Yesterday, it was reported that the Auditor-General Tan Sri Amrin Buang said that there was no need to audit 1Malaysia Development Berhad because it was already being audited by a “Big Four Firm”.
He said “Why aren’t we auditing 1MDB? As far as their accounts are concerned, they are already audited by one of the big four… There is no reason for us to come back to ask them to open their accounts again,” he said today, adding that to audit any firm was a “very laborious task”.
I have the utmost respect for the Auditor-General because we have been relying on his department to unearth various shenanigans within the Government agencies and departments and they have been doing a very creditable job for the thankless task.
However, I cannot agree at all with Tan Sri Amrin on this issue because the role of an auditing firm to prepare financial statements for the company is very different from the role played by the National Audit Department.
The role of the Auditor-General office is not to “audit” invoices and receipts to tabulate the balance sheet, profit and loss statement of a company or organisation. The role instead is to make qualitative evaluation of the “value” arising from the company’s activities as well as ensuring that monitoring non-financial compliance.
As an example, if 1MDB were to acquire parcels of land in Penang for RM1.3 billion, it would be the function of the Big Four firm to record the purchase and ensure that all the necessary receipts and payment records are in order. In contrast, the role of the Auditor-General office would be to verify if the transaction, while valid, has been in the interest of the Government. The evaluation would therefore involve the rate of return, the relative value of the transaction, the rational and plans for the parcels of land and the timeliness of the completion of the project.
In addition, the Auditor-General office understandably conducts only samplings of activities to be audited and certainly does not involve producing financial statements for the entire company.
We call upon Tan Sri Amrin Buang to seriously consider including 1MDB as one of the future audit projects for the National Audit department because it is the single largest debtor in the country outside of the Government. If 1MDB with more than RM42 billion of debt, for one reason or another, collapse like another controversial firm, Renong Bhd in the late 1990s, then the implication for the country’s economy will be earth-shattering.