KUALA LUMPUR – The non-compliance of federal ministries and departments with financial management has led to issues involving irregular payments, loss of public funds, and wastage amounting to RM620.07 million in 2020.
Auditor-General (AG) Datuk Nik Azman Nik Abdul Majid said of the RM510.49 million in irregular payments, RM499.19 million involved payments for maintenance service claims without being verified at the National Security Council level.
Meanwhile, of the RM104.79 million loss in public funds, RM81.69 million involved unclaimed penalties not imposed by the Immigration Department, and RM4.79 million involved equipment that was received late and not installed at Istana Budaya.
“To enable corrective actions and improvements to be taken, the AG has submitted 29 recommendations – namely, four recommendations for financial statement verification, and 25 compliance audit recommendations to be considered for implementation by ministries and departments,” he said.
He said this in a statement after the AG’s report on the government’s financial statements and the 2020 Federal Ministries and Departments Compliance Audit was tabled at the Dewan Rakyat today.
Nik Azman said compliance audits involving a total of RM899.44 million had been carried out on three ministries and five departments – covering aspects of contract management amounting to RM772.4 million, government procurement (RM54.8 million), and revenue collection (RM72.24 million).
Moreover, in the Emphasis of Matter on the Federal Government’s Financial Statements, the AG stated that the government’s debt in 2020 amounted to RM879.56 billion or 62.1% of gross domestic product (GDP).
Federal debt increased by RM86.56 billion or 10.9%, compared with RM793 billion or 52.4% in 2019.
According to the AG, 50.4% or RM98.06 billion of the RM194.56 billion of new loans in 2020 was used to finance the principal repayment of matured loans.
“This shows that the government is dependent on new loans to repay mature loans, and the use of development fund collections amounting to RM8.27 billion for the repayment of private financing initiative liabilities and guarantee commitments,” he said.
Besides this, a total of RM2.65 billion was used to pay for the Health Ministry’s hospital and clinic support, as well as maintenance of facilities in the Education Ministry that was previously paid using operating expenditure allocations.
“Development fund collections financed through loans should, in fact, be used to finance physical development projects that contribute to the creation of new capital that can enhance the country’s development and have a high multiplier effect to generate economic activity,” he said.
‘True, fair view of financial position’
On another note, government revenue declined 14.9% to RM225.08 billion in 2020 from RM264.42 billion the previous year, while Covid-19 expenditure amounted to RM38.02 billion.
Operating expenditure declined 14.7% to RM224.6 billion, a decrease of RM38.74 billion compared with 2019, while development expenditure amounted to RM51.36 billion, a decrease of RM2.81 billion or 5.2% compared with RM54.17 billion in 2019.
Nik Azman said overall, the government has a deficit of RM87.65 billion and a deficit-to-GDP ratio of 6.2%, compared with 3.4% or RM51.37 billion in 2019.
According to the statement, the report contains three main components – the verification of the government’s financial statements for the year ended December 31, 2020; the government’s financial analysis; and the compliance audit of ministries and departments.
Nik Azman said overall, the government’s financial statements show a true and fair view of the government’s financial position for the year ended December 31, 2020, and its accounting records are orderly and up to date.
It is the second tabling of the report in the Dewan Rakyat this year after the AG’s Report 2019 Series 2 was tabled on September 28. The National Audit Department also briefed Public Accounts Committee members in Parliament today on the main issues of the audit findings.
The AG’s report can be accessed by the public from 10.10am today, while issues in the report’s Compliance Audit of Ministries and Federal Departments 2020 will be uploaded on the AG’s Dashboard Portal from 11am. – Bernama, October 28, 2021
