CH1: INTRODUCTION TO PUBLIC FINANCIAL 5.

To ensure proper implementation and

ADMINISTRATION evaluation of all government economic
6. To assess efficiency and effectiveness of
DEFINE PUBLIC FINANCIAL ADMINISTRATION all government resources
7. Different between public sector & public
Public financial administration embraces a wide sector
range of purposes and practices. In Malaysia,
public financial administration involves three levels COMPONENTS OF PUBLIC FINANCIAL
of government federal, state and local and ADMINISTRATION
includes a wide range of ministries, departments,
statutory a) Budgeting operating, development
Bodies, and semi-government agencies. b) Auditing internal, external
CONCEPT OF PUBLIC FINANCE c) Accounting cost, counting, accrual,
obligation
i. As a management tool d) Supply management purchasing goods
- Control good and services and services
e) Treasury ministry of finance
ii. As a process (time cycle) f) Tax administration direct tax and
- Preparation budget indirect tax
- Estimate cost
- Establishing proper accounting CH:2 FINANCIAL PROVISION LAW
statement
- Method internal control DEFINITION/AIM/OBJECTIVE
- Preparing appropriate financial
statement To ensure proper financial administration in
- External control by parliament and government and as a guidelines because it use
auditor general law and regulations that ensure proper,
efficient and effective use of public money
iii. As a displinary study
OBJECTIVE OF FINANCIAL PROVISIONS
iv. As a development tool (NEP)
- Program planning 1. Establish the general framework for the
- Program implementation control of public expenditure
- Program review 2. As a broad requirements of a good financial
management systems in government
THE OBJECTIVE OF PFA 3. Govern the methods of which public funds
are to be administered and accounted for
i- To ensure financial accountability 4. Provide for division of various revenues of
ii- To ensure proper management Federal and State government
iii- To ensure compliance 5. Define the borrowing powers of Federal and
iv- To ensure government activities & State government
6. As a requirement to maintain specified
program
Consolidated Funds by the Federal and State
government
THE SIGNIFICANT/IMPORTANT OF PFA
7. Specify basic principles of government
finance
There have seven (7) of significant and important
8. As a requirement to prepare financial
statements
1. To avoid wastage of government resources
9. As a requirement to prepare annual
2. To avoid deception & breach of trust
statements of assets and liabilities
3. To ensure proper revenue collection and
expenditure
TREASURY The main provision instruction.
4. To achieve governments development
objectives

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FINANCIAL PROCEDURE ACT 1957
a) PART II Accounting officer
b) PART III Control And
Management of Public Finance
Budgeting is a statement of revenue and
expenditure for the future which is used as a
planning & management tool for national
economic sources to fulfill the peoples needs,
Budgeting is a financial planning that includes
revenue and expenditure.

SECTION 15A - Controlling officer OBJECTIVE / PURPOSE OF BUDGETTING

SECTION 15 - Virement
SECTION 16 - yearly statement of account 1) Implementation of government policy
SECTION 17 - write off 2) System of legal controlling and monitoring
SECTION 18 - surcharge 3) Important sources of information to the
public
FEDERAL CONSTITUTION PART VII 4) As a working guide to the administration
and control of finances
1. Article 96 no tax unless 5) As a management tool
authorize by law
2. Article 97 consolidated funds PRINCIPLES OF BUDGETING
3. Article 98 expenditure charge
on federal 1) Annually
Consulted funds 2) Unity
4. Article 99 annual financial statement 3) Specificity
5. Article 100 supply bill 4) Accuracy
6. Article 101 supplementary & 5) Prior Authorization
excess expenditure
7. Article 102 power of parliament CHARACTERISTICS OF BUDGETING
8. Article 103 contingencies funds
9. Article 104 - withdrawal from 1) It is a financial planning for an
consolidated funds organization - Demand is higher than
10. Article 105 auditor general supply, so resources are limited.
11. Article 106 power & duties of Auditor 2) It has forecasted revenues and
general expenses - The budget is a forecast of
12. Article 107 report of auditor general expected revenue and expenditure of the
13. Article 108 national finance council government.
14. Article 109 grant of states
3) Formulated to achieve specific
15. Article 110 assignment
purposes -The budget has specific
taxes and fees to the state
objectives to achieve such as reducing
16. Article 111 restriction of borrowing
poverty and increasing agricultural
17. Article 112 restriction of
productivity.
alteration in established of
states 4) It has specific duration - The budget has
a specific time-frame such as one year. In
MAIN PROVISION IN TREASURY Malaysia, the budget is effective from the
INSTRUCTIONS 2nd of January to 31st December

Ways Of Controlling and Recording

Account Just For Financial Record
Write Off & Auditing
Procedures
Haw To Spend Money And Record
Account.

CH:3 PUBLIC BUDGET/BUDGET SYSTEM

DEFINITION OF PUBLIC BUDGETS

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 Big amount / capital involves strategic decision
making
Funded by borrowing
Requires supervision & maintenance
Implication to the public
CLASSIFYING BUDGETS ELEMENTS OF THE LINE-ITEM/ TRADITIONAL
There are two components of the government BUDGETING SYSTEM
budget i.e., revenue and expenditure.
1. Focus on control aspect (efficiency)
a) National Revenue 2. Efficient means is purchased and details
Federal Revenues of purchase
Tax revenue 3. Focus is on input and not on output
Non-tax revenue
Non-revenue receipt The Characteristics of LIBS
Revenue from federal territories
State Revenues 1) Analysis, authorization and control
Land tax 2) ,ore fiscal control budget
Water 3) Based on past year expenditure
Entertainment tax 4) Makin sure that money spent for
authorized purposes only
b) Local Government Revenues 5) Central power the treasury will
Assessment tax determined all decision regarding how to
Licenses, fees and user charges spend the money

c) Other sources of government revenue Weaknesses of the Line Item Budget

Borrowing- a secondary source of revenue
Money creation 1) A line-item budget emphasizes inputs
Inter-government grants 2) not link inputs with outputs and therefore
Direct sale of goods and services- this is non tax says nothing about how efficiently
in nature and includes such things as publicly resources are used
produced water, toll services and postal services. 3) The line-item budget tends to focus
Sales of public land are also an example. Fees decision making on details
and licenses also comprise a small portion of it. 4) The focus on detailed line-item control
leads to micromanagement of agency
d) National Expenditure operations by central budget offices and
i. Operating expenditure - Approval from finance
parliament is not required 5) Public managers thus exercise very
limited managerial
ii. Supply Expenditure
Parliament Approval is required in the form of an
Appropriation bill.
When approved, becomes an Act.
Expenditure for daily operations of Government
Agency. E.g. Payment of salaries for civil servants,
overhead expenditures, stationery items
Economic services
Social services
Security & defense
General administration

e) Development Expenditure
Usually non-repetitive expenditure Programme And Performance Budgeting
Made in relation to the Five year Malaysia Plans System (PPBS)
Presented in Parliament in the form of a
Resolution and does not need a bill a) Program
Long-term return - Functions

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 - Objectives d. A more generalized approach to
- Activities expenditure control
- Responsibility center

b) Performance
- Appropriateness THE BUDGETARY PROCESS IN MALAYSIA
- Adequacy
- Effectiveness There are four steps in the budget cycle
- Efficiency process.

Elements of PPBS 1. Formulation of the budget

2. Budget approval by legislation/authorization
1. Identifying Objectives 3. Budget implementation/execution
- Setting out in clear terms the purpose 4. Budget auditing
for which an organization exist
- Meaningful planning to achieve Agencies involved in budgeting system in
objectives Malaysia
- Avoid duplication
2. Programmed Planning & Structuring a) Public services department (PSD)
- Set of activities that have common b) Economy planning unit (EPU)
objectives
c) Treasury (Ministry of Finance)
- Selection of best feasible alternatives
d) Implementation and coordination (ICU)
- Priority programmed
e) Bank Negara
3. Developing Performance Indicator
- Evaluate financial & physical
PROBLEM IN THE BUDGET CYCLE
performance
- Select the units of measurement,
a) Uncertainty In Preparing Estimates Since
reflect the output quantity/quality
There Cannot Be Absolute Accuracy
- Comparison between actual output &
b) There Is Tendency To Inflate Expenditure
targeted output
To Ensure Adequate Coverage
4. Performance Evaluation
c) Problem Of Unspent Allocations
- Asses the relevance, results and
d) To Spend Funds In Haste Towards The
impacts
End Of The Financial Year
- To see whether the programmed is
realistically planned & properly
CONCLUSION
managed
1. Budget is a planned revenue and
expenditure
2. Must have strategic and plan
3. Must follow the provision of law in
Malaysia to ensure the optimum or most
effective, efficient usage of public moneys.

CH: 4 PUBLIC REVENUE

DEFINITION OF PUBLIC BUDGET

The budget has been defined as an estimate of

proposed expenditures for a given period or
Elements of MBS
purpose and the proposed means of financing
them. It is also a projection for future revenues
a. Expenditure target
and expenditures. A budget is adopted by the
b. Program agreement & Exception report
legislative body typically for a year although some
c. A cycle of programmed evaluation
states adopt it for a two year period

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DEFINITION OF TAX 2) Regressive tax - A regressive tax is one
whose rate decreases as the size of the
Compulsory levy made by the public authorities base increases, and thus the yields
(for which nothing is received directly in return) increases less than proportionately to the
Taxes are levied by governments primarily as a base. Few taxes are specifically
means of raising revenues to finance operations of regressive but a number of taxes have
government. Examples are Income tax Road tax regressive effects because of disparities in
Corporate Tax Sales Tax etc taxpayers income. e.g. the tax on liquor
and cigarettes.
OBJECTIVE OF TAXES
3) Proportional tax - A proportional tax is
a. To gain revenue one whose rate remains constant
b. Redistribution of income regardless of the change in the size of the
c. Price stability base and thus the yield is proportional to
d. Economic development & growth the base. For e.g. is property and sales
e. Allocation function tax.

CHARACTERISTICS OF TAXES
CHARACTERISTICS OF A GOOD TAX SYSTEM
1) Certainty - It is necessary that the tax
laws are clear and the taxpayer is i. An ability to pay
therefore able to predict, with reasonable ii. Certainty
certainty what his tax liability is likely to be. iii. Compliance and collection costs
iv. Simple & easy
2) Compliance and collection costs - A tax v. Flexible
which is difficult to collect and involves the vi. Motivating
taxpayer keeping complicated records is
undesirable. It will not only be unpopular SOURCES AND CLASSIFICATION OF TAXES IN
to the taxpayer but costly and MALAYSIA
administratively difficult to the government.
i. Direct tax - It is levied directly on the
3) Enforceability - It is essential that taxes income or assets of individuals or
are imposed which are possible to companies
enforce. In developing countries with a ii. Indirect tax - Are included in the price of
high level of illiteracy, it would be goods and services we buy.
unsatisfactory to establish a tax system
which was beyond the comprehension of DEFINITION AND OBJECTIVES OF
the taxpaying community, in terms of BORROWING
understanding the laws and keeping the
necessary records. Defines it as a debt incurred by government from
public, local and foreign banks total debt of central
TYPES OF TAXES government either from internal or external
sources
The manner in which tax rates are scaled (the rate
structures) cause taxes to be progressive, Objectives of Borrowing
regressive or proportional. To increase public resources
To overcome temporary budget deficit
1) Progressive tax - Progressive income tax To overcome economic recession
are those in which the proportion of tax To finance economic development programmed
paid increases as income rises, so that the
increase in tax payments is more than SOURCES OF BORROWING
proportionate. The reason is that people 1) Internal Borrowing
with a very large income can pay more The bulk of the loans are domestic in
than proportionately higher tax than those the form of Treasury Bills which are
with smaller incomes. e.g. Income tax

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 short term borrowings intended to
meet cash flow needs
Malaysian Government Securities
(MGS)
Treasury Bills
Investment Certificates
Loan for Housing Loan Fund
2) External Borrowing
a. Direct external loans - project loans
normally obtained from the World Bank,
Asian Development Bank and other
development agencies
b. Indirect borrowings - Indirect borrowing,
both internal and external, are normally
obtained from a consortium of banks both
within the country and externally for
specific projects undertaken by public
enterprises
3) Internal Loans:
Loans (Internal banks) Ordinance
1958
Loans (local) Ordinance 1959
Treasury Bill (Local) Act 1064
Government Investment Act 1983
4) External Loans:
External Loan Act 1963
Extended credit Act 1966
Development fund Act 1966
Loans (Asian development Bank)
Act 1968
Loans (Islamic Development
Bank) Act 1977
Loans that have original or
extended maturity of more than
one year, owned to non-residents
and are repayable in foreign
currency, goods and services
International/Multilateral Financial
Institutions
World Bank
ASEAN Development Bank
Islamic Development Bank
Bilateral Government Sources
International Monetary Fund
PUBLIC DEBT AND ITS IMPLICATIONS
Governments, like any other legal entity, can take
out loans, issue bonds and make financial
investments. Government debt (also known as
public debt or national debt) is money (or credit)
owed by any level of government; either central
government, federal government, municipal
government or local government. Some local
governments issue bonds based on their taxing
authority, such as tax increment bonds or revenue
bonds
Public debt can be classified into two types
Reproductive debt which is a profitable debt.
Debt is taken to buy real asset or project
development.
Static debt which is not to be used for buying
real estate and project development. Not profitable
but for the sake of government.eg. For reducing
deficit in operating budget
Implications of Borrowing
When government borrows, the principal amount
has to be paid and interest charges on the loans
constitute a burden on the taxpayers. Interest on
the public debt is generally regarded as a normal
operating cost of the government, whereas the
repayment of the debt is provided for by a system
of sinking fund contributions.
There are also economic effects of external
borrowing. External borrowing increases the
resources available to country initially but reduces
the resources available in the future. When a
country borrows from overseas, it derives
purchasing power which it enables it to increase
its resources hospitals, schools, roads. But upon
repayment, there is an outflow of funds and the
borrowing country is deprived of its purchasing
power.
Internal debt has an adverse effect in that it
requires extra taxes to be imposed to finance the
interest payments.
Borrowing can be manipulated by the lender
country for their own political advantage. For
example, one of the motives for lender countries to
fund specific developing countries is to ensure
there is a curb on terrorism.
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 forecasts of revenue as well as
expenditure
b) Allocation of resources consistent with
policy priorities- It is also called strategic
allocation of resources
c) Good operational management and tax
administration is the revenue aspect of
good operational management of
CH: 5 PUBLIC EXPENDITURE expenditure
REASONS FOR PUBLIC EXPENDITURE
SCOPE AND ROLE OF PUBLIC EXPENDITURE
a) There is a need for proper budgeting of
Public expenditure is a basic means of resources
implementing government policy and utilizing b) Prudent spending is essential for the
sources productively, effectively and sensitively. stability of a government and proper
Public expenditure plays an important role in the earnings are a pre-requisite to wise
economic development of a country spending
c) Every budget deals with how actual funds
Barro identifies government spending into should be allocated to various projects
three (3) main types. and sectors
d) All governments have to collect resources
a) Government purchases of goods and from the economy, in a sufficient and
services for current use are classed as appropriate manner and allocate and use
government consumption. those resources responsively, efficiently
b) Government purchases of goods and and effectively
services intended to create future benefits
such as infrastructure investment or PRINCIPLES OF PUBLIC EXPENDITURE
research spending are classed as
government investment. a) Comprehensiveness
c) Government expenditures that are not b) Discipline
purchases of goods and services, and c) Legitimacy
instead just represent transfers of money d) Flexibility
such as social security payments are e) Predictability
called transfer payments. f) Contestability
g) Honesty
The scope of public expenditure in most h) Information
countries has been classified i) Transparency
j) Accountability
a) Defense
b) Economic development CLASSIFYING PUBLIC EXPENDITURE IN
c) Social services MALAYSIA
d) Administration
e) Grants to provincial governments 1) Operating expenditure
f) Subsidies - Controlling Officer
g) Exploitation of natural resources - Programmed
- Activity
Role of Public Expenditure - Object of Expenditure (Sub-head)

There are three main goals for public expenditure:
fiscal discipline; economic growth and equity
Three key roles of public expenditure
a) Fiscal discipline (expenditure control).
Fiscal discipline results from good
Economic, social, security, general
administration, charged and transfers
(grant, loan, and repayment).
classified by programmed/activities
supply and charged expenditure
2) Development expenditure

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 - Purpose of Expenditure (Vote head) 2. Transparency
- Controlling Officer 3. Value For Money
- Programmed 4. Open And Fair Competition
- Activity 5. Fair Dealing
- Object of Expenditure (Sub-head)
CATEGORIES OF GOVERNMENT
Classification by section divided into PROCUREMENT
economic, social, security, general
administration and contingency reserve 1. Work Penyelegaraan
fund 2. Supplies Stationary, ubat2an
Classification by function divided into 3. Services consultant, research
development vote head which further
classified into projects. TYPES OF PUBLIC PURCHASING
development expenditure is to achieve the
objectives of the Five year Malaysia Plans 1. Casual Purchase Less Than RM50k
2. Quotation Rm50k RM 500k
CH: 6 PUBLIC PROCERUMENT 3. Tender More Than RM500k
4. Emergency Purchase Ap173b
Procurement or purchasing as it is also called is 5. Foreign Purchase SSP 18/77
important to the government because it supports
government functions. Every government PROBLEM IN PROCUREMENT
department needs supplies, equipment and
services to accomplish their mission. Goods and 1. Misuse of power
services need to be purchased in sufficient quality 2. Misuse of public money
and quantity and as economically as possible. 3. Time consuming
Inefficient purchasing practices can be costly 4. Corruption
because large amounts of money are involved 5. Problem in specifications for highly
specialized goods
Objectives OF PUBLIC PROCERUMENT 6. In foreign buying there is a need to look
into Malaysia foreign policy
1. To ensure continuous supply of materials and
services. CH: 7 PUBLIC ACCOUNTING
2. To ensure efficient, effective and ethical
procurement Definition of Public Accounting
3. To stimulate and encourage the growth and
development Accounting is the process of recording, classifying
4. To expand and invigorate the local industrial and summarizing financial Transactions
sector
5. To promote alternative and multiple sourcing Accounting is also defined as an art of recording
through supplier every single government transaction and to ensure
this process complies with financial provisions and
POLICIES & PROCEDURES OF PUBLIC laws.
PROCERUMENT
Importance of Public Accounting
1. to stimulate the growth of local industries
2. to encourage and support the involvement 1. To facilitate function & responsibilities of
of Bumiputera public officer
3. to increase and enhance the capabilities 2. To create a control tool for revenue and
of local institutions expenditure
4. to stimulate and promote service 3. To provide an insight report of financial
5. to accelerate economic growth whereby 4. As a reporting tool to the public
Government procurement 5. To fulfill public accountability concept of
government
PROCEDURES OF PUBLIC PROCERUMENT 6. To compliance financial
7. To assist to management in decision
1. Public Accountability making

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 5. To report to secretary general of treasury
TYPES of Public Accounting on any irregularities in public accounting
system.
1. Cash Accounting
2. Accruals Account THE ISSUE IN PUBLIC ACCOUNTING
3. Obligation Accounting
1. Lack Of Report
2. Non Adherence
3. Incomplete Data
4. Failed Managed
PRINCIPLES of Public Accounting 5. Accounting
6. Bureaucracy and Red Tape Issues
1. Legally THE SOLUTION OF ISSUES OF PUBLIC
2. Maintenance & Keeping ACCOUNTING
3. Stewardship
4. Accountability 1. Training
2. Incentive
Account system structure of Public 3. Usage at up data accounting system
Accounting 4. Objective & policies of public accounting
should be clear & conform
1. Self Accounting System Department
2. Non Self Accounting Department CH: 8 PUBLIC AUDITING

CONCEPT OF PUBLIC ACCOUNTING DEFINITION OF AUDITING

1. Preparing A systematic examination of financial or

2. Analyzing accounting records by a specialized inspector,
3. Commenting called an auditor, to verify their accuracy and
4. Recording truthfulness. A hearing during which financial data
5. Keeping are investigated for purposes of authentication
6. Interpreting includes financial auditing, Performance
7. Data auditing, Compliance auditing.
8. Transaction
9. Financial Information OBJECTIVES OF AUDITING
10. Financial Condition
11. Performance 1. The government auditors role supports
12. Accountability the governance responsibilities of
oversight, insight, and foresight
MAJOR COMPONANT OF PUBLIC
ACCOUNTING - Oversight addresses whether
government entities are doing what
1. Maintenance Book And Record they are supposed to do and serves to
2. Compliance With Regulation Dan Rules detect and deter public corruption
3. Preparation Of Report And Statement - Insight assists decision-makers by
providing an independent assessment
ROLE OF THE ACCOUNTANT GENERAL of government programs, policies,
operations, and results
1. To Enhance accountability & transparency
in federal government accounting PURPOSE OF AUDITING
2. To Enhance accounting and financial
management 1. To Identify Degree Of Compliance
3. To assist government in making decision 2. To Identify Extent Of Effectiveness &
4. To develop and implement human Efficiency
resource 3. To Identify Financial Position And
Condition

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 4. To Ensure The Accountability In Public
Sector
TYPES OF AUDIT
1. Internal
- Established by government agencies
themselves
- Full time employees / internal staff
- Assist the management to improve &
update the operations
- Safeguards the organizational assets
- Special department/unit & functions
- Report to the Head of Department and
Higher level
Role and functions Internal Audit
- Adherence to organization rules
- Provide information to the
management
- Review of operating procedures
- Avoid wastage, fraud, inefficiency,
ineffectiveness
- Increase the accuracy of data
2. External Audit
- Independent bodies (National Audit
Department)
- To fulfill needs of third party
- Article 105 & 106 of Federal
Constitution
- Section 6 of Audit Act 1957
- Yearly basis annually
Roles and functions External Audit
- Audit the Financial statement &
budget
- Direct responsibility to YDPA
- Prepare a financial report & to submit
the proposal to be analyzed by Public
Accounting Committee.
- To ensure the accountability through
the compliance with financial
provisional law
DIFFERENCES BETWEEN FINANCIAL AND
MANAGEMENT AUDIT
1. Financial audit - Examining previous
financial statements & records in order to
establish a fair & just financial statement
2. Performance Audit - Evaluating the
performance of the whole organization in
terms of its units to determine how
effective and efficient every resource are
used and managed
3. Management Audit - Evaluating the
management of the whole organization in
terms of its personnel to determine the
effectiveness, efficiency, responsibility and
accountability in managing every
resource, records.
ANNUAL REPORTS OF THE AUDITOR
GENERAL
Common weaknesses identified in the Auditor
Generals Report:
1. Overspending this is a common
weakness identified.
2. Under spending a number of agencies
had not spent the amount allocated.
3. Additional spending- a number of
agencies had applied for additional
estimates from Parliament.
4. Delay in payments for supplies and
goods. Payments for previous years were
made.
5. Stores and accounting assets not
properly managed
6. Internal controls not sufficient where it
concerned tax collection
7. Management systems towards
development projects was weak
8. Main reasons for these weaknesses are
9. Poor maintenance of vote book keeping
10. Failure of the warrant holder to submit
complete monthly expenditure returns to
the relevant officer.
THERE ARE SEVERAL WEAKNESSES IN PAC:
1. it is a legislative body but due to lack of
separation of powers, it cannot effectively
carry out its duties
2. its scope and functions are too wide
hence lack of time to complete all audit
3. It is only a committee so does not have
executive power. It is up to Dewan Rakyat
whether to take action or not.
4. Chairman of PAC is from the
government party, not the opposition
CH: 9 FINANCIAL RELATIONSHIP BETWEEN
FEDERAL AND STATE GOVERNMENT
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FEDERALISM CONCEPT AND DIFINITION
Federal system is one in which the functions of
government are shared between a central
authority & regional authorities both set as being
autonomous in certain areas & driving their
respective powers from the constitution or
interpretations of it, not from each other
FINANCIAL RELATIONSHIP BETWEEN
FEDERAL AND STATE
1. Distribution Of Revenue
2. Establishment Of New Post
3. Federal Grants To The State
4. Borrowing Power
ISSUES IN FINANCIAL RELATIONSHIP
BETWEEN FEDERAL AND STATE
1. Lack Of Revenue And Source
2. Escalating Management
3. Increase Debt Of State
4. Area Of Revenue
5. Limited Borrowing
6. Political Factor
THE SOLUTION OF ISSUES IN FINANCIAL
RELATIONSHIP BETWEEN FEDERAL AND
STATE
1. Provide More Grant To State
2. Redistribution Of Taxing Power To The
State
3. Changing Ration Of Distributer And Tax
Revenue
4. Transferring Of Funds From The State
CH: 10 PUBLIS ACCOUNTABILITY
DEFINITION OF FINANCIAL CONTROL AND
ACCOUNTABILITY
Control is broadly defined as a process designed
to provide reasonable assurance regarding the
effectiveness and efficiency of operations,
reliability of reporting and compliance with
applicable laws and regulations.
Acceptance of responsibility for action
decision relate administrative process
OBJECTIVE OF FINANCIAL CONTROL AND
ACCOUNTABILITY
1. Effective Control
2. Effective System
3. Utilize Money
TYPES OF ACCOUNTABILITY
1. Financial accountability
2. Performance accountability
3. Management accountability
4. Democratic/ Political accountability
ACHIEVE PUBLIC ACCOUNTABILITY
- The creation of an effective control in
the management of public moneys
- The establishment of effective
systems for public officials to execute
responsibilities entrusted to them
- The utilization of public moneys in
accordance to authorized purposes
and relevant activities without any
wastage
Principles of Effective Accountability
1. Clear roles and responsibilities
2. Clear performance expectations
3. Balanced expectations and capacities
4. Credible reporting
5. Reasonable review and adjustment
Accountability mechanisms available in the
Malaysian context
1. Parliament /Dewan Rakyat
2. Public Accounts Committee
Weaknesses of the PAC
1. Committees are toothless entities for they
are headed by the ruling party MPs and
also they lack sufficient authority and
resources.
2. The Public Accounts Committee (PAC)
fails to have a major impact partly
because the financial and management
control within the government is generally
weak.
3. Legislative committees are always
advisory bodies and as such, they lack
any formal authority to enforce their
and
recommendations and decisions.
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CH: 11 PROBLEMS AND ISSUES IN PUBLIC
FINANCIAL ADMINISTRATION IN MALAYSIA

CURRENT REFORMS IN PUBLIC FINANCIAL

ADMINSTRATION

1. Enhancing Accountability within the public

sector
2. Introducing the Accountability Index
3. Introduction of Outcome Based Budgeting
(OBB) - Based Budgeting is to replace the
Modified Budgeting system
4. Strengthening internal control systems
5. Improvement to financial management
infrastructures
6. Improving the effectiveness of financial
management
7. E-Procurement

ETHICAL ISSUES IN PUBLIC FINANCIAL

ADMINISTRATION

1. Strategies to Promote Professionalism

and Ethical Conduct.

- introduction of clock-in system (1981),

- leadership by example (1983)
- use of name-tags(1985),
- campaign on clean, efficient and
trustworthy government (1989)
- Excellent work culture movement
(1989).

PROBLEMS IN PUBLIC FINANCIAL

ADMINSTRATION

1. Weaknesses in the Budget Process

2. Power of Controlling Officers
3. Lack of Sources & Revenues
4. Increase Debt
5. Misuse of Public Assets and Corruption
6. Inexperienced Staff
7. Failures of Development & Capital
Expenditure and Projects

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