This article first appeared in The Edge Financial Daily, on May 19, 2016.

KUALA LUMPUR: The financial management of federal ministries and departments showed a decline in performance last year, compared to the previous two years, according to the Auditor-General’s Report 2015.

“[The] performance of financial management by federal departments showed a decrease in the number of excellent departments for 2015, compared to 2014 and previous years,” said the National Audit Department (NAD) in the auditor-general report released yesterday.

Last year, only 16 out of 25 federal ministries were rated as excellent, compared to 20 ministries in 2014 and 23 ministries in 2013.

The performance of financial management by federal departments also declined, with a total of 22 (55%) out of 40 departments rated as excellent in 2015, compared to 29 (56.9%) out of 51 departments in 2014, and 21 (46.7%) out of 45 departments in 2013.

“The financial management performance could still be further enhanced, if controlling officers or heads of departments not only take action to rectify the weaknesses as highlighted by [the] NAD, but also take preventive actions to ensure that the same weaknesses do not recur,” said the NAD.

The NAD made several recommendations to improve financial management at the ministries. These include comprehensive checks by department heads to determine if weaknesses highlighted by the NAD also occur in departments and responsibility centres.

“Heads of departments should establish a check and balance system; supervise closely and conduct surprise checks and periodic assessment of skills and capabilities of officers; and give training to officers who are involved in financial management so as to improve their efficiency. This is to avoid officers who lack experience and skills from making decisions.

“Records on assets should always be updated by the ministries or departments in preparation for the federal government’s shift towards accrual accounting,” the NAD added.