READINESS OF GOVERNMENT AUDITORS IN FRAUD DETECTION
IN MALAYSIA

1.0 PROBLEM STATEMENT
1.1 Public sector governance requires the controlling and accounting officers to discharge their responsibilities of stewardship of public resources by being open, accountable, prudent in decision making, managing and delivering results. The provision of the Financial Procedure Act 1957 also places a high premium for controlling officers to be personally responsible and accountable for propriety and accountability. The most typical frauds involve in public sector are bribery, false statements and false claims, embezzlement, conflict of interest, phantom contractor, collusive bidding, progress payment fraud, over or under invoicing, extortion, nepotism and favoritism, loss of revenues on account of tax or duty evasion, unfair recruitment, computer frauds and others. (Buang, 2008). 1.2 Cases of mismanagement in the public sector have increased tremendously based on the Arrest Statistic by Malaysian Anti Corruption Agency and the Auditor-General Report (AG’s Report). Among the cases in AG’s Report 2006 to 2010 are The Port Klang Free Zone (PKFZ) development cost ballooned from RM2bil to RM4.6bil (The Star, 29 June 2011) highlighted by PriceWaterCoopers, based by earlier AG’s report. The Government is mulling over the possibility of taking civil action against National Feedlot Corporation to recover the RM250mil soft loan given to the company (The Star, 17 Oct 2012). Other cases highlighted were Kolej Kemahiran Tinggi Mara Balik Pulau in Penang, which paid RM84,640 for two laptops. The college bought another 450 computer units totaling up to RM3.45mil, with 19-inch monitors at RM8,500 each and 17-inch monitors at RM7,500 each. The Youth and Sports Ministry had overspent RM8.39mil for its National Youth Skills Institutes (IKBN). In consequences, five people were arrested including one ministry senior officer and a supplier. The four were charged under Section 11(c) of the Anti-Corruption Act while the fifth person was charged with criminal breach of trust. Another four in Kota Bharu, Kelantan, claimed trial in connection with the overpriced goods in setting up the IKBN in Bachok. Three people were charged with the purchase of ...

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