Table of Content


Public sector refers as the part of economic system that provides basic authorities services. The public sector is controlled by national, province or local authoritiess. Public sector services vary from state to state, but in most states the populace sector encompasses services such as the armed forces, fire combat, public roads, constabularies, public theodolite, communications, instruction, societal plans, health care and others. By and large, the public sector provides services to the public assistance and benefit to all of society. The resources that used in supplying public sector services are fundamentally come from public financess, which generated from revenue enhancement gross collected from revenue enhancement remunerators. So, revenue enhancement remunerators stand as one of the major entity of public sector ‘s stakeholders, together with voters and Parliament. As stakeholders, those entities would anticipate public sector carried out with good public presentation, legislated and conformity with ordinances.

In this study, the major focal point in public sector auditing is on keeping public answerability. The intent of answerability procedure of strengthens control system by given independent confidence on the manner the authorities use the public financess toward legislative assembly ( parliament ) . This is because authorities acts as “ agent ” to utilize the resources and give authorization to accomplish their end. Therefore authorities has the duty to account the ways they utilized the resources and the result. Thus the individual who misused the resources for non the intent as it supposed to carry through would be penalizing under public answerability. ( The institute of Internal Auditors ( IIA ) , 2006 )

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In keeping public answerability and guaranting the effectivity of public sector administration, public sector hearers every bit known as authorities hearers play a critical function. Harmonizing to Zaidi Mat Daud ( 2007 ) , in Malaysia, the populace sector scrutinizing function is monitored by National Audit Department ( NAD ) which leaded by the Auditor General. When Malaysia gets independency in 1957, legislated audit and range of authorities scrutinizing in Audit Act was introduced. There have been some developments in the audit attack to run into the altering throughout this period.


Harmonizing to Muhammad Akram Khan ( n.d. ) , public sector hearer would show their sentiment base on the audit process carry out more or least same as the corporate hearer. However public sector hearer would deeper than corporate hearer by public sector hearer need to look into the public outgo incurred and gross collected conformity to regulations and ordinance that non the duty of corporate hearer.

In the recent old ages, public sector had experienced important enlargement in all over the universe. There are several grounds for this important enlargement. First, it is closely related to the increasing public concerns for more accountable and crystalline administration. Traditionally, public sector auditing was associating to the fiscal and conformity auditing. Public sector hearers have the responsibility to supply an independent confidence over the usage of public financess by the authorities. They need to guarantee that the recorded fiscal minutess are right authorized and follow with Torahs and ordinances.

Therefore the populace ( via parliament ) commented that the audited study that based on the fiscal information merely was deficient. The information that provided in the audit studies was deficient for them to find the answerability of authorities bureaus in the operating of plans or activities. More and more people start to concern on the publication of public sector audit study as they want to acquire known on the public presentation of authorities bureaus undertaking. Peoples want to guarantee that the resources that used in the authorities bureaus undertaking are appropriate and as stated aim since it is the public fund. Furthermore, the increasing democratisation and attending on corruptness people are contribute to the alterations in public sector scrutinizing ; by where public get to hold more sophisticated auditing.

Beside the above mentioned ground, the alterations in the populace sector scrutinizing were besides influenced by the reforming of public sector. The range of authorities activities expanded, organize a simple map of jurisprudence and justness of administrative to play an active function in social-economic developments which has increased the size of public outgo. Besides that, besides have claims for resource allotment. As the resources are limited hence demand a rational determination devising in public outgo. ( Muhammad Akram Khan, n.d ) . As for the alterations, it was a demand for the authorities hearer to reexamine the populace sector scrutinizing. The occupation range and authorization of public sector scrutinizing have to use as the alterations in public sector.

Hence, both issues had led the National Audit Department ( NAD ) to spread out the traditional public sector scrutinizing into a broader country, which is associating to the “ Performance auditing ” or we can besides name it as “ Value for money audit ” . Generally, many hearers use both footings interchangeably. In this study, we refer it as the formal term “ public presentation audit ” , which adopted by the International Organization of Supreme Audit Institutions ( INTOSAI ) Auditing Standards.


Harmonizing to Zaidi Mat Daud ( 2007 ) , definition of public presentation auditing in Malaysia was given by International Organisation of Supreme Audit Institutions ( INTOSAI ) . That concern on three elements that are economic system, efficiency and effectivity of the activities carried out by authorities bureaus. There are:

Audited account on the economic system of administrative activities must follow with the sound direction policies and administrative rules and patterns. Economy will concentrate on the minimal use of money, manpower and other resources.

Audited account on the efficiency of use homo, fiscal and other resources to find the lacks by audited house. Efficiency of audit is to do certain that the resources had been use optimally to accomplish the coveted result.

Audit effectivity of public presentation to accomplish the audit house aims and existent impact of activities compared intended impact. Audit effectivity is based on whether activities carried out had achieved the coveted result.

Besides definition indicated by INTOSAI, Waring and Morgan defines public presentation audit as “ a systematic, nonsubjective appraisal of the achievements or procedures of a authorities plan or activity for the intent of finding its effectivity, economic system, or efficiency ” .

Harmonizing to Stockholm and Kjell Larsson ( 2004 ) , the thought to organize the footing of public presentation auditing is public answerability. Public answerability means the individual who responsible for the authorities plan is responsible for running all plans efficaciously and efficiency. Accountability let the public penetration into the activities carried out by authorities thoughts. Performance auditing is a manner to allow the public stakeholder to exert their control and to obtain insight into the result and running of the activities carried out by authorities bureaus. Besides that, public presentation auditing besides provide the reply does the authorities utilized the resources sagely and suitably.

In this public presentation scrutinizing has two chief aims that are guarantee authorities answerability and advance better direction patterns. As this study is more concentrating on the answerability of public sector scrutinizing so we merely accent on the authorities answerability aim of this public presentation auditing. Harmonizing to Zaidi Mat Daud ( 2007 ) , the ways carry out by this public presentation scrutinizing to guarantee authorities answerability by exerting effectual legislative control and inadvertence. As the resources are limited, so to make up one’s mind the allotment resources suitably the hearer must supply more information on the value of the consequence or end product. This value of consequence or end product is non step in pecuniary footing but in term of grade of attainment and quality services provided. Based on that parliament had required it should be base on managerial facet instead than fiscal footing such like more focal point on how effectual and efficiency authorities implement and carried out plan instead than amount spend for each plan. Therefore public presentation auditing can supply more utile information to parliament and stakeholder on how effectual and efficiency the bureau pull off the resources.

Therefore, it is clearly shows that public presentation audit is to analyze public sector ‘s direction and public presentation in the facets of economic system, efficiency and effectivity and besides to supply recommendations for public presentation betterment. From above, public presentation audit is besides of import in maintain authorities bureaus answerability. However, in Malaysia, public presentation auditing patterns enduring some failing which would impact the effectivity of the authorities bureaus. As we have an effectual auditing system it could guarantee the answerability of public bureaus are in the right topographic point.



As the traditional public sector auditing has expanded into a broader country, public sector hearers have faced some jobs and challenges in advancing public answerability by alteration into public presentation auditing. Harmonizing to Zaidi Mat Daud ( 2007 ) , one of the jobs is enlargement of the power in the audit authorization. The power to transport out the audit would find the effectivity of the Auditor General in public presentation auditing. Therefore audit authorization is of import because it give the power to look into all the public resources and operation by entree all the information needed to Auditor General. Currently, Malaysia audit authorization is same as the other commonwealth states which merely briefly oppugning the virtue of the policy. There are some statements stating that they should cover the issues of effectivity of the virtues of the policy into their range. This ground for that is to maximize the benefits of public presentation auditing and keeping the independent of the populace sector hearer. However, the procedure of including the virtues policy into duty map of audit authorization is hard and hazardous because this issue can be arguable and problematic. It might act upon the hearer joins into political statements. The duty of the issues of virtues policy is under curate as they are puting the policy for the auditing.

Besides that, when NAD expanded the audit map to public presentation auditing, it means the range had become broader as public presentation audit range is broader comparison to fiscal audit. The professional and qualified hearers possessed by the National Audit Department are unequal. For the intent to run a more comprehensive auditing, different techniques and accomplishments are required by the populace sector hearers. However, the scrutinizing educational, developing agreements and figure of audit staff do non run into the demand of the modern public sector scrutinizing. The job of insufficiency of the audit staff in National Audit Department can be proved by the numerical Numberss in old ages 2005 and 2006. In 2005 and 2006, merely 128 times and 143 times of the public presentation auditing is being carried out. ( Zaidi Mat Daud, 2007 ) The basic installations for preparation and research are non plenty as they are missing of professional and qualified hearer. Hence, the public presentation scrutinizing that carried out is much lower than the figure of authorities bureaus, ministries and sections at the province and federal degrees.

In add-on, acoording to Zaidi Mat Daud ( 2007 ) the public sector hearers in Malaysia are confronting the job with seasonableness issues for Auditor General ‘s audit study. The publication of the audit study will be tardily because the study is comprehensive. Audit General Department demand to publish an audit study that based on fiscal information and relevant economic information that related to authorities bureaus ‘ undertakings. For that ground, it consumes longer clip to garner the both needed information for authorities hearer. They are confronting the job of clocking spread after execution of the public presentation scrutinizing into the public sector scrutinizing. NAD was concerned about this issue and took several options to work out the job of seasonableness. As a consequence, the seasonableness issues on the publication of audit study had significant betterment. Although public sector hearers have significant betterment on issue of seasonableness in audit study publication, they are still unable to settle the job. The job of clocking spread still exists. For case, the audit study for 2005 was completed after the center of the twelvemonth 2006, which was completed merely in October 2006.

Besides, the National Audit Department faces the independency job every bit good. Some non-governmental organisations and 3rd parties argue that National Auditor Department is non independent plenty as they will be influenced by outside parties, particularly authorities. In New Sunday Times that reported in 2005, it stated that Audit Department was under the attention of our Prime Minister. Next, our 4th Prime Minister, Tun Dr Mahathir Mohamad had besides inference as to bespeak that the Auditor General should non print some issues to public. It is because he wants to avoid the attending from public and doing it sensational. Then, more significantly, Audit General had admitted that the undercover or unreleased national involvement and policy issues will hold an impact on the information that provided to public. As if it is to the full disclosed the relevant national involvement and policy issues in the audit study, it will bring out the jobs. The place and repute of the undertaking for authorities bureaus will be different because it disclosed all the jobs that the authorities bureaus confronting now. ( Zaidi Mat Daud, 2007 ) In sum-up, they did non hold the freedom to unwrap the content of the audit study.

Another challenge is deficiency of guidelines and criterions that can utilize as benchmark in public presentation auditing. Benchmarking is of import in public presentation auditing as public presentation auditing will necessitate indexs or guidelines to look into whether the consequence can move as effectual feedback to the populace sector. Although there is suggestion that some beginnings can be used in developing of public presentation scrutinizing standards, but that set of developed standards or index may besides non suited or non able to reflect the existent status of a public sector in public presentation auditing. The illustration of the beginnings include usingA engineered criterion, comparable public presentation, historical public presentation, or through understanding and treatment.


Besides the enlargement into public presentation auditing, NAD besides has come out with some advanced and unconventional attack to set up answerability in Malaysia Public Sector. Harmonizing to The Asiatic Organization of Supreme Audit Institutions ( ASOSAI ) ( 2006 ) , one of them is NAD actively to educate and give consciousness to politician, authorities officers and interested parties on answerability issues, good administration, transparence and unity. Furthermore, audit and answerability is being a compulsory subject in all authorities initiation classs that participated by NAD senior officers.

Several plan has been introduced by NAD in 2002 to better good administration and answerability such as Adopted Agencies, Audit in – Traveling building Undertakings and ICT System. Furthermore NAD has besides provided advisory and consultancy function to Ministries, Departments, or Government Agencies on fiscal direction and undertaking direction. NAD besides helps organisation to place hazard and extenuate the possible hazard responsible their action or inactivities. ( ASOSAI, 2006 )

Harmonizing to The International Journal of Government Auditing Inc ( INTOSAI ) ( 2008 ) , on 4th of November 2007, NAD of Malaysia and Audit Board of the democracy of Indonesia ( BPK ) cooperated on Public Sector Auditing by signed a Memorandum of Understanding ( MOU ) which took topographic point in Mexico. MOU is the first cooperation understanding between two states of the Association of South East Asiatic Nations ( ASEAN ) . In this understanding, Supreme Audit Institutions ( SAI ) Malaysia and Indonesia will work together in the preparation and research of public sector scrutinizing. Tan Sri Ambrin Buang, Auditor General of Malaysia stated that he wished this understanding can help both states in information, cognition, experience sharing and exchange through seminar, conferences, preparation, and audience. This cooperation is merely stress on information exchange in scrutinizing countries but it besides for other countries such as good administration of public sector in Asia.

Harmonizing to ASOSAI ( 2006 ) , Government of Malaysia besides has committedness in bettering authorities answerability by presenting several mechanisms. One of the attempts is the scene of Integrity Committee and Committee for Financial Management and Histories at ministries, section or bureaus. To better the disposal and fiscal direction transparence, unity and answerability, the commission ‘s map are more or least like audit commissions that do periodic reappraisal of controls, ordinances and processs of the public sector. Besides that, Integrity Committee needs to do recommendations on the ailment and failing they received in order to better the status. Head of Department is the leader of both commissions. The quarterly study prepared by Committee for Financial Management and Histories have to subject to Treasury while quarterly study prepared by Integrity Committee have to subject to the high degree commission on unity chaired by Prime Minister.

Besides that, the other attempt is the regulation that all the members of Executive, Legislative Assembly and civil service demand to unwrap their plus for testing and record intent. This is directed by Government of Malaysia. ( ASOSAI, 2006 ) Furthermore, they besides need to declare acquisition of plus and the resource of the acquisition fund. All of the regulations are to give confidence to authorities unity and answerability by maintaining a depository system on declaration of assets.

OpinionS toward public sector scrutinizing

Auditing in public sector is non an easy as it involves assorted governmental sections and bureaus which largely constituted in complicated constructions. Besides, what are traveling to scrutinize by a public sector hearer are related to the use of public fund and other resources. It is much more hard and complicated if compared with private sector scrutinizing. In private sector, the hearers are accountable to the audited company ‘s stakeholders who consist of stockholders, providers, creditors and etc. The responsible is heavy, but it becomes much heavier in public sector. Public sector hearers are accountable to a wider community which includes Parliament, lifts and revenue enhancement remunerators. They seem like the watchdog of the populace to guarantee the authorities sections or bureaus are utilizing the public fund in proper manner. So, public sector hearers play of import function in set uping the populace sector ‘s relevance and dependability.

Apart from that, many studies have showed a planetary tendency of public trust worsening towards public sectors. Public today becomes more knowing and sophisticated. They tend to be misanthropic towards authorities policies or patterns. They ever like to cognize what really authorities is making and how good authorities spends the public fund. With this, the traditional fiscal and conformity auditing will non able to fulfill the public demands. Performance scrutinizing that brought into public sector scrutinizing will able to get the better of the deficit of the traditional auditing. Although there are several challenges arose from public presentation auditing, in our point of position, public presentation auditing is still applicable and feasible. Despite from its jobs, public presentation auditing will able to demo public sing the authorities section ‘s public presentation in 3 positions: economic system, effectivity and efficiency. Public can derive better sights of it. For the populace sector itself, public presentation auditing can be their ‘enemy ‘ as it used to analyze its plan, map or direction system and observe if there is any fraud. On the same clip, it can be besides a utile tool because the consequences from public presentation auditing can assist the certain public sector to better.

By looking at private and public sector in the facet of public presentation auditing, we can happen the difference in between. In private sector, a company by and large has its peculiar aims that easy to specify which normally relate to gain maximization. However, in public sector, it becomes different because there are many entities involved in public sector. Therefore, the populace sector ‘s nonsubjective can be really wide which may affect both net income and non-profit dimension. This makes the public presentation indexs are comparatively harder to specify, unlike for private sector. It adds the troubles and challenges in construing the public sector public presentation during scrutinizing.

Although there is several jobs that non easy to get the better of in short clip, authorities uninterrupted enterprises and attempts will able to cut down the jobs to a lower degree. Performance scrutinizing in Malaysia ‘s public sector auditing should be enhanced.


The populace sector is executing a principal-agent relationship. The functionary as an agent is accountable for the principal for the stewardship of resources. If audit activity is effectual, hazards built-in in the principal-agent relationship can be reduced. Auditor is responsible to supply an nonsubjective and independence appraisal on the agent ‘s accounting and study whether the usage of resources is harmonizing to the wants of the principal. Actually there are some factors that inherent in the principal-agent relationship which is moral jeopardies, farness, complexness, and effect of mistake.

Public sector scrutinizing had broadened its focal point from single minutess to command plan operation, but it should keep the feature which based on its credibleness by including indifferent sentiments towards the topic under audit. This is because the credibleness strengthens public administration which done by measuring the functionaries candidly, reasonably, transparently and in conformity with Torahs and ordinances. We proposed that elected and appointed functionaries at all degrees of authorities should back up the effectual audit activities by set uping independent audit maps that meet all of the cardinal elements.

In decision, public sector auditing is of import to do certain that the public entities had fulfilled their responsibility to be accountable to the citizen by supplying nonsubjective appraisals on whether they manage the public resources efficaciously and responsibly.

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