KUALA LUMPUR (Nov 23): The federal government has incurred a deficit of RM37.35 billion last year, which is 3.49% of the gross domestic product (GDP), according to the third series of the 2014 Auditor-General's (AG) Report.

The deficit was covered by internal and external loans amounting to RM109.08 billion. Apart from financing development expenditure, the loans were also used to repay existing debts and finance the Housing Loan Trust Fund, according to the report.

The federal government received revenue totalling RM220.63 billion in 2014, up RM7.26 billion (3.4%) from the RM213.37 billion it recorded in 2013.

In the same year, the government had approved an allocation of operating expenditure amounting to RM222.08 billion, in which a total RM219.59 billion or 98.9% was spent.

"As for development expenditure, federal ministries/departments have spent RM39.50 billion (98.4%) out of the RM40.16 billion of the approved allocation," read the AG's report.

The report also highlighted that there was a slight decline in financial management performance of the federal ministries in 2014, when compared to the previous two years.

The National Audit Department audited 24 federal ministries and 51 federal departments in 2014 in order to evaluate whether their financial management was in accordance with related laws and financial regulations.

The National Audit Department also carried out surprise checks at 244 Federal Departments/Offices at state and district levels, and its findings revealed that a number of offices not fully comply with stipulated financial regulations.

Amongst them were mail registers, cash books and petty cash books were not properly maintained or updated accordingly; surprise inspections were not conducted as required; and payment vouchers were not supported by relevant documents.

The reports were submitted to relevant Heads of Department at Headquarter and State level for further actions.

Besides conducting mandatory audits as provided under the law, the National Audit Department also carried out special evaluation on the financial management performance of Premier Grade Officers in various ministries/departments/agencies. From January 2014 to July 2015, 43 Premier Grade Officers have been evaluated.

"On a whole, the Federal Government's Financial Statement for the year ended Dec 31, 2014 reflected a true and fair view of the financial position of the Federal Government and its accounting records were properly maintained and updated accordingly," read the AG's report.

The report also mentioned that the Public Accounts Committee (PAC), which was formed to examine and monitor national financial affairs by ensuring the affairs have been governed and managed in an efficient, effective and transparent matter, had conducted 76 meetings and two project site visits from January 2014 to July 2015.

The meetings were also attended by representatives from the National Audit Department, Ministry of Finance, Public Service Department, the Accountant General's Department, as well as the Economic Planning Unit.