EXECUTIVE SUMMARY

The purpose of this paper is to answer the question “Noncompliance with

rules and regulations still occurred even though there are existences of

Internal Audit Unit in all Ministries. Discuss”

The first part will discuss generally about the history, roles and

responsibility of Internal Auditors in public sector. Then it will be continued

with the effectiveness or not of Internal Audit function in public sector and then

to find out and elaborate the possible causes of noncompliance with finance

rules and regulation.

Overall it can be observed that the internal audit function in the public

sector in Malaysia is imperfect caused by understaffing and hampered by

inadequate support from top management while the auditors seldom extend

their full cooperation. The auditors themselves lack appropriate knowledge

and training on effective auditing approaches. The negative perception of

internal audits lead to inaction by management on recommended remedies.

This nullifies the positive contribution internal audit potentially holds to elevate

the service delivery quality of the public sector.

Nowadays there are several possible causes which contribute to

noncompliance with the rules and regulation in public sector and lead to

ineffective internal audit such as;

1. Lack of audit staff

2. Does not have full support or commitment from top management

3. Lack of training

4. Lack of independence

5. Staff lack of competency/knowledge of auditing techniques

6. Low grading of position of head of internal auditors