Auditor General s Report For The Year 2013

Transcription

1 Auditor General s Report For The Year 2013 The Activities Of The Departments/ Agencies And The Management Of Penang State Government Companies 1 st Series

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3 AUDITOR GENERAL S REPORT FOR THE YEAR 2013 The Activities Of Departments/Agencies and Management Of State Government s Companies For Penang 1 st Series NATIONAL AUDIT DEPARTMENT OF MALAYSIA

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5 PREFACE 1. An article 106, of the Federal Constitution and the Audit Act 1957 requires the Auditor General to audit the State Government s Financial Statements, Financial Management and Activities of the State Ministries/Departments/Agencies. Section 5(1) (d) of the Audit Act 1957 empowers the Auditor General to carry out audit on any company registered under the Companies Act 1965 that are receiving grant/loan/guarantee from the Federal or State Government and any company where more than 50% of the paid-up share capital is held by the Federal Government, State Government or a public authority. Articles 107 of the Federal Constitution requires the Auditor General to report on the audit findings to the Supreme Head of Malaysia, His Majesty, Seri Paduka Baginda Yang di-pertuan Agong and His Excellency, the Head of State of Penang. His Majesty will grant his Royal assent for the Report to be tabled in Parliament while His Excellency will then assent for the Report to be tabled in the State Legislative Assembly. 2. For the year 2014, the National Audit Department will continue to implement the initiatives under the GTP2.0: NKRA Anti Corruption to table the Auditor General s Report on the Activities of Departments/Agencies and the management of State Government s companies in Parliament/State Legislative Assembly at every seating. The National Audit Department will also continue to support the National Transformation Policy and to assist the Departments/Agencies making improvements by giving opinions and recommendations through the auditing carried out thus enhancing the people s well-being. I hope the report with regards to the implementation of Activities of Departments/Agencies and Management of Penang State Government s Companies for the year st Series will become the basis for improving all weaknesses, strengthen efforts to improve and increase accountability and integrity and obtain value for money for each expenditure made as desired by the Government. 3. This report is the result of auditing carried out on certain activities implemented in two Agencies and one State Government s Company. Auditing on activities of State Departments/Agencies is for the purpose of evaluating whether the programme and activities planned are carried out successfully in accordance with the time frame set, no wastage and their objectives are achieved. Auditing on management of company is to evaluate whether the financial performance of the company is good, management of activities, finance and corporate governance of the company were implemented orderly and in accordance to the regulations and objectives are fully achieved. 4. Audit Observations have been submitted to the relevant Heads of Departments/Agencies/State Government Companies. Only significant Audit findings are reported in this Report. This Report is also forwarded to the Chief Minister s and State Secretary s Office of Penang. In order to improve on the weaknesses highlighted or to avoid their recurrence, I have forwarded 12 recommendations for the respective Heads of Departments/Agencies to take action. 3

6 5. I wish to express my gratitude to all officers of the State Departments/Agencies and State Government Companies who have given their full cooperation to my officers throughout the audit. I would also like to extend my appreciation and thanks to my officers who have worked diligently and given their full commitment to complete this Report. (TAN SRI DATO SETIA HAJI AMBRIN BIN BUANG) Auditor General Malaysia Putrajaya 27 January

7 REPORT SUMMARY ACTIVITIES OF STATE DEPARTMENTS/AGENCIES AND MANAGEMENT OF STATE GOVERNMENT S COMPANIES 1. PENANG MUNICIPAL COUNCIL - Solid Waste Management 1.1. Penang Municipal Council was established on December 15, 1976 under the Local Government Act, 1976 to provide local authority services in the island of Penang. The administrative area of the Council consists of a multi-ethnic population of 722,300 people covering an area of square km. To ensure public hygiene and proper solid waste management, Municipal Services Division (BPP) under the Department of Urban Services, Public Health and Licensing was established by the Council to manage the services of collecting, transporting and disposing of solid waste throughout the island The Council has divided the collection area into 8 zones where the collection works in 7 zones were carried out by contractors and the remaining one zone was operated by the Council itself. The Council has also specified that domestic solid waste collection by the contractors must be done at night. Based on the Council s Client Charter, all solid waste must be collected every day for commercial premises, three times a week for residential premises and every day except Sunday for high rise buildings Council has appointed a company, Eurasia Express Sdn. Bhd. (Eurasia) to remove solid waste from the Batu Maung Transfer Station to Pulau Burung Landfill since August The Penang State Government has decided to temporarily close the Batu Maung Transfer Station in July 2011 for construction of Penang s Second Bridge. Therefore, to ensure the transfer of solid waste in the island to run as usual, solid waste transfer operations was moved to Ampang Jajar Transfer Station (SPAJ). Additionally, the operating hours was changed to night in order to avoid congestion at SPAJ which was also used by the Seberang Perai Municipal Council. On July 16, 2012, the Council appointed PLB Terang Sdn. Bhd. through a Request for Proposal to replace Idaman Bersih Sdn. Bhd. (IBSB) to perform the activity of disposing solid waste in the Pulau Burung Landfill for a period of 20 years An audit conducted in March until June 2013 revealed that overall, the solid waste management was satisfactory in terms of monitoring collection works by 7 contractors through the use of Global Positioning System (GPS). In addition, the transfer of solid waste from SPAJ to Pulau Burung Landfill was executed on the day of collection according to schedule. The construction of the leachate treatment plant and recycling centre as well as upgrading of the leachate treatment pool in Pulau Burung Landfill is also on schedule. However, there are some weaknesses that need to be given due attention as follows: 5

8 Contamination from leachate which spilled on to roads was not cleaned in the operations area of the Council by the contractors. Inefficiency of collection service by Council due to shortages of truck compactors. Table (Schedule) of Services Board not available in Council s servicing zones and not updated in contractor s servicing zone. The weight of solid waste disposed by the contractor did not achieve the minimum weightage as specified in the agreement of contract. Waste bins provided by the Council could not accommodate the amount of solid waste discarded by the public. Total suspended solids in all locations around the landfill exceeded the standard limit. Late actions taken on solid waste management complaints To enhance the solid waste management, Council is recommended to take the following actions: Establishing Standard Operating Procedure for the operation of collection implemented by the Council in order to avoid contamination when collections are carried out Collection contractors have to comply with the conditions stipulated in the contract Replacing the compactor trucks and proposing for disposal by the Council Review the weight of solid waste disposed by the contractor as specified in the contract. 2. STATES SPORTS COUNCIL - Use And Maintenance of Stadium Batu Kawan 2.1. The construction of the Penang State Stadium (Stadium) in Batu Kawan has been planned since 1995 as a major and largest outdoor stadium in Penang. The Stadium was built to replace the City Stadium to host the Malaysia Games (SUKMA) in A 150-acre site in Batu Kawan was earmarked for the construction of the new Stadium. The site was proposed as a State Sports Complex not only as an open Stadium, but also to provide facilities for other sports. In the early 2000s, the 90 acres Stadium was completed at a cost of RM104 million incurred by the Penang Development Corporation (PDC). After the conclusion of SUKMA, the State Government decided to appoint PDC as the maintenance agency until the State Government decides the structure of the proper management of the Stadium and other sports facilities. Beginning 2003, the State Government has decided that all stadiums and sports facilities be managed by the Seberang Perai Municipal Council (MPSP). The handover of the management of the Stadium to the Penang State Sports Council (MSN) was implemented after the Executive Council (MMK) on December 19, 2008 approved the 6

9 handover of the management of the Stadium by MPSP to MSN. The handover was made in January MSN has set a target for the use of the Stadium as a social facility to the community to be used optimally in the entire Stadium. The rental rates for the Stadium facilities are based on rental rates available under MPSP management since April Overall, an audit carried out between March and June 2013 revealed that the performance of the rental management and maintenance of Stadium Batu Kawan is less than satisfactory despite the use of the Stadium increase 207 times or 287.5% in 2013 and 122 times or 169.4% in 2012 compared to 2011 due to several weaknesses: Management of the Stadium bookings was disorganised. Regulations on cub prix racing rental was not set and rental rates were not standardized. Similarly, Stadium stalls rental were unsatisfactory. Poor management of receivables. Performance of cleaning contracts was not satisfactory. There were damages to facilities, equipment and in the Stadium surroundings. The Stadium safety was less than satisfactory To ensure that the proper use and maintenance of Stadium Batu Kawan is managed efficiently and achieve its objectives, it is recommended that the State Sports Council to take action for improvement in the following areas: Promoting the use of the Stadium widely and on a continuing basis through the website or local media to increase rental revenue so that reliance on the provisions of the Government can be reduced Improving the management of bookings and rental of existing Stadium facilities in terms of documentation to ensure it is more efficient, organized and standardized Take the immediate action for maintenance and repair of facilities and equipment, and the surroundings to ensure the Stadium is always in good condition and safe to use Reviewing the Stadium and stalls rental rates to ensure the tenancy agreement can provide value added to the MSN revenue. 3. MAJLIS AGAMA ISLAM - Usaha Tarbiah (Pulau Pinang) Sdn. Bhd Usaha Tarbiah (Pulau Pinang) Sdn. Bhd. (UTSB) was established under the Companies Act 1965 on May 12, 2004 with an authorized capital of RM5 million and paid up capital of RM4,003,004. UTSB is a wholly-owned subsidiary company of Majlis Agama Islam Negeri Pulau Pinang (MAINPP). UTSB was established to manage and organize a Private 7

10 Higher Education Institution (HEI) by the name of Kolej Islam Teknologi Antarabangsa (KITAB). The establishment of KITAB was approved by the Ministry of Higher Education Malaysia (MOHE). KITAB offers 5 diploma programmes namely Diploma in Syariah, Diploma in Tahfiz Al -Quran, Diploma in Qiraat Al -Quran, Diploma in Banking and Diploma in Finance. KITAB also offers 3 degree programme namely Bachelor of Usuluddin (Tafsir Hadis), Bachelor of Syariah (Al - Ahwal Al - Syahskhiyah) and Bachelor of Syariah (Muamalah Wal Iqtishad) in collaboration with the Institut Agama Islam Negeri (IAIN) North Sumatera Medan and Ar Raniry Acheh, Indonesia. In addition, Arabic and English Intensive Courses are also held. As of May 2013, the total enrollment of students in KITAB is 528 students An Audit carried out revealed that as a whole, the financial and corporate governance performance of UTSB were less than satisfactory. Among the weaknesses detected were as follows: Three of the 5 diploma programme has only provisional accreditation from the Malaysian Qualifications Agency and application has not been made to obtain accreditation for three degree programme. Intake performances for 3 out of 5 diploma programme were less than satisfactory. 27 students or 25 % managed to complete the study within the minimum period of 7 semesters whereas the rest took more than the minimum period of between 8 and 14 semesters to complete. Lecturers did not have teaching permit. Increase in outstanding amount of tuition fees each year due to lack of action being taken by UTSB to recover the arrears. Hostel facilities were not well maintained and hostel safety was unsatisfactory To enhance the management of the Company and the comfort and safety of the students, UTSB is recommended to take the following actions: Establish company s SOP in all departments to ensure their smooth operations Enhancing the monitoring of KITAB to ensure the conditions set by the Ministry Of Education and Malaysian Qualifications Agency is followed Establish an effective method of collecting outstanding tuition fees so that the total arrears can be reduced Improve the facilities and safety of student hostels. 8

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