auditing

Reported by: Yussamir Yusof
Lecturer: Mr. Adam Malik
Faculty of Management
ID Number: 00000000
Bachelor of accounting

Corruption will be decline by Effectively Auditing enforcement

Lately, the number of corruption increasingly in Malaysian public sector. This problem will be worst if the government or the Authority agencies did not do something to solve it. On this matter, Auditor General and PAC must act effectively and efficiency to ensure the corruption in public sector wouldn’t occur worst in future. To ensure this matter couldn’t occur next time, the Authority should plan or provides strategy in various ways. One of the effective planning that can be implementing is, emphasizing the accountability and professional auditing among the Malaysian Auditor.

Base on the International Standard on Auditing 120, Framework of International Standards on Auditing (Paragraph 11 and 13), and states:

The objective of an audit of financial statement is to enable the auditor to express an opinion whether the financial statement are prepared, in all material respects, in accordance with an identified financial reporting framework. The phrases used to express the auditor’s opinion are “give a true and fair view” or “present fairly, in all material respects,” which are equivalents term. The auditor’s opinion enhances the credibility of financial statements by providing a high, but not absolute, level of assurance.

According to this article, Auditor General should be independent and cannot be influence with others. The integrity and accountability of Auditor can be seen by their true and fair accounting report.

To do fair and true report auditing, there should walk on three type of auditing. There are Financial Audit, Compliances Audit and Performance Audit. Each type of Audit have own purpose and objective.

The first is Financial Audit, this audit design to determine whether the annual financial statement shows a true and fair view of the financial position and whether the government entity has complied with all legal and regulatory requirements. It involves obtaining and evaluating the evidence on the organization’s financial reports.[1]

Second is Compliance Audit, this audit design to review and examination of system records and activities in order to test for adequacy of system controls, to ensure compliance with established policy and operational procedures, to detect breaches in security, and to recommend any indicated changes in control, policy and procedures.[2]

Compliance audit report on the legality and control of a specified operation of an organization. It also reports probity of public funds dealing of the government’s entity. The report of this audit will include either a summary of the findings or the expression of assurance as to the degree of compliance with the specified criteria.[3]

The third is performance Audit. This audit refers to an examination of a program, function, operation or the management systems and procedures of a governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources. The examination is objective and systematic, generally using structured and professionally adopted methodologies.

In most countries, performance audits of governmental activities are carried out by the external audit bodies at federal or state level. Many of these audit bodies have established guides for conducting performance audits which explain how performance audits are planned, conducted and its results reported.
Performance audits may also be conducted by Internal Auditors who are employees of the entity being audited. However, some national governments require agencies, departments and branches to periodically retain outside auditors to conduct them.

In the USA, all auditors who follow GAGAS standards are required to maintain independence, supervision, continuing professional education, and conduct the audit using a specific process designed to increase the quality of the audit and reduce the politicization of audit work. Although there are separate professional credentials and certifications for Financial Auditors, the persons that conduct Performance Audits in the USA are often Certified Public Accountants, Certified Internal Auditors, or have a broad background in public policy, business or public administration.

The scope of performance audits may include the detection of fraud, waste and abuse, although often these are not included in the scope. Prior to engaging in a performance audit, the auditor must have a scope and plan defined which will be used to guide the audit process.
Performance auditing differs from performance measurement, the latter being the responsibility of management of the entity. In addition, performance measurement may include a broad variety of activities that do not meet the rigor of an independent external assessment.[4]

Conclusion, if the Auditor General using this type of audit in efficiency and effectively, the fraud and corruption will decline and the public sector will be save from this harm. Moreover, it will impact the public sector become more efficient and the same time raise up their accountability and integrity.

*report ini adalah salah satu individual assignment bagi subjek Public sector accounting.Diharap dapat diambil iktibar!KATAKAN TIDAK PADA RASUAH!

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[1] Public sector accounting Malaysian Context. Second edition. Chapter 8, page 208.

[2] E-Commerce PKI CA Glossary - http://www.ecommercepki.com/cps/glossary.htm

[3] Public sector accounting Malaysian Context. Second edition. Chapter 8, page 209.

[4] Managerial Auditing Journal, ISSN: 0268-6902, Emerald Publishing Group

Performance Measurement and Metrics, ISSN: 1467-8047, Emerald Publishing Group

Benchmarking: An International Journal, ISSN 1463-5771, Emerald Publishing Group

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