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©New Sunday Times (Used by permission)
by Aniza Damis and Tan Choe Choe

The Auditor-General’s latest report has once again caused a stir. Aniza Damis and Tan Choe Choe speak to the man himself, Tan Sri Ambrin Buang, on the preparation of the report and its impact

Q: Have you been sued before?

A: No, but there have been threats to sue. If they want to sue, I'll wait for the suit.

When we do our work, we don't have ulterior motives of wanting to defame anyone. I'm just looking at whether people have complied with procedures. If the rules or procedures say you must get certain types of licences and only these licences can be considered when making a decision, but the contract is subsequently given to a company which does not have the licence at the time the decision is made.

Q: Then it's an improper decision?

A: Yes. But whatever it is, when we sit down with the ministry and present our findings, if the ministry thinks that what we said is not accurate, then we expect them to tell us.

During the auditing process, there are opportunities for the auditee to respond to our queries, and sometimes take actions based on our observations. So, the audit report should be read in the context of the period or time it was prepared.

Q: So, by the time the report becomes public, actions may have been taken?

A: They know what we're going to write, the observations that may be critical of them. So it's up to them. And we expect them to take actions.

Q: If in the report you say a certain company doesn't have a licence, it may be that by the time the report comes out, that company may have already obtained the licence?

A: Yes. But the onus (to make corrections) is on the ministry. And unless they do so, based on the evidence provided to us, this is the conclusion we came up with.

Q: So, if actions have been taken by the time the report comes out but the report says these entities have failed to do something, what happens then? For instance, some companies have threatened to file defamation suits against you because they say you have tarnished their image.

A: If they've obtained the licence during the time we were auditing, then why not furnish the information to us? But if they obtained the licence after our audit, of course, it's a different story.

Q: If the report's contents no longer reflect the true picture, wouldn't that be unfair to companies?

A: I think I will look at it if they sue me. All the evidence we've gathered during the audit indicated that certain things were not proper.

Q: In the exit conference, when auditees have given their explanations, do you change your findings?

A: No, unless we think that it's no longer material to our conclusion. Sometimes we note that they have taken action on our observation.

You see, our main interest is that these people take action. When they say they'll take action, we have to monitor whether action is really taken. Last year, for instance, we included a section on whether actions were taken on findings of the previous year. This is how we give feedback.

Q: When auditees say they have taken note or they'll take action, do they really do so?

A: They do. For example, during the performance audit, I instructed my auditors to go back and see if there have been any changes.

Normally, this is something the Treasury is supposed to monitor, but we've started doing it this year.

Q: Have you or your staff ever had any interference in the course of your work? Has anyone ever tried to tell you what to do or not to do?

A: No.

Q: No one even tried?

A: Why should they?

Q: Well, there are always people who have their own interests to protect.

A: Even if they try, as far as I'm concerned, I don't think it will influence me. Because I respect the trust given to me.

Q: But as we have seen, even Anti-Corruption Agency officers can be charged for graft.

A: I cannot comment on the workings of other departments. But in terms of interference, I would say no. We decide what to do, and I supervise the work. And since I sign the report, I take responsibility for what's inside.

Q: Has anyone from your office ever been charged for graft?

A: Not that I know of.

Q: You have staff embedded in ministries, departments and agencies. Do you rotate them to maintain their neutrality?

A: Yes. That's my policy. The general guideline is five years. If it's a high-risk department, it's not good for them to stay too long, because they may become too familiar (with the auditees).

Q:How do you do your work without fear or favour?

A:I am expected to give a reality check to the government on what's happening. So, we have to do our job with honesty and sincerity, without any ulterior motives. When we keep these principles in mind, then there's nothing to fear or favour.

I take it as a public trust, enshrined in the Constitution as well as the Audit Act.

As you can see from what we've produced in the last few years since I became the auditor-general, there were many horror stories (of mismanagement of funds in the report). That's a reflection of the thoroughness of our work. We believe we have to deliver a true account of things to the government, with the belief that people will act on it.

We don't want the problems to be repeated. Most of the time, these weaknesses can be resolved.

With financial management, why are some organisations good and some weak?

To me, it's a reflection of the human factor within the organisation -- whether they've been diligent or competent. People make mistakes because they don't have enough competence. So, the solution is to train them.

Q: Is it difficult to do what you do?

A: No. My conscience is clear. So is the conscience of my people.

Q: You said that ministries, departments and agencies are audited annually. But in this report, you only audited 16 ministries.

A: When it comes to performance auditing, yes, we don't do all of them. The reason is that we have too many entities to audit, and only a limited number of people to do it.

Q: How do you decide who to audit?

A: When we choose, we decide on what type of audit to do. We have the same criteria that we use. We look into the overall estimated audit impact, their financial materiality, the risk to good management, the significance of the programme to the activities of the agency, the visibility of the programme or activities as reflected in political sensitivity and national importance, and whether there's been any written audit coverage and auditability.

Q: Given that the Youth and Sports Ministry was highlighted last year, why wasn't it audited this year?

A: All ministries are audited under attestation and compliance audits, including the Youth and Sports Ministry. Last year's report on purchases by the National Youth Skills Institute was a performance audit on one of the agencies of the ministry. In the compliance audit for that ministry that year, under the accountability index, the ministry was rated as satisfactory.

So, they have been audited for financial management. We did an attestation audit on them.

Q: But given the spectacular findings of the performance audit the year before, why was a performance audit not done again to see if there was anything else more spectacular?

A: Well, we might have skipped this year but next year we may go in again; no problem. And we can do a follow-up audit.

In any case, for that particular case, we know that some people have been dragged to court. So from our point of view, action has been taken.

Q: Do you have enough staff?

A: I'm very happy that recently we have been given the green light for another 500 workers, which we are in the process of recruiting.

Q: Is that enough?

A: For the time being, it's sufficient to enable us to carry out more performance audits.

Q: How many people do you have now?

A: Before the restructuring, we have 1,600. So, after this, we will have over 2,000. Out of 1,600, we have close to 1,000 auditors.

The reason we asked for more staff is because we decided to do the accountability index, and we want to make it compulsory for all ministries and all state treasuries.

Q: In the report, we found a lot of problems with the Ministry of Health, yet it was given a "good" rating. Why?

A: In the case of the ministry, they are weak in certain elements only. But in other elements, they are all right. So, on the whole, they have done well. We look at all the elements. That's why they've been given a good rating.

Q: When you find that someone has signed something that could be construed as improperly managing something, or improperly acquiring something, why is it that you do not name the person?

A: If we have the information, no problem, we'll name him.

Q: How bad does it have to be to get an "unsatisfactory" rating? No one was given an "unsatisfactory" rating this year.

A: When the overall compliance towards financial rules and regulations are poor, then they will get unsatisfactory rating.

To me, it shows that the staff involved in handling financial matters at that department or agency are not competent or diligent.

Q:What do you plan to do about the money that went to ministries that were not supposed to get it?

A: Actually, those are accounting errors. Remedial actions can be taken.

Q: How does an accounting error like this occur when the money for driver's licence goes to the Prime Minister's Department or the Health Ministry?

A: Remember I mentioned about competency? Sometimes the staff are not careful, not diligent. Our job is to identify errors, and they must take action to rectify them.

Q: Are ministries obliged to respond to your queries?

A: Yes. They have to respond to the treasury, the treasury compiles all the responses into a report that is submitted to Parliament. Then, we also look at the response that they give to the treasury. If we are not satisfied, we will follow up on it.

Q: At what point are they obliged to respond?

A: They are obliged to respond to our audit queries at all times. Even during the audit process, when we query, they have to respond.

Q: But there have been instances where there are no response at all to the issues that you raised.

A: To my knowledge, they do respond.

Q: But in the case of the procurement of the multi-million ringgit X-ray machines by the Health Ministry, they didn't respond.

A: That means they have difficulty in explaining their case.

Q: Are you satisfied with the responses that you got?

A: We'll see what are the promises in their response. Most of the time they say: "We will take action". So, we have to follow up and see what action has been taken because we have to report it the following year.

So, maybe after six months, we will call them and ask what's the latest on the issue.

Q: Are you disappointed in any way by the response to your report?

A: Normally the statements are a litany. We will go the extra mile to monitor that the actions promised will be delivered. Some actions will take time and cannot be done overnight.

To me, I am satisfied with every little measure taken to improve the image of the public service through our report.

Q: For the year 2007, what was the worst case of financial management that you came across?

A: It's very difficult to judge. For me, every case of non-compliance reflects weaknesses that need to be rectified.

Q: For the Federal Government alone, how much money has been lost on mismanagement of finances?

A: We will never know actually. We audit based on sampling, so we cannot really know. We've not gone to the extent of calculating how much we've lost. Our interest is to get the report going, and we're interested in actions.

Q: You don't enforce penalties. But there is a five-month gap between the end of the audit and the releasing of the report. Do you make any reports to the ACA before the report gets published?

A: Why do I need to do that? The ACA can read the report for themselves. In the course of their work, if they ask us for information they think we have, of course, we are willing to help them.

Q: So, even if you come across gross discrepancies, you will not report them because your job is just to list them out.

A: For something that requires further investigation, we leave it to the ACA.

Q: What if they went through the reports and missed out what seemed like gross discrepancies to you. Would you then lodge a report?

A: It depends on the case. After all, we're operating on our own and they're operating on their own. The ACA director-general and I are members of the National Integrity Board.

If I think there are things that the ACA should know, then why not? But as a general rule, we do our work and we leave them to do their work. We don't investigate in the manner that they do.

Q: The financial management boo-boos that we've seen, like spending half a billion and getting back only RM25 million, and spending RM3 million for only nine healthy cows -- are such incidents normal worldwide, or is it uniquely Malaysian?

A: I don't think it's uniquely Malaysian. If you read the audit reports from other countries, these things happen in most countries -- whether developing or developed. Nobody's perfect.

Q: Have we improved or have we been the same over the years?

A: If you look at the accountability index as a barometer, which is a reflection of the overall situation, things are not as bad as some people may think.

 

TYPES OF AUDITS AND PROCEDURES INVOLVED

There are four types of audit the Auditor-General is mandated to do under the Audit Act 1957:
i. Attestation audit
This concerns financial statements -- whether the accounts show a true and fair view, and if accounting records have been maintained properly, follow acceptable accounting principles, and kept up-to-date.

ii. Compliance audit
This looks at the financial management of public entities; how they manage receipts, expenditure, budget, trust accounts, investments and assets.
It also looks at whether rules and regulations had been observed in the management of these elements.

The Accountability Index (IA), introduced last year, puts this audit on a more objective platform, where ratings are given for compliance.
Those with 49 per cent and below will be considered unsatisfactory; 50 to 69 is satisfactory; 70 to 89 is good; and 90 to 100 is excellent.

iii. Performance audit
This is to ascertain whether government activities and projects have been carried out efficiently, economically, and if they achieved the desired objectives.

iv. Spot audit
This is a spot check to see if appropriate financial management controls are in place at all times. The focus is usually on entities that collect revenue.
- Time frame
While spot audits may take one or two days, the other three audits take about four months per entity.

This will give auditors enough time to get all the documents, facts and figures.

There are two types of auditors: internal auditors, who are stationed at ministries and do internal audits on the instruction of the secretary-general, and external auditors from the auditor-general's department who check on ministries annually.

- Entrance and exit
An audit starts with an entrance conference. Officers from the auditor-general's department will go to a specific entity and meet with management to inform them of their intention to audit.

The management will then have to provide the officers with all documentation.

The auditing is usually done by a team of three or four officers, who will check files, bills, contracts and other documents. Sometimes, site visits are carried out.

At the end of the audit, a draft report will be submitted to the management of the entity being audited and the latter will have to check whether the auditors' observations were correct.

During this time, the auditors will write in to seek confirmation from the management about any issues they are uncertain of. The answers they receive will be kept as documentary evidence.

Then an exit conference is held -- which is usually conducted by the auditor-general, his two deputies or the state director.

The conference gives the management an opportunity to comment or explain to the auditors before the report is finalised.

Once it is finalised, the report goes to the auditor-genreal for approval and then to the printer. It is then submitted to the Yang Di-Pertuan Agong, before being tabled in Parliament.

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