Taib Mahmud talks about the weaknesses of Public Sector Accounting in Malaysia??

SOURCE:-Taib: Accounting is weak

KUCHING: Chief Minister Tan Sri Abdul Taib Mahmud is concerned over weaknesses in the country’s public sector accounting system.

He said that these weaknesses must be addressed to ensure the country’s resources were spent wisely, expediently and in a transparent manner.

He was concerned about the current lack of accurate and timely financial information to guide the government of the day in important decision-making.

Taib believed that the current system, which was cash based, did not provide a true reflection and real-time position of the Government’s financial affairs.

“For instance, expenditures are reported as they are spent and paid for, not as they are incurred.
“Revenues are recorded as they are received and not as they are earned,” he said in his keynote address at the opening of the National Public Sector Accountants Conference here yesterday.

The text of his speech was read by Infrastructure Development and Communications Minister Datuk Seri Michael Manyin.
Taib noted that, under the present system, assets were seldom accounted for and tracked after they were purchased.
He said, consequently, these assets were generally not factored into the cost of production of goods and services provided to the public.

The Chief Minister, said under such an archaic system, the Government was not fully able to get the true picture of how much goods and services actually cost nor was it able to accurately know the full extent of its liabilities.

“It is unable to gauge accurately what its revenue and expenditures really are until they are received or paid for,” he noted.

Taid said that another glaring issue was the current lack of a unified or standardised accounting system and basis reporting.

He said, despite the use of a set of Federal Treasury Instructions, there was still the lack of a standardised approach to treatment of expenses and recognition of revenue between state and federal departments, agencies and statutory bodies.

“Unlike the private sector where such practices are more harmonised universally, public sector financial and accounting reporting does not facilitate or allow inter-department or inter-ministry comparison to enhance efficiency,” he said.

Taib said, after so many years, the public sector financial mana-gers were still unable to provide a system of budgeting and reporting that gave the assurance that every sen or ringgit spent on programmes and activities, both at operating and development level, was aligned to the overall policies and objectives of the government of the day.

“My experience is that budgets are just an accumulation of figures on what needs to be spent by ministries and departments.
“Budgets are drawn each year without adequate emphasis on how such expenditures can support our overall national objectives,” he said.

Taib also said, under the current practice, not enough emphasis was placed on real output that was expected from such spending.

He said there was no real effort to report on actual output and have it measured and reported in any objective and realistic manner and that the Government’s performances was merely measured by the amount of monies spent on a particular project and not by what was actually achieved by way of units of output, the programme outcome and ultimately its economic and social impact.

The Chief Minister said that even today the performance of an agency or department was generally still measured by whether its budget allocation was spent.

He said there was indeed no means of measuring and evaluating the real benefits of the economic and social programmes and how they were able to achieve the intended policies and objectives of the government of the day.

“With this lack of useful information, the Government is generally unable to find ways of doing things and keep track of the performance of departments and agencies.

“Therefore, the deployment of a more relevant accounting budgetary and reporting system is now an absolutely necessity to prove good stewardship,” he said.