What are our expectations of the new Auditor-General?

Madinah Mohamed may want to take up the challenge to audit the human resource issues in the public sector so that strategic plans can be developed to address the alleged bloated civil service.

COMMENT

By KK Aw

Since Madinah Mohamad was appointed the auditor-general with effect from 23 Feb, 2017, social media has been abuzz with discussions on her lack of expertise as an accountant and auditor.

Some even extended this issue to other key senior civil service appointments. The Federal Constitution and the Audit Act 1957 do not specify the professional qualifications of the auditor-general.

Many people have misguided expectations of the auditor-general as they associate auditing with financial auditing only.

The annual A-G’s reports put much more emphasis on the activities of the public entities than on the financial statements. The sensational audit findings that are reported in the mass media are found mainly in the activities reports.

The Public Accounts Committee (PAC) has oversight of our national spending and it works closely with the National Audit Department (NAD). One of PAC’s main roles is to scrutinise the A-G’s Report and to investigate if the findings of the audit department are addressed and the recommendations implemented by the audited entities.

The dictionary provides two definitions for the word “account”: A report or description of an event or experience; and a record or statement of financial expenditure or receipts relating to a particular period or purpose.

Many people are unfortunately fixated on the second definition. We want to hold the government and public sector accountable and this can only make sense with the first definition.

The Public Accounts Committee is called “Jawatankuasa Kira-Kira Wang Negara” in the national language. This reflects the second definition of the word “account” and adds to the confusion.

The highly regarded outgoing auditor-general is an economist by training while the current Auditor-General of Singapore, Willie Tan, is a mechanical engineer by training. Apparently, other former auditors-general are also not accountants by training. So, the basic training of the auditor-general should not be an issue as other expertise are more important.

The NAD is the supreme audit institution of the country. The vision of the NAD is “to be recognised as a key contributor towards financial management excellence and enhance good governance in the public sector.”

NAD has just over 1,900 officers, with offices in all the different states and in some of the federal ministries. The A-G is the auditor of over 1,400 government departments and agencies and about 1,700 government-linked companies.

On top of this, audits are also conducted on the hundreds of federal and state projects. Government initiatives like the BR1M are also audited.

In such a complex environment, the effectiveness of the A-G is unlikely to depend on his or her technical skills but on the management and leadership skills.

The civil service is driven by procedures, rules, and regulations, and this is the base the NAD must work from. Understanding and appreciating procedural knowledge is, therefore, a prerequisite.

The usual management issues such as providing a conducive working environment, staff motivation, improving productivity, communication skills, public relations, human resource development and so on are all important.

Madinah has released her profile at https://www.audit.gov.my/index.php/en/ketua-audit-negara/profil. It is an impressive service record and she has held 13 positions in various government departments and agencies over the years. These experiences and exposures should hold her in good stead in her new position.

The public sector entities are engaged in a diverse range of activities and functions. The NAD needs to appreciate this and learn of their challenges, priorities, and critical issues faced. Audit findings and recommendations not in line with this may be considered frivolous or out of touch.

Such knowledge may be acquired from the staff of the public entities through good working relationships or through research and consultation with outside parties.

The ability to get personal knowledge to provide leads or feedback to help the audit process could be invaluable. Otherwise, the auditors may miss critical factual information that the audited entities wish to withhold.

It would appear that former A-G Ambrin Buang paid a lot of attention to procurement management and rightly so. The NAD conducted a combined total of about 70 specialised procurement management audits at both the federal and state levels from 2010 to 2014.

His keynote address at the “Combating Procurement Fraud in the Public and Private Sectors Forum 2017″ on Jan 24, was headlined “Public procurement most vulnerable to corruption, says the Auditor-General” by the MalayMail OnLine.

The recent spate of arrests by the MACC of senior civil servants in procurement-related graft may have been unnerving for Ambrin. It looks like procurement management remains a major issue despite all the efforts undertaken.

The procurement cycle is complex. It involves needs analysis, requirement specifications, site investigation, design, contract specifications, scheduling, budgeting, tendering, vendor selection, project implementation, monitoring and supervision, testing and commissioning, documentation, and training and many other activities.

Technically, procurement should also include project management and contract implementation.

Procurement must be executed professionally at every stage of its cycle. Procurement corruption is not something that can be fixed through auditing as “audits are not a panacea”.

Part of our public sector problem is the lack of professionalism, competency and support facilities at the various stages of the procurement cycle. This needs to be addressed by the agencies concerned with inputs from the stakeholders and the NAD.

The current issue about the civil service is the allegation that the service is bloated. The payment for emoluments, pensions and other benefits for retired staff is taking up much of the government’s annual operating expenditure.

There may be a need to downsize but it must be done systematically with considerations for business continuity, succession and so on.

Instead of just conjecture, it would be more meaningful if we can find audit information related to human resources.

I am afraid that this issue has been hardly touched on by the NAD in the last few years.

Human resource issues are raised when there is a lack of expertise for the operation and maintenance of sophisticated machinery or systems. Alternatively it is when positions in the technical departments are left vacant.

Madinah has a PhD in Human Resource Management. Perhaps, she may want to take up the challenge to audit the human resource issues in the public sector so that strategic plans can be developed to address the alleged bloated service.

Proposals and decisions made should be evidence-based and NAD is perhaps the only agency with the means to gather this information independently and cost effectively.

KK Aw is an FMT reader.