INTERNAL AUDIT FAQ

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QUESTION

 ANSWER

1

When was the Internal Audit Unit established at MBSJ?

The Internal Audit Unit, Subang Jaya City Council was established on 15th August 1997 under administrative authority and is responsible to the management. The implementation of duties is subject to the Act, By-Laws, Policies and Procedures of the Subang Jaya City Council.

The Internal Audit Unit has been entrusted with the responsibility of ensuring accountability in the administration and management of public funds through auditing the financial management and management activities of the Subang Jaya City Council. The audit findings relating to the finances and activities of the Council are reported to the Mayor and presented at the Audit and Corporate Management Committee Meeting. The minutes of the Meeting are then tabled and considered for approval by the Full Council Meeting.

2

What are the main references of the circular regarding the establishment and role of the MBSJ Internal Audit Unit?

It was established based on the Local Government Act 1976 (Act 171), the Audit Act 1957 (Act 62) and Treasury Circular No. 9/2004 General Circular No. 3/1998 by the Prime Minister's Department.

3

Why should auditing be carried out?

Audits are conducted to ensure that the provisions of acts, laws and regulations are complied with.

4

What types of auditing are conducted by the Internal Audit Unit at MBSJ?

There are five (5) types of auditing carried out at the MBSJ Internal Audit Unit, namely:

1.Financial Management Audit

Financial Management Audit is an audit approach to determine the existence of the completeness and integrity of the internal control system as well as compliance with the established rules and laws. The aspects that are emphasized are management control, budget control, receipt control, procurement control, expenditure control, trust account / trust fund and deposit management, asset and store management, vehicle management and investment and loan management.

2.Performance Auditing

Performance Auditing is a detailed audit approach to determine whether resources and operations have been implemented prudently, efficiently and effectively.

3. Compliance Audit

Compliance audits are conducted including a detailed analysis of project management implemented by the Council to determine any leakages in the Council's fund expenditure.

4.Special Audit / Investigation

Special Audits/Investigations are conducted at the direction of top management and the Corporate Audit and Management Committee from time to time.

5.Follow-up Audit

Follow-up Auditing is an audit approach to reprimands that have been raised to ensure that corrective actions have been taken and do not recur.

5

How is the auditing process carried out?

The auditing process is divided into 3 stages, namely planning, implementation and reporting.

1.Planning

Preparation of an Audit Planning Memorandum (APM) which outlines the key details of the audit strategy. After the APM is approved, an Audit Program is prepared to show each step that needs to be taken during the audit and provide an estimated time for each step.

2. Implementation

The audit is conducted based on the Audit Program that has been prepared. Before the audit, an Entrance Conference will be held with the auditee to explain the objectives, scope and methodology of the audit that will be conducted.

3.Reporting

Audit reporting is in accordance with the following provisions:

Internal Audit Exit Conference

Audit observations will be presented at the Internal Audit Exit Conference four (4) times a year which will be chaired by Top Management and attended by the Head of Department.

Audit and Corporate Management Committee Meeting

After the Final Report is submitted to the Top Management for approval, the report will be presented at the Audit and Corporate Management Committee Meeting. The meeting membership consists of appointed Council Members and relevant department officers. The final audit report will then be submitted to the Selangor SUK UPEN and the Selangor SUK Internal Audit Division.

6

Information regarding the Corporate Audit and Management Committee (CAM) Meeting

The Corporate Audit and Management Committee or JKAPK was established around 2009 on the instructions of the Selangor State Government through the Local Authority Section Circular: SPBT No. 2 of 2009 which came into effect on 20 May 2009.

The membership of the Audit and Corporate Management Committee consists of Council Members appointed in accordance with the decisions of the MBSJ Top Management on a rotating basis for every two (2) terms.

This committee is an important component in ensuring accountability and effective corporate management. This committee upholds three (3) important principles in carrying out its duties, namely independence, communication and accountability.

This committee assumes the following responsibilities and duties:

1. Reviewing the needs for UAD effectiveness regarding the formation of organizational structures and the development of human resource skills.
2. Review the effectiveness and capability of the City Council's internal control system standards.
3. Reviewing UAD's annual audit plan and establishing coordination between Internal Audit and External Audit.
4. Evaluate audit reports to recommend improvements and follow-up actions by management.
5. Provide advice to Council Members regarding Financial Statements and Financial Reports issued by the Council.
6. Report to management on staff or related parties found to have committed irregularities for further action by management.

7

What are the latest plans implemented by the MBSJ Internal Audit Unit?

The Internal Audit Unit takes several approaches to ensure that each audit conducted is effective as follows:

1. Introducing the pre-exit concept , which is calling all Auditees (audited departments) according to a planned schedule after the audit observations are issued. Through the pre-exit concept   , the Audit team will discuss face-to-face regarding audit findings and proposed solutions that can be presented to the Auditees to improve work processes in the Department.

2. From time to time, the Audit department also collaborates with the Training Unit, Management Services Department to organize appropriate briefing/course sessions. Through these briefings/courses, the audit department will provide important input to participants regarding regulations and circulars that must be complied with.

8

What are the main objectives of the Internal Audit Unit at MBSJ?

The objectives of the Internal Audit Unit are:

1. Determine that financial operations are managed in an orderly manner and ensure that required policies, laws and regulations are complied with.

2. Regularly and systematically review and evaluate agency operations in terms of perfection, capability, efficiency, comfort and economy.

3.Identify any weaknesses or problems of the parties involved and recommend steps to improve operations in areas where they are needed or where corrective action is required.

4. Play a role as a check and balance mechanism on the management of all departments by providing independent, objective and timely reports.

5. Ensuring that information is distributed more effectively, planned, efficiently, quickly and accurately.

6. Creating a conducive work environment leading to an efficient and effective level of management in organizational management.