from 31 January 2009.
• The Ministry should claim penalty from the supplier for the late supply of 2 units
of ambulance immediately.
• The Ministry should maintain an Asset Register to record all assets procured.
• The Ministry should enhance the monitoring process to ensure quality works are
completed according to schedule.
25
• Create specific posts and special units at the Ministry, State Health Departments
and District Health Offices to prevent and control dengue fever as incidence and
mortality rate of dengue fever kept on increasing yearly. With the creation of
such unit, the Ministry should consider taking over this activity from local
authorities to ensure proper and comprehensive planning and implementation.
• Use of the Vector Detection Index to ensure detection of infection risk level/
dengue epidemic is implemented at all districts. In addition, the prevention and
control of Aedes mosquitoes should be implemented at all identified high risk
localities.
• Create a mechanism to overcome problems that has contributed to the delay in
sending notices of dengue fever cases. Early notification is essential to ensure
the inspection of premises and fogging to be done as soon as possible in the
affected areas to prevent an epidemic from happening.
• Ensure inspections are carried out according to plan as the inspection of
premises to detect the reproduction of Aedes mosquitoes is one of the important
controls to reduce the incidence of dengue fever.
• Ensure follow-up inspections are carried out on premises which were not
inspected during the previous visit so that the potential reproduction habitat for
Aedes mosquitoes are identified and early eradication carried out. For this
purpose, the Ministry should intensify the awareness campaign regarding the
importance of public’s cooperation in making the prevention and control of
dengue fever a success. In relation to this, involvement by public groups such as
community societies, youth clubs, non-governmental organisations and voluntary
groups should also be encouraged.
• Ensure serology tests carried out are recorded properly. This test is to establish
whether an individual has been infected with dengue fever so that treatment can
be given and affected premises and localities be identified earlier to prevent the
epidemic.
• Determine a reasonable time frame and ensure it is complied with to prevent any
delay in the issuance of compound notices which will affect enforcement’s
effectiveness. In addition, action should be taken on all unsettled compound
cases by referring to the Deputy Public Prosecutor.
• Distribute unused equipments to other District Health Offices that require them to
prevent obsolescence and wastage. Besides that, a plan to increase the number
of transportation vehicles should be prepared.
26
revealed that this programme has helped in reducing the addiction level, minimize risky
lifestyle behaviors and improve the quality of an addict’s life. However there were
several weaknesses that need to be rectified such as the number of addicts treated did
not reach the targeted goals due to either lack of medical personnel or required basic
facilities, improper procurement of methadone that resulted in Government incurring
losses, improper records of needles in hand and ineffective monitoring on the
performance of the programme. In this regard, it is recommended that the Ministry
considers the following matters:
• Create special posts and ensure the availability of sufficient basic facilities in all
hospitals or health clinics that are involved in this programme as the
effectiveness of the Methadone Replacement Therapy requires the involvement
of health personnel on a full time basis and sufficient basic facilities.
• Ensure financial aid is provided to the Malaysian AIDS Council and other
responsible non-governmental organisations under the Needle and Syringe
Exchange Activity before such activity commences.
• Enhance the Needle and Syringe Exchange Activity by increasing the coverage
areas through the Outreach activity as this programme is able to create
awareness among the addicts on the risk of HIV infections through sharing
needles. Besides this, co-operation with the police and locals must be improved.
• Impose penalties on suppliers who do not comply with the terms and conditions
of contract for supplying methadone. In future, the Ministry should immediately
inform and submit a copy of the agreement to hospitals to prevent purchases of
methadone outside contract at a higher cost.
• Ensure all parties involved in the procurement, recording and storage of needles
comply with relevant regulations.
27
benefits could not be enjoyed by the public fully. Besides that, compliance to the LP was
not closely monitored. In this regard, it is recommended that the Town and Village
Planning Department, State and Local Authorities who are directly involved in the
preparation/usage of the LP consider the following matters:
28
• Monitor the performance of suppliers of books and ensure they comply with the
terms and conditions of contract and impose penalties if they fail to do so. A
mechanism should be created to enable rural libraries to procure the latest
magazines.
• Synchronize procurement of books and library accessories with completion date
of construction/renovations of rural libraries to ensure they could operate and
benefit the public upon completion.
a. The Ministry of Information (Ministry) had spent not less than RM40 million for the
procurement of External Broadcasting Van with Broadcasting System and Digital
Radio Production in order to increase broadcasting coverage of Radio Television
Malaysia (RTM). However, there were several weaknesses in the said procurement
such as delays in the supply of the specific van/equipments, contract conditions not
complied with and improper payments. To ensure the objectives of the procurement
are achieved and the Government gets value for money, it is recommended that the
Ministry considers the following matters:
• Ensure the contractor supplies the External Broadcasting Van and Broadcasting
Equipments that have yet to be delivered. In relation to this, the Ministry should
ensure the contractor renews the Performance Bond which had expired on 3rd
March 2009 and renews the warranty for the undelivered van and equipments.
• For the case where payment has been made for unsupplied equipments,
investigation should be carried out to identify the responsible parties and if found
guilty, surcharge must be taken against them.
• RTM should inform their stations that received the equipments on its warranty
and manufacturer’s guarantee in order to benefit from these facilities.
• Contracts must be signed within 4 months from the date of issuance of the Letter
of Acceptance.
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• Ensure the Performance Bond is valid until all repairs on defects are completed
by the contractor to prevent the Government from bearing the cost of repairs.
• Carry out detailed planning of the procurement and obtain views from lecturers/
trainers to ensure only compatible and required equipments are procured.
• Review the rate of penalty imposed on suppliers for delays in the supply of
equipments as the present rate is too low.
• Determine time frame for every relevant work process in the maintenance/
repairs of equipments and ensure that the time allocated is complied with to
prevent delays in maintenance/repairs. In addition, the Ministry should take
action on suppliers who delay maintenance/repairs by imposing a penalty or
confiscate the Performance Bond.
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equipments not used optimally due to oversupply/not required/not suitable equipments,
delays in supply, payments made though equipments has not been tested/
commissioned, equipments kept at an unsuitable/unsafe location as well as asset
records not maintained properly nor updated. In this regard, it is recommended that the
Ministry considers the following matters:
• Obtain views from relevant lecturers to ensure equipments procured are suitable
for the courses. For cases where suppliers failed to deliver, the Ministry should
take immediate actions to acquire unsupplied equipments by appointing new
suppliers. Whereas for the oversupplied equipments, it should be distributed to
other community colleges which require the said equipments.
• Take action to ensure that all remaining equipments that have not been received
by the relevant community colleges are delivered by suppliers immediately.
• The relevant community colleges should urgently apply for funds from the
Ministry to improve its security. Community colleges should also be perceptive
regarding the suitable placement of the equipments and to immediately obtain
certification from the Department of Occupational Safety and Health Malaysia for
specific equipments that require such certification.
• Maintain proper and up-to-date asset records for easy reference. Such records
should also be regularly checked by responsible officers and used for the
purpose of physical verification.
• Carry out investigation to determine all payments were vouched with supporting
documents. If misappropriation of funds occurs, disciplinary action or surcharge
must be taken against the responsible parties.
• Training should be given to officers involved in the procurement of equipments
and the maintenance of the asset records especially for officers of the
community colleges.
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• Prepare a comprehensive manual on managing this complex that includes all
aspects of managing a common user building such as financial requirement,
usage of areas/facilities and the security of the building.
• As a short term solution, renovate and modify all underutilised areas such as
Day Nursery, Library, Sports and Recreation Room to be converted into work
areas for departments facing critical shortage in office space. For long term
measure, the Ministry should plan to relocate certain departments that do not
deal with the public in different buildings/locations as the surrounding areas of
the complex are limited.
• The Ministry and management of the complex should take immediate action to
increase its level of security to ensure the safety of assets and users.
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• Ensure fully functional system/equipments are installed at suitable locations. For
this purpose, continuous supervision must be carried out to ensure maintenance
of the system/equipments are done according to schedule and breakdowns
repaired immediately. Besides this, the Ministry/RMP should co-operate with the
relevant local authorities to ensure construction/road widening/development
activities do not affect the effectiveness of the system.
• Designate police personnel to manage the system and train them to operate the
system especially in film handling to ensure there are no faulty recordings which
will jeopardise the issuance of summons.
• Determine a time frame for each process from the date of offence until the
issuance of summons to ensure there is no delay in issuing summons to
offenders.
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• The Accountant General's Department Malaysia should expedite interfacing of
the Government Financial And Management Accounting System (GFMAS) and
Human Resource Management Information System (HRMIS). Heads of
department should ensure all required information is updated in HRMIS and its
accuracy verified.
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• The Board and management should monitor and supervise closely the
performance of borrowers and carry out post mortem review on all NPLs in
accordance to the policies of EXIM Bank. This is to ensure NPLs do not
continue to increase. In addition, loan performance status should be made a
compulsory agenda and to be presented/discussed at every Board’s meeting.
• The Board should ensure that Prasarana has the mechanism to monitor the
status of assets being used by its operator to ensure that assets are properly
maintained and not exposed to the risk of being lost and misused.
• The management should re-examine the role of RapidKL as the bus and Light
Rail Transit operator as well as to determine alternative propositions as a long
term plan. This is due to the increasing critical financial position of Prasarana to
bear the cost of maintenance of buses and rails amounting to RM10.50 million
which should have been borne by RapidKL.
• The Board should ensure that Prasarana’s subsidiaries comply with Government
circulars as the Government does have interest in these subsidiaries. The
Board should also closely monitor the performance of such subsidiaries to
ensure that they operate efficiently and in consistence with their objectives. For
dormant subsidiaries, the Board should determine a suitable business plan and if
these subsidiaries are not required any more, then steps should be taken to wind
them up.
• The Ministry of Finance should closely monitor Prasarana to ensure its finance is
being managed efficiently and prudently in order to improve its cash flow and
consequently being able to redeem its issued bonds.
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• The Ministry of Finance should state clearly the requirement of Prasarana to
abide to the conditions of procurement through direct negotiation as stated in its
approval letter. In addition, the Ministry of Finance should forbid its officers from
approving any procurement relating to a company if he/she is a member of the
Board of that company. This is to avoid any conflict of interest.
JKP Sdn. Bhd. (JKP) is wholly owned by the Government with a paid up capital of
RM10.25 million. The main objective of JKP is to execute socio-economic projects that
have been identified by the Penang Bumiputera Development Committee to protect
bumiputera interest so that they will not be left out from the fast economic development
of the state. The audit revealed that bumiputera participation in JKP development
projects had achieved the target of at least 70%. However there were several
weaknesses in the management of its main activities such as delays in projects, no
contract signed between JKP and project consultants or rental collection agents or
business premise tenants as well as rental and maintenance charges were not collected
accordingly resulting in high rental arrears. In addition, JKP also did not comply with
certain regulations issued by the Ministry of Finance on financial management. For
example, JKP did not pay any dividend to the Government even though it had recorded
net profit for the year 2005 and 2006. In this regard, the Board of Directors and the
management of JKP as well as the Ministry of Finance should consider the following
matters:
• To safeguard JKP’s interest, the Board should ensure contracts with consultants,
rental collection agents and business premise tenants are signed so that
enforcement could be taken against those who fail to fulfil their obligations. In
addition, the Board should also ensure all construction contracts have provisions
for penalties on delays or failure to complete projects.
• The management should ensure contractors rectify all defects before the expiry
of the Defects Liability Period as this can tarnish the image of JKP as a property
developer.
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• The management should ensure all contractors adhere to safety procedures at
project sites as required by the Occupational Safety and Health Act 1994.
• The Board should monitor the performance of the Audit Committee to ensure its
effectiveness.
• The Ministry of Finance should ensure JKP adheres to the requirement of the
Companies Act 1965 and all circulars issued for a systematic and prudent
financial management. In addition, JKP should update its financial management
procedures and ensure total compliance.
• The Ministry of Finance should ensure that the management prepares its
corporate plan, key performance indicators and implementation strategies in its
efforts to achieve the mission and vision of the company and safeguard
Government’s interest as the shareholder of the company.
• The Board should closely monitor the performance of the company nominated to
manage capital funds to ensure each investment is managed properly and gives
optimum returns. A comprehensive standard operating procedures regarding
investment should be prepared and complied with by all relevant parties.
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• The Board should ensure the Audit Committee and Internal Audit Unit are
formed/appointed to carry out internal checks to ensure proper financial
management.
• The Ministry of Finance should review the status of KMP in respect of its capital
capability so that it could improve investment initiative and transfer of technology
to Malaysia.
• As the Government has incurred not less than RM208.30 million (excluding the
cost of renovations) to build 19 Seri Malaysia hotels, the management should
ensure the ownership of relevant hotel lands are immediately transferred to the
Federal Government to safeguard Government’s interest.
• The management should pursue with the hotel management company of Hotel
Seri Malaysia franchise system for information not available from the
Management Operation Review Report in order to facilitate the evaluation of the
performance of hotel operators.
• As Seri Malaysia Hotel, Kuala Terengganu has been chosen as the flagship of
the hotel chain, the management should ensure its operations including financial
management achieve targeted standards consistently.
• The management should ensure the guidelines on the management of funds are
reviewed and updated. The Board should monitor regularly the management of
funds to ensure its usage is proper and transparent as well as in accordance
with its objectives.
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• To achieve the Government’s objective in setting up the Hotel Seri Malaysia
franchise system, the Board/management, the hotel management company and
hotel operators should ensure their respective roles, functions and
responsibilities are implemented efficiently, effectively and in accordance with
terms and conditions of agreements.
• The Board should monitor the performance of the Audit Committee to ensure its
effectiveness especially on how to deal with weaknesses revealed by the
National Audit Department. In this regard, the management should fill up
immediately the approved posts in the Internal Audit Unit.
• The Ministry of Finance should ensure RHSM adheres to the requirement of the
Companies Act 1965 and all circulars issued for a systematic and prudent
financial management.
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