FORENSIC ACCOUNTING IN PUBLIC SECTOR

About the article

This research is basically to identify the significance of internal auditing in the Malaysia public
sector, and its subsequent extent and how does it influence in the public sector hierarchy and
decision making.
Problem Statement
Public sector as a whole addresses the interest of a larger and wider group of stakeholders.
Therefore, in order to ensure appropriate level of transparency, integrity, quality and improved
service delivery in public sector, it is crucial to know the role of internal auditing.
Research Objective
The objectives of this research is to identify the problems that occurs and faced by the internal
audit function in the public sector entities and to rectify the level of effectiveness and its
contributing factors.
Methodology
In order to collect data for this research, the researcher collected the data by using questionnaires
distributed to all participants during an Internal Audit Symposium 2008 that was held in National
Audit Academy in Negeri Sembilan. The participants were attended by head of internal auditors,
internal auditors and other staff of internal audits departments from various categories of public
sectors departments and agencies around Malaysia.
There were three parts of the questionnaire where the first part contain of demographic questions
on age, gender, highest educational level, professional qualification and the experience of the
respondent. While, the second part of the questionnaire consists questions of the respondent's
workplace. The last part particularly seeks information in the issues of, the important factors that
could contribute to the effectiveness of internal audit function and the main problems faced by
the internal audit function.

Research Questions
In this research, there were two open-ended questions were used in the questionnaires in order to
obtain elaborate answers and opinions. The questions are:
1) If you are an internal auditor in a public sector organization what are the main problems
normally faced by the internal audit function?
2) In your opinion, what are the important factors that will contribute to the effectiveness of an
internal audit function?
Findings
Based on the two open-ended questionnaires distributed during the symposium, the findings are
as below:
The main problems normally faced by the internal audit function.
1. Lack of audit staff
2. Internal audit function does not have full support /commitment from
3. Top management
4. Lack of cooperation from auditor
5. Lack of training
6. Lack of independence
7. Staff lack of competency/knowledge on auditing techniques
8. Action on audit findings and recommendations not taken by auditee and the management
9. Lack of experience staff in the IAF
10. Low grading of position of head of internal auditors
11. Negative perception from auditee
12. Limited/lack of resources

The important factors that will contribute to the effectiveness of an internal audit function.
1. Internal audit quality
2. Support of top management

3. Adequate resources
4. Cooperation from auditor
5. Interaction with audit committee
Conclusion
Based on the distributed questionnaires, it shows that lack of audit staff is identified as the major
problems faced by the internal audit in the public sector in order to conduct and effective internal
auditing. It is also important to received adequate support from top management as well to
received sufficient training in order to have appropriate and extensive knowledge in order to
achieved its objectivity and effectiveness of internal auditing. To sum up, the need of change and
improvement in management are also important to improve the internal audit function in the
public sector.
Critiques

Lack of audit personnel & incompetence

Change audit scope

Risk based focus on risk area rather than operational aspect such as financial risk,
reputational risk and other risk.

Able to proposed new idea.

Current study has not investigated the relationship between the problems to the
effectiveness of internal audit function of the public and the private sectors.