CHAPTER 3 RULES AND REGULATIONS IN PUBLIC SECTOR FINANCIAL MANAGEMENT

Hierarchy of legal Provision

Federal Constitution 1957

Financial Procedure Act 1957, Audit Act 1957, Accountant Act, Local Government Act, Statutory Body Act, Financial Reporting Act

Treasury Instructions, Treasury Circulars, Treasury Circular Letters

Accounting Standards

Law - rules of conduct meant to enforce justice and prescribe duty or obligation and carry with the power and authority of the enactor and associated penalties for failure or refusal to obey Regulations - any guidelines/instructions provided by the authority body and it must be in line with the laws Explain the requirement by tha laws

Acts = laws passed by parliament Enactments = laws passed by state legislative assemblies Ordinance = laws passed before independence/ laws passed Sabah and Sarawak Purpose of rules and regulations Process of compiling legality Avoid misused fund, fraud,waste, and diversion from the objective of government A general framework Governs the method by which publuc funds are to be administered and accounted for

Why Need? Diverse of G objectives Large amount of annual expenditure at all levels To ensure accountability of public money To take care of public interest

To ensure objectives are achieved

Relationship: Federal Constitution does not dictate everything in detail. (mandatory and have to be complied) The other related Acts (FPA, AA, LGA, etc) are made to give more detailed interpretation and explanation of the spirit of FC (mandatory and have to be complied) Treasury Instructions gives even more detailed explanation regarding the public finance as general (mandatory) Treasury Circulars and Treasury Circular letters are detail explanations regarding a certain matter for day to day operation in a particular year (mandatory)

Constitution Supreme source of law Does not dictate everything in detail Mandatory and have to be complied All other law must be consistent with the constitution o Act 96 no tax/rate can be levied unless have authority o Act 97 all revenue and monies raised by Federal G shall be paid to the Federal Consolidated Fund o Act 98 expenditure charged on Federal Consolidated Fund o Act 99- Annual F/S o Act 100 Supply Bills o Act 101 Supplementary and excess expenditure o Act 102 power to authorise expenditure on account or for unspecified purposes o Act 103 contingency Fund o Act 104 Withdrawal from consolidated Fund o Act 105 Auditor General o Act 106 Powers and duties of Auditor General o Act 107 Reports of Auditor General o Act 108 National Finance Council o Act 109 Grants to State o Act 110 Assignment of taxes and fees to the states o Act 111 restrictions on borrowing o Act 112 restriction on alternations in establishment of states

Financial Procedure Act 1957 Specific act that interpret and explain the financial requirement stated in FC Provides guidance for; Control and management of public finance for Malaysia Provides a financial and accounting procedure for collection, custody and payment of public monies and procedure for purchase, custody and disposal of public properties

Provides authority for the investment of money standing in the consolidated funds

To enforce provisions of the Federal Constitution relating to finance

Local Government Act: Act that spesifically bound all the LGs in peninsular Malaysia only Provides a detailed about: Sources of revenues for LG (sec. 39) Accounts and Audit (Part V; sec.53 61)

Statutory Bodies Act 1980 act that provide the requirement for preparation and submission of the statements of accounts for audit of all the statutory bodies incorporated pursuant to the provisions of the Federal Law. Main content: Interpretation (section 2) Application and construction (Part II; sec. 3-4) Audit of accounts (Part III; sec 5-6) Submission and tabling of accounts and reports (Part IV: sec 7-8) Extension of time limit (Part V; sec 9) Miscellaneous (Part VI; sec.10- 11)

Treasury Instructions Circulars provided by the treasury to deal with the current financial requirement policy Current and detailed guideline related with the financial aspect like budget format, financial statement etc

Accounting Standards Standard published by the accounting body Normally dealt with the reporting format and disclosure requirement Voluntary in-term of applicability, subject to the rules and regulation Normally adopt by the government agencies which have an autonomy power and practice accrual basis accounting.