Highlights of Auditor-General's Report 2013 series 2

A total of 230 suggestions were made in the Auditor-General's (A-G) Report 2013 series 2 tabled in Parliament on Monday, to assist the federal and state governments and federal statutory bodies to make improvements, and overcome weaknesses reported.

Under a new system introduced in 2012 The report which used to be tabled once a year, it is now divided into three parts and to be tabled in the Dewan Rakyat’s three meetings which allows for greater public scrutiny.

Here are some of the highlights of the report:

1. Rural water supply projects in Sarawak

The rural water supply projects in Sarawak, under the Rural and Regional Ministry, implemented by the Sarawak Public Works Department, is aimed at providing clean and treated water to the rural communities.

· Three of the 13 rural water supply projects showed poor quality of construction, which included leakages at the reservoir water tank at phase 1 of the Serian Regional Water Supply Project.

· The AG's report also discovered that the building of the anchorage at the Lawas Damit intake was not according to specifications set while high-density polyethylene (HDPE) pipes of the size of 300mm were not laid underground in the Gelugus Lawas water treatment plant.

· Preliminary studies were not carried out comprehensively by 4 out of the 11 appointed project consultants which resulted in frequent changes in standard operation procedure.

2. Communication and Multimedia Ministry

The Broadcasting Department under the Communication and Multimedia Ministry, or Radio Television Malaysia (RTM), entered into RM111.30 million worth of deals without formal contracts.

· Out of 426 television programmes meant for TVi, a new channel launched in 2011, 413 of them did not have a formal contract.

· RTM had only relied on letters of acceptance (SST) as the legal document for these deals.

3. Upgrading of Pohon Batu to Pancur Hitam, Federal Territory Of Labuan

The report found that officers from the Public Works Department had signed documents related to the upgrading of a road from Pohon Batu near Simpang Tamu to Pancur Hitam, a project under the Ninth Malaysia Plan in the Federal Territory of Labuan.

· Variation Order document was signed by an unauthorised Public Works Department officer who was the Chief Assistant Director of Road Division, acting as a Superintending Officer’s representative.

· The cost of the project, , increased by RM3.64 million ringgit (from its original RM52.8 mil to RM56.44 mil) while the road distance was shortened by 3.1 km (from the original 6.6km to 3.5km).

4. Railways Assets Corporation (RAC)

Railway Assets Corporation (RAC) is a Federal Statutory Body under the Ministry of Transport Malaysia. The AG report revealed that RAC had overpaid a contractor for the servicing of its 38 Electric Multiple Units (EMU).

· RAC signed a two-year contract with Chinese company CSR ZhuZhou Electric Locomotive Co Limited (CSR ZELC) in 2011 for servicing and upgrading works. In order to carry out the works, CSR ZELC had set up a local company – CSR Kuala Lumpur Maintenance Sdn Bhd.

· At least 50% of the daily servicing by the contractor was not carried out for five months. Audit checks had however found that the weekly and monthly servicing followed the maintenance schedule.

· RAC had already paid RM99.94 million to the contractor to service all 38 sets of EMU, despite service was not carried out fully and according to schedule.

5. Federal Land Development Authority (Felda)

The AG report discovered that FELDA had not received approval from their respective Tender Committees for its 160 procurement projects worth RM3.6 mil between 2010 and 2012.

· Procurements were found to have been done directly by the departments involved and approved by the respective department’s director.

· 56 procurements amounting to RM183.13 million, and two of them worth RM60.68 million were not yet signed.

· Procurements totalling RM1.85 million for Felda Settlers Celebration and RM3.65 million for interior decoration works for Felda Tower in 2011 were broken up into smaller contracts in order to avoid the tender process

· Lack of monitoring and supervision on Felda settlers had resulted in it to be forced to undertake a fresh census in 2012 which involved a cost of RM1.02 million.

6. Land Transport Commission (SPAD)

SPAD had failed to complete the safety compliance auditing of the land public transport and commercial vehicles in 2011 and 2012. The AG report revealed that SPAD only focused on inspecting the safety compliance of express busses and not all land public transport.

· SPAD was also found to be slow in collecting fines. It failed to effectively monitor payment of compound fines amounting to 31.9% or RM868,798 of the RM2.72 million uncollected fines due since 2011.

· Most of the uncollected compound fines were from SPAD's east zone, totalling RM425,748 or 49% of the total outstanding sum nationwide

· The Central zone still needed to collect RM294,750, north - RM86,200 and south - RM62,100 of fines sued.

7. Education Ministry

The Education Ministry were found to have received repeated work variation orders over completed school buildings. The Public Accounts Committee said some of the projects were already completed and handed over to the Public Works Department (PWD) before the orders were issued

· 62 out of 122 work variation orders valued at RM5.44 million were submitted to the Education Ministry, 41 to 550 days Certificate of Practical Completion (CPC) were issued.

· Completion of three fully residential schools were delayed between 90 to 909 days resulting in the schools to reduce the intake of students.

8. Federal Territories and Urban Well-being Ministry

The Kuala Lumpur City Hall (DBKL), under the Federal Territories and Urban Well-being Ministry were found to be ineffective in managing revenue from advertisement licences and ‎billboards.

· As of December 2012, the Ministry owed DBKL a sum of RM138.35 million in the form of unpaid premise signage advertisement (RM128.14 million) and billboard licence fees (RM10.21 million).

· The AG report found that the (advertisement?) licence application process was not user-friendly, resulting in many applications being approved without complying to the stipulated conditions.

· Separate systems used for indoor and outdoor advertisement and signage had caused information of the collection from the issuance of advertisement licence to remain uncertain.

· Between 2010 and May 2013, collection from the issuance of advertisement/signage licence was RM52.09 million or 83%, compared to the estimated collection of RM62.73 million.

9. Royal Malaysian Customs Department

The AG report found that over half of the employees of the Royal Malaysian Customs Department had not received training on ways to use cargo scanners.

· A survey conducted by the AG’s Department on 32 Customs officers using the machines in five states found that 56% (or 18 respondents) never attended courses on operating the scanners, while 31% said that they were not skilled at using the machines.

· RM69 million were spent for 16 cargo scanning machines, two of which had been constantly breaking down.

· The two scanners were already in use by 2013 and have recorded annual breakdown rates of 11.8% and 15.6% per annum respectively, exceeding the 10 % rate deemed as acceptable by the AG’s Department.