Malaysia’s Auditor-General, in presenting financial outcome of Federal Agencies for the year 2022 today, said out of 130 audited financial statements on Malaysia’s Federal Agencies, special attention should be given to the financial performance of the agencies standing behind in Subsidiary Companies.
The Auditor General’s Report (LKAN) on the Financial Statements of Federal Agencies for 2022 was presented in the Dewan Rakyat today (Mac 6) in order to obtain approval from His Majesty the King. The Auditor General also gave a briefing on the main issue of LKAN to the National Accounts Committee (PAC). Findings of the report include:
80 Federal Agencies recorded a current surplus amounting to RM54.677 billion and 50 Federal Agencies recorded a current deficit amounting to RM4.570 billion;
126 Federal Agencies have higher total assets than total liabilities while four Federal Agencies show higher total liabilities than total assets; and
86 Federal Agencies received management and development grants from the Federal Government amounting to RM27.034 billion, while 83 Federal Agencies have unsettled cumulative development grants amounting to RM25.535 billion.
The presentation of LKAN in the Dewan Rakyat is based on legal provisions under Article 107 of the Federal Constitution. Reporting by the Auditor General on the accounts of the Federation, states, public authorities and accounts for other bodies is in accordance with the powers and duties provided under Article 106 of the Federal Constitution.
The auditing of Federal Agency Financial Statements in 2022 is also guided by International Standards of Supreme Audit Institutions (ISSAI) and Accrual Basis Financial Statement Auditing Guidelines. This is to ensure that auditing is carried out in accordance with the Malaysian Public Sector Accounting Standards (MPSAS), Malaysian Financial Reporting Standards (MFRS) and Malaysian Private Entities Reporting Standard (MPERS) to produce quality reports.
As of January 11, 2024, 140 out of 144 Federal Agency Financial Statements for the year 2022 have been submitted for verification by the Auditor General. Of that number, 130 Federal Agency Financial Statements in 2022 have completed certification.
A total of four Federal Agencies have yet to submit their Financial Statements for 2022 due to the disruption of the financial system network and the delay in the appointment of the Chairman of the Board of Directors.
A total of 116 Financial Statements of Federal Agencies in 2022 have been given the Auditor General’s Certificate with an Unmodified Opinion. Next, 14 Financial Statements of Federal Agencies were given the Auditor General’s Certificate with a Modified Opinion, namely 13 Criticized Opinions and one Opposing Opinion.
Federal agencies that are weak in terms of preparing financial statements are also given attention in the LKAN this time, especially those that get the Auditor General’s Certificate with a Modified Opinion for a period of three consecutive years, that is from 2020 to 2022. Among other things, these agencies do not comply accounting standards, poor maintenance of financial records and having financial system problems, the Auditor General said.
Analysis of Federal Agency Financial Statements Year 2022
It was also found that 10 Federal Agencies have the highest loan balance amounting to RM122.388 billion. A total of four of the 10 agencies have outstanding loans from the Federal Government amounting to RM5.338 billion. While three of the four Federal Agencies have rescheduled the loan repayment period.
53 Federal Agencies have 234 subsidiary companies with an investment value of RM56.128 billion. Of these, 212 subsidiary companies have an active status while 22 subsidiary companies have a dormant status. In addition, 121 subsidiary companies recorded profits while 91 subsidiary companies suffered losses. Only 66 of the 212 active subsidiary companies have paid dividends to the Federal Agency amounting to RM1.910 billion in 2022.
Main Audit Focus – Key Audit Area
This report gave emphasis on material and significant matters that have an impact on the performance of the Federal Agency’s financial position. The main focus of the audit for the financial statements of 2022 is related to going concern issues, impairment of investment value and dividend payments to contributors as follows:
The Federal Land Development Authority (FELDA) and the Malaysian PR1MA Corporation (PR1MA) face going concern issues based on the level of indebtedness and dependence of the two agencies on Government assistance (whether in the form of grants, loans or guarantees).
