Audit Institution In Malaysia Case Study

INTRODUCTION

Audit institution in Malaysia has already existed since the British colonial period in early 19th century. When Malaysian Federation secured independence in 1957, Office of Auditor General of Malaysian Federation was established. Position of State Audit (JAN) Malaysia was formed based on Article 105 of Federal Constitution and the Audit Law 1957 with a mission to conduct audit professionally and independently to the implementation of state finance and produce a balanced report to the parliament and enhance good governance in public sector. The highest leader in JAN Malaysia is called Auditor General (Ketua Audit Negara). The selection and responsibility of Auditor General is conducted in compliance with stipulation on Article 105

The aim is to reveal deviations from accepted standards and principles of legality and value for money, early enough to take corrective action, to make those responsible to accept responsibility, get compensation or to prevent or make such breaches more difficult. The main reason of audit is being explained in the International Standard on Auditing 120, Framework of International Standards on Auditing (paragraph 11 and 13). The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework. The phrases used to express the auditor's opinion are ’give a true and fair view‘ or ’present fairly, in all material respects,’ which are equivalent terms. The auditor's opinion enhances the credibility of financial statements by providing a high, but not absolute, level of assurance. The purpose of public sector auditing is to determine any embezzlement from the estimation being planned, to declare any wrongdoings in relation to the principles, orders, rules and regulation and to declare the elements and factors which fail to lead for effectiveness, efficiency and economical utilisation of the government’s

Auditing consists of two categories which are internal audit and external audit. Internal audit, power and responsibility is under the Head of Individual Government Organisation and reported made to the Head of the Organisation. Internal audit facilitate public sector organisations to achieve accountability and integrity. It is an auditing carried out by sub-unit of the organizations. Internal Audit Department comprise of qualifies auditors who are named internal auditors. Internal audit focus on adherence to management operation, internal control systems, proper record keeping and fraud detection. In public sector, audit carried out by appointed staff of the organisation to independently and objectively review and evaluate organisation activities to maintain or improve the efficiency and effectiveness of internal control and governance. In Malaysia, internal audit will help organisation to ensure public accountability, governance, integrity, transparency and quality service