Country Report Presentation

History of National Audit Department
The Auditor General’s institution has been in existence since the British colonial administration in the
early 19th century. The nature of auditing during this era was mainly on certification of accounts and
maintenance of records. When the Federation of Malaya attained its independence in 1957, the name
of the audit institution was changed from Audit Institution to National Audit Department (NAD). It is
modelled after Westminster which is also known as the Anglo-Saxon or the Parliamentary Model. It was
first established under Article 97 of the Reid Commission Report and further stipulated in the Federation
of Malaya Agreement 1948, followed by Article 105 of the Federal Constitution and finally expressed
comprehensively through the Audit Act 1957.
Appointment and Function of Auditor General
The Auditor General (AG) is appointed by the king on the advice of the Prime Minister and after
consultation with the Conference of Rulers representing 13 states of Malaysia. To enhance his
independence, provisions regarding his remuneration and security of tenure have been provided in the
Federal Constitution and Audit Act 1957. His remuneration which is charged on the Consolidated Fund is
fixed by law and cannot be altered to his disadvantage and his removal from office is similar to the
Federal Court judge.
In performing its statutory duties, the AG is not subject to the authority of any minister or the Executive
body. This technical independence is reinforced by the Audit Act which allows the AG to carry out the
audit in a manner as he may deem fit. However, as the head of a government department, he is subject
to the rules and regulations in the administration of his department as any other Head of Departments.
In terms of financial independence, NAD yearly budget undergoes the scrutiny, review and approval
process of the Ministry of Finance Malaysia and the Parliament.
Type of Audit
Presently, the AG conducts four type of audit:
Financial Statement/Attestation Audit
To give an opinion as whether the Financial Statements of the Federal Government, State
Government, Federal and State Statutory Bodies, Local Government, Islamic Religious Council and
other public entities:
 Show a true and fair view.
 Financial performance and cash flow are in accordance with the approved Malaysian Financial
Reporting Standards
 Accounting records are maintained properly and kept up to date.
Financial Management (Accountability Index) Audit
 To evaluate whether financial management of the Ministries/Departments/Agencies of the
Federal and State Governments is in accordance with the relevant financial laws and
 This evaluation covers elements of the organization management, budget, receipt,
expenditure, Trust Fund/Trust Accounts and Deposits, asset and stores, investment and loans
as well as financial statements.
Performance Audit
 To evaluate whether programmes and activities of the Ministries/Departments/Agencies have
been carried out economically, efficiently and effectively
 Achieve its desired objectives and goals
Government Companies’ Management Audit
 To evaluate whether the Government companies/subsidiaries have been managed in a proper
Commencing 2013, the AG conducts follow-up on actions taken by Ministries/Departments/Agencies on
issues reported in the AG’s Report in a more structured approach. Apart from the above audit, the NAD
also embark on real time (priori audit), environment audit and IT audit.
Legal and Regulatory Environment
The roles and responsibilities of NAD on anti-corruption was not indicated specifically. However, it well
embedded within Section 6 of the Audit Act 1957 which require the Auditor General to examine and
ascertain whether;
Reasonable precautions have been taken to safeguard collection and custody of public
Payments are properly authorised, charged and supported by sufficient vouchers and
Accounts and records are properly maintained;
Funds applied to the purposes it was intended were carried out or managed in an
efficient manner with due regard for economy, avoidance of waste and extravagance;
Provisions of Federal Constitution, financial Procedure Act 1957 and any written law
have been complied with.
Coupled with the above, Section 7 of the Audit Act 1957 further stipulated the power of the AG to
conduct any inquiry, examination or audit and to report thereon to him.
As for anti-money laundering, the Malaysian Government has introduced the Anti-Money Laundering
Act, 2001 (AMLA) on 15 January 2002. The Central Bank of Malaysia, Bank Negara Malaysia (BNM) has
been appointed as the competent authority for the purpose of combating money laundering activities.
On 6 March 2007, this Act was renamed as Anti-Money Laundering and anti-Terrorism Financing Act
2001 (Act 613) is to provide for the offence of money laundering, the measures to be taken for the
prevention of money laundering and terrorism finances offences and to provide for the forfeiture of
terrorist property. The Financial Intelligence Unit within the CBM is responsible for policy formulation of
anti-money laundering measures. The Royal Malaysia Police also play an important role on anti-money
laundering through its Commercial Crime Investigation Department.
NAD did not have mandate to detect or fight money laundering as it revolve within a web of complex
placement, layering and integration of illegal money in the financial and banking industry. NAD has been
acting as a whistle blower whereby suspected cases of money laundering sniffed during the course of
auditing will be reported to these agencies.
Anti-Corruption Strategy
NAD has its own anti-corruption strategy implemented in accordance with the National Anti-Corruption
Strategy, NAD Strategic Plan (2011-2015) and Memorandum of Understanding (MOU) with the
Malaysian Anti-Corruption Commission (MACC).
Firstly under the National Anti-Corruption Strategy, the Government of Malaysia has embarked on a
Government Transformation Programme (GTP) which is implemented into 3 phases; GTP 1.0 (20092012), GTP 2.0 (2013-2015) and GTP 3.0 (2016-2020) with each having its own focal points.
GTP 1.0 seeks to initiate immediate and big changes to the civil service, government structure and
renew the faith of people with the government. Seven (7) New Key Results Area (NKRA) were
implemented to address:
 Rising Cost of Living
 Fighting Corruption
 Reducing Crime
 Improving Student Outcomes
 Raising Living Standards of Low Income Households
 Improving Rural Basic Infrastructure
 Improving Urban Public Transport
GTP 1.0 has achieved many significant accomplishment and positive results during the four years of its
implementation. The 2nd phase of the GTP was launched in 2013 and it builds on the successes of GTP
1.0 by further deepening and broadening reforms to complete the transformation. It is under GTP 2.0
whereby the NAD was assigned with four (4) initiatives namely;
Fast Tracking Access To Auditor General's Performance Audit Report
Action Committee
Auditor General's Online Dashboard
Putrajaya Inquisition
Details of these initiatives will be elaborated further in the best practice of NAD’s reporting and followup role.
Secondly under the 2nd focus of the Strategic Plan (2011-2015), NAD is embarking into new area of
auditing such as forensic auditing by establishing Subject Matter Expert Team on fraud. The Key
Performance Indicator for this programme is to set up 1-2 new units/groups.
Thirdly on the 29th of May 2012, the NAD and MACC signed a Memorandum of Understanding to
implement a cross-fertilisation program by attaching officers from both agencies. The aim is to
strengthen the ability and capacity of auditors in terms of techniques to detect existence of fraud,
malpractice, corruption, irregularities and violations of systems and procedures. As of October 2013,
three series of exchange program involving 7 officers from each agency had been attached for 6 months
in the respective agencies.
NAD’s Role in Prevention of Corruption and Money Laundering
The 16th INCOSAI held in Uruguay in 1998 adopted an accord that SAIs should create an environment
that is unfavorable to fraud and corruption. The theme of this accord points to prevention. For NAD, the
main objective of preventive role is to minimize the risk of fraud and corruption. Perhaps, it is the most
effective tool in reducing corruption and fraud as actual discoveries of corruption are comparatively low.
This is not a surprising fact as finding of corrupt activities within the regular audit is mere incidental than
an audit focus. However the deterrent effect of an audit carried out by NAD should not be
In this aspect, NAD contributes an effective preventive role in anti-corruption by the various type of
audit implemented as follows:
Financial Management Audit through Accountability Index
Accountability Index (AI) was introduced by NADM in 2007 as a performance measure to be
benchmarked on a yearly basis. It is part of the initiative and continuing effort by NAD to enhance
accountability and integrity of public fund management in all government ministries, departments
and agencies at the Federal and State levels.
The rationale of implementing AI is to respond to the concern of the Government leaders and
people over the instances of non-compliance and internal control weaknesses that were repeatedly
highlighted in the annual audit reports. Through an objective and transparent star rating system, it
is hoped that agencies will be sufficiently induced to take corrective actions on the weaknesses on a
timely basis. Thus, it is hoped that AI will motivate heads of ministries, departments and agencies to
walk the talk in ensuring accountability and integrity in their respective organizations. As a
benchmarking mechanism, AI can assist auditees to measure the progress of their financial
management over the years.
AI covers a wide spectrum of nine activities ranging from; Organisational management control
Budgetary control Receipts control Expenditure control Trust Fund /Trust Account and Deposit
Account management Asset and inventory management Investment management Loans
management and Preparation of financial statement.
For each of these categories, there are established rules and regulations in which the Secretary
Generals and the Director Generals are duty bound to comply and held accountable. For each of
the category audited, an overall score of the weighted marking will be given. Marks will be given
according to the agency’s performance in financial management and will be translated into star
ratings as follows:
4 stars - Excellent (90%-100%)
3 stars - Good (70%-89%)
2 stars - Satisfactory (50%-69%)
1 star - Not Satisfactory (49% and below)
This AI will be implemented every year for departments and agencies classified in the compulsory
list, all ministries and the four main revenue-generating agencies at the federal level, namely the
Royal Malaysian Customs Department, the Immigration Department of Malaysia, the Royal
Malaysian Police and the Road Transport Department. As for the State Government, the
compulsory list includes all State Treasuries, State Economic Development Corporations and all the
state Islamic religious Councils. The rest of the departments and agencies including Federal and
State Statutory Bodies will be assigned their AI once every three years.
Since the inception of AI in 2007, it has shown to deliver good results by the increasing number of
auditees securing excellent or 4 stars rating and number of unqualified report given to the audited
financial statements of government agencies.
4 Stars Rating
For example 194 ministries, departments and agencies have been rated excellent or 4 stars in 2013,
compared with 143 in 2012, 111 in 2011 and 77 in 2010. The spill-over of good effect of AI can be
seen from the number of unqualified report given to the audited financial statements of
government agencies for the year 2013. Compared to 2012, unqualified report has slightly
increased with no adverse and disclaimer report.
ii). Surprise Inspection
Apart from the normal attestation of Federal and States Government Financial Statements and
compliance audit, there are about 7,000 responsible centers that are involved in the financial
management. It is almost an impossible task to conduct audit on all these centers simultaneous or
even on a rotational basis.
Therefore, to overcome the problem of unable to perform audit of all these responsible centers and
to instill a certain degree of audit presence, NAD implement Surprise Inspection (SI). SI is traced to
be implemented since 1932 and still has been carried out till today. The importance of SI is
reflected in the AG’s Key Performance Indicator as 540 agencies of the Federal and State
Government level will be audited every year on a rotational basis.
It is hoped that head of agencies will always stand guard of any eventuality that they will be audited
anytime without being informed and adhere to rules and regulations in their financial management.
This audit covers the inspection of collection, petty cash and valuables, delegation of authority,
investment, stamps, safe/vault and payment. Audit is completed within one day and observation
will be raised the same day.
iii). Promoting Good Governance
Good governance is the best antidote to fraud and corruption. It is about doing the right thing
when nobody is watching. It demands an overall high ethical behavior, integrity and accountability.
To instill this antidote, NAD add value and reinforces good governance through its oversight, insight
and foresight roles as follows:
a). Oversight
NADM assist decision makers by assessing, evaluate and report whether funds for the intended
purpose are well spend, comply with laws and regulations and the success or failure of the financial
and performance of the programs. Oversight by auditors also includes detection and deterrent of
fraud, inappropriate or abusive acts, misuse of power and resources entrusted to public officials.
b). Insight
Auditors can provide insight to decision makers by assessing programs or activities which are
feasible and performing, share of best practices and bench marking information. Programs can be
assessed horizontally across the agencies or individually.
c). Foresight
An auditor assists agencies to look forward by identifying trend and bringing attention to challenges
before it become a crisis such as demographic trends, economic conditions or changing security
threats, identify risks and opportunities arising from the changing environment of society,
technology and nature of economy. By using risk based auditing approach, the audit focuses on
identifying the risks and recommends on how managing the risks to the agencies.
iv). Integrity and Governance Committee
The AG and some senior officers of the NAD were elected as member of the Integrity and
Governance Committee (IGC). This committee is headed by the Minister in the Prime Minister
Department and meeting is held once a month. Others members of the committee are
representatives from the MACC, Malaysian Institute of Integrity and other agencies related to
The purpose of IGC is to coordinate all initiatives (whether short, medium or long term) relating to
the purpose and mission of government policy against corruption in order to provide a united,
consistent and coherent approach. Therefore, the involvement of NAD in IGC is very important as it
can contribute towards formulation of anti-corruption policy based on weaknesses discovered
during the audit.
As for NAD’s role in prevention and detection of money laundering, it has no specific role or
responsibilities. However, it still play preventive and detective role through joint exercise with other
enforcement agencies such as the Central Bank of Malaysia, MACC, Inland Revenue Board, Attorney
General Office and Customs. “Operation of RM3 Billion Task Force” is a typical example of a successful
joint exercise which aims to detect and investigate loss of revenue, money trail and money laundering.
NAD plays its role in auditing and analyzing documentations leading to trail of money. For NADM, the
main objective of preventive role in anti-money laundering is to enhance cooperation and network with
other enforcement agencies.
NAD’s Role in Detection of Corruption
Traditionally, primary responsibility for preventing and detecting corruption rests with the auditee and
enforcement agencies such as police and anti-corruption agencies. SAIs are not seeing fraud and
corruption busting as its main goal but rather on fostering an environment that is not conducive for
fraud. Auditors are entrusted to review and provide assurance on the financial aspects of the
organization to the management and parliament.
However in face of many shocking cases, the qualities of work carried out by auditors are always
questioned. The increasing of fraudulent practices and corruption has raised concerns regarding the
credibility of the audit profession. Public believes SAI should seek to detect fraud and corruption.
While the type and audit approach to prevent corruption may have been appropriate, it is becoming
more apparent that more could and should be done to detect fraud and corruption. There is also a need
to reduce the expectation gap between stakeholder and audit. For this matter, NAD is well positioned to
support, supplement and enhance effectiveness of existing anti-corruption initiatives by the government
and other enforcement agencies.
In NAD, most of the corrupt activities were detected through:
 Proactive approach through risk based audit by detecting red flags and symptoms of corruption.
Amongst other audit tools and techniques applied to detect corrupt activities are evaluation of
internal control such as administrative controls and accounting; data mining with the use of
Computer-Assisted Audit Techniques (CAATs); data gathering tools such as interviewing,
observations, questionnaires, checklists and sampling; and analytical review such as ratio
analysis and variance analysis.
Reactive approach based on complaints and referrals received
Risk-Based Audit
Risk-based audit is the methodology used to detect fraud in the auditing process. It helps to identify
aspects of high risk. Auditors need to go through 3 stages of the audit process namely planning,
execution and reporting. The possibility of fraud can be identified during the planning and
implementation stage of the audit process. Key methods of the auditing process for detecting fraud are
shown in Table 1.
Table 1
Key Auditing Process to Detect Fraud
Evaluate Risk Of Fraud In General
1.1 Discuss how and where fraud could easily happen
1.2 Get information to identify risk of fraud
1.3 Identify potential risk of fraud
1.4 Identify material misstatement
1.5 Evaluation on prevention of fraud
Fraud Indicators For High Risk Activity
Analysis Of Fraud Assessment Results
Further Examinations Of Fraud
Documentation of Fraud
Using this methodology;
 Auditors discuss and consider situation where external and internal factors could lead to fraud
 Professional skepticism will be applied whereby a possibility of material misstatement due to
fraud could occur regardless of any past experience and integrity of the entity
 Auditors will obtain sufficient information about the entity and environment in which it
operates to evaluate fraud risk
 Auditors need to consider if misstatements in financial statement is due to fraud or due to
misuse of assets.
 Auditors should evaluate whether programs and controls that have been designed to prevent
fraud is appropriate and functioning well.
After identifying high-risk activities, the auditors will conduct an in-depth study for indication of fraud
activity. Auditors should be alert to signs of fraud, know how to study the situation and understand that
signs of fraud do not necessarily indicate the existence of fraud in a high risk activity. Based on risk
assessment, audit objectives and audit procedures will be developed to detect fraud. Analytical
procedures should be performed if the results or expected outcome is material. If senior management is
involved in the fraud, auditor should consider whether it is an indication of a larger problem. Proper
documentation of fraud is most critical and important. Auditors should document all activities and
results to support conclusions and for further reference. This documentation will be a significant
reference to the auditor during follow up actions or if used as evidence in court. Auditors need to
document the followings;
Audit group discussions
Procedures to obtain information for identifying and assessing risks of fraud
Identification of fraud risks
Procedures implemented to address the risks
Communication with management and audit committee
Port Klang Free Zone Scandal: The audit that led to its detection started with the Port Klang
Authority’s (PKA) Financial Statement Audit for the year 2003 whereby qualified report of going
concern was issued as it did not have sufficient financial resources to meet its obligation –
“Contingent Liabilities of RM1.81billion (USD 600 million)”. Qualified report on PKA’s Financial
Statement was given until 2005 for the same reason.
In 2006, a special audit was performed by NAD and the findings were reported to the
government. Subsequently in 2007, a joint investigation by the Attorney General, MACC and
NAD was conducted. In October 2008, a forensic audit was carried out by Pricewaterhouse
Coopers and according to the report issued on 3 February 2009, it could potentially end up
costing the Malaysian taxpayer USD4 billion. In 2009 and 2010, specific charges to individuals
involved were made and some are acquitted of the charges while the proceedings for the
remains are still on-going.
Message to Auditor General
Apart the proactive approach of risk based audit to detect fraud and corruption, “Message to Auditor
General” is another platform provided by NAD in its website for public to send enquiries, complaints
against perceived irregularities and propose recommendations to improve transparency and
Through this reactive approach, complaints received from the public will be investigated and informer
will be responded within 15 working days. This link has provided the NAD with another source of
information from the public to detect fraud and corruption.
In 2013, a total of 69 emails were received through the “Message to Auditor General” link in the NAD
website. Most of the complaints involved non-compliance of rules and regulations, misappropriation of
fund, abuse of power, false claims and delays in projects. Apart from complaints, NAD received
suggestions for improvement and congratulatory messages through this link too.
NAD’s Role in Reporting and Follow-Up Role
Auditors are responsible for obtaining reasonable assurance that the financial statements / activities are
free of material misstatement. However, absolute assurance cannot be achieved and the auditor's
report does not reflect absolute certainty. Even with a good audit planning and well executed
implementation, it may not detect material misstatement. Any discovery after an audit is not indicator
of auditors did not comply with the auditing standards.
Upon discovery of red flags or symptoms of corruption during a regular audit, an in-depth and full blown
investigation will be conducted. After obtaining substantial evidence of fraud, auditors should discuss
with senior management of NAD and notify the management or the audit committee during the course
of audit, pre-exit conference and exit conference. Fraud involving senior management and fraud entity
that causes a material misstatement to the financial statements or activity must be disclosed in the
audit report.
Auditors should get the views of top management before bringing the matter to the knowledge of other
agencies. Auditor may make recommendations to improve and further enhance the organisation's
internal controls. Upon tabling of AG’s Report, issues with indication of fraud will be picked up by the
anti-corruption agency for further investigation. SAI will assist by providing information and
Transformation in AG’s Report and Follow-Up
In recent years, the Auditor General’s Report (AGR) is much awaited by the public with keen anticipation
and interest because of the media coverage on various shortcomings of the public service in managing
public money. It is used to be an annual affair where the AGR is tabled soon after the presentation of
budget. Naturally, the ensuing public reaction to audit revelation tends to be critical because of
weaknesses highlighted and unawareness of the follow-up action taken by the relevant agencies.
However beginning 2013, AGR on performance audit will be tabled every time the parliament sits. This is
made possible when the NAD was assigned with four initiatives under the Government Transformation
Programme 2.0 (GTP). Under the National Key Result Areas (NKRA) On Combating Corruption, NAD was
tasked as one of the agencies that can indirectly help to tackle the issue of corruption.
Four (4) Initiatives on Reporting and Follow-Up
The Performance Management & Delivery Unit (PEMANDU) of the Prime Minister Department
announced four new initiatives to transform the process of reporting and follow-up of the AGR as
Fast Tracking Access to Auditor General's Performance Audit Report (FTA)
AG's Report used to be tabled once a year in October. There is a time lapse of 14 months after
completion of an audit before the AGR can be tabled. It prevents any action to be taken against
a person until the date has passed. This increase chances of evidence be tampered and make
investigation difficult.
This initiative calls for AG's Performance Audit Report to be fast-tracked so that it can be tabled
every time Parliament sits or at least thrice yearly. It would enable follow-up action to be taken
by the enforcement agencies at an earlier stage. Once-a-year AG's Report containing an
overwhelming amount of information will be reduced too.
The aim of FTA is to;
• Promote transparency
• Induce pressure on the relevant authorities to act on outstanding issues
• Tackle the issue of once-a-year AGR which contains an overwhelming amount of
• Enable follow-up action to be taken by the enforcement agencies at an earlier stage
To implement this initiative effectively, a revamp to the existing organisation structure has been
done with the establishment of a new division called Follow-Up Division (FUD). The functions
and responsibilities of FUD are;
• Updating data and information of audit findings and feedback for 3 activities of the
Federal Government, State Government and Federal Statutory Bodies according to
three series of presentations.
• Secretariat for Action Committee meeting.
• Secretariat Putrajaya Inquisition meeting.
• Coordinate information related to punitive and corrective action of the Ministry of
Finance Malaysia, Attorney General Chambers of Malaysia, Department of Attorney
General, Malaysia Anti-Corruption Commission, Public Service Department and the
Royal Malaysia Police.
On the work process, each audit team is responsible to update issues and status of the audit
into the Follow-Up Tab of the Auditing Management System. Each audit sector need to send
these issues and status through online to the FUD based on 8 criteria as follows;
• Unreasonable pricing
• Improper payment
• Construction / Supplies does not comply with specifications
• Unreasonable delays
• Wastage
• Weaknesses in revenue management
• Weaknesses in management and maintenance of assets
• Poor management of government-linked companies
Subsequently, these issues and status will be scrutinised and summarized by FUD before
submitting to the Auditor General for approval. It will be uploaded and published in the AG’s
Dashboard one hour after the AGR is tabled in the parliament. Any action or feedback received
after the tabling in parliament will be monitored and updated by FUD until the issue is settled.
ii). Action Committee On the AG’s Report
The member of Action Committee (AC) consists of Ministry of Finance Malaysia, Attorney
General Chambers of Malaysia, Public Service Department, Royal Malaysia Police and Malaysia
Anti-committee commission. It has the responsibilities to:
• Determine the next course of actions to be taken by Ministries / Departments / Agencies
on the issues raised in the AGR.
• Help Secretary General, Director General and Head of Department to address issues
raised in the AGR.
Two types of actions that can be taken by AC are:
• Corrective
Improvement of systems and procedures
• Punitive
If there are elements of corruption or abuse of power, breach of trust and negligence
that resulted in losses to the government
iii). Auditor General's Online Dashboard
This initiative is partly related to the first initiative of Fast Tracking Access to Auditor General's
Performance Audit Report (FTA). Soon after the AGR on performance audit is tabled in the
Parliament, issues and status of follow–up will be published in the AG’s Online Dashboard
Prior to this initiative, public are unaware or have limited access to follow-through of
recommendations made in the AG's Report. Now, public can access the dashboard and its status
is shown in a traffic light system; red color indicating action yet to be taken, currently under
action in yellow color and solved in green color.
No action taken by the auditee
Auditee is taking action on the audit
findings raised in AGR
Findings highlighted in AGR is solved
as actions has been taken by auditee.
In short, AGD serves as a platform to disseminate information on audit issues and the follow-up
actions. It has the benefits of:
Updating the public on outstanding issues in AG's Report
Promote transparency
Improve public perception
The dashboard is updated and maintained by a division working continuously and full time
throughout the year. This reflects the aggressiveness of follow-up on audit findings by the NAD.
iv). Putrajaya Inquisition
The need of an Inquisition Committee chaired by the Prime Minister and other relevant
ministries and agencies is due the large backlog of cases reported by the AG. It is believed that
under the oversight of the Prime Minister, it will create an impetus to various agencies to
consider recommendations seriously and take the necessary plan. The main goal is to clear
backlog of cases and the AG's office is the secretariat of this Inquisition.
Guidelines On Auditing of Fraud
Fraud indicators are difficult to identify but generic indicators are almost present everywhere. To
successful recognize these indicators, auditors must rely on their technical experience, professional
judgment and good understanding of how fraud is committed. Audit strategy should be diverted on
areas and operations prone to fraud and corruption by developing effective high risk indicators.
To enhance auditor’s skill on fraud detection, NAD has issued a Fraud Auditing Guideline whereby audit
strategies, procedures and techniques are drawn out.
10. Capacity Building
Continuous training for audit staff is important to ensure auditing standards of the highest quality are
maintained at all times. The National Audit Academy has conducted courses on auditing, accounting,
performance audit, information communication and technology, management and fraud.
Between 2006 and 2013, a total of 283 audit staffs are given training on fraud, corruption and money
laundering. Apart from in-house courses, NAD also seconded officers to the Big Four Audit firms for a
period of 8 months to one year to gain auditing knowledge, experiences and best practices in the private
sector. Auditors are given the opportunity to attend courses conducted by professional and auditing
bodies locally and abroad. This includes active participation in working group organized by INTOSAI and
ASOSAI such as INTOSAI Working Group on Fighting against Corruption and Money Laundering
On the 29th of May 2012, the NADM and Malaysian Anti-Corruption Commission signed a Memorandum
of Understanding to implement a cross-fertilisation program by attaching officers from both agencies.
The aim is to strengthen the ability and capacity in terms of techniques to detect existence of
malpractice, corruption, irregularities and violations of systems and procedures. This is a significant step
forward to expose auditors to the latest concepts, methodologies and skills in the fight against
11. Summary
It is recognized that NAD did not have legal mandate to prosecute corruption and money laundering
perpetrators. However, NAD still can contribute effectively by collecting evidences in the course of audit
by pointing out suspected cases of corruption and money laundering, if possible to the appropriate
authorities to take further action.
NAD also recognized the need to develop competence and capacity so that they can assist the relevant
authorities in pursuing their investigations. Steps towards this need have been taken with the signing of
MOU with MACC on cross-fertilisation program and the establishment of Subject Matter Expert Team on
Fraud. Currently NAD is studying the possibility of becoming a commission service or a board under the
Department Transformation Plan. The transformation of the auditing process must have buy-in support
from the Federal and State Government. Without this continuous support, the earlier AI and four
initiatives of the NKRA Corruption will never get started.