Power to contract

As stated in the Sabah Ordinance 1961, the function of Sabah local authorities is that they
have the power to enter into contracts i.e. the Sabah Local Authority can enter into contracts
necessary or desired to perform any of its functions under or any other Ordinance. However,
in this context, the Sabah Ordinance provides that every contract to be done must obtain prior
approval from the state government. This means that the Sabah local authority cannot enter
into any contract without the prior permission of the state government as the case may be
may enter into a contract with a value in excess of the amount directed in respect of the local
authority by the state government.

One example, related to the function of local authorities to make contracts is, On 14
OCTOBER 2018 the Sabah Local Authority, namely YB Tuan Haji Mohd Anuar Bin Mohd
Tahir, who is the Deputy Minister of Works has completed the handing over ceremony of the
Mandalipau National School Completion Project, Papar . This is one of the projects for the
Construction and Upgrading of Poor Schools Using the Industrial Building System (IBS)
Method in Sabah. The purpose of the project is to create a conducive and safe teaching and
learning environment at an immediate rate.

With the section mentioned above empowers the Sabah local authority to determine who can
participate in this tender. This process allows local authorities to get the best contractors for
the state government, through tender quotations for the year that will be done on the state
government’s own website. This will make it easier for the state government to select the best
contractor as well as suitable and coincident with the tender. After the selection is made,
contractors will be divided into tasks to manage maintenance as well as will be supplied with
the requirements to perform their duties.

To conclude, a good perception of local authorities will definitely enable them to carry out
their functions more effectively as they will gain good cooperation, support, and trust among
the community.
 4.3 AUDIT OF ACCOUNTS

Audit of accounts is a financial provision that exists in the Sabah Local Government
Ordinance 1961. As an auditor's review or inspection of different books of accounts, followed
by a review of physical inventory to ensure that all departments in accordance with the
method recorded to track transactions is the definition of Audit. It is done to assess the
authenticity of the financial statements supplied by the firm. In the audit of accounts, the
appointment of one or more individuals shall be made by the Minister to be the auditor or
auditors of the accounts of any authority.

As stated in the ordinance, the auditor may request that all books, by written notice, deeds,
contracts, accounts, vouchers and documentation and other documents deemed appropriate be
submitted before the auditor for the purpose of audit or review of accounts. Further, those in
possession or in charge of all these shall be required to appear before him in any such
investigation or inspection or adjournment, and to make and sign declarations in respect
thereof.

As a example, in 1981 the jurisdiction of the Sabah State Treasury Department established
the Internal Audit Section and on 1 July 2020 it was placed under the Ministry of Finance.
This is because, it is based on the decision of the National Finance Council to create, under
the Internal Audit Division/Unit, the State Ministry of Finance, for all State Governments.
For example, departments and agencies under the Sabah state government that were audited
in 2018 were declared as excellent in their financial performance based on the Auditor
General's Report 2018 Series 1, 13 out of 29 ministries. Apart from that, there were three
other ministries, departments and agencies in the state rated good, 10 reached a satisfactory
level, and one was rated unsatisfactory in the study released that day. However, various
ministries, departments and organizations need to strengthen internal financial management
controls to avoid recurring problems and to minimize the more severe compliance risks
indicated in the report.

To conclude, the audit of the financial statements will be included in the scope of the audit
that will be conducted to verify the annual financial statements submitted by the Sabah
government to meet legal requirements and accounting standards. In this case too, the
accounts audit is responsible for reviewing the assets and interests of the organization
covered in terms of losses, fraud and misappropriation. This is because, to assess the
reliability and effectiveness of the financial system as well as the internal controls of the
organization. Apart from that, through this audit, the Auditor General will check whether the
statements provided reflect the true and fair financial position and the accounting records
thereon have been maintained in an orderly and up -to -date manner. Therefore, in this
context, auditors must also always ensure that the activities of the organization are managed
prudently, efficiently and effectively, including providing advice or views on all Financial
Management Systems. In this regard, it will assist the management of state government
organizations in terms of financial management and accounting records are managed in an
orderly manner as well as in compliance with policies, laws, procedures, and regulations in
force. Last but not least, it will also help to improve and strengthen existing practices and
procedures in the system to prevent vulnerabilities and abuses.