AUDITOR GENERAL S REPORT FOR THE YEAR 2012

Transcription

1 AUDITOR GENERAL S REPORT FOR THE YEAR 2012 The Activities Of Departments/Agencies And The Management Of State Companies For PERAK 3 rd Series NATIONAL AUDIT DEPARTMENT OF MALAYSIA

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3 PREFACE 1. Article 106 of the Federal Constitution and the Audit Act 1957 require the Auditor General to audit the State Government s Financial Statements, Financial Management and Activities of the State Departments/Agencies. Section 5(1) (d) of Audit Act 1957 empowers the Auditor General to audit companies registered under the Companies Act 1965, which receive grant/loan/guarantee from the Federal or State Government and companies in which more than 50% of the paid-up capital is held by the Federal Government, State Government or State Government Agencies. An order cited as the Audit (Accounts of Companies) Order 2004 (Revised 2009) the consent of the Supreme Head of Malaysia, His Majesty, Seri Paduka Baginda Yang di-pertuan Agong authorised the Auditor General to conduct an audit on the State Government Companies. While Article 107 of the Federal Constitution requires the Auditor General to submit his Report on the audit findings to the Supreme Head of Malaysia, His Majesty, Seri Paduka Baginda Yang di-pertuan Agong and His Royal Highness, the Sultan of Perak. His Majesty will give his Royal Assent for the tabling of the Report in Parliament while His Royal Highness will then assent for the tabling of the Report in the State Legislative Assembly. 2. The National Audit Department has been given the responsibility to implement 4 initiatives under the GTP2.0: NKRA Anti-Corruption as from One of the initiatives is the submission of Auditor General s Report on the Activities of State Departments/Agencies and the Management of State Government Companies to be tabled in the Parliament/State Legislative Assembly when every session convened. This would enable the public to access the Report promptly, in line with Government s aspiration to make the Government Transformation Programme for the period of 2013 to 2015 a success. I hope this Report for the Year 2012: 3 rd Series would be a basis in rectifying all weaknesses, reinforcing improvement efforts, enhancing accountability and integrity as well as getting value for money for every spending as desired by the Government. 3. The Audit on the activities of the State Departments/Agencies was to evaluate whether the planned programmes and activities were successfully implemented in a timely manner, without any wastage and achieved its objectives. While the Audit on the company s management was to evaluate the financial performance of the company, management and financial activities as well as corporate governance. 4. There were a total of 3 activities and one companies management reported in the Auditor General s Report of Perak for the year 2012: 2 nd Series. Whilst, The Auditor General s Report of Perak for the year 2012: 3 rd Series reported another 2 activities and a company management namely State Road Maintenance Program (MARRIS), Management of Perak State Government s Religious Secondary School and Perak Hi-Tech Park. Sdn. Bhd.. The audit observations were submitted to the relevant Head of Departments/Agencies/State Government Companies. Only significant audit findings are

4 reported in this Report. In order to rectify weaknesses and prevent recurrences, I have put forward 10 recommendations as remedial actions to be taken by the Head of Department /Agency and Chief Executive Officer concerned. 5. I wish to express my gratitude to all officers of the State Departments/Agencies and State Government Companies who gave 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 25 September 2013

5 REPORT SUMMARY ACTIVITIES OF STATE DEPARTMENT/AGENCIES AND MANAGEMENT OF STATE GOVERNMENT COMPANIES 1. PUBLIC WORKS DEPARTMENT OF KINTA DISTRICT PUBLIC WORKS DEPARTMENT OF KUALA KANGSAR DISTRICT KUALA KANGSAR MUNICIPAL COUNCIL - State Road Maintenance Program (MARRIS) 1.1. State road means any public roads, other than a gazetted Federal Roads as stated in Federal Roads Act 1959, which are accessible to the public. According to Schedule 10, Part II of the Federal Constitutions, the state road maintenance means the maintenance, repairs, and rehabilitation of state roads, road cushions, bridges, and culverts, which are part of the road, for maintaining purposes as when it was constructed or repaired. Based on the records of the Malaysian Road Records Information System (MARRIS), the length of the state road network that was maintained by the end of 2012 in the State is 15, km. The state roads were maintained by the Public Works Department (PWD), the Local Authority (LA), District and Land Office (DLO) and the Department of Irrigation and Drainage (DID). A concessionaire G.B. Quarry Sdn. Bhd. was appointed by the PWD to carry out the maintenance and repair the roads. In addition, the implementing agencies will also appoint another contractor to conduct maintenance work in accordance with the specifications. According to the Road Maintenance Guidebook 2010, road maintenance purposes are to ensure: Road surfaces and surrounding always give comfortable and safe driving; Road structure with adequate endurance to accommodate the traffic load; and The road immediately rehabilitated in the occurrence of unexpected event such as landslides and so on An audit conducted from May to July 2013 revealed that overall the State Road Maintenance Program is satisfactory except for the performance of the construction and maintenance of drains that need to be improved. Weaknesses found were as follows: Recurrence of construction defects. Defects due to road excavating by other agencies Drains were not maintained To ensure that the maintenance of state roads are constantly well managed, safe and comfortable, PWD is recommended to take the following actions:

6 Ensure a constant and continuous maintenance work needs to be done to ensure road damages are not recurring Ensure state roads maintenance is monitored constantly in order to avoid unapproved excavating work by other agencies and the roads are properly repaired for the safety of road users. 2. PERAK ISLAMIC RELIGIOUS DEPARTMENT - Management Of Perak State Government s Religious Secondary School 2.1. Perak State Government has established the State Religious Secondary School (SRSS) in order to provide a proper religious education to Muslim students in Perak. To accomplish this purpose, 3 SRSS namely the Raja Izzuddin Shah School, Raja Perempuan Taayah School and Raja Dr. Nazrin Shah School were established in 1959, 1960 and 2000 respectively. As at 2012, SRSS have 1,746 students and 171 teachers. SRSS is administered by the State Government under Religious Education Division (RED), The Perak Islamic Religious Department (Department). The State Government has allocated RM3.39 million and RM44.18 million for SRSS development and operating expenditure for 2010 until 2012 respectively. A total of RM2.83 million was spent on development expenditure and RM43.59 million was spent on operating expenditure An Audit conducted April to July 2013 found that overall the academic performance of all the three SRSS was good due to their achievement of Average School Grade and Average Subjects Grade were under level 2 and these good achievements should be maintained. However, the management of SRSS was unsatisfactory due to some weaknesses as follows: Asset management was not satisfactory. School facilities were not properly and not fully utilized, as well as the level of cleanliness was less than satisfactory. The management of Public Money Contribution Account is not satisfactory. Ineffective monitoring To enhance the efficiency and effectiveness of the management of the Perak State Religious Secondary School, Perak Islamic Religious Department and the SRSS are recommended to take the following actions: Standard Operating Procedure should be prepared in order to strengthen the SRSS financial management particularly the Public Money Contribution Account Provide trainings related to the financial management for the administration of SRSS on regular basis.

7 Ensure the Inspection Unit under Religious Education Division and the SRSS management perform a major role effectively in monitoring SRSS Ensure that school facilities and assets always well kept, clean, safe, well maintained, and properly repaired. 3. PERAK STATE DEVELOPMENT CORPORATION - Perak Hi-Tech Park. Sdn. Bhd Perak Hi-Tech Park Sdn. Bhd. (The Company) is a subsidiary of the Perak State Development Corporation (SEDC), with holding of 100 % equity. The company formerly known as Silver Active Management Sdn. Bhd. was established on the 24 June 2002 under the Companies Act The establishment objectives are to promote the local and global industries through transformation and innovation in manufacturing, trade and services. Silver Active Management Sdn. Bhd. was renamed as Perak Hi-Tech Sdn. Bhd. on the 9 April The main activity of the Company is to develop High Technology Park, comprising of the development of high-tech industrial area, government institutions, housing and real estate in line with the Perak State Government's intention towards a progressive state by the year Until 31 December 2012, the Company is operated with an authorized capital of RM500,000 and paid-up capital of RM160, An Audit conducted from February to April 2013 revealed that overall the management of the Company was satisfactory due to the accumulated profits of the Company amounted to RM0.45 million until December 31, 2011 as compared to RM0.66 million accumulated losses in However, the basic infrastructure development of the main activities of the Company is unsatisfactory, due to projects undertaken were not able to complete on schedule. The overall Corporate Governance is unsatisfactory due to policies, financial and accounting regulations of the Company were not available. Weaknesses found were as follows: Constructions were completed on schedule. The Company did not have terms of reference relating to the roles and responsibilities of the Board of Directors and the Board Meetings were held not as frequent to discuss matters relating to the activities of the Company. Internal Audit Unit of SEDC did not carry out an audit on the Company. Standard Operating Procedures, Policy, Finance, and Accounting Regulations were not available. Strategic Planning and Key Performance Indicators were not available In order to enhance its performance, the Department and SEDC recommended to take the following actions:

8 The company should take immediate action to on upgrading of Jalan Protocol in accordance with PWD specifications to guarantee road endurance, and hand over the maintenance works to PWD Perak State Development Corporation should expedite the implementation of the decision made in the meeting with the representatives of the squatters so that the Company can continue the construction projects as planned The Company should ensure that the Standard Operating Procedures, strategic planning, and key performance indicators as well as Finance and Accounting Procedures Policies are complete in order to improve the financial management of the Company The Company should establish an Internal Audit Unit and subsequently the Internal Audit Unit of SEDC should conduct the audit of the Company's financial management.