PUTRAJAYA: The National Audit Department will conduct audits on nearly 2,000 government-linked companies (GLCs) starting this year after continuous governance misconduct, says Datuk Seri Anwar Ibrahim.
The Prime Minister said this was due to governance issues found in GLCs such as weaknesses in KPIs, incompetent CEOs, persistent losses, profits not being returned to the government and major decisions made without approval of the board of directors of the GLCs.
The Prime Minister said this in his speech at the launch of the Implementation of Auditing of Government-linked Companies at the Putrajaya International Convention Centre here on Thursday (Feb 6).
“Among the governance issues identified are weaknesses in monitoring the presentation and achievement reports of key performance indicators (KPIs) and the strategic plan of the company.
“There was also failure of the chief executive officer to play a role in managing, supervising, and overseeing business operations to achieve the goals or objectives of the parent company, including its subsidiaries.
“This also included persistent and consecutive losses at either the parent company or its subsidiaries and profits of the company not distributed to the government as a return to the government,” said Anwar.
He said that on top of that, the appointed investment committee members and audit committee members of the GLCs were found unable to provide opinions and advice to the board of directors or senior management of the companies.
Anwar said that despite such governance issues being highlighted in the Auditor-General’s Report annually, such misconduct continued to be repeated.
“Significant company decisions, such as salary payments and services, are not presented for approval and information to the Board of Directors,” said Anwar, referring to cases where top management of GLCs were found to have had pay increments despite poor KPIs.
On May 20 last year, the government had then decided to further govern and audit GLCs and Companies (GLCs) and Companies Limited by Guarantee (CLBG).
This directive provides guidance to the ministries overseeing these companies on regulations and procedures related to management and governance within GLCs and CLBGs established by the Federal Government,” said Anwar.
The pilot audit method for GLCs will be using the e-SelfAudit system, which utilises artificial intelligence (AI), initiated last November.
“More importantly, this system has been developed internally through the National Audit Department Digitalisation Project without additional cost implications,” said Anwar.
He further called upon GLCs to prioritise values in their governance and uphold full accountability, and not only focus on making profits.
Earlier at the same event, Auditor-General Datuk Seri Wan Suraya Wan Mohd Radzi said that the amendment to the Audit Act 1957 is a game changer for the National Audit Department.
“This includes the introduction of a new auditing approach known as the ‘Follow the Public Money Audit’.
“The scope of powers of the Auditor-General has been expanded to include the auditing of other bodies, including companies that receive government interests in the form of financial guarantees.
“The Auditor-General can also issue guidelines regarding audits and has the new power to follow up on audits concerning actions taken in response to any recommendations, comments, or opinions provided by the Auditor-General.
She explained that any serious irregularity issues discovered during the auditing process can be brought to the attention of the Follow-up Committee on the Auditor-General’s Report at any time.
“This committee is co-chaired by the Auditor-General and the Secretary-General of the Treasury.
“The membership includes the Malaysian Anti-Corruption Commission, the Attorney General's Chambers (AGC), the Public Service Department (JPA), and the Royal Malaysia Police (PDRM) to ensure that irregularities discussed are acted upon by enforcement agencies and the audited parties,” said Wan Suraya.
She said that the e-SelfAudit system was developed internally, with partners such as Deloitte, Ernst and Young (EY), and PwC (PricewaterhouseCoopers).
“The efficiency and performance of the e-SelfAudit system have actually been tested through a pilot project carried out on Nov 18, 2024, involving 206 GLCs nationwide.
“All data obtained and uploaded into the e-SelfAudit System are protected under the confidentiality provisions of subsection 8(3) of the Audit Act 1957.
“All National Audit Department officers are also subject to the Official Secrets Act 1972, and any information obtained will be securely stored in our database and comply with the Cyber Security Act 2024 (Act 854), the Data Sharing Bill 2024, and the National Audit Department's Cybersecurity Policy 2022,” said Wan Suraya.
