By the Accountants Today Team

Public sector internal audit in Malaysia is embarking on a transformative journey to enhance its role in driving good governance for nation building. Internal audit practitioners in the public sector therefore have to be prepared to take on evolving and expanding roles in this changing landscape.

“In a world of evolving governance, where tech is king, the role of internal audit in the Malaysian public sector is vital. It’s not just about ticking compliance boxes; it’s about sustainability, tech acceptance, and a risk-based mindset. Internal audit becomes the superhero, leading the charge in value creation, performance optimisation, and transparency,” stated Datuk Wan Suraya Wan Mohd Radzi, Auditor General Malaysia in her keynote address at the recent Public Sector Internal Audit Conference 2024 jointly organised by the Malaysian Institute of Accountants (MIA) and the Institute of Internal Auditors Malaysia (IIA Malaysia).

Addressing an audience of close to 150 public sector internal audit professionals on the conference theme of Shaping Tomorrow’s Governance: Innovation In Public Sector Auditing, Datuk Wan Suraya advised that, “Old auditing ways don’t cut it anymore. We need to evolve, innovate, and adapt to face the challenges ahead.”

Key takeaways

Datuk Wan Suraya highlighted key developments and initiatives undertaken by the National Audit Department of Malaysia (NADM) that will level up the internal audit practice in Malaysia.

“By harnessing the power of technology, auditors can uncover insights, detect anomalies, and identify potential risks more effectively, thereby strengthening the internal audit function,” she said. 

The NADM has embarked on a digitalisation project that includes developing a data warehouse, an audit analytics application, an audit dashboard, as well as hardware and other supporting infrastructure. “This project aims to generate high-impact results that will empower NADM to make well-informed decisions by leveraging big data analytics, integrated data management, and data sharing across agencies. The outcome of this project will play a crucial role in strengthening the NADM’s main systems, empowering the delivery of enhanced auditing services, increasing fraud detection and facilitating policy changes through the adoption of new technologies for sustainable digitalisation.”

The NADM intends to strengthen collaboration and communication between internal audit, management, and other stakeholders to ensure alignment of objectives, transparency, and accountability. “By fostering open dialogue and constructive feedback, internal audit can build trust, enhance governance practices, and drive performance improvement initiatives more effectively,” said Datuk Wan Suraya. In this regard, NADM has signed a Memorandum of Understanding (MoU) with the Malaysian Anti-Corruption Commission (MACC) focusing on knowledge and experience sharing to improve service delivery to stakeholders. NADM also has a similar agreement with Universiti Teknologi MARA (UiTM). NADM has also signed an MoU with the IIA Malaysia to develop a mutual collaboration, sharing of knowledge and training in the field of auditing.

Investing in the professional development of internal audit professionals will equip them with the necessary skills, knowledge, and competencies to navigate complex governance challenges effectively. Furthermore, providing opportunities for training, certification, and skill-building initiatives will empower auditors to perform their roles with excellence and integrity.

The NADM is providing training programmes through the National Audit Academy to upgrade the skills and knowledge of auditors. “Internal auditors should be given appropriate ongoing training programs to meet the growing technical complexity and diversity of tasks within the organisation,” said Datuk Wan Suraya. For example, the National Audit Academy recently conducted a course on Financial Statements of Majlis Agama Islam for all states and also a Financial Statements course for Local Authorities. 

Sustainability principles should be integrated into internal audit processes to promote environmental, social, and governance (ESG) considerations. By evaluating the impact of organisational activities on sustainability outcomes, internal audit can help mitigate risks, enhance resilience, and drive long-term value creation for the public sector, said Datuk Wan Suraya. In this matter, the NADM plans to conduct collaborative audits with other Supreme Audit Institutions, focusing on the ESG aspect, particularly climate change.

Continuous Monitoring and Assurance to further enhance the utilisation of the Auditor General Dashboard (AGD) – NADM uses the AGD as a platform to address and monitor issues published in the Auditor General Report to be resolved at once appropriately by the relevant ministries/departments/agencies and State-Owned Enterprises, thus helping to improve public perception of the Government.

Datuk Wan Suraya noted the persistent recurrence of issues despite being highlighted in the Audit Report year after year. One reason is because follow-up on the audit findings or recommendations is less prioritised after the tabling of Audit Reports. “Through the Auditor General Dashboard, the NADM can effectively monitor and follow up on actions taken and ensure timely resolution of outstanding matters.”

Internal audit should utilise the dashboards, key performance indicators (KPIs), and benchmarking metrics to track progress, identify trends, and proactively address areas of concern. By adopting a proactive stance, internal audit can support decision-making processes and drive continuous improvement initiatives effectively.

By focusing on these key areas and implementing strategic initiatives, public sector organisations can strengthen the internal audit function, enhance governance practices, and drive sustainable performance improvement for the benefit of all stakeholders.

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