Title: Internal audit in the state and local governments of Malaysia: problems and solutions
Author: Azham Md. Ali, Mohamad Hisyam Selamat, Juergen Dieter Gloeck, Lee Teck Heang
Faculty of Business and Economics, Universiti Pendidikan Sultan Idris Tanjung Malim, Perak 35900, Malaysia.
College of Business, Universiti Utara Malaysia, Sintok, Kedah 06010, Malaysia
Department of Auditing University of Pretoria, Pretoria, 0002, South Africa.
School of Business, Monash University, Sunway Campus Jalan Lagoon Selatan, 46150 Bandar Sunway, Selangor Darul Ehsan, Malaysia
Abstract: In Malaysia, a growing catalogue of organisational failures and mismanagement in both the public and private sectors highlights the need for effective internal audit. Interviews conducted with internal auditors working in State and Local Governmental Bodies (SLoGBs) located in Peninsular Malaysia highlighted numerous problems faced by the audit function. The problems range from staff, skills and training shortages to premeditated obstruction of the auditors in their attempts to perform their duties, and are similar to what is found in many other countries. The way forward towards an improved internal audit function begins with having the right kind of organisational head in the organisations. Other moves include the setting up of audit committees in the organisations and an internal audit monitory body at either the state or the federal level. Improvement in the audit function may also come about with specific moves coming from the federal government, the institutions of higher learning and the internal auditors themselves. For these different moves towards a well-functioning internal audit in SLoGBs to materialise, the prerequisite is Malaysia's possessing the right kind of social and political surroundings – which to this day is still an elusive matter.
Keywords: internal audit; Malaysia; state government; local government; interviews; audit committees; audit monitoring.
Int. J. of Accounting and Finance, 2010 Vol.2, No.2, pp.192-219
Available online: 09 Mar 2010