Each time the AG’s report is released, the media will be in
a frenzy - highlighting the project delays; cost overruns, abuse of public
funds, loss of assets and other malfeasance in the government machinery. After
a few days, this news item will slowly disappear from the media. Occasionally,
the MACC and PAC may pick up some issues, and the news may drag on a little
longer. Some efforts to improve the
government machinery may have taken placed, but they have not been effective as
the same issues are repeated year after year.
Previously, the AG’s report was released once a year. Starting
from 2013, the AG’s report will be released in three parts and will be debated
in three parliament sittings. This initiative by Pemandu is intended to keep
the AG’s report in the news. Whether it will be effective in introducing true
reforms in the government machinery, we have yet to see. Over exposure of the
AG’s report in the media may even have negative effects if there is no
substantial change in the format and contents of the reports.
The mandate of the Auditor-General Office
The office of the Auditor-General is one of the major instruments
created to improve governance and to make the government machinery more
transparent. The Auditor-General position is specified in the Federal
Constitution under Article 105, the powers of the Auditor-General under Article
106 and the Reports of the Auditor-General under Article 107.
Given these powers, the National Audit Department has wide-ranging access to the financial records and officials
of the ministries, departments, agencies and government linked companies (audit
objects). This is spelt out in the Audit Act 1957.
Classifying Concession Agreements as Official Secrets – an anomaly?
Concession agreements for the
IPP, water and highway and others are classified as secret under the Official
Secrets Act 1972. This effectively made the financial management and activities
of these concessionaires outside the purview of the Auditor General’s office. Any senior government officer appointed by the
Minister, Mentri Besar or Chief Minister can declare a document to be secret
under the OSA. Does this not erode the mandate given to the Auditor General
under the Federal Constitution and the Audit Act? Perhaps, our legal experts
can clarify this apparent anomaly.
What is in the AG’s Report
The National Audit Department has offices in every state in
the country. It has access to all the ministries, government departments and agencies,
and government linked companies. The audit objects may include any of these
organizations and any of the government programmes, projects or initiatives
except those under the OSA. Each year, only a sample of these units is audited
and as such to get a more complete picture; it is necessary to look at the
reports for a few years.
The National Audit Department needs to carry out four types
of audit at the federal and state level, namely - Attestation Audit, Compliance
Audit, Performance Audit and Government Companies’ Management Audit. These are described in more details in the
more recent AG’s report.
The AG’s reports are divided into several documents for them
to be presented to Parliament and the State Legislative assemblies. It is also
separated into a few documents, typically for finance and activities. A summary
of the reports in English was provided from 2009. More recently, a separate
report on feed backs (Maklum balas) has been produced. Starting from 2013, the
reports are also produced in three series. Thus, each year, the AG’s report can
have as much as 56 to 90 documents.
Is the AG’s Report good enough?
The media and the general public have always treated the
AG’s report with deference because it is a unique and valuable source of
information about the abuses, incompetency and other shortcomings in the
government machinery. There are very few criticisms of the report itself. However,
the reality is that the AG’s report was not effective in promoting good
governance and efficiencies. Even our
former PM of 22 years, called for the government to pay attention to AG’s
report and improve efficiency (www.thesundaily.com, Dec 26, 2013). He also wanted
the ministers to be held responsible (www.star.com.my, Oct 10, 2013).
Why is it perceived that the government is ignoring the AG’s
reports? Why are the various stakeholders not using the report as a frequent report in this article:
- Is the information in the AG’s report
accessible, usable and exploitable?
- Audit Report content
- Audi findings and recommendations
Accessible, Usable and Exploitable
For the AG’s report to be effective, the information in the
report must be accessible, usable and exploitable. After all, this is the
information age.
Making information available online is essential but by itself
does not make the information accessible. Some of the older report documents
(circa 2008) are as large as 500MB. Without high-speed broadband, it is not
feasible to download such huge files. The file size for the latest release
(2013) can still be larger than 10MB. The information for each year is spread
over 50 to 90 files, thus making finding information difficult without the help
of a search engine. Even with a search engine like Google, searching for the
PDF files have been found to be incomplete. It is likely that Google will not
index the large PDF files as their crawler will have to download it.
What is likely to be more useful for users is to be able to
browse the various audit objects (in the hundreds) to see which objects have
been audited and when. The users would also like to see if there are outstanding
actions required and whether these have been resolved. If there is a second
audit on the same audit object, a comparison can be very meaningful. To be able
to identify those objects that have not been audited is also significant.
Information is only useful when it is organized. The current
AG’s report is organized for presentation to the legislative bodies on a
periodic basis. If a person wants to use the report for other purposes, then
the person must be willing to invest in a lot of time and effort to reorganize
the information. For different issues he
is researching, the same process will have to be repeated. With the advances in
information technology today, a technical solution should be available to make
the information more accessible and usable.
The information in the documents needs to be integrated so
that it is easy for users to connect the dots. This will allow them to see
existing and emerging patterns in the operation of our government machinery.
How the information can be exploited is left to the
resourcefulness and ingenuity of the stakeholders.
Audit Report Content
Naming those involved
Government officers and other staff involved in the weaknesses
identified are not named in the AG’s report. Naming them would put on record
their involvement in these activities. It does not necessarily mean that they
are the culprits, but it does imply their impotence or incompetence as they were
employed to provide their management and leadership expertise. We must not
forget that these same senior officers are the ones that parade themselves in
their organization’s web sites.
In the same vein, names of vendors, contractors and
consultants together with the senior project executives are often omitted. Would
not this be a big step towards accountability?
Photos of defects
The AG’s reports for states’ activities are padded with
pictures of defects and poor maintenance. Properly organized, the pictures can
be useful for the various stakeholders to reduce future incidents. However, in monetary
terms, the cost implication pale when compared with the billions of ringgits
expended in many infrastructure development projects.
Perhaps, a better way to manage these photographs is to
create a pictures repository where each picture is suitably captioned and includes
meta data such as date, location, related project, owner, builder, type of
defect and so on. Crowd sourcing of such images can also be solicited to create
a more complete repository of defective work and maintenance. With this
repository, the deficient work of contractors and poor maintenance of the
agencies involved can be viewed independently of the AG’s report. It will be a very useful resource for the
training of government officers and technical students.
Audit Findings and Recommendations
The audit findings and recommendations form the most
important parts of the AG’s report. Typically, the AG’s report provided an
overall assessment of the audit unit followed by the weaknesses and
recommendations. Unfortunately, the
National Audit Department tends to be over generous with the overall assessment
as audit units considered good or satisfactory can come with a long list of
critical weaknesses. The danger of this generosity is that the audit units may
focus only on the overall assessment and disregard the weakness as something to
be expected.
If we compile all the weakness in the AG’s report, weaknesses
are found in many areas such as administration, contract administration,
facilities and asset management, human-resource
management, procurement, project implementation, technical know how and
in the consultants and contractors. The array of audit issues raised covers
almost every activity and function such as competency, contractual, delays,
delivery, documentation, environmental, financial controls, management controls,
authority and mandate, procurement procedures, record keeping, resource
capacity and utilization, risk management, supervision, technical competency
and quality assurance.
With such wide-spread shortcomings, it is more than likely
that there are underlying systemic issues. Unfortunately, the recommendations
of the National Audit Department were focused on addressing the immediate
problems and at that overly simplistic. A small sample from the numerous audit
recommendations is given below:
- PWD should ensure that construction projects are
carefully planned to ensure the smooth running of the project;
- PWD and consultants should monitor the
maintenance works during the defects liability period to make sure that work is
done according to schedule;
- The consultants should conduct a comprehensive
review before the complete As-Built Drawings is finalised;
- selection of contractors who were not
qualified/experienced which partly contributed to the problems in project
management, delays in project completion and high number of Non-Compliance
Reports;
- give due attention to ground settlement problem
and ensure that a
long-term remedy is
taken immediately;
- give serious
attention to the
administration of contracts to
protect the interest of the Government.
The audit units are the organizations with the expertise to
address the problems identified, and they should be held responsible. With systemic problems, the problems may need
to be excalated. As such, it may be presumptuous
for the National Audit Department to offer solutions to the problems when they
should only be suggesting directions or providing independent opinions. Perhaps for this reason, the agencies involved,
do not find the audit recommendations helpful.
The difficulty of providing effective audit recommendations
is not new or peculiar to Malaysia. The
United States General Accounting office (GAO) published a useful guideline on
“How to get Action on Audit Recommendations” back in 1991. The recommendations provided by the National Audit Department are missing the fundamentals
if we use this guideline as the base.
To make sense of this mess, we need a multi-level typology
of this weakness and issues against which we can cluster the various audit
sections. This will allow the audit sections
to be reorganized based on this typology.
This reorganization, may enable us to observe patterns and trends in the
behavior of the government machinery that are not readily apparent. It may help
the government identify and prioritize the weakness to be addressed.
Closing Remarks
The duty of the Auditor General is an onerous one, but it is
extremely important for good governance and to reduce the abuses and short
comings in the government machinery. Unfortunately,
the AG’s report has not been effective and the same problems in the government
machinery are repeated year after year.
This problem is not easy to address, and a lot of ground work is required. This article has discussed some of these issues. A comprehensive diagnosis of the issues,
constraints and resources involved must be made. The existing AG’s report can be the basis of
this diagnosis, but it needs to be supplemented with additional information. This must be followed by developing the
guiding policies and the formulating of coherent plans to address every facet
of the problem. It certainly requires
commitments from the political leaders for the implementation of these plans.
