In order to maintain the accountability for the public, the formation of the Malaysian National Audit Department plays a vital role in the process. The National Audit Department was also the foundation in the growth of the public sector accounting in Malaysia. The motive of the formation of National Audit Department is to support the financial management and public accountability through the audit of accounts and the activities done by the public sector. Therefore, the National Audit Department has been given the responsibility to conduct various types of audit in Malaysia. The National Audit Department is vested by two laws which are the Malaysian Constitution and the Audit Act 1957. Stated under Section 9 (1) and Section 6 of the Audit Act 1957, the National Audit Department is responsible to ensure the existence of the accountability in the administration and the management of the public funds through the audit of accounts and activities done by the Federal government, State government, Local government and the statutory bodies. As stated by the Auditor General of Malaysia in year 2007, the National Audit Department has to audit accounts consisting of 27 Federal ministries, 86 departments, 13 State governments, 112 Federal government agencies, 139 State government agencies, 144 Local authorities and 15 Islamic religious councils. In addition to this, the government-linked companies who received grants from the government will also be audited by the Malaysian National Audit Department. The National Audit Department is led by the Auditor General. Stated in Article 105 of the Constitution, the Auditor General is chosen by the Yang Di Pertuan Agong with advice by the Prime Minister. The appointment will then be done after the consultation with the Conference of Rulers. The National Audit Department will help the Auditor General by providing independent review of the performance and the financial management of public sector agencies and bodies while implementing audit obligations.
As seen in the chart in the previous page, all the audit divisions in Malaysia are supervised by the Auditor General. The staffs in the National Audit Department are the members of the Malaysian Civil Service where their employment’s terms and conditions are reviewed by the Public Service Commission (Suruhanjaya Perkhidmatan Awam Malaysia). The Public Service Commission are the one with the responsibilities in choosing the candidates to be hired in the National Audit Department. These staffs are assigned with the powers of the Auditor General, as stated in the Federal Constitution and Audit Act 1957 for carrying out audit. The Auditor General’s office is a part of the administrative set-up. It is an independent from the executive branch of the Government. His independence is assured by the provision in the Constitution for the appointment, remuneration and security of lease of the office. It is also stated in the Constitution that the Auditor General is able to resign at any time but he is not allow to be removed from the office without the decision by the Federal Court. He also has the power to obtain and retrieve any explanation and access to all records and documents including classified documents that would enable him to carry out his duties. There are mainly three types of audit works that need to be done by the Malaysian National Audit Department. The three type of audits carried out as stated in the Audit Act are Financial Audit, Compliance Audit and Performance Audit. Financial Audit is done to give opinion on whether the financial statements that have been prepared by public sector agencies showed true and fair view of the financial position. Financial audit requires the Auditor General to test out the truthfulness and fairness of the financial information that have been prepared. Besides that, the financial statements will also be audited and checked whether it has been prepared in accordance to the financial reporting framework...
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