CIA3010
Public Sector Accounting
Semester 1 - 2022/2023
Week 13: Development in Public Sector
Accounting
Outline
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Public Sector Reforms
Governance
Emerging Issues
Unclaimed Moneys
Public Sector Reforms
• Public sector is entrusted with a twin task:
» Socio economic development
» Nation building
• Series of reforms or modernization were undertaken
• Factors:
» Environmental (economic conditions and societal demands)
» Developmental policies
» Objectives of government
• Referred to as new public management (NPM) or new public
financial management (NPFM)
• Associated with “doctrines of public accountability and
organizational best practice”
• Involved deliberate changes to the structures and processes
of public sector organisations with the objectives of getting
them (in some sense) to perform better.
Emergence of public sector reforms
• Inputs
» Public sector was seen to require unsustainably large
and/or unsustainably increasing public expenditure.
• Processes
» There was concern about inefficiency in the use of
public resources – waste, delay, mismanagement and
corruption
• Outputs
» Concerns were widespread that the public sector was
not delivering what it should be.
NPM Characteristics
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Hands on management
Focus on outputs
Private sector-based management
Emphasis on economy and cost cutting
Decentralization
Competition
Citizen oriented
Changes in Public Sector
Accounting
• More in line with the private sector accounting.
• Emphasis of accounting changed from showing
stewardship and accountability to measuring
performance and efficiency in the public sector.
• Adopted accrual accounting and budgeting
» Accountability and transparency
» Goals and performance requirements
» Dysfunctional behavior related to spending
» Poor asset and liability management
» Important accounting information not reported
» Global competitive forces that demand efficiency for
survival
PSR in Malaysia
Economic Policies, Economic Development Plans and Nature of Public Sector
Reforms in Malaysia
Economic Policy
Period
Economic
Development Plan
1966 - 1970
1st Malaysia Plan
1971 – 1975
2nd Malaysia Plan
1976 – 1980
3rd Malaysia Plan
1981 – 1985
4th Malaysia Plan
1986 – 1990
5th Malaysia Plan
New Development
Policy (NDP)
1991 – 1995
6th Malaysia Plan
1996 – 2000
7th Malaysia Plan
National Vision Policy
(NVP)
2001 – 2005
8th Malaysia Plan
2006 – 2010
9th Malaysia Plan
New Economic Model
(NEM)
2011 – 2015
10th Malaysia Plan
2016 - 2020
11th Malaysia Plan
Pre-New Economic
Policy
New Economic Policy
(NEP)
Nature of Public
Sector Reforms
Economic reforms
Public administrative
reforms
Financial
performance
management
New Public Sector Governance
• “Public sector governance encompasses the policies and
procedures used to direct an organization’s activities to provide
reasonable assurance that objectives are met and that operations
are carried out in an ethical and accountable manner. In the
public sector, governance relates to the means by which goals
are established and accomplished. It also includes activities that
ensure a government’s credibility, establish equitable provision of
services, and assure appropriate behaviour of government
officials — reducing the risk of public corruption.”1
• Aims: to ensure that an organization achieves its overall
outcomes in such a way as to enhance confidence in the
organization, its decisions and its actions.2
• Focuses on:
» Performance – the effective and efficient delivery of goods, services or
programs
» Conformance – adherence to the law, regulations, published standards,
and community expectations of probity, accountability and openness. 3
Institute of Internal Auditors, “The Role of Auditing in Public Sector Governance”, (Florida USA: 2006), p. 3.
Australian National Audit Office, Public Sector Governance, Volume 1: Better Practice Guide, (Canberra: 2003), p.
6.
3 Ibid. Note: the term “compliance” can interchangeably be used with “conformance”.
1
2
Principles of Good Public Sector Governance
1. Rule of law – law is above everyone and is applied fairly to
everyone, whether the governor or governed (external control)
2. Transparency/Openness – citizens’ right to have access to
information about what government is doing and how decisions
have been reached; appropriate disclosure of key information.
3. Accountability – public sector entities, and the individuals within
them take responsibility for their decisions and actions, including
their stewardship of public funds and all aspects of performance.
4. Public sector ethics and probity – adhere to a set of moral
principles, standards, or values that govern their conduct, and to
act with complete honesty and integrity (internal control)
5. Stewardship – refers to government officials carefully managing
the power and resources entrusted to them in a manner that is
consistent with the public interest. Act prudently, ensure fiscal
sustainability.
6. Leadership – setting the “tone at the top”, leaders within public
service promote and support the principles of good public sector
governance by leadership and example.
9
Unclaimed Moneys
(Wang Tak Dituntut)
https://egumis.anm.gov.my
Learning Outcomes
• Explain the concept of unclaimed moneys
• Explain the prevailing regulations of unclaimed
moneys in Malaysia under the Unclaimed Moneys
Act 1965
• Understand the submission process of unclaimed
moneys in Malaysia
• Discuss the non-compliance issues with regard to
the Unclaimed Moneys Act 1965.
Introduction
• In broad terms, unclaimed moneys refer to an
amount of money to be paid legally to a proper
recipient within a certain period of time as
specified in the Unclaimed Moneys Act 1965.
• The Unclaimed Moneys Act 1965 is an Act
relating to the payment of unclaimed moneys into
the Federal Consolidated Fund.
Unclaimed Moneys Act 1965 (cont.)
• Under the Unclaimed Moneys Act 1965, the sums
of moneys, which have existed for a specified
period of time and have yet to be claimed by the
rightful owners, will be transferred to the Registrar
of Unclaimed Moneys.
• The Accountant General of Malaysia was
appointed as the Registrar of Unclaimed Moneys
effective from 1 June 1975.
• The owner of the unclaimed moneys may recover
the moneys from the Registrar either in person or
in writing.
Unclaimed Moneys Act 1965 (cont.)
• The Unclaimed Moneys Act 1965 also details the
entities that must comply with the Act as well as
the penalties incurred for non-compliance with the
provisions of the Act.
• ‘Owners’ in the context of the Unclaimed Moneys
Act 1965 refer to the person or party entitled to
any unclaimed moneys, which include his or her
executors, administrators or assigns; whereas in
the case of a company that is governed by the
Companies Act 2016, this may include its
liquidators, or its lawful attorneys or agents in
Malaysia.
Unclaimed Moneys Act 1965 (cont.)
Classification of Unclaimed Moneys
• Moneys which are legally payable to the owner
but has remained unpaid for a period of not less
than one year
• Moneys appearing in an account that has not
been operated in whatever manner by the owner
for a period of not less than seven years
• Money appearing in a trade account that has
remained dormant for a period of not less than
two years
Unclaimed Moneys Act 1965 (cont.)
Who Should Comply with the Provisions of the
Unclaimed Moneys Act 1965
• A company incorporated under the provisions of
Companies Act 1965 (or foreign companies as specified
under Division 2 of Part XI of the same Act) Boards
established to manage funds relating to retirement
benefits;
• All registered societies and cooperative societies;
• Corporations, public authorities and trade unions;
• Firms (i.e. unincorporated body of persons associated
together to carry out business).
Unclaimed Moneys Act 1965 (cont.)
Organizations or parties that
are required to comply
with the provisions of the
Unclaimed Moneys Act 1965
Unclaimed Moneys Act 1965 (cont.)
Role of the Registrar of Unclaimed Moneys
• The Registrar is responsible for carrying out the obligations
and functions vested under Part II of the Unclaimed
Moneys Act 1965 as follows:
(1) As trustee to the unclaimed moneys received
(2) To refund the unclaimed moneys to claimants who provide proof
that he has a legal right over the money to be claimed
(3) To inspect the records of company or firm to ensure compliance
with the provisions of the Act
(4) To suggest the imposition of compound and penalty on company
or firm that has committed an offence under the Act.
Submission of Unclaimed Moneys
Submission Process and Relevant Sections
• According to Section 10 of the Unclaimed Moneys Act
1965, the firm/company is responsible for the following:
(1) maintain a record of all unclaimed moneys in a register to
be kept at its principal office or place of business in
Malaysia in the form to be determined by the Registrar
(2) lodge the unclaimed moneys with the copy of the register
not later than 31 March of the following year
(3) submit unclaimed moneys register for the purposes
Gazette
(4) starting from 2016, submissions of Unclaimed Moneys
must be done through Online Banking.
Submission of Unclaimed Moneys
(cont.)
Refund of Unclaimed Moneys
• According to Section 13(1) of the Unclaimed Moneys Act 1965,
when Registrar satisfied that the claimant is the owner of the money,
the Registrar shall pay the money from Consolidated Trust Account
or Consolidated Revenue Account.
• There is no time limit for the application of the unclaimed moneys
claim.
• The claimant can check an apply for refund directly from the
Registrar's office
• The Registrar of unclaimed moneys has never appointed any firms
or individuals to act as agents for the refund
• Starting from 2018, the claimant can check through online.
Currently, the Accountant General Department is still developing the
website.
Submission of Unclaimed Moneys
(cont.)
Submission process
of unclaimed moneys
for 2018
(Source: Accountant
General’s Department of
Malaysia)
Non-compliance with the Unclaimed
Moneys Act 1965
• A firm which fails to comply with sections 10(1) and (2) is guilty
of an offense and the firm and every officer of the firm may be
fined not exceeding RM20,000 and a further fine not exceeding
RM1,000 for each day during which the offence continues ‒ s
10(4), Unclaimed Moneys Act 1965
• Section 12 of the Act empowers the Registrar or any person
authorized by him to carry out inspection of the records to
ascertain whether a company or firm is complying with the
provisions of the Unclaimed Moneys Act 1965
Non-compliance with the Unclaimed
Moneys Act 1965 (cont.)
• The Registrar or any person authorized by him may also
seize any books, registers, records or documents in order to
furnish evidence of non-compliance of the Unclaimed
Moneys Act 1965 by the company or firm
• There are two important documents that need to be
produced to the company or firm by the authorized officer to
carry out the inspection:
(a)Authority warrant
(b)Secrecy declaration
Non-compliance with the Unclaimed
Moneys Act 1965 (cont.)
• According to section 12(4) of the Act, a company or firm and every officer of the
company or firm may face a penalty of a fine not exceeding RM5,000 or an
imprisonment for a term not exceeding three months or both, if the company or firm
or the officer:
(a) refuses to produce, avoid producing or prevent the production of any such book
(including minute book), register, record or document when being required by the
Registrar or a person so
(b) refuses or fail to correct any error found in any such book (including minute
book), register, record or document when being required by the Registrar or a
person so authorized
(c) obstructs or hinders the Registrar or person authorized while exercising any of
the powers referred to in section 12(1).
• the Registrar may, with the consent in writing of the public prosecutor, compound any
offense committed by a firm and every officer of the firm not exceeding 50% of the
amount of maximum fine for that offense by making a written offer ‒ S16(1),
Unclaimed Moneys Act
• Section 16(2) of states that an offer under section 16(1) may be made at any time
after the offence has been committed, and if the amount specified in the offer is not
paid within the time specified in the offer or within such extended period as the
Registrar may grant, prosecution for the offence may be instituted at any time.
Suggestions to improve the ways unclaimed
moneys operate
(1) Shift the ownership of unclaimed moneys from the
Accountant General to firms
(2) Amend the Unclaimed Moneys Act 1965 to make it
mandatory for companies or firms to declare their
amounts of unclaimed moneys
(3) Distribution of incentives from the Accountant
General’s Department to firms that comply with the
rules or best practices
(4) Amending the Unclaimed Moneys Act 1965 to be
more proactive
Revision
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Final examination (60%)
Thursday 16 February 2023 (3.00 pm – 6.00 pm)
3 hours, 3 questions (total 60 marks)
Course learning outcomes:
1. Describe the components of public sector, the structure of
government and the legal requirements related to financial
provisions (Test)
2. Discuss issues related to government management accounting
and control, budgeting and performance (Test and Final)
3. Discuss issues related to government financial accounting,
reporting, accounting standard and auditing (Assignment and
Final)
4. Answer questions related to the importance of governance and
accountability in the public sector(Assignment and Final)