Auditor General Report - 2008-English

CONTENTS
Page
THE FEDERAL GOVERNMENT’S FINANCIAL STATEMENT AND FINANCIAL

MANAGEMENT OF THE FEDERAL MINISTRIES/DEPARTMENTS
Preface 3
Part I - Certification Of The Federal Government’s Financial Statement 6
For The Year Ended 31 December 2008
Part II - Financial Management Of The Federal Government 6
- Overall Financial Management Performance 6

- Financial Management At Federal Ministries And Departments 6
Level
ACTIVITIES OF THE FEDERAL MINISTRIES/ DEPARTMENTS AND THE

MANAGEMENT OF GOVERNMENT COMPANIES
Preface 11
Part I - Implementation Of Activities By The Federal Ministries/Departments 13
PRIME MINISTER’S DEPARTMENT

Attorney General’s Chambers
- Handling Of Civil And Prosecution Cases By State Legal 13
Advisor Offices
MINISTRY OF FINANCE
- Public Infrastructure Maintenance Programme, Basic 13
Infrastructure Programme And Parliamentary Constituency
Rural Development Projects
Inland Revenue Board
- Management Of Individual Tax Assessment For Salaried 14
Income Under Self Assessment System
- Management Of Refunds For Overpaid Income Tax 15
Royal Customs Department Of Malaysia
- Management Of Customs Duty Assessment On Imported 16
Goods
MINISTRY OF AGRICULTURE AND AGRO-BASED INDUSTRY
- Infrastructure Development Programme For Crop 17
Diversification
- Construction Of Tanjung Manis Integrated Deep Sea Fishing 18
Port, Mukah, Sarawak
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MINISTRY OF RURAL AND REGIONAL DEVELOPMENT
- Management Of Infodesa Programme 18
MINISTRY OF WORKS
- Construction Of The Federal Government Administrative 19
Centre, Muadzam Shah, Kedah
Public Works Department Sabah
- Construction Of Sapulut - Kalabakan Road, Sabah 20
MINISTRY OF TRANSPORT
- Electrified Double Track Project Between Rawang And Ipoh 20
MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION
- Management Of Human Capital Development Programme In 21
Science, Technology And Innovation
MINISTRY OF FEDERAL TERRITORY
City Hall Kuala Lumpur
- Enforcement Of Trading Activities, The Department Of Safety 22
And Enforcement
MINISTRY OF EDUCATION MALAYSIA
- Maintenance Of School Buildings 23
- Project To Supply Clean Water To Rural Schools In Sabah 24
MINISTRY OF HEALTH MALAYSIA
- Construction Of Pekan Hospital, Pahang 24
- Management Of Prevention And Control Of Dengue Fever 25
- Management Of Harm Reduction Programme 26
MINISTRY OF HOUSING AND LOCAL GOVERNMENT

Town And Country Planning Department, Peninsular Malaysia
- Management Of Local Planning 27
MINISTRY OF INFORMATION, COMMUNICATION AND
CULTURE
National Library Department
- Management Of Rural Libraries 28
Department Of Broadcasting
- Management Of Procurement Of External Broadcasting Van 29
With Broadcasting System And Digital Radio Production
MINISTRY OF HUMAN RESOURCES
- Management Of Educational Equipments In Training Institutes, 30
Manpower Department
MINISTRY OF HIGHER EDUCATION
- Management Of Procurement Of Course Equipments For 30
Community Colleges
MINISTRY OF HOME AFFAIRS
- Construction And Management Of The Ministry Of Home 31
Affairs Complex, Perak
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Royal Malaysian Police
- Management Of Red Light Surveillance Camera System And 32
The Issuance Of Summons
VARIOUS MINISTRIES AND DEPARTMENTS
- Management Of Emolument For Civil Servants 33
Part II - Management Of Government Companies 34
- Export - Import Bank Of Malaysia Berhad 34

- Syarikat Prasarana Negara Berhad 35
- JKP Sdn. Bhd. 36
- Kumpulan Modal Perdana Sdn. Bhd. 37
- Hotel Chains Of Seri Malaysia Sdn. Bhd. 38
- Malaysia Venture Capital Management Berhad 39
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SYNOPSIS
AUDITOR GENERAL’S REPORT 2008

ON THE FEDERAL GOVERNMENT’S
FINANCIAL STATEMENT AND
FINANCIAL MANAGEMENT OF THE
FEDERAL MINISTRIES/DEPARTMENTS
PREFACE
1. Article 106 and 107 of the Federal Constitution and Audit Act 1957 require the
Auditor General to audit the Federal Government’s Financial Statement, financial
management as well as its activities and submit his Reports to the King and obtain his
consent before tabling the Audit Reports in Parliament. To fulfil these responsibilities,
the National Audit Department needs to carry out 3 types of audits as follows:
1.1. Attestation Audits – to give an opinion as to whether the Federal

Government’s Financial Statement for the year concerned shows a true and fair
view as well as its accounting records were maintained properly and updated
accordingly.
1.2. Compliance Audits – to determine whether the financial management in

Ministries/Departments is in accordance with relevant financial laws and regulations.
1.3. Performance Audits – to ascertain whether Government activities have

been carried out efficiently and economically to achieve its desired objectives/goals.
2. Similar to the year 2007, audit findings on the Federal Government’s Financial
Statement and financial management are reported separately from the audit findings on
the activities of the Federal Ministries/Departments as well as management of
Government companies. This separation allows easy reference and to ensure a greater
impact on the issues raised as each has a different scope of objective and management
technique. My Report on the Federal Government’s Financial Statement and financial
management for the year 2008 includes the followings:
Part I : Certification On The Federal Government’s Financial

Statement For The Year Ended 31 December 2008
Part II : Financial Management Of The Federal Government
Part III : Involvement of The National Audit Department In Various
Activities To Enhance Public Fund Management And
Accountability
Part IV : General Matters
3. The audit on the Federal Government’s Financial Statement for the year ended 31
December 2008 revealed that the Statement generally reflects a true and fair view on
the financial position of the Federal Government, operational outputs and cash flow for
the year concerned as well as accounting records were maintained properly and
updated accordingly. As for the financial management of the Federal Government,
3
auditing revealed the non-compliance of various financial regulations. Several
weaknesses due to insufficient manpower, lack of training in financial management,
inadequate supervision and lax of monitoring continue to occur.
4. All matters reported had been brought to the attention of the respective Controlling
Officers/Heads of Department for confirmation. The National Audit Department has
taken various measures to assist the Federal Ministries/Departments in rectifying the
weaknesses in financial management. Among the measures taken were as follows:
4.1. Implementing the star rating system based on the Accountability Index.
Through this system, marks will be given for compliance of regulations of 6 main
elements in financial management. The 6 elements are management control,
budgetary control, revenue control, expenditure control, management of trust funds
and deposits as well as management of assets and stores. The Federal
Ministries/Departments rated as excellent can become a role model to others. This
would motivate Federal Ministries/Departments to diligently improve to enhance their
financial management.
4.2. Published the book “Excellent Financial Management From The Perspective
Of The National Audit Department”. This is one of the proactive steps introduced to
enhance Government’s financial management. Therefore, it is hoped that the Heads
of Department/Agency will be guided by examples of common weaknesses
identified during the course of audit in order to achieve an excellent rating under the
Accountability Index System. It is also hoped that the book will be used as a
reference in Government training institutes and public institutions of higher learning.
4.3. Treasury Instructions require the Heads of Department to ensure the

responsible officers safeguard public money, stamps or other valuable items in
safety boxes, vaults, cash boxes or other receptacles. Heads of Department should
also ensure complete and updated records being maintained and periodic
inspections carried out by senior officers. To ensure the implementation of these
instructions, the National Audit Department has carried out surprise inspections in
98 Federal Departments/Offices throughout the country.
4.4. The Agency Adoption Programme was introduced in 2003. Under this
programme, selected offices with weaknesses in financial management were given
continuous guidance and advice to assist them in rectifying weaknesses especially
with regard to the maintenance of accounting records. In 2008, this programme was
implemented in 5 Government offices. Generally, financial management at the
selected offices have improved and showed significant positive results.
4.5. Carrying out special evaluations on the performance of Premier Grade

Officers on financial management as part of their confirmation exercise. A total of 92
Heads of Department were evaluated from January 2008 to May 2009. These
evaluations have indirectly contributed towards the enhancement of the financial
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management as promotion of Heads of Department would only be considered by the
Public Services Department after the National Audit Department had confirmed that
the officers had taken corrective actions on the weaknesses on financial
management.
4.6. Officers from the National Audit Department have participated in discussions
on the development of computerised systems at various Federal
Ministries/Departments to ensure internal controls were adequate to safeguard the
integrity of data and reliability of the systems. It is felt that such involvement is
necessary as huge expenditure has been spent in developing computerised
systems. Thus, it is appropriate that these systems should be implemented properly
to meet the desired objectives.
5. I wish to express my thanks to all the officers in the various Federal

Ministries/Departments who have given their full cooperation to my officers during the
audit. I also wish to record my appreciation and thanks to my officers who have worked
diligently and for their total commitment to complete this Report.
( TAN SRI DATO’ SETIA HAJI AMBRIN BIN BUANG )

Auditor General of Malaysia
Putrajaya
17 June 2009
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SYNOPSIS
PART I - CERTIFICATION OF THE FEDERAL GOVERNMENT’S

FINANCIAL STATEMENT FOR THE YEAR ENDED 31
DECEMBER 2008
1. The Federal Government’s Financial Statement for the year ended 31 December
2008 as a whole reflected a true and fair view of the financial position of the Federal
Government and the accounting records were also properly maintained and kept up-to-
date.
PART II - FINANCIAL MANAGEMENT OF THE FEDERAL GOVERNMENT
Overall Financial Management Performance
2. For the year 2008, the Government had approved RM152.01 billion for operating
expenditure in the government sector. However, a total of RM153.50 billion was spent
during the year whereby exceeding approved allocation amounting to RM1.49 billion.
Nine Ministries had spent more than the approved allocation for emolument, services
and supplies, acquisition of capital assets, subsidies and fixed charges. Whereas a total
of RM42.85 billion (91.2%) was spent out of RM46.98 billion as approved under the
development allocation for the implementation of 1,111 projects. The Government had
received revenue totalling RM159.79 billion as compared to RM139.89 billion for the
year 2007. There were 56 Federal Ministries/Departments with arrears of revenue
totalling RM23.19 billion for the year 2008 as compared to RM14.08 billion for the year
2007. The significant increase was due to the requirement in the Treasury Circular No. 3
Year 2008 which was issued in the beginning of the year 2008 by the Ministry of
Finance whereby all outstanding loan and other debts should be considered as
Receivable Account.
Financial Management At Federal Ministries And Departments Level
3. The National Audit Department had carried out audits in 27 Federal Ministries
and 33 Departments in the year 2008 in order to ascertain whether financial
management at these Ministries and Departments were being managed according to
established laws and financial regulations. The result of the audit showed that some of
the Federal Ministries and Departments were not serious to improve their performance
in financial management even though such weaknesses had been repeatedly reported
and brought up to their attention by the National Audit Department. As an effort to
motivate the Federal Ministries and Departments to further improve and strengthen their
performance in financial management, the National Audit Department has introduced
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the Accountability Index for financial management. Federal Ministries and Departments
rated as excellent can become a role model to others. From the assessments carried
out, the financial management performance of 4 Ministries and 2 Departments were
rated as excellent; 20 Ministries and 10 Departments as good and the remaining 3
Ministries and 10 Departments as satisfactory. Besides that, the Headquarters and 14
state branches of the Royal Malaysian Customs Department as well as 11 Malaysian
Representative Offices abroad under the Ministry of Foreign Affairs were also audited.
4. The Controlling Officers/Heads of Department must ensure that the responsible

officers safeguard public money, stamps or other valuable of any kind in safety boxes,
vaults, cash boxes or other receptacles as stated under the Treasury Instructions. They
must also ensure that all records are properly maintained, up-to-date and examined by
senior officers periodically. In order to ensure that such duties were carried out by the
Controlling Officers/Heads of Department, the National Audit Department has carried
out surprise inspections in 98 Federal Departments/Offices. The audit revealed that
there were some instances where public money and other valuable items were not kept
safely, delays in banking-in collections and cash balances in hand differ from records.
5. Besides conducting mandatory audits as provided under the laws, the National
Audit Department also implements the Adoption Programme and special evaluations on
the financial management performance of Premier Grade Officers from various
Ministries/Departments/Agencies. In 2008, the National Audit Department had carried
out the Adoption Programme at 5 Federal Department whereas from January 2008 to
May 2009, a total of 92 Premier Grade Officers had been evaluated.
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SYNOPSIS
AUDITOR GENERAL’S REPORT 2008

ON ACTIVITIES OF THE
FEDERAL MINISTRIES/DEPARTMENTS
AND THE MANAGEMENT OF
GOVERNMENT COMPANIES
PREFACE
1. Article 106 and 107 of the Federal Constitution and Audit Act 1957 require the
Auditor General to audit the Federal Government’s Financial Statement, financial
management as well as its activities and submit his Reports to the King and obtain his
consent before tabling the Audit Reports in Parliament. To fulfil these responsibilities,
the National Audit Department needs to carry out 3 types of audits as follows:
1.1. Attestation Audits – to give an opinion as to whether the Federal

Government’s Financial Statement for the year concerned shows a true and fair
view as well as its accounting records were maintained properly and updated
accordingly.
1.2. Compliance Audits – to determine whether the financial management in
Ministries/Departments is in accordance with relevant financial laws and regulations.
1.3. Performance Audits – to ascertain whether Government activities have
been carried out efficiently and economically to achieve its desired objectives/goals.
2. Starting from 2006, my Report on performance audits on the implementation of

activities of the Federal Ministries/Departments and the management of Government
companies are prepared separately from the Report on the Financial Statement and
financial management of the Federal Government for the year 2008. This is for easy
reference and to ensure greater impact on the issues highlighted. My Report on the
implementation of activities of the Federal Government as well as the management of
the Government Companies for the year 2008 includes the followings:
Part I : Implementation Of Activities By The Federal Ministries/

Departments
Part II : Management Of Government Companies

Part III : Follow-up Actions Being Undertaken/Not Carried Out By The
Ministries/Departments/Government Companies On Matters
Highlighted In The Auditor General’s Reports For The Year 2006
And 2007
3. Section 6(d) Audit Act 1957 requires the Auditor General to conduct audits to
ascertain whether Government activities have been managed efficiently, economically
and in accordance with the objectives of these activities. The audits were conducted on
various activities among others, project constructions, maintenance works, law
enforcements, procurements, asset management, taxations as well as social economy
enhancement programmes. This Report contains matters observed from the audits on
32 activities/projects undertaken by various Ministries/Departments/Government
companies. Generally, the Ministries/Departments/Government companies have
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planned well for the implementation of these activities/projects. However there were
several weaknesses in the execution of these activities/projects due to shortage of
manpower and expertise, insufficient funds, lack of close supervision and ineffective
monitoring.
4. As in previous years, auditing had also been carried out on companies which
Government owned more than 50% equity. This is to ascertain whether the respective
company have carried out its activities effectively, prudently and in accordance with its
established objectives. This Report comprises the analysis of financial performance of
48 Government companies based on their Financial Statements for the year 2007 and
matters observed from the audits on the management of activities carried out by 6
Government companies. Audit analysis revealed that 27 of these companies reported a
profit before tax amounting to RM78 billion for the year 2007 whereas 21 companies
had incurred losses totalling RM0.87 billion. However, only 14 out of the 27 profitable
companies paid dividends totalling RM72.21 billion to the Government and taxes
amounting to RM24.37 billion were collected from 30 companies. Generally, the audit
on the management of activities by the companies revealed that the activities were well
planned. However, there were several weaknesses in the execution of these activities
that needs to be rectified especially those related to internal controls on financial
management.
5. To assist the Ministries/Departments/Government companies to overcome the

weaknesses highlighted in the Auditor General’s Report for the year 2007, a total of 360
recommendations were proposed. Follow-up audits conducted up to 1 April 2009
revealed that the respective Ministries/Departments/Government companies had taken
action on 338 (93.9%) recommendations. As for the Auditor General’s Report for the
year 2006, actions on 201 (93.9%) from 214 recommendations have been taken. The
13 and 22 recommendations for year 2006 and 2007 respectively are either being
undertaken or has not been carried out yet.
6. I wish to express my thanks to all the officers in the various Federal

Ministries/Departments who have given their full cooperation to my officers during the
audit. I also wish to record my appreciation and thanks to my officers who have worked
diligently and for their total commitment to complete this Report.
( TAN SRI DATO’ SETIA HAJI AMBRIN BIN BUANG )

Auditor General of Malaysia
Putrajaya
17 June 2009
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SYNOPSIS
PART I - IMPLEMENTATION OF ACTIVITIES BY THE FEDERAL MINISTRIES/

DEPARTMENTS
PRIME MINISTER’S DEPARTMENT

Attorney General’s Chambers
- Handling Of Civil And Prosecution Cases By State Legal Advisor Offices
The State Legal Advisor Office (SLAO) is responsible for drafting and vetting laws to be
tabled at the State Legislative Assembly, provides legal advice to the State Government
in all aspects of administration, relationship between Federal and State Governments as
well as the private sector and to conduct prosecutions on criminal and civil proceedings.
The audit revealed that there is room for improvement in conducting criminal and civil
proceedings as there were cases where SLAO had taken up to 183 days to review a
civil case and up to 1,149 days for a criminal case. Among the factors which caused
such delays were the difficulties faced in seeking further information from other law
enforcement agencies, heavy workload, unstipulated time frame to complete certain
work processes and the frequency of transferring officers involved in on-going cases. As
such, it is recommended that the Attorney General’s Chambers considers the following
matters:
• Ensure work processes involving civil and criminal cases are completed by
SLAO within the time frame as stipulated in the High Court Rules 1980,
Subordinate Court Rules 1980 and Limitation Act 1953. As for work processes
without a stipulated time frame, the Attorney General’s Chambers should
determine the time frame and ensure all SLAO complies with it.
• Review staffing in SLAO to deal with the increasing workload.
• Standardise a Management Information System to be used by all SLAO in order

to facilitate references/reviews and to further improve the monitoring on handling
of cases.
MINISTRY OF FINANCE
- Public Infrastructure Maintenance Programme, Basic Infrastructure
Programme And Parliamentary Constituency Rural Development Projects
From 2005 to November 2008, a total of 92,687 projects under the Public Infrastructure
Maintenance Programme, Basic Infrastructure Programme and Parliamentary
Constituency Rural Development Projects involving RM4.59 billions were implemented.
Generally, the audit revealed that certain programmes/projects were not satisfactorily
implemented such as delays in project completion, work done not in accordance with
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the original scope of works, increased project cost due to the inclusion of procurements
of equipment and asset in the scope of works, unutilised facilities upon completion,
improper payment made for works not done and shortages of officers in project
supervision. To ensure the objectives of these programmes/projects are achieved and
Government gets value for money, it is recommended that the Federal Treasury,
Implementation and Coordination Unit (ICU) in the Prime Minister's Department and
State Development Offices (SDO)/District Offices consider the following matters:
• The Letter of Offer should clearly state the date of commencement and
completion of works and also the provisions relating to penalties for delays so
that SDO/District Offices can initiate action against contractors who failed to
execute their works accordingly.
• ICU should ensure each and every project is implemented as planned and
utilised optimally to avoid wastage of public funds.
• The SDO of the Federal Territory of Kuala Lumpur should investigate improper
payments and if there are any irregularities, appropriate actions must be taken
against those involved.
• The Federal Treasury should review the post of technicians and assistant
technicians emplaced at each SDO by taking into account the present workload.
SDO should then ensure specific trainings to be given to enable them to carry
out their duties efficiently and effectively.
MINISTRY OF FINANCE
- Management Of Individual Tax Assessment For Salaried Income Under Self
Assessment System
The Self Assessment System is based on ‘Assess, Pay and File’ concept where a
taxpayer is required to make his/her own assessment/tax computation by referring to
guidelines/regulations issued, make payment and submit Income Tax Form (BE Form)
to Inland Revenue Board (IRB). Generally, the audit revealed that the Self Assessment
System for salaried income is useful as it reduces the workload of IRB officers. However,
there were some weaknesses in its implementation that could cause non/under
collection of income tax. Among the weaknesses were BE Forms could not be sent to
taxpayers, non/late submission of BE Forms by taxpayers and no penalties imposed,
mistakes/inaccurate information in BE Forms as well as Tax Deduction Schedules were
not prepared by employers and notices not issued by IRB to employers to deduct
employees salary with tax arrears. The IRB must immediately solve the problems
regarding BE Forms as it can affect the collection of Government revenue. As such, IRB
is advised to take the following actions:
• Provide continuous explanations to taxpayers by desk officers at public places

such as shopping malls and office buildings.
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• For cases to be audited by the Desk Audit Unit (Salaried Income), all supporting
documents must be obtained from taxpayers and filed accordingly.
• Penalties must be imposed on taxpayers for non/late submission of BE Forms.
• Ensure employers prepare Tax Deduction Schedules for employees with a

monthly salary exceeding RM2,551.
• Issue a Tax Deduction Instruction to ensure employee salaries are deducted to

settle their tax arrears.
• Strengthen manpower in the Desk Audit Unit (Salaried Income) as over 50% of
the BE Forms audited by the Unit revealed taxes were either over or under
collected.
MINISTRY OF FINANCE
- Management Of Refunds For Overpaid Income Tax
In accordance with Section 111 Income Tax Act 1967, the Inland Revenue Board (IRB)
is responsible to refund overpaid income tax to taxpayers. Auditing on samples of
refund of overpaid income tax involving RM648.70 million revealed that majority of the
refunds were delayed between 10 days to 2 years for manual cases and up to a year for
e-Filing cases. Among the reasons for the delay were due to the implementation by
stages of the Self Assessment System, incomplete/doubtful information/document
submitted by taxpayers and the incapability of IRB to solve this problem as responsible
officers were required to manage other assignments. In addition, some of the overpaid
income taxes were not refunded correctly resulting in losses to the Government. As the
collection of income tax is of uttermost importance to Government revenue, it is
recommended that IRB considers and takes immediate actions on the following matters:
• To enhance its delivery system, the IRD should comply with the time frame for
repayment of overpaid income taxes as stipulated in the Client Charter.
• The Client Charter on repayment of overpaid income taxes should be clearly and
specifically stated. In relation to this, taxpayers need to be informed of their
responsibility in ensuring the correctness of income tax assessment information
for all the relevant years of assessment, the original dividend vouchers attached
are complete, overpaid income tax for the concerned assessment year to be
offsetted with the income tax due from other years of assessment, outstanding
real property gains tax and debts due to Government for companies if the
Compared Total exceeds the Compared Aggregate for purpose of dividend
payment.
• Simplify the tax payment codes through discussion with the Federal Treasury.
This is important to prevent taxpayers from filling the wrong transaction code due
to the confusion over the numerous existing codes which have resulted in
payment transactions been recorded in the unrelated assessment year.
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• Review the manpower requirement in every Collection Branch/Unit by taking into
consideration the existing workload.
• Prepare a complete checklist on computation for repayment of overpaid income

tax in order to ensure only correct amounts are refunded accordingly. Items to
be listed for checking are tax increase under subsection 107B(3)/107C(9),
subsection 107B(4)/107C(10), subsection 103(3) and 103(4) of Income Tax Act
1967, debts under section 108 of Income Tax Act 1967, outstanding real
property gains tax and proof of confirmation of dividend vouchers for tax
deduction.
• Prepare a standardised Computation of Excess Income Tax Statement for every
refund to be used by all IRD Branches and sent to taxpayers involved. The
statement should contain detailed information such as the date and income tax
assessment for each assessment year, date and income tax imposed, date and
income tax payable and amount due to Government (involves dividend and real
property gains tax) to facilitate taxpayers to carry out checking on the
computation of the refund of overpaid income tax.
• Overpayment of refunds should be collected immediately from taxpayers
involved.
• The Fund For Income Tax Refund Statement should to be prepared for auditing
purpose as stipulated in the Trust Deed.
• Determine the amount of funds required under the Fund For Income Tax Refund
so as to ensure all refunds are made accordingly to taxpayers.
Royal Customs Department Of Malaysia

- Management Of Customs Duty Assessment On Imported Goods
From 2006 to 2008, the Royal Customs Department of Malaysia had collected an
average of RM6.38 billion a year on import duty, excise duty (import) and sales tax
(import). The audit revealed several weaknesses such as delay in declaring imported
goods and payment of import duties/taxes by forwarding agents/importers, errors in
classification and valuation by Assessing Officers, poor handling of Custom Declaration
Forms, shortcomings in the Customs Information System that accept multiple import
declaration of the same goods and poor interface with Gate Control System. To
overcome these weaknesses which among others were due to manpower shortage and
weakness in monitoring, it is recommended that the Royal Customs Department takes
the following actions:
• Prepare a guideline on the rate of compound/fine to prevent the imposition of low

rates of compound/fine that are incompatible for offences committed and non-
uniformity between custom stations. The Royal Customs Department should
increase monitoring and enforcement to ensure importers complies with the laws
and regulations.
• Follow-up on the application for additional post of Assessing Officers that had
been submitted to the Public Service Department to ensure posts created are
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compatible with the heavy workload and to reduce classification and valuation
errors of imported goods. In addition, approved posts should be filled
immediately.
• Carry out surprise checks and enforce disciplinary action to ensure proper
management of declaration forms and to prevent any infringement.
• Ensure the Price Monitoring And Classification Committee holds periodical

meetings to enhance its functions as a supervisory body to resolve issues and
problems of assessment and classification at station and state level effectively.
• Collect arrears of revenue zealously to prevent losses on Government revenue.
• Ensure the integrity of data in the Customs Information System and the system
is able to interface with the Gate Control System to substantiate payment of
import duties/taxes. For cases whereby Gate Control System does not work, the
Customs Officers stationed at check points should inspect documents and goods
physically.
• Prepare annual training programme to ensure each and every officer attends
course/training for at least 7 days a year as stipulated under Service Circular No.
6 of 2005 in order to increase his/her skill and efficiency especially related to
their line of work.

- Infrastructure Development Programme For Crop Diversification
As at December 2008, the Government has incurred a total of RM182.93 million to carry
out the Infrastructure Development Programme For Crop Diversification. Generally, the
implementation and monitoring of constructing agricultural infrastructure were
satisfactory whereby 92.5% of the projects were implemented as planned. However,
there were weaknesses in maintaining the completed infrastructure and implementation
of agricultural activities. To ensure continuous benefit on the implementation of this
programme, it is recommended that the Ministry consider the following matters:
• Take immediate action to complete the abandoned project in order to benefit the
project participants as planned.
• Prepare a periodical maintenance plan and provide sufficient allocation for such
maintenance.
• Ensure areas chosen are suitable before approving a project so that agricultural
activities can be carried out throughout the year.
• Apart from close monitoring and continuous guidance, prepare a strategic plan
to assist farmers to market their crops as this is crucial in encouraging them to
actively cultivate the crops.
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- Construction Of Tanjung Manis Integrated Deep Sea Fishing Port, Mukah,
Sarawak
The construction of Tanjung Manis Integrated Deep Sea Fishing Port, Mukah, Sarawak
was implemented at a cost of RM313.62 million. The audit revealed several
weaknesses such as project delay, unsatisfactory work quality and some basic facilities
were not constructed or completed. Thus the main objective of the project could not be
completely achieved. To overcome these weaknesses and also to prevent the
recurrence of the same weaknesses in other projects, it is recommended that the
Ministry of Agriculture and Agro-based Industry, the Ministry of Finance, Public Works
Department and Fisheries Development Authority of Malaysia consider the following
matters:
• The contractor should not be allowed to postpone any repair works until the
completion of phase 3 of the project as damages/defects can become more
serious if immediate remedial actions are not taken.
• For a fast track project implemented by design and build concept and approval
by the Ministry of Finance on a multi-phase contract price, the Ministry of
Finance should approve the contract price for each phase in sequence to the
implementation stages as suggested by the Ministry/Department concerned.
This is vital to prevent disruption of the implementation of the project.
• The Ministry of Finance should approve sufficient allocation to complete all basic
facilities/components of the project to ensure a fully functional Integrated Deep
Sea Fishing Port and thus ensure the achievement of its objective.
MINISTRY OF RURAL AND REGIONAL DEVELOPMENT

- Management Of Infodesa Programme
The Infodesa Programme aims to bridge the digital divide between urban and rural
communities. As at 31 December 2008, a total of RM68.38 million was incurred for this
programme and 41,298 participants were given ICT training. The audit revealed several
weaknesses such as delay in project completion as well as delay in operating the
completed Infodesa Centres (MID) due to delay in procuring equipments and filling up
the post of MID managers. In addition, a total of 156 MID constructed by the Federal
Government were situated on land that has yet to be registered in the name of the
Federal Land Commissioner. To overcome these problems and to ensure that the
objective of this programme is achieved, it is recommended that the Ministry of Rural
and Regional Development considers the following matters:
• As this is a costly programme that has been implemented since the Eighth
Malaysia Plan, the Ministry should create a permanent post for MID managers to
facilitate the appointment process and ensure the MID managers’ commitment.
• Ensure that each MID establishes a Management Board to assist in its functions.
As District Officers are too busy to chair the board meeting, a representative
from the District Office could be appointed as chairman.
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• Close monitoring of projects to ensure they are implemented within the
stipulated time frame. In this regard, the implementing agency should submit
monthly progress report and to clarify if any delays were to occur.
• Ensure MID managers abide all financial rules and regulations on procurement
and management of assets. Related records and registers should be maintained
and updated regularly. The Ministry must also conduct regular spot checks on
MID to confirm compliance with the related rules and regulations. To ensure MID
managers perform their responsibility competently and effectively, management
training including financial management should be given.
• Increase the number of computer users in MID to ensure ICT equipments are
used optimally and to achieve the objective of bridging the digital divide between
urban and rural communities. For this purpose, the Ministry should increase
awareness among the local and neighbouring communities of the facilities
available in MID.
• Ensure all MID project sites are registered in the name of the Federal Land
Commissioner in order to continue its activities even if a change of the ruling
party of the state Government occurs.
• Adequate allocation for maintenance of equipments and buildings should be

budgeted for to ensure continuity of this programme.
• Perform regular reviews to determine the achievements of the programme and to
carry out further improvements.
MINISTRY OF WORKS
- Construction Of The Federal Government Administrative Centre, Muadzam
Shah, Kedah
As at 31 December 2008, 95% of the Federal Government Administrative Centre,
Muadzam Shah, Kedah project was completed and a total of RM243.53 million was
spent. The audit revealed several weaknesses such as the appointment of the
contractor and project implementation method that caused project delay, unsatisfactory
contract management, delay/not occupying completed building and poor quality
construction works. This complex could have been utilised earlier if effective co-
ordination between the Prime Minister’s Department, Public Works Department (PWD)
and other involved agencies exist and efficient consultants were appointed. To
overcome these problems, it is recommended that PWD as the Project Superintending
Officer and user departments/agencies consider the following matters:
• Procurement of furniture should be synchronized with construction work

progress. In this regard, furniture should be procured when the progress of
construction work achieved 80% so that the complex could be utilised upon
completion.
• For a common-user building, user departments/agencies should be identified
and finalized at the planning stage of the project to prevent changes in building
plans that could cause delays.
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• User requirements should be considered during the design stage to prevent a
completed building being left unoccupied for not fulfilling their needs and
additional cost for renovations.
• To safeguard Government's interests, PWD should comply with rules and

regulations on contract management. In this regard, the contract should be
signed within 4 months after the issuance of Letter of Acceptance. Stern action
needs to be taken to ensure contractor rectify all defects reported before the end
of the Defects Liability Period.
• Close supervision and monitoring to prevent project delay and ensure stipulated
work specifications are fully complied.
PUBLIC WORKS DEPARTMENT SABAH

- Construction Of Sapulut - Kalabakan Road, Sabah
The Sapulut - Kalabakan Road, Sabah was constructed by Konsortium FA Irama Duta
Sdn. Bhd. (contractor) under the design and build concept at a total cost of RM563.33
million. The contractor was appointed by the Ministry of Finance through direct
negotiation. The audit revealed that even though the original plan was to construct a
paved road for a distance of 145 kilometers, only a gravel road was built due to
insufficient allocation caused by the problem of the contractor’s obligation to remove
substantial amount of unsuitable material from the project site. The problem of
unsuitable soil was not identified prior to project implementation due to inadequate soil
investigation. Monitoring of the implementation and maintenance of this project was
unsatisfactory resulting in poor quality workmanship. In this regard, it is recommended
that the Public Works Department Sabah considers the following matters:
• Ensure the contractor repairs damaged road and drains as well as slope failures
to prevent the situation from getting worst until the whole road gets damaged
before the expiry of the Defects Liability Period and thus putting road users' lives
at risk.
• Enhance monitoring to ensure the contractor carries out quality maintenance
according to schedule and stipulated terms and conditions of the contract.
• Apply sufficient allocation under the Tenth Malaysia Plan to pave the road.
• Ensure adequate soil investigations are carried out by responsible parties for
future road construction projects so that a suitable design can be prepared
before commencement of the project.
MINISTRY OF TRANSPORT
- Electrified Double Track Project Between Rawang And Ipoh
The Electrified Double Track Project Between Rawang And Ipoh was implemented at a
cost of RM5.77 billion through 2 packages namely the Infrastructure Package and
System Package. The main contractor for the Infrastructure Package is DRB-Hicom
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Berhad (DRB-Hicom) while Mitsui-MTS Konsortium (Mitsui) is the contractor for the
System Package. The audit revealed the objective of the project was not fully achieved
due to several weaknesses such as delay in project completion that resulted in an
estimated cost overrun of RM1.43 billion, procurement of excess equipments and non-
coordination of train procurement with infrastructure development. In addition, there is a
possibility of the Government bearing part of the losses estimated at RM1.14 billion.
This is due to a maximum liability of RM257.99 million that could be claimed from the
contractor as stipulated in terms and conditions of the contract between DRB-Hicom
(original contractor) and the Government. To ensure Government gets value for money
and also to prevent the recurrence of the same weaknesses in other projects, it is
recommended that the Ministry of Transport (Ministry), Keretapi Tanah Melayu Berhad
(KTMB) and related central agencies consider the following matters:
• The Ministry should impose penalties amounting to RM80.88 million (RM164,727

per day) on DRB-Hicom for failing to complete the project on time.
• Five sets of Automatic Fare Collection System which are still kept in the store
should be distributed to commuter stations that require them to avoid wastage.
• The Ministry/KTMB should ensure all defects are rectified by contractors during
the Defects Liability Period so that the Government will not incur additional cost
for repairs.
• Procurements of related equipments and facilities should be synchronized with
the infrastructure and system development. In this regard, equipments and
facilities should be procured when the progress of construction work achieved
80% so that the infrastructure could be fully utilised upon completion.
• As stipulated in terms and conditions of the contract, the Ministry should report
to the Ministry of Finance to terminate the service of the project manager who
failed to perform.
• Central Agencies should allocate sufficient funds to procure equipments/facilities
that are components of the project to enable a completed project to function
according to plan.
MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION

- Management Of Human Capital Development Programme In Science,
Technology And Innovation
From 2006 to 2008, a total of RM153.73 million was spent to carry out the Human
Capital Development Programme. The audit revealed several weaknesses such as
targets of schemes not fully achieved, payments made to unqualified recipients, several
important elements to safeguard Government’s interest were not included in the
contract, delay in distributing allocations and failure to comply with terms and conditions
of contract as well as inefficient monitoring and evaluation of the programme. In this
regard, it is recommended that the Ministry of Science, Technology and Innovation
(Ministry) considers the following matters:
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• Intensify publicity of the Human Capital Development Programme especially
among students/lecturers of institutions of higher learning and also officers of
Ministry/agencies involved in the field of science and technology.
• Ensure all important elements are included in the contract such as the
requirement for all recipients to submit examination results/research progress
reports and to present oneself after the end of the study/research. In addition,
monitoring should also be carried out by the Ministry to ensure that the above
terms and conditions are fully complied with and to impose penalties on those
who fail to comply.
• Evaluate the Human Capital Development Programme to ascertain whether the
programme has achieved its intended objective and consequently take remedial
actions on any weaknesses that could affect the achievement of its objective.
MINISTRY OF FEDERAL TERRITORY

City Hall Kuala Lumpur
- Enforcement Of Trading Activities, The Department Of Safety And
Enforcement
Generally, the audit revealed that the enforcement on the trading activities by the
Department of Safety and Enforcement is unsatisfactory. Among the weaknesses
observed were the Enforcement Action Reports were inconsistent with the Yearly
Performance Target, delays in carrying out follow-up actions on KEJA’s (obstruction by
chairs and tables) operations, inefficiency in managing public complaints and Notice of
Offence and Compound (Notice of Offence) as well as confiscated items were not kept
properly. To overcome the above weaknesses, the City Hall Kuala Lumpur (City Hall) is
recommended to consider the following matters:
• Ensure the Enforcement Action Report is prepared in consistent with the related
Yearly Performance Target to enable evaluations be carried out on the
performance of the enforcement activities by the Department of Safety and
Enforcement.
• The Work Procedure Manual and the Client Charter for enforcement of trading
activities need to be concise and clear. As such, City Hall needs to determine
the time frame for carrying out follow-up action after issuance of Notice of
Offence/informing verbally to the petty traders to remove the chairs and tables
that caused obstruction. In addition, the time frame for managing the public
complaints as stated in the Work Procedure Manual and the Client Charter
should be standardized. City Hall also needs to maintain a comprehensive and
up-to-date Record of Complaints for the purpose of monitoring and enhancing its
efficiency on delivery system.
• Enhance the methodology in managing compound collections by overcoming the

problems relating to PADU System (Laws Database System). Besides that, City
Hall needs to monitor the status of every Notice of Offence that was issued and
prepare a Report on Arrears of Compound as well as to ensure that all Notice of
Offence are filed properly.
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• Reduce time frame for claiming back confiscated goods from 3 months to 1
month to enable earlier action to write-off the confiscated goods and thus
overcome the problem of storage congestion and further depreciation of its value.

- Maintenance Of School Buildings
A total of 47 private consultants were awarded contracts worth RM22.18 million to
identify maintenance/repair works in schools that need to be carried out, supervise/
monitor and certify the actual works done by contractors before payments are made by
the Ministry of Education Malaysia (Ministry). The audit revealed that unsatisfactory
maintenance works on some school infrastructure/buildings had resulted in poor/
unconducive situation that could endanger the safety of its users. The weaknesses in
the maintenance and repair works were due to the Ministry not being allocated sufficient
funds and technical manpower. The Ministry on its part had not monitored the
performance of the consultants which resulted in some consultants who fail to carry out
their responsibilities effectively. In addition, the required monitoring on the works that
supposedly carried out by the Ministry/State Education Departments (SED)/District
Education Offices (DEO)/schools was not done. To overcome the above weaknesses, it
is recommended that the Ministry considers the following matters:
• Prepare a scheduled maintenance plan that includes preventive and corrective

maintenance for all schools in the country based on General Circular Letter No.
2 of 1995. For this purpose, sufficient financial allocation must be provided.
• Prepare a clear and measurable scope for maintenance/repair works for easy
reference by contractors and officers who supervise the related works.
• Enhance monitoring/supervision on maintenance/repair works carried out by

contractors. For this purpose, the Ministry should closely monitor the
performance of the consultants to ensure that they carry out their responsibility
effectively as stipulated in the contract. Teachers stationed at SED/DEO/schools
should not be given the task of managing maintenance works. Such
responsibility should be given to those with technical knowledge and expertise.
In relation to this, sufficient technical posts must be created and Technical
Assistants Grade J36 which are still vacant in some SED must be filled
immediately. To enhance monitoring on maintenance/repair works, a monitoring
register should be maintained in each school.
• Take appropriate actions against those who were proven to have certified works
as completed which actually has not been completed or not done at all as this is
an improper payment. If the certification was done by a public officer, disciplinary
action or surcharge must be imposed. If this involved a consultant, the company
concerned should be blacklisted and the offence reported to the relevant
professional bodies for further action.
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• Restructure the various divisions responsible for maintenance of school
buildings by placing them under one unit to ensure maintenance/repair works
could be planned and managed efficiently and effectively.
• Ensure all concerned parties involved in maintenance/repair works comply with

the relevant financial regulations. Market surveys must be carried out to ensure
Government gets value for money for all procurements. Financial management
training should also be given to those involved.

- Project To Supply Clean Water To Rural Schools In Sabah
The Ministry of Education Malaysia (Ministry) had implemented projects to supply clean
water to rural schools in Sabah through the Rain Water Harvesting System, well tube,
gravity water tube reticulation system and supplying treated water project. As at
December 2008, a total of RM174.32 million had been spent for supplying clean water
through Rain Water Harvesting System. The audit revealed that the implementation of
phase 3 of this project was not satisfactory. There were weaknesses such as delays in
project completion, work specifications not fully met, no maintenance of the pipe water
system by contractors and project modifications done without approval by the
Department of Federal Development of Sabah. To ensure the targeted group benefits
from this project, it is recommended that the Sabah Project Team (SPT) who has taken
over the function of the Department of Federal Development of Sabah and the Ministry
consider the following matters:
• SPT should closely monitor the work carried out by contractors and ensure
periodical maintenance of the pipe water system is carried out. In this regard, the
school authorities, the Ministry, SPT and the contractors should coordinate by
having regular meetings to discuss and overcome maintenance problems of this
project.
• The Ministry should allocate funds for maintenance of the project after the expiry
of the Defects Liability Period for its continuous benefits.
• SPT should ensure school authorities obtain approval before modification works
are carried out so that the said modification would not affect the function of the
water tank.
• SPT should determine total penalties that could be imposed on contractors and
ensure that they settle the amount concerned.

- Construction Of Pekan Hospital, Pahang
The audit revealed that the implementation of this project at a total cost of
RM96.45 million was not satisfactory resulting in the Government incurring losses as
well as facilities provided could not be utilised for the benefit of the public. Among the
weaknesses observed were the issuance of Certificate of Practical Completion (CPC)
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even though certain portion of the works had not been completed and equipments not
fully supplied by the contractor, delays in project completion resulting in cost overrun,
unsuitable/poor quality construction works and equipments/facilities not been used
optimally. To rectify the weaknesses, the Ministry of Health (Ministry) and the Public
Works Department (PWD) need to consider the following matters:
• PWD should speed up the process of signing the contract to safeguard

Government’s interest and to enforce contract terms and specifications.
Performance Bond and all insurance policies should also be submitted within the
stipulated time.
• PWD should not issue CPC before completion of project and all equipments are
supplied by contractor.
• The Ministry should ensure the 2 years warranty period for equipments received
after the issuance of CPC is set from the actual date of equipments received and
not from 31 January 2009.
• The Ministry should expedite repair works on all detected defects/damages so

that the hospital can operate effectively. In addition, the Rehabilitation and
Pharmaceutical Unit should operate as soon as possible to ensure equipments
procured could be utilised optimally.
• The Ministry should claim penalty from the supplier for the late supply of 2 units
of ambulance immediately.
• The Ministry should maintain an Asset Register to record all assets procured.
• The Ministry should enhance the monitoring process to ensure quality works are
completed according to schedule.

- Management Of Prevention And Control Of Dengue Fever
The audit revealed that the activities to prevent and control dengue fever by the Ministry
of Health Malaysia (Ministry) were not effective in decreasing the incidence and
mortality rate of dengue fever but instead keeps increasing every year. According to the
Ministry’s record there were 49,335 cases of dengue and dengue haemorrhagic fever
with 112 deaths in 2008 as compared to 38,556 cases and 92 deaths in 2006. Among
the factors that could have caused such increase were weaknesses in enforcements
and controls such as inspections of premises were not done according to plan, failure to
follow-up inspections on premises that could not be inspected during the previous visits,
vector detection index not fully used, delay in notifying dengue cases and incomplete
blood test. These weaknesses among others were due to lack of manpower and
facilities as well as lack of cooperation from the public in the prevention and control of
this disease. In relation to this, it is recommended that the Ministry considers the
following matters:
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• Create specific posts and special units at the Ministry, State Health Departments
and District Health Offices to prevent and control dengue fever as incidence and
mortality rate of dengue fever kept on increasing yearly. With the creation of
such unit, the Ministry should consider taking over this activity from local
authorities to ensure proper and comprehensive planning and implementation.
• Use of the Vector Detection Index to ensure detection of infection risk level/
dengue epidemic is implemented at all districts. In addition, the prevention and
control of Aedes mosquitoes should be implemented at all identified high risk
localities.
• Create a mechanism to overcome problems that has contributed to the delay in
sending notices of dengue fever cases. Early notification is essential to ensure
the inspection of premises and fogging to be done as soon as possible in the
affected areas to prevent an epidemic from happening.
• Ensure inspections are carried out according to plan as the inspection of
premises to detect the reproduction of Aedes mosquitoes is one of the important
controls to reduce the incidence of dengue fever.
• Ensure follow-up inspections are carried out on premises which were not
inspected during the previous visit so that the potential reproduction habitat for
Aedes mosquitoes are identified and early eradication carried out. For this
purpose, the Ministry should intensify the awareness campaign regarding the
importance of public’s cooperation in making the prevention and control of
dengue fever a success. In relation to this, involvement by public groups such as
community societies, youth clubs, non-governmental organisations and voluntary
groups should also be encouraged.
• Ensure serology tests carried out are recorded properly. This test is to establish
whether an individual has been infected with dengue fever so that treatment can
be given and affected premises and localities be identified earlier to prevent the
epidemic.
• Determine a reasonable time frame and ensure it is complied with to prevent any
delay in the issuance of compound notices which will affect enforcement’s
effectiveness. In addition, action should be taken on all unsettled compound
cases by referring to the Deputy Public Prosecutor.
• Distribute unused equipments to other District Health Offices that require them to
prevent obsolescence and wastage. Besides that, a plan to increase the number
of transportation vehicles should be prepared.

- Management Of Harm Reduction Programme
The Harm Reduction Programme implemented by the Ministry of Health Malaysia
(Ministry) since 2006 consists of 2 components, namely Methadone Replacement
Therapy as well as Needle and Syringe Exchange Activity with the objective of
preventing the spread of Human Immunodeficiency Virus (HIV). Generally, the audit
26
revealed that this programme has helped in reducing the addiction level, minimize risky
lifestyle behaviors and improve the quality of an addict’s life. However there were
several weaknesses that need to be rectified such as the number of addicts treated did
not reach the targeted goals due to either lack of medical personnel or required basic
facilities, improper procurement of methadone that resulted in Government incurring
losses, improper records of needles in hand and ineffective monitoring on the
performance of the programme. In this regard, it is recommended that the Ministry
considers the following matters:
• Create special posts and ensure the availability of sufficient basic facilities in all
hospitals or health clinics that are involved in this programme as the
effectiveness of the Methadone Replacement Therapy requires the involvement
of health personnel on a full time basis and sufficient basic facilities.
• Ensure financial aid is provided to the Malaysian AIDS Council and other
responsible non-governmental organisations under the Needle and Syringe
Exchange Activity before such activity commences.
• Enhance the Needle and Syringe Exchange Activity by increasing the coverage
areas through the Outreach activity as this programme is able to create
awareness among the addicts on the risk of HIV infections through sharing
needles. Besides this, co-operation with the police and locals must be improved.
• Impose penalties on suppliers who do not comply with the terms and conditions
of contract for supplying methadone. In future, the Ministry should immediately
inform and submit a copy of the agreement to hospitals to prevent purchases of
methadone outside contract at a higher cost.
• Ensure all parties involved in the procurement, recording and storage of needles
comply with relevant regulations.
• Ensure the MyMMT system (My Methadone Maintenance Therapy System)

functions as planned and the Malaysian AIDS Council submits report on its
achievement of activities organised within the stipulated time in order to enhance
monitoring of the Harm Reduction Programme. With information obtained from
the above sources, the Ministry should then carry out analysis to evaluate the
effectiveness of the programme.
MINISTRY OF HOUSING AND LOCAL GOVERNMENT

Town And Country Planning Department, Peninsular Malaysia
- Management Of Local Planning
Local Planning (LP) is an important reference document to ensure systematic
development of a particular area. It contains among others, explanation regarding the
use of land, environment, infrastructure and utility, landscape and traffic of a particular
area. The audit revealed several weaknesses such as delay in gazetting the LP that
resulted in a shorter execution period, approval of development based on a draft LP and
27
benefits could not be enjoyed by the public fully. Besides that, compliance to the LP was
not closely monitored. In this regard, it is recommended that the Town and Village
Planning Department, State and Local Authorities who are directly involved in the
preparation/usage of the LP consider the following matters:
• All involved parties should collectively prepare a comprehensive guideline on

preparation, gazetting, printing, distribution and enforcement of the LP to ensure
it could be adhered to by all concerned parties. Among others, the guidelines
should state the responsible party to manage the printing, the number of LP to
be printed and distributed as well as records to be maintained in relation to the
preparation, distribution and monitoring of its usage. In addition, a time frame
should also be determined for each related work process.
• The Ministry of Finance should review the process of appointing consultants and
the cost involved to prepare the draft LP as the present process takes a long
time.
• The local authorities should consistently monitor the relevant areas and take
necessary actions against parties who do not abide by the LP to ensure that the
development is done in accordance with the gazetted LP. This is required to
ensure a systematic development of the area does not threaten life or the
environment and the Government gets value for money for costs incurred in
preparing the LP.
MINISTRY OF INFORMATION, COMMUNICATION AND CULTURE

National Library Department
- Management Of Rural Libraries
As at 31 December 2008, a total of 425 rural libraries were operating in the country.
They were established to be the catalyst to cultivate the reading habit and reduce
disparities of illiteracy among the rural folks and the urbanites. The audit revealed
several weaknesses such as delay in completing construction/renovation of buildings,
works did not comply with agreed specifications/scopes, unsatisfactory maintenance of
buildings, improper records of books and penalties were not imposed on suppliers who
failed or delayed the supply of books/reading materials. In this regard, it is
recommended that the National Library Department considers the following matters:
• Monitor construction of rural libraries or renovations on public buildings as rural

libraries to ensure project specifications/scopes are fully complied with by
implementing agencies. In addition, the National Library Department should
review the number of officers required to carry out supervision as currently it has
only one assistant technician to supervise the construction of all rural libraries in
the country. The same officer is also involved in other development projects
managed by the National Library Department.
• Carry out periodical maintenance of rural libraries to ensure they are always in
good physical condition and safe to use. For this purpose, sufficient funds should
be allocated.
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• Monitor the performance of suppliers of books and ensure they comply with the
terms and conditions of contract and impose penalties if they fail to do so. A
mechanism should be created to enable rural libraries to procure the latest
magazines.
• Synchronize procurement of books and library accessories with completion date
of construction/renovations of rural libraries to ensure they could operate and
benefit the public upon completion.
• Ensure all rural libraries continuously implement activities of cultivating reading

habits as these can increase the interest of reading among the local
communities. For this purpose, a guideline on Implementing Rural Libraries
Activities should be issued to relevant parties to explain the implementation
procedures/processes of such activities.
• Review whether a minimum fine could be imposed on book borrowers to reduce

the rate of lost/unreturned books.
MINISTRY OF INFORMATION, COMMUNICATION AND CULTURE

Department Of Broadcasting
- Management Of Procurement Of External Broadcasting Van With
Broadcasting System And Digital Radio Production
a. The Ministry of Information (Ministry) had spent not less than RM40 million for the
procurement of External Broadcasting Van with Broadcasting System and Digital
Radio Production in order to increase broadcasting coverage of Radio Television
Malaysia (RTM). However, there were several weaknesses in the said procurement
such as delays in the supply of the specific van/equipments, contract conditions not
complied with and improper payments. To ensure the objectives of the procurement
are achieved and the Government gets value for money, it is recommended that the
Ministry considers the following matters:
• Ensure the contractor supplies the External Broadcasting Van and Broadcasting
Equipments that have yet to be delivered. In relation to this, the Ministry should
ensure the contractor renews the Performance Bond which had expired on 3rd
March 2009 and renews the warranty for the undelivered van and equipments.
• For the case where payment has been made for unsupplied equipments,
investigation should be carried out to identify the responsible parties and if found
guilty, surcharge must be taken against them.
• RTM should inform their stations that received the equipments on its warranty
and manufacturer’s guarantee in order to benefit from these facilities.
b. To safeguard Government’s interest, it is recommended that the Ministry should

improve its procurement management by taking the following steps:
• Contracts must be signed within 4 months from the date of issuance of the Letter
of Acceptance.
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• Ensure the Performance Bond is valid until all repairs on defects are completed
by the contractor to prevent the Government from bearing the cost of repairs.
• Any application to modify the specification or equipment schedule should only be

approved after a price adjustment and contract cost survey has been carried out.
The contractor should also submit a confirmation of quality assurance
comparable to the original specification.
MINISTRY OF HUMAN RESOURCES

- Management Of Educational Equipments In Training Institutes, Manpower
Department
Under the Eighth Malaysia Plan, the Ministry of Human Resources (Ministry) has spent
not less than RM441.33 million to provide educational equipments to 7 Industrial
Training Institutes throughout the country. The audit revealed several weaknesses in the
management of the equipments which resulted in Government not getting value for
money and adversely affected the academic activities. Among the weaknesses were
equipments procured at a much higher cost than market value, not less than RM3.66
million worth of equipments not utilised or underutilised and improper maintenance of
equipments. These weaknesses among others were the result of poor planning for
procurement/maintenance of equipments and the failure to carry out market price
surveys. In this regard, it is recommended that the Ministry considers the following
matters:
• Ensure contract price is based on negotiated price of each type of equipment

and agreed between the supplier and the Ministry and not based on the
approved allocation for the procurement. In relation to this, market price surveys
should be carried out as a reference in determining the price of the equipments
as well as verify the price offered by the supplier.
• Carry out detailed planning of the procurement and obtain views from lecturers/
trainers to ensure only compatible and required equipments are procured.
• Review the rate of penalty imposed on suppliers for delays in the supply of
equipments as the present rate is too low.
• Determine time frame for every relevant work process in the maintenance/
repairs of equipments and ensure that the time allocated is complied with to
prevent delays in maintenance/repairs. In addition, the Ministry should take
action on suppliers who delay maintenance/repairs by imposing a penalty or
confiscate the Performance Bond.
MINISTRY OF HIGHER EDUCATION

- Management Of Procurement Of Course Equipments For Community Colleges
From 2006 to 2008, the Ministry of Higher Education (Ministry) had spent a total of
RM80.07 million to provide course equipments for community colleges. The audit
revealed several weaknesses such as required equipments were not provided,
30
equipments not used optimally due to oversupply/not required/not suitable equipments,
delays in supply, payments made though equipments has not been tested/
commissioned, equipments kept at an unsuitable/unsafe location as well as asset
records not maintained properly nor updated. In this regard, it is recommended that the
Ministry considers the following matters:
• Obtain views from relevant lecturers to ensure equipments procured are suitable
for the courses. For cases where suppliers failed to deliver, the Ministry should
take immediate actions to acquire unsupplied equipments by appointing new
suppliers. Whereas for the oversupplied equipments, it should be distributed to
other community colleges which require the said equipments.
• Take action to ensure that all remaining equipments that have not been received
by the relevant community colleges are delivered by suppliers immediately.
• The relevant community colleges should urgently apply for funds from the
Ministry to improve its security. Community colleges should also be perceptive
regarding the suitable placement of the equipments and to immediately obtain
certification from the Department of Occupational Safety and Health Malaysia for
specific equipments that require such certification.
• Maintain proper and up-to-date asset records for easy reference. Such records
should also be regularly checked by responsible officers and used for the
purpose of physical verification.
• Carry out investigation to determine all payments were vouched with supporting
documents. If misappropriation of funds occurs, disciplinary action or surcharge
must be taken against the responsible parties.
• Training should be given to officers involved in the procurement of equipments
and the maintenance of the asset records especially for officers of the
community colleges.

- Construction And Management Of The Ministry Of Home Affairs Complex,
Perak
This complex was completed in April 2005 at a cost of RM41.83 million. The audit
revealed several weaknesses such as the As-Built Plan together with the Operational
and Maintenance Manual were only furnished by the contractor 3 years after project
completion, delay in handing over the As-Built Plan had caused the consultant to face
difficulties in certifying the quality of the construction works and remedial works were not
fully carried out by the contractor during Defects Liability Period. In addition, work areas
were not up to the standards set by the Malaysian Administrative Modernisation and
Management Planning Unit and also did not take into consideration areas for additional
staff as well as facilities such as the Day Nursery, Library, Sports and Recreation Room
were not utilised. In this regard, it is recommended that the Ministry considers the
following matters:
31
• Prepare a comprehensive manual on managing this complex that includes all
aspects of managing a common user building such as financial requirement,
usage of areas/facilities and the security of the building.
• Settle all issues on remedial works immediately by urging the contractor to

complete unfinished works and to issue the Certificate of Making Good Defects
as well as to finalise the closing account of the project as soon as possible.
• The Complex Maintenance Management Committee which was formed in July

2008 must take assertive and immediate actions to settle complaints from
employees and the public regarding the facilities in the complex.
• As a short term solution, renovate and modify all underutilised areas such as
Day Nursery, Library, Sports and Recreation Room to be converted into work
areas for departments facing critical shortage in office space. For long term
measure, the Ministry should plan to relocate certain departments that do not
deal with the public in different buildings/locations as the surrounding areas of
the complex are limited.
• The Ministry and management of the complex should take immediate action to
increase its level of security to ensure the safety of assets and users.

Royal Malaysian Police
- Management Of Red Light Surveillance Camera System And The Issuance Of
Summons
The Red Light Surveillance Camera System was developed by the Royal Malaysian
Police (RMP) at a cost of RM8.98 million with the intention to increase awareness of
road users to abide the traffic lights rules, thereby reducing the accident rate at road
junctions. The contract for maintenance, repairs and supply of spare parts for this
system valued at RM5.46 million was signed between the Ministry of Internal Security
and Commercial Circle (M) Sdn. Bhd. for the period from 2004 to 2009. As at 31
December 2008, the contractor has been paid a total of RM3.21 million. The audit
revealed that the management and monitoring of the system and its equipments were
not satisfactory. There were several weaknesses that could adversely affect the
effectiveness of the system such as equipments not being fully utilised, faulty
equipments that remain unrepaired and without proper maintenance, placing
equipments at unsuitable locations and inefficient issuance of summons. To rectify the
weaknesses and to ensure the Government achieves the objective of installing the
system and to get value for money, it is recommended that the Ministry of Home Affairs
and RMP take the following remedial actions:
• Create a mechanism to collect data on the number of accidents due to violation

of the traffic light rules and accidents at junctions which have been installed with
the system for the purpose of evaluating the effectiveness of the system in
achieving its objective.
32
• Ensure fully functional system/equipments are installed at suitable locations. For
this purpose, continuous supervision must be carried out to ensure maintenance
of the system/equipments are done according to schedule and breakdowns
repaired immediately. Besides this, the Ministry/RMP should co-operate with the
relevant local authorities to ensure construction/road widening/development
activities do not affect the effectiveness of the system.
• Designate police personnel to manage the system and train them to operate the
system especially in film handling to ensure there are no faulty recordings which
will jeopardise the issuance of summons.
• Determine a time frame for each process from the date of offence until the
issuance of summons to ensure there is no delay in issuing summons to
offenders.
VARIOUS MINISTRIES AND DEPARTMENTS

- Management Of Emolument For Civil Servants
Based on data in the Human Resources Management Information System (HRMIS), a
total of 1,257,426 posts of various grades have been approved by the Public Services
Department of which 1,013,532 posts have been filled up as at 31 December 2008. The
total filled up posts do not include 206,652 personnel in the armed forces and police.
For 2008, a total of RM41.01 billion has been spent on emoluments. At ministries/
departments, there were several weaknesses in the management of emolument that
resulted in over/under payments due to mistakes/carelessness by/of the officers while
processing payments, lack of co-ordination among divisions involved, lack of
supervision on collections of overpaid emoluments and service records not updated. To
overcome the weaknesses, it is recommended that ministries/departments consider the
following matters:
• Impose surcharge against careless officers who caused over/under payments of

emoluments in accordance with Section 18 Financial Procedures Act.
• Establish co-ordination among involved parties at all levels to ensure existing
regulations are complied with and timely updating of information could be done
whenever there is a change in officer’s status especially involving transfers and
promotions.
• Ensure responsible officers carry out detail checking before approving any
changes in the emolument of officers to avoid over/under payments.
• Issue delegation of power to officers who approve the Statement of Changes of

Officer’s Salary (Form Fin. 8).
• Provide regular training to officers who manage emolument payment to increase
their awareness in existing and latest regulations. The National Public
Administration Institute should be requested to organise courses related to the
management of emolument. In addition, officers should refer to the process of
managing emolument as stated in the Manual Work Procedures.
33
• The Accountant General's Department Malaysia should expedite interfacing of
the Government Financial And Management Accounting System (GFMAS) and
Human Resource Management Information System (HRMIS). Heads of
department should ensure all required information is updated in HRMIS and its
accuracy verified.
• Internal Audit/Inspectorate Unit in each ministry/department should randomly

check service records of officers every 6 months to ensure these records are
complete and updated. Errors detected from such checking could be rectified
immediately.
PART II - MANAGEMENT OF GOVERNMENT COMPANIES
As at 31 December 2008, the Government has invested RM24.21 billion in 99

companies. A total of RM22.51 billion was invested in 50 companies where the
Government holds more than 50% equity. The objectives of these investments are to
obtain reasonable returns, maintain Government’s interest in strategic sectors and to
invest in sectors that lack investments from the private sectors. Audit analysis on the
income for 2007 of 48 companies revealed that 27 companies earned pre-tax profit of
RM78 billion whereas the remaining 21 companies incurred losses amounting to
RM0.87 billion. However, only 14 out of the 27 profitable companies paid dividends
totalling RM72.21 billion to the Government. A total of 30 companies paid tax amounting
to RM24.37 billion to the Government. The audit revealed that the activities of these
companies were well planned. However there were weaknesses in the implementation
of these activities especially with regards to internal controls of financial management.
- MANAGEMENT OF EXPORT- IMPORT BANK OF MALAYSIA BERHAD

Export-Import Bank of Malaysia Berhad (EXIM Bank) is wholly owned by the
Government with a paid up capital of RM2.71 billion. The main objective of EXIM Bank
is to arrange for credit facilities to increase the capabilities of Malaysian companies to
export products/services and carry out investment projects overseas. From 2006 to
2008, EXIM Bank approved 115 loans/guarantees totalling RM3.30 billion. The audit
revealed that the management of lending activities of EXIM Bank were not satisfactory
such as approval of loans which does not meet the established criteria or without liquid
assets or bank/corporate guarantees, loose process in the release of loans, ineffective
performance monitoring of the borrowers and increase in non-performing loans (NPLs).
In this regard, it is recommended that the Board of Directors and the management of
EXIM Bank consider the following matters:
• The management should ensure appropriate loan securities are determined by

considering the risk level of every borrower by giving priority to securities such
as cash/cash and equivalents or bank/corporate guarantees.
34
• The Board and management should monitor and supervise closely the
performance of borrowers and carry out post mortem review on all NPLs in
accordance to the policies of EXIM Bank. This is to ensure NPLs do not
continue to increase. In addition, loan performance status should be made a
compulsory agenda and to be presented/discussed at every Board’s meeting.
• The management should ensure dividends be paid from profits to the

Government, who as a shareholder entitles for such returns on the investments.
- MANAGEMENT OF SYARIKAT PRASARANA NEGARA BERHAD

Syarikat Prasarana Negara Berhad (Prasarana) is wholly owned by the Government
with a paid up capital of RM3.80 billion. The company is responsible to manage the
infrastructure of public transportation in Klang Valley and Penang. As at 31 December
2008, Prasarana had issued 8 bonds totalling RM8.47 billion to finance its activities.
The audit revealed that the financial performance and management activities of
Prasarana were not satisfactory. It had incurred losses from the year 2005 to 2007 and
the accumulated losses as at 31 December 2007 was RM839.81 million. Due to poor
cash flow, it is not possible for Prasarana to redeem the balance of the issued bond
amounting to RM7.10 billion. In addition, the management of its activities especially
procurements, write-offs and record keeping of assets were not satisfactory and key
performance indicators were not established. In this regard, the Board of Directors and
the management of Prasarana as well as the Ministry of Finance should consider the
following matters:
• The Board should ensure that Prasarana has the mechanism to monitor the
status of assets being used by its operator to ensure that assets are properly
maintained and not exposed to the risk of being lost and misused.
• The management should re-examine the role of RapidKL as the bus and Light
Rail Transit operator as well as to determine alternative propositions as a long
term plan. This is due to the increasing critical financial position of Prasarana to
bear the cost of maintenance of buses and rails amounting to RM10.50 million
which should have been borne by RapidKL.
• The Board should ensure that Prasarana’s subsidiaries comply with Government
circulars as the Government does have interest in these subsidiaries. The
Board should also closely monitor the performance of such subsidiaries to
ensure that they operate efficiently and in consistence with their objectives. For
dormant subsidiaries, the Board should determine a suitable business plan and if
these subsidiaries are not required any more, then steps should be taken to wind
them up.
• The Ministry of Finance should closely monitor Prasarana to ensure its finance is
being managed efficiently and prudently in order to improve its cash flow and
consequently being able to redeem its issued bonds.
35
• The Ministry of Finance should state clearly the requirement of Prasarana to
abide to the conditions of procurement through direct negotiation as stated in its
approval letter. In addition, the Ministry of Finance should forbid its officers from
approving any procurement relating to a company if he/she is a member of the
Board of that company. This is to avoid any conflict of interest.
• The Ministry of Finance should establish an indicator specifically to be used as a

basis for bonus payments for companies having social commitments such as
Prasarana.
- MANAGEMENT OF JKP SDN. BHD.
JKP Sdn. Bhd. (JKP) is wholly owned by the Government with a paid up capital of
RM10.25 million. The main objective of JKP is to execute socio-economic projects that
have been identified by the Penang Bumiputera Development Committee to protect
bumiputera interest so that they will not be left out from the fast economic development
of the state. The audit revealed that bumiputera participation in JKP development
projects had achieved the target of at least 70%. However there were several
weaknesses in the management of its main activities such as delays in projects, no
contract signed between JKP and project consultants or rental collection agents or
business premise tenants as well as rental and maintenance charges were not collected
accordingly resulting in high rental arrears. In addition, JKP also did not comply with
certain regulations issued by the Ministry of Finance on financial management. For
example, JKP did not pay any dividend to the Government even though it had recorded
net profit for the year 2005 and 2006. In this regard, the Board of Directors and the
management of JKP as well as the Ministry of Finance should consider the following
matters:
• The management should ensure that contractors and nominated sub-contractors

have good track records, sufficient resources and financial stability as any
delays in completing projects may cause JKP to face legal actions taken by
house buyers.
• To safeguard JKP’s interest, the Board should ensure contracts with consultants,
rental collection agents and business premise tenants are signed so that
enforcement could be taken against those who fail to fulfil their obligations. In
addition, the Board should also ensure all construction contracts have provisions
for penalties on delays or failure to complete projects.
• The management should promote the sales of houses or rental of business

premises besides managing the buildings in good conditions.
• The management should ensure contractors rectify all defects before the expiry
of the Defects Liability Period as this can tarnish the image of JKP as a property
developer.
36
• The management should ensure all contractors adhere to safety procedures at
project sites as required by the Occupational Safety and Health Act 1994.
• The Board should ensure comprehensive guidelines for financial/activity

management, corporate plan, key performance indicators and implementation
strategies are prepared to manage the main activities of JKP and ensure they
are followed accordingly.
• The Board should monitor the performance of the Audit Committee to ensure its
effectiveness.
• The management should have close monitoring of the management of its

subsidiaries to ensure efficient operation of such subsidiaries is in accordance
with the objective of their formation.
• The Ministry of Finance should ensure JKP adheres to the requirement of the
Companies Act 1965 and all circulars issued for a systematic and prudent
financial management. In addition, JKP should update its financial management
procedures and ensure total compliance.
- MANAGEMENT OF KUMPULAN MODAL PERDANA SDN. BHD.

Kumpulan Modal Perdana Sdn. Bhd. (KMP) started its operation on 1 July 2001 and is
wholly owned by the Government with a paid up capital of RM3.00. KMP is responsible
to manage and administer capital funds for the procurement of technology. As at 31
December 2008, KMP has managed investment totalling RM92.62 million. The audit
revealed that the management of KMP specifically the Hi-Tech Venture Capital Scheme
(HTVC) was not satisfactory. There were several weaknesses such as improper
appointment of the General Partner of HTVC, non-compliance of terms and conditions
of contract by the General Partner, ineffective role and responsibility of the nominee/
trainee managers for HTVC investments and poor monitoring of the performance of the
company appointed to manage the capital funds. In this regard, it is recommended that
the management of KMP, its Board of Directors and the Ministry of Finance consider the
following matters:
• The Ministry of Finance should ensure that the management prepares its
corporate plan, key performance indicators and implementation strategies in its
efforts to achieve the mission and vision of the company and safeguard
Government’s interest as the shareholder of the company.
• The Board should closely monitor the performance of the company nominated to
manage capital funds to ensure each investment is managed properly and gives
optimum returns. A comprehensive standard operating procedures regarding
investment should be prepared and complied with by all relevant parties.
• The Board should regularly evaluate the performance of technology transfer as

compared to set targets. For this purpose, the Board should determine the
evaluation methodology.
37
• The Board should ensure the Audit Committee and Internal Audit Unit are
formed/appointed to carry out internal checks to ensure proper financial
management.
• The management should have close monitoring of the management of its

subsidiaries to ensure efficient operation of such subsidiaries in accordance with
the objective of their formation.
• The Ministry of Finance should review the status of KMP in respect of its capital
capability so that it could improve investment initiative and transfer of technology
to Malaysia.
- MANAGEMENT OF HOTEL CHAINS OF SERI MALAYSIA SDN. BHD.

Hotel Chains of Seri Malaysia Sdn. Bhd. (RHSM) started its operation in April 1994 to
manage a chain of medium cost hotels with a paid up capital of RM131.34 million. The
audit revealed that although RHSM recorded profits for the year 2006 and 2007, it is still
not financially sound as it did not have the capability to meet all of its current liabilities.
There were several weaknesses in the management of RHSM especially the
implementation of Hotel Seri Malaysia franchise system, hotel management company
and hotel operators did not adhere to the terms and conditions of agreements,
operational manual not updated by the hotel management company, hotel operators did
not settle monthly fees according to schedule, delay by RHSM in transferring ownership
of hotel lands as well as its finances not managed according to established regulations.
Even though RHSM has reported a net profit for the year 2006 and 2007, no dividend
was paid to the Federal Government and State Governments concerned. In addition,
weaknesses in financial management and implementation of activities as reported in the
Auditor General’s Report for 2004 have not been rectified. In this regard, it is
recommended that the hotel operators, the hotel management company, management/
Board of Directors of RHSM and the Ministry of Finance consider the following matters:
• As the Government has incurred not less than RM208.30 million (excluding the
cost of renovations) to build 19 Seri Malaysia hotels, the management should
ensure the ownership of relevant hotel lands are immediately transferred to the
Federal Government to safeguard Government’s interest.
• The management should pursue with the hotel management company of Hotel
Seri Malaysia franchise system for information not available from the
Management Operation Review Report in order to facilitate the evaluation of the
performance of hotel operators.
• As Seri Malaysia Hotel, Kuala Terengganu has been chosen as the flagship of
the hotel chain, the management should ensure its operations including financial
management achieve targeted standards consistently.
• The management should ensure the guidelines on the management of funds are
reviewed and updated. The Board should monitor regularly the management of
funds to ensure its usage is proper and transparent as well as in accordance
with its objectives.
38
• To achieve the Government’s objective in setting up the Hotel Seri Malaysia
franchise system, the Board/management, the hotel management company and
hotel operators should ensure their respective roles, functions and
responsibilities are implemented efficiently, effectively and in accordance with
terms and conditions of agreements.
• The Board should monitor the performance of the Audit Committee to ensure its
effectiveness especially on how to deal with weaknesses revealed by the
National Audit Department. In this regard, the management should fill up
immediately the approved posts in the Internal Audit Unit.
• The Ministry of Finance should ensure RHSM adheres to the requirement of the
Companies Act 1965 and all circulars issued for a systematic and prudent
financial management.
- MANAGEMENT OF MALAYSIA VENTURE CAPITAL MANAGEMENT BERHAD

Malaysia Venture Capital Management Berhad (MAVCAP) was formed on 19 April 2001
and is wholly owned by the Government with a paid up capital of RM200 million. The
main activity of MAVCAP is to manage venture capital investment in the field of
information and communication technology (ICT) through 2 types of investment that are
Direct Venture Capital (DVC) and Outsourced Partners Programme (OSP). The returns
of such investment will be obtained when it is disposed off. The audit revealed several
weaknesses in the management of MAVCAP such as non-compliance to guidelines/
terms and conditions of agreements, poor monitoring on the performance of fund
managers and investment companies, training to venture capital entrepreneurs was not
planned nor carried out according to the established mission as well as inadequate
monitoring on the management of subsidiaries. In this regard, it is recommended that
the Board of Directors/management of MAVCAP and Ministry of Finance consider the
following matters:
• The management should urgently finalise the updating of the Investment

Operational and Process Manual to ensure efficient management of investments.
• The management should closely monitor the performance of fund managers to
ensure proper management of investments as stipulated in the contract in order
to get the best returns.
• The Board should establish a clear policy and review the requirements and
appropriateness of venture capital training to ensure MAVCAP achieve its
mission of training and creating entrepreneurs and professional manpower in the
field of ICT.
• The Board should ensure a comprehensive yearly corporate plan and
implementation strategies are prepared to achieve the mission and vision of the
company besides safeguarding the interest of the Government as a shareholder
of the company.
• The Ministry of Finance needs to review or determine the status of Craddle Fund
Sdn. Bhd. (CFSB) and its relationship with MAVCAP besides establishing a
mechanism to monitor the management of activities and finances of CFSB.
39

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CONTENTS

THE FEDERAL GOVERNMENT’S FINANCIAL STATEMENT AND FINANCIAL

- Overall Financial Management Performance 6

ACTIVITIES OF THE FEDERAL MINISTRIES/ DEPARTMENTS AND THE

Part I - Implementation Of Activities By The Federal Ministries/Departments 13

PRIME MINISTER’S DEPARTMENT

MINISTRY OF HOUSING AND LOCAL GOVERNMENT

Part II - Management Of Government Companies 34

- Export - Import Bank Of Malaysia Berhad 34

AUDITOR GENERAL’S REPORT 2008

1.1. Attestation Audits – to give an opinion as to whether the Federal

1.2. Compliance Audits – to determine whether the financial management in

1.3. Performance Audits – to ascertain whether Government activities have

Part I : Certification On The Federal Government’s Financial

4.3. Treasury Instructions require the Heads of Department to ensure the

4.5. Carrying out special evaluations on the performance of Premier Grade

5. I wish to express my thanks to all the officers in the various Federal

( TAN SRI DATO’ SETIA HAJI AMBRIN BIN BUANG )

PART I - CERTIFICATION OF THE FEDERAL GOVERNMENT’S

PART II - FINANCIAL MANAGEMENT OF THE FEDERAL GOVERNMENT

Overall Financial Management Performance

Financial Management At Federal Ministries And Departments Level

4. The Controlling Officers/Heads of Department must ensure that the responsible

AUDITOR GENERAL’S REPORT 2008

1.1. Attestation Audits – to give an opinion as to whether the Federal

2. Starting from 2006, my Report on performance audits on the implementation of

Part I : Implementation Of Activities By The Federal Ministries/

Part II : Management Of Government Companies

5. To assist the Ministries/Departments/Government companies to overcome the

6. I wish to express my thanks to all the officers in the various Federal

( TAN SRI DATO’ SETIA HAJI AMBRIN BIN BUANG )

PART I - IMPLEMENTATION OF ACTIVITIES BY THE FEDERAL MINISTRIES/

PRIME MINISTER’S DEPARTMENT

• Review staffing in SLAO to deal with the increasing workload.

• Standardise a Management Information System to be used by all SLAO in order

• Provide continuous explanations to taxpayers by desk officers at public places

• Penalties must be imposed on taxpayers for non/late submission of BE Forms.

• Ensure employers prepare Tax Deduction Schedules for employees with a

• Issue a Tax Deduction Instruction to ensure employee salaries are deducted to

• Prepare a complete checklist on computation for repayment of overpaid income

Royal Customs Department Of Malaysia

• Prepare a guideline on the rate of compound/fine to prevent the imposition of low

• Ensure the Price Monitoring And Classification Committee holds periodical

• Collect arrears of revenue zealously to prevent losses on Government revenue.

MINISTRY OF AGRICULTURE AND AGRO-BASED INDUSTRY

MINISTRY OF RURAL AND REGIONAL DEVELOPMENT

• Adequate allocation for maintenance of equipments and buildings should be

• Procurement of furniture should be synchronized with construction work

• To safeguard Government's interests, PWD should comply with rules and

PUBLIC WORKS DEPARTMENT SABAH

• The Ministry should impose penalties amounting to RM80.88 million (RM164,727

MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION

MINISTRY OF FEDERAL TERRITORY

• Enhance the methodology in managing compound collections by overcoming the

MINISTRY OF EDUCATION MALAYSIA

• Prepare a scheduled maintenance plan that includes preventive and corrective

• Enhance monitoring/supervision on maintenance/repair works carried out by

• Ensure all concerned parties involved in maintenance/repair works comply with

MINISTRY OF EDUCATION MALAYSIA

MINISTRY OF HEALTH MALAYSIA

• PWD should speed up the process of signing the contract to safeguard

• The Ministry should expedite repair works on all detected defects/damages so

MINISTRY OF HEALTH MALAYSIA