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Audit Act 1957 amendment to strengthen national governance, accountability

KUALA LUMPUR: The amendment to the Audit Act 1957 will empower the Auditor General (AG) to examine, enquire into and audit the accounts of any other body, including companies registered under the Companies Act 2016, in receipt of "financial guarantee" given by the federation or the state.

The National Audit Department through the fact sheet of the bill said the new provision will provide the department with a more significant role as the nation's check and balance mechanism in the management of state funds through a comprehensive scope of auditing and ensuring that audit recommendations are taken seriously by implementing recommended corrective measures.

It said the term financial guarantee shall have the same meaning assigned to it in the Public Finance and Fiscal Responsibility Act 2023.

The department added that the amendment to the act will also see the introduction of a new section that will empower the AG to conduct a follow-up audit to review the action taken by the federation, a state, a public authority or a specified body on the recommendations, comments or observations made by the AG in the audit report.

"The new section also seeks to provide that the AG may at any time submit a report on the follow-up to the Yang di-Pertuan Agong and may submit a copy of such report to the head of state of a state to a minister.

"Meanwhile, the act is being amended to further empower the AG institution, which aligns with the Madani government's efforts to enhance national governance and public sector accountability," it said.

The amendment to the act had its first reading in Dewan Rakyat last week by Minister in Prime Minister's Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said.

The act has not been amended in 33 years with the last amendment in 1991, necessitating updates to address current governance and auditing needs.

The second reading is expected to be carried out within the current Dewan Rakyat proceedings.

At the same time, the department said the amendments are also expected to improve and strengthen the governance through the enhancement of scope audits to include entities with government financial guarantees; ensuring comprehensive tracing and auditing of public money to promote transparency and accountability; empowering the AG to issue relevant guidelines to maintain the audit quality; and ensuring the auditee to carry out corrective and preventive actions based on audit recommendations, thereby improving compliance and governance.

Meanwhile, in terms of overlapping duties between the role of the AG and the Public Accounts Committee (PAC) through the amendment, the department said PAC is a parliamentary committee established under Standing Order 77 of the Dewan Rakyat Standing Orders.

"(Hence,) it (PAC) is charged to examine reports of the AG laid before the House under Article 107 of the Federal Constitution.

"The AG, on the other hand, is responsible for the auditing of the accounts of government agencies in the federation andsStates, including other public authorities and specified bodies.

"PAC will not only scrutinise the AG's reports, but also such other matters as the committee may think fit, or which may be referred to the committee by the Dewan Rakyat."

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