UNIVERSITI TEKNOLOGI MARA
THE OVERSIGHT FUNCTION OF THE
PUBLIC ACCOUNTS COMMITTEE (PAC)
IN REPORTING THE AUDITED
FINANCIAL STATEMENTS OF THE
STATE GOVERNMENT
ROSE SHAMSIAH SAMSUDIN
Thesis submitted in fulfillment of the requirements
for the degree of
Doctor of Philosophy
Faculty of Accountancy
July 2011
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Candidate's Declaration
I declare that the work in this thesis was carried out in accordance with the
regulations of Universiti Teknologi MARA. It is original and is the result
of my own work, unless otherwise indicated or acknowledged as
referenced work. This topic has not been submitted to any other academic
institution or non-academic institution for any degree or qualification.
In the event that my thesis been found to violate the conditions mentioned
above, I voluntarily waive the right of conferment of my degree and agree
to subject to the disciplinary rules and regulations of Universiti Teknologi
MARA.
Name of Candidate
: Rose Shamsiah Samsudin
Candidate's ID No.
: 670120-02-5652
Programme
: ACC990 Doctor of Philosophy in
Accountancy
Faculty
: Faculty of Accountancy
Thesis Title
: The Oversight Function of the Public
Accounts Committee (PAC) in Reporting
the Audited Financial Statements of the
State Government.
Signature of Candidate
: SL
Date
: 22nd July 2011
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ii
ABSTRACT
A critical problem concerning the functioning of the Public Accounts Committee (PAC)
is the delay in tabling the PAC Reports at the State Legislative Assembly (SLA). The
delay in the PAC process causes outdated information to be relayed to the SLA as the
PAC reviewed audited financial statements that were no longer current. Some
Malaysian states even reviewed and reported on financial statements from several years
concurrently. Consequently, the significance of the PAC Report is at stake as the
comments and recommendations made by the PAC may not be relevant. Within
Malaysian PACs context, much about the related situations is not known due to lack or
limited exploration on the matter. Thus, besides looking at PAC practices in general,
one of the Malaysian state governments PAC namely State B is used as a case study in
order to illuminate the state of affairs. State B was chosen as it has experienced the
period where the state PAC Reports were previously seriously delayed, to the current
condition, where the PAC Reports have been timely produced for the SLA. Using data
from documentary evidence; non-participatory observations; and in-depth interviews on
PAC members, the Secretary to the PAC, and the Head of state government's Audit
General's Office (AGO), the PAC forms, conditions and process were traced from the
time when the AGO Report on the state government's financial statements were issued
to the point where the PAC Report was tabled at the SLA. Initially, this study develops
an institutional approach to the legislative financial oversight function by the PAC. The
data revealed that the institutional setting and capacity building do not provide an
adequate explanation for the delay in PAC reporting. The individual as well as the
collective behaviour of the PAC also contribute to the PACs effective performance. As
cognitive beings, human process information from their environment and what they
perceive concerning a situation defines their reactions to it (Bandura, 1986; 1999;
2000). The individual and collective behaviour of PAC both influence and are
influenced by personal factors such as attitudes, abilities, goals and expectations, as
well as the social environment surrounding them. Hence, Bandura's theory of reciprocal
determinism is relevant to the repetitive problems and cyclical conditions of PACs
mediocre performance. The SLA should be more alert to the current delays in PAC
reporting, as they are the ones who pass laws including those concerning the
governance of states. It is a challenge for PACs to balance their performance as it may
fluctuate as personalities, politics, current events and public opinions alter the political
landscape within the local context. Future studies may consider a more precise
measurement procedure for PAC performance.
in
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ACKNOWLEDGEMENTS
I wish to express my greatest gratitude to Allah, most gracious most merciful, for
granting my wish of completing this PhD thesis a reality. My sincerest thanks to my
father, Samsudin Ahmad, foster mother Rokiyah Tayib, and my siblings Salmi, Salina,
Fadzli and their spouses Husni, Ruhaila and Saad, for their constant encouragement and
well wishes that have kept me going even when things did not work my way. I am also
grateful for the continuous support financial or otherwise, given by the Ministry of
Higher Education (MOHE), my employer Universiti Utara Malaysia, and the academic
staff of Faculty of Accountancy Universiti Teknologi MARA (UiTM), Malaysia.
The contributions of my supervisor Associate Professor Dr. Nafsiah Mohamed, my key
informants as well as my interview participants have been a vital part of this effort.
Their time, experience, intelligence and enthusiasm to this work are deeply appreciated.
I would also like to acknowledge the continuous support in the form of comments made
by Professor Keith Maunders, Visiting Professor at the Faculty of Accountancy, UiTM
as his insightful comments on this research has helped me tremendously.
I am also indebted to so many of my wonderful guru and friends who have strengthened
my spirit especially during the most challenging time. They have shown great interest
and support in my research and encouraged me to carry on. May Allah reward all of us
with success, in this world and the Hereafter.
Finally, the work on this thesis is dedicated to the loving memory of my late mother
Hashimah Hj Saidin. She has been my tower of strengths at the start of this PhD journey
thus her sacrifices in terms of love, time, and attention have always been my inspiration
and motivation to see through this effort.
Heartiest thanks to all. I hope I do you proud.
IV
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TABLE OF CONTENTS
CANDIDATE'S DECLARATION
ii
ABSTRACT
iii
ACKNOWLEDGEMENTS
iv
TABLE OF CONTENTS
v
LIST OF TABLES
xi
LIST OF FIGURES
xiii
LIST OF ABBREVIATIONS
xiv
LIST OF APPENDICES
xv
LIST OF CONFERENCES AND PUBLICATION
xvi
CHAPTER 1: INTRODUCTION
1.0
Introduction
1
1.1
The establishment of PACs worldwide
2
1.2
PACs establishment in Malaysia
3
1.3
Motivation of this study
5
1.3.1
7
Preliminary study on Malaysian PAC
1.4
Problem statement
9
1.5
Research questions
11
1.6
Obj ectives of the study
12
1.7
Methodological approach
13
1.7.1
Methodology key assumptions
14
1.7.2
Triangulations of methods, data sources and analysis
15
1.7.3
Emancipation activity
15
1.8
1.9
Conceptual framework
16
1.8.1
19
Application of the framework
Structure of the thesis
20
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CHAPTER 2: LITERATURE REVIEW
2.0
Introduction
21
2.1
Theoretical perspectives
21
2.1.1
Theoretical model of society
22
2.1.2
Reciprocal determinism
23
2.1.2 (a) Motivation
25
2.1.3
Public choice theory and organizational practice
26
2.1.4
Framework in explaining oversight activity
28
2.2
PAC as an oversight body of legislature
30
2.2.1
PAC in parliamentary systems
33
2.2.2
Holding the state governments to account
37
2.2.3
Attributes of a good PAC according to the literature
41
2.3
Timeliness of information and implications on reporting
44
2.4
Summary
47
CHAPTER 3: METHODS OF DATA COLLECTION AND ANALYSIS
3.0
Introduction
48
3.1
Methodological approach
48
3.2
Research context
50
3.2.1 How participants were selected
50
3.2.1 (a) Documents - PAC Reports
51
3.2.1 (b) Interactions - National PAC meeting and State
Legislative Assembly (SLA) sessions
51
3.2.1 (c) Individuals - PAC members, Head of State AGO,
Secretary to PAC
53
3.2.2 Methods used to generate data
54
3.2.2 (a) Website search
55
3.2.2 (b) Non-participatory observations made
55
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3.2.2 (c) Documentary evidence collected
57
3.2.2 (d) Interviews performed
61
3.2.2 (d)(i)
Interviews with State B's PAC
members
3.2.3
3.2.4
3.2.5
3.3
68
Comprehensiveness of data collection
73
3.2.3(a) Triangulations of methods, data sources and analysis.
74
Procedures for analysing the data and corroborating the
findings
75
3.2.4(a) Emancipation activity
77
Reflections
77
Summary
78
CHAPTER 4: CURRENT PRACTICES OF MALAYSIAN PACs
4.0
Introduction
80
4.1
PAC as part of the financial accountability cycle
80
4.2
Regulatory framework of Malaysian states PAC
83
4.2.1
State Legislative Assembly (SLA)
83
4.2.2
State Legislative procedures and functions
84
4.2.3
Malaysian states PACs establishment under legislations
84
4.2.4
Rationale behind PACs establishment at state levels
87
4.3
Institutional design of PAC
89
4.3.1
No uniformity in usage of terms on PAC
89
4.3.2
Inconsistency and vagueness in membership appointment
90
4.3.2 (a) Observations of PAC members' appointment
at SLA
94
4.3.2 (b) Vagueness of the basis used for PAC members
appointment
4.3.2 (c) Party composition and party relations
95
100
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4.3.3
4.4
and activities
105
4.3.3 (a) Focus on financial activity and accountability
108
4.3.3 (b) Power to execute prescribed role and functions
113
4.3.4
Autonomy and independence of PAC
114
4.3.5
Relationships with the Auditor General's Office (AGO)
116
Capacity building of the PAC
4.4.1
4.4.2
4.5
The PAC members' discernment of their functions
118
PAC relies mostly on SLA and AGO in running its
activities
119
Accessibility to information
121
Summary
124
CHAPTER 5: PUBLIC ACCOUNTS COMMITTEE'S (PAC) PROCESS
5.0
Introduction
126
5.1
Lack of local standards or best practices in PAC process
126
5.2
The overall flow of PAC process
127
5.3
Issues on untimely PAC Reports
138
5.3.1
Non-existence of a standard format of PAC Report
138
5.3.2
Timely submission of annual financial statements
138
5.3.3
Deferral in review of audited financial statements
13 9
5.3.4
Concurrent review of audited financial statements
141
5.3.5
Why are the PAC Reports delayed?
141
5.3.5 (a) Thematic conceptual matrix on the delay in
PAC reporting
142
5.3.5 (b) Emerging patterns of factors causing the delays in
PAC reporting and strategies to overcome them
143
5.3.5 (c) Conditions necessary for effective functioning of
PAC
5.4
149
Summary
152
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CHAPTER 6: THEORIES ASSOCIATION AND DISCUSSION
6.0
Introduction
153
6.1
The context under which the PAC is operating
154
6.1.1
6.1.2
6.2
PAC as an organization under the legislative
institution (SLA)
155
Public choice theory and organizational practice
157
The institutionalization of the PAC
6.2.1
160
Institutional arrangement, activities and norms conducive
to oversight activity
161
6.2.1 (a) Interaction of PAC members with other players
within the accountability systems
6.2.2
6.2.3
161
6.2.1 (b) Power versus authority
163
6.2.1 (c) Dynamics of accountability
167
Structural and organizational disincentives conducive to
oversight activity
169
6.2.2 (a) Non-partisan approach by PAC members
172
6.2.2 (b) Chairman's personal style
174
6.2.2 (c) Political will and technical capacity
176
Motivations and inducements to engage in oversight
behaviour
176
6.2.3(a) Bandura (1986) theory of Reciprocal Determinism
in human motivation
6.3
Organizational and operational issues concerning the PAC
6.3.1
179
182
Distorted flow in the PAC process specifically the
PAC reporting
182
6.3.1 (a) Preparations by members before PAC meetings
183
6.3.1 (b) The publication of the conclusion and
recommendations of PAC
186
6.3.1 (c) Challenge for speedier work process
188
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6.3.2
6.4
Barriers to creating an understanding of the PAC functions
Summary
188
192
CHAPTER 7: CONCLUSIONS, RECOMMENDATIONS AND FUTURE
RESEARCH
7.0
Introduction
193
7.1
An overview of financial oversight by PAC
193
7.2
How the PAC works and critical factors affecting performance
197
7.2.1
Inability to understand the PAC functions
198
7.2.2
PAC work climate and work process
199
7.2.3
Ensure adequacy of resources financial or otherwise
202
7.2.4
PAC non-review of current audited financial statements
204
7.2.5
Authorities awareness of the delay and initiative taken
to monitor them .
7.2.6
205
Promoting greater credence and relevancy of PAC through
timely reporting and improved sources of reference and
information
7.2.7
206
Cooperation and good relationships of all parties on PAC
work
7.3
208
Research Implications
208
7.3.1
Theoretical contributions
209
7.3.2
Methodological contributions
212
7.3.3
Practical Contributions
213
7.3.3(a) Outcome of emancipation activity at state D
213
7.4
Limitations and future research
215
7.5
Conclusion of the study
216
REFERENCES
219
APPENDICES
234
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LIST OF TABLES
Table
Title
Page
1.1
Research Process
9
1.2
Conceptual Framework
16
2.1
Rockman (1984) framework on oversight
30
3.1
PAC Reports Obtained
51
3.2
Observation on PAC Members' Appointment
52
3.3
Participant Interviewees
54
3.4
Background Information on PAC of State B
69
3.5
Data Accounting Sheet
71
3.6
Triangulation of Data Source
72
4.1
Integration of Financial Accountability Cycle and PAC
Cycle in Malaysia
81
4.2
PAC Established at State Level
90
4.3
PAC Member at National Meeting in 2006
91
4.4
Years of Being a PAC Member (Tenure)
91
4.5
PAC Members (Proportion out of State Assembly Seats)
92
4.6
State B PAC Members Background Information
96
4.7
PAC Attributes
99
4.8
PAC Appointment Process
100
4.9
PAC Activities (Malaysia states PAC)
105
4.10
PAC Activities (State B)
107
4.11
PAC Achievements
108
4.12
PAC Resources
122
4.13
Degree to Which Legislature Conducts Legislative
Oversight
124
5.1
The General Process in Addressing the AGO Report
128
5.2
Audit Certification of 2005 and 2006 Financial Statements
139
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Title
5.3
5.4
Audited Financial Statements Reviewed by PAC and
Tabled at SLA by 2005 and 2006
140
Parties Identified as Critical to Promote Timely PAC
Reporting
143
5.5
Reasons for Delay in PAC Reporting
144
5.6
Suggestions to Overcome PAC Reporting Delay
146
5.7
Typology of PAC Roles in Dealing with Late PAC
Reporting
148
5.8
Impact of Delay
149
5.9
Categories of Reasons for Delay in PAC Reporting
150
5.10
Categories of Strategies to Overcome Delay in PAC
Reporting
Frameworks on Explaining Oversight Behaviour
151
178
Number of PAC Meetings before PAC Reports Were
Produced
184
6.1
6.2
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LIST OF FIGURES
Figure
Title
Page
6.1
Theoretical Perspectives Emerging from the Study
157
7.1
Integration of Theories
210
7.2
Integration of Theories and Bandura (1986) Reciprocal
Determinism in Explaining Performance Behaviour
211
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LIST OF ABBREVIATIONS
AGO
Auditor General's Office
DUN
Dewan Undangan Negeri
EXCO
Executive Council Member
JCPAA
Joint Committee of Public Accounts and Audit
MB
Menteri Besar or Chief Minister
MPs
Members of Parliaments
PAC
Public Accounts Committee
SLA
State Legislative Assembly
SFO
State Financial Officer
sso
State Secretary Office
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LIST OF APPENDICES
Page
Appendix A:
Key Literature Review
235
Appendix B:
Public Accounts Committees - International
243
Comparison by Countries
Appendix C:
Interview Protocols and Consent Form
246
Appendix D:
Interview Guide Questions
253
Appendix E:
Narrative of What Took Place at SLA during
PAC Members' Appointment
261
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List of Conferences and Publications
List of Conference Papers
1. Rose Shamsiah, S. & Nafsiah, M. (2007). The Public Accounts Committee
(PAC) Commitment in Reviewing and Reporting on State Government's
Financial Statements. Accounting Studies International Conference. Kuala
Lumpur, Malaysia, October 3 0 - 3 1 .
2. Rose Shamsiah, S. & Nafsiah, M. (2008). Upholding Integrity Through Public
Accounts Committee's (PAC's) Work in Reviewing and Reporting on State
Government's Financial Statements. International Accounting and Business
Conference IABC2008. Johor, Malaysia, August 1 8 - 1 9 .
3. Rose Shamsiah, S. & Nafsiah, M. (2010). Public Accounts Committee (PAC) of
A Malaysian State: An Exploratory Analysis. 22ndAsian-Pacific Conference on
International Accounting Issues. Gold Coast, Australia, November 7 - 1 0 .
4. Rose Shamsiah, S. & Nafsiah, M. (2010). Dissemination of Findings on
Functions of Public Accounts Committee (PAC) of State Governments. PAC
Meeting of state D. State D Financial Office, October 8.
5. Rose Shamsiah, S. & Nafsiah, M. (2011). Emancipation Activity on Functions
of Public Accounts Committee (PAC) of State Governments and PAC KEY
Trial-Run. PAC Meeting of state D. State D's PAC Meeting Room, 1-3 March.
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List of Publication
1. Rose Shamsiah, S. & Nafsiah, M. (2009). The Magnitude of Public Accounts
Committee's (PAC's) Work in Reviewing and Reporting on State Government's
Financial Statements. Malaysian Accounting Review, 8(2), 1 -15.
List of Competition
1. PAC KIT (Public Accounts Committee (PAC) Key Indicator Track - Silver
Place).
Invention, Innovation and Design 2010, Dewan Sri Budiman, Universiti
Teknologi MARA Shah Alam, Malaysia, January 1 2 - 1 4 .
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CHAPTER 1
INTRODUCTION
1.0
Introduction
The State Legislative Assembly (SLA) at state level and the House of Representatives
at Federal level carry immense responsibility in making sure that government's
spending on programmes as well as policies lead to improvements benefiting the public.
Over the years, tremendous amounts of money were allocated in the form of budgets
with the interests of the nation in mind. Thus, it is important to ensure that budgets were
spent for the purposes intended. Still, financial oversight by legislative committees such
as Public Accounts Committee (PAC) has yet to be fully tapped and taken advantage of
in securing the well-used of public funds by the government. The quality and regularity
of financial oversight activities is a reflection that SLA members as representation of
the public, are executing their duties and commitment on behalf of the constituents who
elected them, to ensure that public accountability on the funds approved and allocated is
served.
This chapter provides the background and motivation for the study. It also provides
facts concerning the Public Accounts Committees (PACs) in Malaysia and other parts
of the world, including the issues and problems that led to this research. The
methodological approach to this research as well as the conceptual framework applied is
also highlighted.
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1.1
The establishment of PACs worldwide.
PACs of the State or Federal Government are select committees in the respective
Legislatures. They were commonly formed as a tool for ensuring transparency in the
government operations by most Commonwealth countries. The Denmark, France,
United Kingdom, Canada, Hong Kong, India, Fiji, South Africa, Singapore, Australia
and Malaysia are examples of countries with PAC or the like (see Appendix B, page
233). The structure and functions of PACs were first established following the reforms
made by William Gladstone when he was the British Chancellor of the Exchequer, in
1861 (Peake, 1948; Dubrow, 1999; Jones and Jacobs, 2005; Pellizo et al., 2006).
Nowadays, even the non-Commonwealth
countries
seem to replicate
such
establishments for the same purpose as it was initially made to perform (McGee, 2002;
Loney, 2004).
The purpose of the PACs has remained unchanged since they were first introduced
(McGee, 2002; Loney, 2004; Jones and Jacobs, 2005). PAC exists to hold the
authorities to account for the lawfulness, efficiency as well as effectiveness in using
public money and stores. Regardless under which country they were established, the
committees have similar roles and responsibilities. They normally recommend
improvements to the efficiency and effectiveness of government activities. In doing so,
a key part of PAC activity is the following up aspects of the Auditor General's Office
(AGO) Reports to the Parliament or the State Legislative Assembly. In addition, PACs
may also receive referrals from the Parliament or Legislative Assembly to undertake
inquiries.
With the current demand for greater openness in government finances as well as in the
conduct of their operations, PACs as representatives of the people, need to execute their
functions well in ensuring the integrity of public budgeting and spending. However, in
doing so legislatures across the world are faced with challenges (Wehner, 2002; Jones
and Jacobs, 2005). In a comparative study, Wehner (2002) identified some of the best
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practices of PACs. However, what constitutes best practice is not always evident as
studies have shown that the institutional settings, needs and contexts, which vary
between countries, may contribute to the difference between the PACs execution of
their role and functions (Wehner, 2002; Neal, 2003; Pellizo and Stapenhurst, 2004;
Jones and Jacobs, 2005).
1.2
PACs establishment in Malaysia.
In keeping with the concept of parliamentary democracy, which forms the basis of the
government administration in Malaysia, the Malaysian Federal Constitution 1957
emphasizes the separation of governing powers among legislative, executive, and
judicial authorities both at the federal level, and at the state level. In any of the three
separate powers, accountability mechanisms are built into the laws, regulations, and
institutions, especially in those controlling public expenditure (Ahmad Sarji, 1992). In
line with this, Dubrow (1999) observed that, generally, the accountability mechanisms
available to any one legislature depend upon constitutional provisions regarding the
specific powers of the legislature.
Accountability systems, financial or otherwise, are important as they help reflect the
accountability has been well executed among public servants and, thus, public funds
and public stores are safe-guarded against misbehaviour which may occur due to a lack
of public accountability. The setting-up of the PAC as a committee of legislature, at
federal or state levels, is very much related to the concept of accountability.
Accountability refers to the obligation to give answers and explanations concerning
one's actions and performance, to those with a right to require such answers and
explanation (Glyn, 1987; Fowles, 1993; Mulgan, 2000; Murray & Nijzink, 2002).
Therefore, accountability is in existence through the granting of powers and
responsibilities at various government levels to act in the best interests of the public.
The same concept generally applies when the public, through the election process,
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grants power and responsibilities to their representatives (members of the State
Legislative Assembly or SLA) to be in charge of the running of the state.
Some of these state assemblymen are involved in governing the state by being
appointed as Executive Council (EXCOs) members. Decisions or actions on public
funds by state governments needs to be accounted for by means of annual financial
statements submitted to the SLA. Accordingly, the auditing work by the Auditor
General's Office (AGO) boosts the accountability process when an independent view
on the existence and execution of public accountability is made in the Auditor General's
Office (AGO) Report on the submitted annual financial statements (Article 107 of the
Malaysian Federal Constitution, 1957). In order to complete the accountability cycle,
the PAC of the SLA, will take up issues addressed in the AGO Report for questioning.
However, this study indicates that there is a break in the flow of this accountability
cycle. The PAC Reports were found to be tabled at the SLA at a much later date than
expected.
Without the existence of a financial oversight body like PAC, there may be little
incentive for public entities or the executives to comply with the requirements of the
SLA, including adhering to the policies and procedures in place to ensure the
appropriate use of public funds. Although the public is considered as a stakeholder of
public funds, with few exceptions, many would have been conditioned to think that
public finance does not warrant the care that would be given to personal finance.
Therefore, many would let matters relating to public finances, including whether it was
used in the most appropriate manner, to be ironed out by those entrusted with the power
to do so. Through their representatives at SLA, taxpayers as the public are actually
entitled to know about the conduct and performance of the activities of the government.
The concept of PAC oversight exists as an essential effect of the SLA's process in
taking into account budgets passed by the SLA before any funding and expenditure is
provided by the government. Thus, the oversight function compliments rather than
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hampers the effective performance of financial accountability with which the state
government is entrusted. In this respect, the PAC is an example of an oversight body of
the SLA, which has a structure, functions, and relationships with the state government.
In addition, the AGO provides assurance on the efficiency and effectiveness of public
spending as well as maintaining the integrity of financial accounts.
The legislative settings of the PAC also provides opportunities for public bodies and
agencies to account to the SLA and, thus, reflects that the concept of stewardship and
accountability is properly executed as well as indirectly established the concept that
public bodies are well-governed.
1.3
Motivation of this study.
The researcher started paying attention to PAC after reading many of those newspapers
reports in the national press which highlighted various improprieties and weaknesses in
the government financial and administrative systems whether at states or federal level,
when both parties are entrusted to balance the nation's books.
The issue of poor administration and mismanagement of public funds has received
considerable critical attention over the years as the Auditor General's Report has
become more transparent. With press conferences taking place whenever the AGO
Reports were tabled at Parliament or the State Legislative Assembly (SLA), poor
administration and mismanagement issues of state government were making headlines.
These cases were highlighted in the Auditor General's Office (AGO) Reports and thus,
should have initiated PAC to start probing (The Star, 29 January 1999; The Star, 25
February 2000).
The most profound issues when these cases took place is that, despite widespread media
coverage as well as negative reactions of the public over the exposure of weaknesses,
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and measures taken to correct flaws in the systems, the so-called weaknesses remain
and problems repeat themselves over the years (The Star, 29 January 1999; The Star, 25
February 2000). It is becoming increasingly difficult to ignore the fact that such
problems as wastage, misappropriations and mismanagement still persists and we are
still seeing public funds being misused; excessive spending made; government taking
ill-advice investments; and delays happening in major government projects. Whenever
such issues are brought up, many are quick to point fingers at others (The Star, 29
January 1999; Harian Metro, 7 April 1999; Utusan Malaysia, 13 October 1999; The
Star, 29 December, 1999; The Star, 25 February 2000; Utusan Malaysia, 4 September
2000).
The AGO has repeatedly said that they has no jurisdiction to enforce penalty against the
offenders highlighted in the AGO Report. The government has been quick to assure that
actions will be taken against offenders (Berita Harian, 29 December 1999; The Star, 29
December, 1999; The New Straits Times, 28 September 2010; The Sunday Star, 24
October 2010). The Malaysian Anti-Corruption Commission (MACC) and the police
for example, insisted that investigations can only be carried out when claims are
reported and can be substantiated with evidence and witnesses. This indicates a need to
understand the various perceptions that exist among different parties regarding their
responsibilities in executing and promoting accountability.
The impact of such conflicts is that the lack of actions taken on weaknesses documented
in AGO Report reflects badly on the different parties, from the government to the
enforcement agencies, to the legislature (SLA) and also the judiciary. The AGO Report
should not be treated lightly and weaknesses exposed should be discussed in SLA and
be given the attention they deserve (Berita Harian, 29 December 1999; The Star, 29
December, 1999; The New Straits Times, 28 September 2010; The Sunday Star, 24
October 2010). What came to mind is that PAC as an important component in the
system of legislature seemed to be overlooked in terms of its potential to contribute
when it should play a key role in the issue. PAC as a committee of SLA, entrusted with
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financial oversight function should demonstrate that it is serious in addressing the issues
raised by the AGO (Degeling and Anderson, 1996; Loney, 2004).
The issue has led the researcher to look further into the PAC. Due to limited exploration
on the work of PAC locally, some preliminary study was initiated. Website search,
documentary search in the form of PAC Report and the 2006 national PAC meeting that
took place in Langkawi was observed.
1.3.1
Preliminary study on Malaysian PAC.
Initially, obtaining information regarding the PAC involved browsing through the
Malaysian state governments' websites, which led to the discovery that out of the
thirteen states that have PACs established under the Standing Order of the Rules and
Regulations of SLA Meeting:
i) Only 3 out of thirteen states have a proper mentioning of the PAC as part of
their legislative committee systems, such as acknowledging the existence of
the PAC; stating its functions and power; and listing the names, photos, and
constituents of the PAC members.
ii) Only 1 state has its PAC Report attached for public perusal. Even then, the
report was from the 1990s.
The proof of the financial oversight work by SLA in this study comes in the form of
PAC Report produced by PAC, tabled yearly at the State Legislative Assembly (SLA).
In the early observations, a request was made to all the thirteen states to send their latest
PAC Report, which was tabled in 2005. One 2005 PAC Report of a state in Peninsular
Malaysia was initially obtained. The first PAC Report received from State B indicated
that the 2005 PAC Report was based on the AGO's Report on the financial statements
of the year 2002. Hence, it seems like issues highlighted by the AGO in the AGO
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