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WHAT is the specific and primary function vested upon the Malaysian Auditor General as Chief
of the National Audit Department?

By virtue of The Federal Constitution and The Audit Act 1957, whereby Article 106 & 107
respectively, spells out that The AG is required to audit the State Government Financial Statement
including its activities and will submit his report to His Majesty, The Supreme Head of Malaysia and
His Excellency, The Head of State of Sabah.

In other words the AG is also required:-

“To give an opinion as to whether the State Government Financial Statement for the year concerned
shows a true and fair view as well as its accounting records are properly maintained and updated
accordingly. Analysis on the Financial Statement is also carried out to assess the State financial
position as to whether it is excellent, good, satisfactory or fair” vide the National Audit Department
preface (1.1) Attestation Audit.

The National Audit Department under the auspices of the current AG Tan Sri Ambrin Buang, is an
independent entity and perform its duties as outlined in its professional Code of Ethics without fear
and favour.

The Auditor General’s Report is made up of Six parts appended as follows:-

Part 1 - Certification of The State Government Financial Statement for the year ended 31st Dec 2009 .

Part 2 – Financial Analysis of The State Government

Part 3 – The State Government Development Plan

Part 4 – Financial Management Performance of The State Ministries/Departments/ Agencies .

Part 5 – Submission, Certification and Tabling of Financial Statements from State Agencies .

Part 6 - Tabling of The Auditor General’s Reports and meetings of the State Public Accounts

The State Government approved a total of 24,866 projects to be implemented by 11 ministries during
the year 2006 to 2010.

Year 2009 marked the fourth year of the 9th Malaysia Plan (MP), during this period a total of 21,432
projects (86.2 %) took off the ground, 343 projects (1.4 %) were in progress of construction, while
3,091 projects (12.4 %) have yet to begin.

Under the 9th MP in 2009 an allocation of RM 6.34 Billion were approved to 11 ministries
/departments, out of which RM 4.84 Billion or 76.4 % was spent as at 31st December 2009, whereby
the National Audit Department conducted a Financial Management audit based upon the
Accountability Index in 38 State ministries/ Departments/Agencies compared to 18 entities being
made in 2008.
In general, the performance of Financial Management by State Ministries/ Departments/ were rated in
the order of significant grading and importance.

No of State Ministries/Departments/Agencies Rating / Marks

38 Good

27 Satisfactory

05 Excellent

In addition a Four Stars award was given to the State Treasury for retaining its Financial Management
achievement at Excellent Level. While a Three Stars award was given to the Sabah Islamic and Sabah
Economic Development Corporation respectively.

The Auditor General’s Report for year 2009 gave synoptic descriptions on the activities of The Sabah
Government Ministries, Departments, Agencies and The Management of State Government
Companies for public accountability appended as follows with some fine examples of budgets
spending for the implementation of various project development in the State.

1 ) Activities of State Departments/Agencies

a ) The Housing Assistance Programme

A total budget of RM 169.4 million was specifically allocated to build 4,740 units of houses under the
programme from 2007–2009 within the District of Ranau, Keningau, Sub-District of Sook and
Sandakan Town Board.

b ) State Department of Irrigation & Drainage, Sabah

In order to maintain urban drainage systems the Department of DID was allocated with a budget
totalling RM 54.09 Million from 2007-2009.

c) Department of Agriculture , Sabah .

A total of RM 10.57 million had been spent out of the RM 13.92 Budget being allocated by The State
Government, while the Federal Government had allocated RM 6.25 million and out of this RM 5.09
million had been spent, for the purpose of implementing the development of planting programme from

It was however, noted in a survey that 51 % of farmers revealed that their targeted incomes were not
achieved. This should be the signal for the relevant authorities to come up with solutions.

d ) State Water Department , Sabah .

The rate of Non–Revenue Water (NRW) was successfully reduced from 57 % in 2005 to 49 % in 2009
as a result of effective management effort to reduce the NRW rate to minimum level. Closed scrutiny
and constant monitoring on the activities of illegal water connection especially within the squatters
zones would further enhance the effective implementation of the NRW project.
e ) Public Work Department .

Focus has been on the Tawau Sewerage Scheme Phase 2 , which is a continuation of the 8th Malaysian
Plan Project under the Sabah State Development Programme with the objective of enhancing the
sewerage disposal in the district.

Budget Allocation - the sum of RM 55 million for Contract 1 and RM 30 million for Contract 2
respectively ,while an additional RM 20 Million was allocated to implement the later in the 10th
Malaysia Plan.

The report noted several weakness and PWD needs to monitor the project development to ensure that
the project could be completed according to schedule.

f) Ministry of Youth & Sport, Sabah .

Under the 9th Malaysian Plan, a total budget of RM 68.87 million had been allocated to construct and
upgrade nine sport complex throughout the State .

g) Fishermen & Fishermen’s Development Cooperative ( KO-NELAYAN )

Under the 9th Malaysian Plan , the State Government had approved an allocation totalling RM 7.50
million for the Small Fishermen Industry Loan Programme ,which aimed at assisting fishermen and
seafood based food producers facing financial difficulties in carrying out their activities and to
increase productivity level. As at Dec 2009, a total of RM 4.56 million was being spent for this
objective. However, one of the weakness detected by the Audit was that the Standard Industry size was
not specified and further recommended that KO-NELAYAN needs to review the limitation of loan,
provide comprehensive guideline, industrial training along with specific guideline on marketing,
packing and labelling to ensure that objective of the programme will be achieved.

Paragraph 5 (preface) of the Auditor General’s Report for the year 2009 Tan Sri Ambrin firmly
emphasised “Besides fulfilling the legislative requirements, I hope this report will be a basis for
remedial actions and to enhance the accountability and integrity of the departments/agencies. This
report is also vital for addressing the economic crisis and to act as a mechanism for all the public
service to transform all performance and public policies such as to ensure conservation & sustainable
management of resources, reducing the digital gap between urban and rural areas, providing quality
service to society, eradicating poverty, restructuring the Malaysian Society, increasing nation’s
economic activities, strengthening the family institution and to provide proper facilities indirectly. This
will contribute to the Government Transformation Programme with its slogan “People First,
Performance Now” hereby fulfilling the needs, interests and aspirations of all Malaysians.

The outcomes of the AG ‘s Report for fiscal year 2009 made headlines in the National Weekly
Business Periodical “The Edge” of its November, 8th, 2010’s edition with a special report titled
“Penang, Sabah & Selangor shine in national audit.

As can clearly be seen, the State that scored well on exceptional fiscal management sat on two
opposite ends of the political sphere in Malaysia–two opposition States with the government of
Penang led up CM Lim Guan Eng, Selangor led by MB Tan Sri Khalid Ibrahim and UMNO led BN
Sabah State Government under the current leadership of CM Datuk Seri Musa Aman.

Sabah has of course, been in the spotlight recently and now, with the findings of the AG’s latest
report . It is worth revisiting some significant facts and figures about “The Land Below The Wind or A
Land of Unity in Diversity” that could give a little bit more perspective to the many numbers reported
and how it all figures into the larger picture of being the government of the day and the lives of

Geographically, this eastern Malaysian State engulfing a total area of about 73,856 sq.km2 is located
on the Northern Segment of Borneo, the World’s Third Biggest Island, is home to a population of
about three million people comprising more than 30 ethnics groups, the major races being the Kadazan
Dusun Murut that dominate most part of the Interior, while the Bajau & Suluk are mostly found living
along the coastal region of the State.

Historically, Sabah become part of the Federation of Malaysia on 16th Sept 1963. It is the second
largest state in Malaysia and is the combined size of Selangor, Johor, Penang, Perak, Kedah, Wilayah
Persekutuan and Kelantan. Quite a sizeable area to govern.

On the political administrative landscape currently, there are 60 State Legislative and 25 Parliamentary
Constituencies in Sabah, the fact is the government of the day with its capable leaders is duty bound to
full fill it commitment to every Malaysian in the State without discrimination.

To accomplish this, every constituency be it at State or Parliament Level gets allocated funds at each
Annual Development Budget. How much allocated budget be evaluated based upon the justification of
the population’s needs within a particular constituency and not by the extend of its electoral

For example, in Sabah there are five larger parliamentary constituencies of varying sizes located along
the State’s coastal areas including one in the landlocked interior region, with their corresponding State
Constituencies shown in brackets namely:-

P.187 Kinabatangan (N.47 Kuamut & N.48 Sukau) 20, 828.43 sq. km;

P.168 Silam (N.49 Tungku, N.50 Lahad Datu & N.51 Kunak) 14,131.15 sq km;

P.183 Beluran (N. 39 Labuk, N. 40 Sugut) 11,020.57 sq km;

P.167 Kudat (N. 1 Banggi, N. 2 Tg Kapur, N. 3 Pitas) 10,689.05 sq km;

P.189 Semporna (N. 52 Sulabayan, N. 53 Senallang & N. 54 Bugaya) 5,638.71 sq km;

While the remote landlocked constituency of P.182 Pensiangan (N.37 Sook & N.38 Nabawan)
delineated with an electoral area of 2,408.31 sq.km, which covers several polling stations located
unevenly at the southern part of the constituency sharing certain stretch of the common International
borderline with the Indonesian Territory of East Kalimantan, is indeed isolated and only accessible by
river transportation that sometime takes days to reach the distant villages dominated by the Muruts.

Judging from the geographical and demographic factors of the constituencies in question, leaders in
the government of the day know they have a big task and cannot escape time consuming efforts to
formulate, plan and implement certain projects for the people living within these areas irrespective of
their races, social creeds, belief and political affiliations etc as outlined in their respective Master Plan.

With this line of thought, let ’s take a look back at Sabah’s leadership history. Since the dawn of
Independence, the State has been ruled by 14 Chief Ministers including those being appointed under
the Two Year Rotation System, the political administrative concept mooted by former premier Tun Dr.

In my commentary entitled ‘Sabahans now realise that Rotation was a curse’ published by The Daily
Express on 26th February 2010, I mentioned that “The changes of CMs every two years under the
Rotation infused a series of administrative and socio-economic complications. Many Government
assets were sold and privatised if they had not already been done so under PBS and the Forest
Management Unit (FMU) Concepts was no exception. In 1997 , the State Reserve was only about RM
60 million, which was only enough to pay the salaries of State Civil Servants for two months .The
amount increased up to RM 300 million after the 1997–2000 Asian Economic Crisis.

The Rotation System was thankfully abolished in 2004. Reports on the status of State Coffers with a
total reserve of RM 2.4 Billion, just like the AG’s report on the State’s good fiscal management
deserves more than a passing or dismissive glance.

Just as the fact that Sabah is the first State to attain a Triple A Rating from RAM Service, an entity
which conducts professional evaluations and assessment to show the State’s ability to honour
commitments. Being government is easier on paper and from the back bench. Thus, in reality, for all
its flaws, the current administration and leadership of Sabah does deserve some measure of
acknowledgement for its effort in improving Sabahan lives. Yes, as much as the gaps in delivery of
service are there, in terms of political development and financial status, Sabah is now in a good
position .

The Daily Express’s report entitled ‘AG gives top rating for Sabah’s finances’ in its November 23rd
edition cited statistics including, in 2009 the State derived revenues from sales tax (RM 957.97) forest
products (RM 345.03), petroleum royalty (RM 742.98), Land (RM 140.70) and water revenue (RM
117.74). Overall revenue fell 8.7 per cent from RM3.34 Billion to RM3.05 in 2008 from the lower rate
of taxes collection.

As at Dec 31, 2009 , the State Government equity investment stood at RM 3.33 billion, an increase
from 2008’s RM 3.17 Billion and is spread over investment allocations in 48 public corporation and
three statutory bodies .

Along with the reported figures, the AG’s 2009 Report also revealed realistic facts by detecting the
weakness of several projects. It is hope this can also aid the current leadership to choose the right
solutions to clear the obstacles and backlogs.

Indeed, the adage was spot on when it was said that “Rome was not built in a day” the fact is there is
no short cut to the National Building Concept.

Certainly, it is not an easy task but not impossible to accomplish, which mean only leaders endowed
with the sheer determination and strong political will and commitment could turn those visions and
missions into reality.

If we had to place some trust or merit in any report, perhaps the AG’s report is one place to start. The
AG is an independent body committed to ethical, professional services without outside influence, to
perform their vested duties for public accountability. As we can see in the latest report, Opposition
States have received the thumbs up as well. Credit should be given where it is due–with the current

But more importantly and not to be forgotten, to echo a key line from the AG, it is hope that remedial
actions are indeed taken to bridge the gaps and flaw present.
In the words of CM Musa , while officiating the Sabah Development Corridor (SDC) a year ago, an
excerpt of his speech reads “It is our vision to see Sabah become a vibrant and economically
successful in this region via the Sabah Development Corridor, more so in respect to the commitment
that the Federal and State Governments have put in place to ensure that the country’s future prosperity
is shared by all Malaysian”.

Under The Sabah Development Corridor (SDC) Concept, the State has been designated with several
sub-regions based upon the strength of their core sectors. For instance, the Trans Pegalan Valley,
Keningau (Interior Agropolitan Zone), Kundasang (Tourism & Highland Agri Zone), Bengkoka
(Northern Agro Forestry Zone) , Sandakan (Agro Bio Innovation Zone), Sg .Kinabatangan (Wildlife
Sanctuary), Lahad Datu (Palm Oil Industrial Cluster), Kalabakan (Integrated Agro Food Commercial
Zone), Semporna (Marine Industry & Tourism Zone), Maliau Basin (Sabah Biodiversity Conservation
Zone), Kota Kinabalu ( Sabah Industrial Zone), Beaufort (SME Agro Food Zone).

We should be proud of the State’s achievement in good fiscal management as reported by the Auditor
General from the National Audit Department for 2009 and look forward to seeing the fruits of the
various initiatives such as those mentioned above. A vibrant economy, improved lives and peace of
mind are objectives not only for Sabahan, but for every Malaysian. For that, we need our leaders to
pave the way and credit will be given where it is due.

Source: http://sabahkini.net/v1/index.php?