SUBJECT : INTERNAL AUDITING

QUESTION 1 (30 MARKS) Article 1: Audit report: RM1.29bil irregular payments due to non-compliance with financial management KUALA LUMPUR (22 March, 2022): Non-compliance with financial management has resulted in issues of irregular payments amounting to RM1.299bil, loss of public funds of RM11.45mil and a waste of RM8.87mil to the government in 2020. Auditor-General Datuk Seri Nik Azman Nik Abdul Majid said that last year, the National Audit Department (NAD) had conducted compliance audits on five federal agencies and submitted 19 recommendations for consideration for implementation. "As of Dec 31, 2021, a total of 140 financial statements have been audited and awarded the Auditor General's Certificate while seven financial statements are in the process of being audited. "A total of 109 financial statements were awarded Clean Audit Certificate, 14 were awarded the Audit Certificate Based on Emphasis of Matter, 17 were given Audit Certificate with Reprimand," he said in a statement on the Auditor-General's Audit Report (LKAN) here on Tuesday (March 22). (Source: https://www.thestar.com.my) Required: a. Based on the above article, discuss TWO (2) reasons contributed to the non- compliance with financial management of the public sector. (10 marks) b. "Outsourcing will play an important role in internal audit and will minimize the non-compliance with financial management of the public sector". Do you agree with the statement and justify your answer. (10 marks) C. Describe the potential criteria of outsourced or co-sourced service provider need to be considered by the public sector agencies in Malaysia. (10 marks)