PSA (Mid Term Test – Revision Note)
Taxes  Governments are not subject to 
5 Question – 50 marks (2 hours) *Each question 10 marks*
Question 1: Difference between private and government
1. Discuss ANY Five (5) main differences in the characteristics (unique features) of a public sector entity and those
of a private entity. (10 marks)
Public Sector
Stakeholders 1. The public sector has numerous 4. The private sector has fewer
institutional stakeholders.
2. A stakeholder is a party who has an 5. The private sector’s stakeholders
interest in the organization’s
activity, project or program.
3. Examples of public sector’s
stakeholders are the parliament,
Auditor General, Cabinet and the 6. Examples of private sector’s
general public.
Compliance  The public sector operates within a 
framework of public authorization
and control. This means all public
sector organizations have to
comply with all rules and
regulations set by the higher
authorities.
 These rules and regulations
determine how a public sector
organization should operate and be
authorized in carrying out its
objectives.
 The public sector organizations
must comply with the Federal
Constitution, Financial Procedure
Act 1957, Audit Act 1957,
Treasury Instructions, Treasury
Circulars and Government
Accounting Standards, Malaysia
Public Sector Accounting
Standards (MPSAS)
Objective  The public sector operates for the 
public and not for making profits.
However, the public sector has 
plurality of objectives, which
include political, economic and
social objectives to be attained.
Contributor vs  In the public sector, the contributor 
beneficiary such as the individual tax payers
will not receive direct benefits from
the Inland Revenue Board; instead,
they enjoy indirect benefits from
the provision of education at all
levels, provision of health services,
continuous clean water supply and
others.
The private sector should pay
Private Sector
stakeholders.
are mainly from the individuals
and the organizations who are
directly or indirectly involved in
the company’s actions.
stakeholders are the shareholders,
the potential investors, financiers
and the suppliers.
The companies, on the other
hand, have to comply with the
Companies Act 2016, the
regulations of the Companies
Commission of Malaysia
(Suruhanjaya Syarikat Malaysia)
and the Malaysian Financial
Reporting Standards.
The private sector organizations
are generally profit-motivated.
They must make sure that their
organizations are profitable so
that they can pay back their
shareholders in terms of
dividends or profit sharing.
The contributors of resources or
the shareholders of the private
sector organizations will receive a
direct and proportionate share of
the profits. The shareholders of
private sector organizations
would normally receive profits
and dividends based on their
shareholdings.
federal, states or local income taxes to support the government
taxes. Furthermore, government in providing essential services
has the power collect taxes and to and public goods that benefit the
require taxpayers to support the country's citizens and economy.
financial operations
Risks  Government is a risk-averse  Private sector is a risk-taker
because they are not rewarded for because companies want to make
taking risks. money (high risk, high return)
Bureaucracy  High as it is heavily regulated, less  Low
freedom to innovate
Financial  Public sector organizations practice  Private companies apply
practices fund accounting, emphasis on matching concept in accounting
performance measurement and for transactions and record them
record economic transactions and on accrual basis.
activities based on cash and
modified cash basis.
Funding  The public sector is funded by tax  Private sector organizations rely
revenue and government budgets. on revenue generated from the
sale of goods or services.
Accountability  The Malaysian public sector is  Private sector organizations are
accountable to the government and accountable to their shareholders
the public. and customers.
 Public sector = government, Private sector = public companies / public listed companies
 Step 1 可以先讲哪个是 public sector，哪个是 private sector， 然后再一个个 apply 特处
 Eg. Ministry of Health vs Sunway Medical Centre, Ministry of Education vs Sunway University （有 Ministry 或
者 government，就一定是 Public Sector）
 真的不会 apply，就只是把 public sector 改去 Ministry of XXX， private sector 改去 Company name
Question 2: Separation of Power
1. Advantages of the ‘separation of power’ in the context of the Malaysia Federal Government
The separation of powers is a fundamental principle of modern democratic systems, which divides governmental
authority into three branches: the legislative, the executive, and the judiciary. Each branch has a distinct function, and
no single branch has complete control over the government. In the context of the Malaysia Federal Government, there
are several advantages of the separation of powers, including:
a) Preventing the Abuse of Power: By dividing power among different branches, the government can prevent any one
branch from becoming too powerful or abusing its power. For example, the judiciary can provide a check on the
legislative and executive branches by reviewing and potentially invalidating their actions if they are unconstitutional.
b) Ensuring Accountability: Each branch of government is accountable to the people in its own way. The legislative
branch is accountable through elections, the executive branch is accountable through the actions it takes, and the
judiciary is accountable through the decisions it makes. This ensures that no branch can act without being answerable
to the people.
c) Promoting Efficiency: By dividing tasks among different branches, the government can operate more efficiently.
Each branch can focus on its specific functions without being bogged down by other tasks. This can help the
government to function more smoothly and to better serve the needs of the people.
d) Encouraging Debate and Collaboration: The separation of powers can encourage debate and collaboration among
the branches of government. By requiring different branches to work together to achieve their goals, the government
can benefit from the diversity of opinions and perspectives.
2. Importance of separation of power (10 marks) crucial to establish a fair and independent judiciary that is not under the control or influence of the other two branches.
The separation of powers is a fundamental principle of modern democratic systems, which involves the division of Here are a few steps that can help address abuse of power and ensure that the judiciary operates independently:
governmental authority into three branches: the legislative, the executive, and the judiciary. Each branch has distinct
a) Separation of Powers: The first step in ensuring the independence of the judiciary is to establish a clear separation
functions and responsibilities, which serve to check and balance the power of the other branches. Here are some of
of powers between the three branches of government. This means that each branch should have its own distinct
the key reasons why the separation of powers is important:
responsibilities and powers, and there should be no overlapping or encroachment on each other's powers.
a) Protecting individual rights: The separation of powers helps to prevent the concentration of power in any one branch
b) Appointment Process: The appointment of judges should be done in a transparent and fair manner, without any
of government, which can help to protect the rights and freedoms of citizens. This is particularly important in
undue influence from the other two branches. This can be achieved by establishing an independent commission or
democratic societies, where individual liberty and the rule of law are valued.
committee that oversees the appointment process and ensures that it is based on merit and qualifications.
b) Preventing abuse of power: By distributing power among different branches of government, the separation of
c) Tenure and Removal: Once appointed, judges should have a secure tenure that protects them from arbitrary removal
powers helps to prevent any one branch from becoming too powerful or dominating the others. This can help to
by the other two branches. This can be achieved by establishing clear guidelines for the removal of judges and
reduce the risk of abuses of power, such as corruption, tyranny, or authoritarianism.
ensuring that it is only done for valid reasons such as misconduct or incapacity.
c) Ensuring accountability: Each branch of government has its own powers and responsibilities, which serve to check
d) Funding: The judiciary should have adequate funding that is independent of the other two branches, to ensure that
and balance the power of the other branches. This helps to ensure that each branch is accountable to the people, and
it can operate effectively and without any influence from the other branches.
that no branch can act with impunity or without oversight.
e) Oversight: There should be an independent oversight mechanism that monitors the functioning of the judiciary and
d) Promoting good governance: The separation of powers can help to promote good governance by ensuring that
ensures that it operates fairly and independently. This can be achieved by establishing an independent commission
decisions are made through a process of negotiation, compromise, and consultation between different branches of
or committee that oversees the judiciary's functioning and addresses any complaints of abuse of power.
government. This can help to ensure that policies are well-considered and reflect the interests of all stakeholders.
e) Fostering stability and continuity: By providing a stable and predictable framework for the exercise of governmental Overall, establishing a fair and independent judiciary requires a combination of legal, institutional, and cultural reforms.
authority, the separation of powers can help to foster stability and continuity in government, which is important for It requires a commitment from all three branches of government to uphold the rule of law and protect the independence
maintaining social order and economic prosperity. of the judiciary.
3. Three powers of government & Problems nowadays

Legislative Power (立法) Executive Power (执法) Judicial Power (司法) Question 3: Four grants
Legislative power is the power Executive power is the power to Judicial power in Malaysia is The 4 major types of grants provided to the state governments are capitation grant, state road grant, state reserve fund
to make new laws or to amend formulate policies, which will be vested in the superior courts and
and revenue growth grant.
or repeal existing laws, to levy implemented by the subordinate courts. The judiciary
taxes or to change existing taxes, governmental agencies. The branch is responsible for 1. Capitation grant
and to sanction expenditure of executive branch is responsible interpreting and applying the
public money. The legislative for implementing and enforcing laws to resolve disputes. Its allocation is to assist the states in their operating expenditure. The computation of the capitation grant is based on
branch is responsible for making those laws.
the population of a particular state. Therefore, the state with the most populace will receive the highest grant.
laws.
The capitation grant payable to each State in respect of a financial year shall be at the following rates:
Eg. Parliament (Dewan Rakyat Eg. Prime Minister and Cabinet Eg. Courts
& Dewan Negara) (a) for the first 100,000 persons at the rate of RM72.00 per person;
(b) for the next 500,000 persons at the rate of RM10.20 per person;
There are several problems that can arise with this system, including: (c) for the next 500,000 persons at the rate of RM10.80 per person;
 Overlapping or unclear roles: Sometimes, the roles of each branch of government can be unclear, leading to (d) for the remainder at the rate of RM11.40 per person,
conflicts between the branches or even an abuse of power. For example, the executive branch may attempt to
overstep its authority and interfere with the legislative or judicial branch. 2. State Road grant
 Lack of cooperation: In some cases, the branches of government may become too focused on their own interests The state road grant is given for the purposes of maintaining the state roads in the state.
and agendas, leading to a lack of cooperation and coordination between the branches. This can lead to inefficiencies,
delays in decision-making, and an inability to effectively address important issues. The State Road grant payable to each of the States of Malaya in respect of a financial year shall be calculated by
 Political polarization: In highly polarized political environments, the separation of powers can become a tool for multiplying—
obstructionism rather than cooperation. For example, the legislative branch may refuse to work with the executive
(a) the average cost to a State of maintaining a mile of State Road at the minimum standard determined for State roads
branch simply because they are from different political parties, even if it means compromising on important issues.
in those States by the Federal Government after consultation with the National Finance Council; by
 Lack of accountability: While the separation of powers is meant to ensure that no one branch becomes too powerful,
it can also lead to a lack of accountability. Each branch may try to shift the blame or responsibility onto another (b) so much of the mileage of State roads in that State as qualifies for grant.
branch, making it difficult for the public to hold their elected officials accountable for their actions.
3. State reserve fund
The state reserve fund is given to the states applying for the grant, meaning it is not given automatically to any states on
4. How to solve abuse of powers / Judiciary should be fair and independent, not under another power annual basis. The state has to apply for it. The purpose of the fund is to assist any state government that has deficits or
Abuse of power is a serious issue that can have far-reaching consequences on society. When it comes to the three for development purpose. The amount is determined by the federal government after consultation with the National
branches of government, namely the executive, legislative, and judicial branches, it is essential to ensure that each Finance Council.
branch operates independently and without undue influence from the other two. In the case of the judicial branch, it is 4. Revenue growth grant
The revenue growth grant is given to the state governments whenever there is an increase by > 10% on the revenue of Combating Prime Minister Improve country Update relevant policies,
the federation. This is to acknowledge the contribution of the states to the total growth of the federal government’s corruption Department ranking on the procedures and enforcement to
revenue. Corruption Perception improve global perception. Use of
Index open or restricted tender process
for all government projects with
Question 4: How to measure performance of government sector the exception of those sensitive
nature.
1. Performance measurement may be able to assist public sector organizations to perform the following Widening Ministry of At least 80% of children Make preschool part of the
organizational functions access to Education Attending preschool. All national education system. School
a. Strategy formulation, determining what the objectives of the organization are and how the organization plans to affordable pupils are expected to be principals and headmasters will be
achieve them and quality able to read, write and rewarded based on the
b. Manage the strategy implementation process, by determining whether an intended strategy is being put into education count when they enter achievements of each school.
practice as planned Year 4 by 2012. Turn
c. Challenge assumptions, by focusing not only on the implementation of an intended strategy but also on making 100 daily smart, cluster,
trust and boarding
sure that its content is still valid
schools into high-
d. Check position, by looking at whether the expected performance results are being achieved performing learning
e. Comply with the nonnegotiable parameters, by making sure that the organization is achieving the minimum centers by 2012.
standards needed, if it is to survive (e.g. legal requirements, environmental parameters). Raising the Ministry of Increase in the number Increase Access to Affordable
f. Communicate direction to the rest of the employees, by passing on information about what are the strategic goals living Social of people with access to Housing: Housing is a basic need,
individuals are expected to achieve standard of Development basic amenities like and it is essential for families to
g. Evaluate and reward behavior, in order to focus employees’ attention on strategic priorities; and to motivate them the poor healthcare, education, have a stable and secure place to
to take actions and make decisions, which are consistent with organizational goals. and housing. live. The ministry can work
towards increasing access to
affordable housing by building
2. Barriers in implementing performance measurement systems low-cost housing units in
 Vision and strategy not actionable underprivileged areas and
 This occurs when the senior management team has failed to achieve consensus as to how the vision should be providing subsidies for families to
achieve. This leads to different groups pursuing different agendas and effort is neither coherent not linked to rent or buy homes.
Improving Ministry of Increase in the number of Water Supply: Rural areas often
strategy in an integrated way.
infrastructure Rural households with access face water scarcity, which affects
 Strategy is not linked to department, team and individual goals in rural areas Development to basic infrastructure the quality of life of the people
 When this happens, then those concerned continue to follow the old traditional performance criteria and thwart such as roads, water living there. The Ministry can
the introduction of the new strategy. This can be exacerbated by an unaligned incentive system. supply, and electricity. work towards providing
 Strategy is not linked to resource allocation sustainable and reliable water
 This often occurs when the long-term strategic planning process and annual budgeting process are separated supply systems to rural
and may result in funding and capital allocations becoming unrelated to strategic priorities. households. This can be achieved
 Feedback is tactical and not strategic through building new water supply
 This occurs when feedback concentrates solely on short-term results (such as the financial measures) and little infrastructure, repairing and
time is reserved for the review of indicators of strategy implementation and success. upgrading existing ones, and
promoting rainwater harvesting
 Resistance to change
and groundwater recharge.
 Implementing a performance measurement system requires a change in the way things have been done before.
Improving Ministry of Increase in ridership: Promotion of Public Transport:
Public sector organizations may be resistant to change due to fear of the unknown, lack of trust in new processes, public Transportation The number of people The Ministry of Transportation
or a preference for the status quo. transport in using public transport should launch campaigns to
the medium should increase. promote the use of public
term. transport. This can be done
3. KPI & Action Plan through advertisements, social
media campaigns, and other
Key result Key ministry Key performance Proposed marketing strategies.
area indicators Activities / Action Plan
Increasing - KPI 1: Increase in Action Plan 1: Encourage and
Disposable household income support small and medium-sized
Reduction of Ministry of Reduce crime on street, Retrain RELA members to help Income KPI 2: Reduction in the enterprises (SMEs) by providing
crime rate Home Affairs including snatch thefts improve public perception on cost of living financial assistance, such as tax
and unarmed robbery by safety. Upgrade equipment for incentives and grants, to boost
20% by the end of 2010 enforcement agencies and increase their growth and create job
the usage of CCTV. Set up special opportunities.
courts for street crime to speed up Action Plan 2: Implement policies
the legal process. to control inflation by reducing
import tariffs and ensuring fair
 competition in the market, which Foster collaboration between industry and academia: The government can also promote economic growth in the
will help to lower prices and digital era by fostering collaboration between the industry and academia. This can be achieved by providing funding for
increase consumer purchasing research and development, establishing incubation centers, and organizing seminars and workshops to share knowledge
power. and expertise.
Education for - KPI 1: Increase in the Action Plan 1: Provide financial
Better Future number of students aid and scholarships for deserving Key Performance Indicators:
enrolled in higher students, particularly those from
education low-income families, to enable  Increase in the number of research and development projects funded by the government
KPI 2: Improvement in them to pursue higher education.  Increase in the number of start-ups and innovations emerging from the incubation centers
the quality of education Action Plan 2: Increase investment Action Plan 2: Investing in People
in education by allocating a higher
percentage of the government's Enhance human capital development: The government can invest in people by enhancing human capital development
budget to education and through education and training programs. This can be achieved by providing more scholarships, vocational training, and
implementing policies to attract upskilling programs to equip the workforce with the necessary skills and knowledge to excel in the digital economy.
and retain high-quality teachers
and educators. Key Performance Indicators:
 Increase in the number of students enrolling in STEM (Science, Technology, Engineering, and Mathematics)
4. Economic empowering’, ‘social re-engineering’ and ‘environmental sustainability’ are the three key courses
development focus areas of the proposed 12th Malaysian Plan. Discuss ANY FIVE (5) relevant action plans and  Increase in the number of workers participating in upskilling programs
recommend ONE (1) key performance indicator for each of the actions discussed. (10 marks)
Support work-life balance: The government can also invest in people by supporting work-life balance. This can be
The 12th Malaysian Plan focuses on three key development areas: economic empowerment, social re-engineering, and achieved by promoting flexible work arrangements, providing parental leave, and ensuring that employees have access
environmental sustainability. Here are five relevant action plans with their respective key performance indicators: to healthcare and wellness programs.
Key Performance Indicators:
a) Increasing Access to Financial Services: This action plan aims to improve access to financial services for  Increase in the number of companies offering flexible work arrangements
marginalized communities, including women and rural populations. One key performance indicator for this action  Increase in the number of employees taking parental leave
plan could be the number of new bank accounts opened in underserved areas.
b) Promoting Sustainable Tourism: This action plan seeks to promote sustainable tourism practices that protect the
Question 5: Financial Reporting
environment and benefit local communities. One key performance indicator for this action plan could be the number
of eco-tourism projects launched and the number of local communities that have benefited from these projects. 1. Objectives of financial reporting
c) Encouraging Green Technology Adoption: This action plan aims to encourage the adoption of green technology by
businesses to reduce carbon emissions and promote sustainable development. One key performance indicator for The objectives of financial reporting in the public sector include the following:
this action plan could be the percentage of businesses that have adopted green technology and the corresponding  To provide detail facts pertaining to financial information. This objective involves providing accurate and detailed
reduction in carbon emissions. financial information that can be used to make informed decisions. It includes information about the government's
d) Providing Affordable Housing: This action plan seeks to provide affordable housing options for low- and middle- revenues, expenditures, assets, liabilities, and cash flows.
income families. One key performance indicator for this action plan could be the number of affordable housing units  To assess the organization’s compliance on legal and other statutory requirements regarding how resources are
built and the percentage of households that have benefited from these units. obtained and spent. Public sector organizations must comply with legal and statutory requirements regarding how
e) Strengthening Education: This action plan aims to improve the quality of education in Malaysia and ensure equal public resources are obtained and spent. Financial reporting helps to assess whether these organizations are
access to education for all children. One key performance indicator for this action plan could be the number of complying with the relevant laws and regulations.
schools that have been renovated or upgraded, as well as improvements in academic performance among students.  To ensure relevant authorities in government make rational decisions about allocation, distribution and utilization
of resources for various sectors of the economy. Financial reporting provides decision-makers with accurate and
reliable information that can be used to allocate, distribute and utilize resources efficiently and effectively.
5. Budget 2020 has four thrusts including boosting economic growth in the new economy and the digital era, and
 To serve as a useful tool to monitor performance of governmental organizations in terms of their efficiency and
investing in people. Discuss how the government of Malaysia can strive for the goals of ‘economic growth in the
effectiveness in the use of public resources. Financial reporting helps to monitor the performance of public sector
digital era’ and ‘investing in people’ by recommending TWO (2) action plans for each goal and TWO (2) key
organizations in terms of how efficiently and effectively they are using public resources. This information can be
performance indicators for each action plan.
used to identify areas where improvements can be made.
Action Plan 1: Economic Growth in the Digital Era  To assess capability and capacity of government organizations to provide high quality products and services, and
its ability to continue to serve the public. Financial reporting helps to assess the capability and capacity of public
Encourage the development of digital infrastructure: The government can strive towards economic growth in the sector organizations to provide high-quality products and services. It also provides information about the
digital era by investing in digital infrastructure, such as high-speed internet connectivity, cloud services, and data centers. organization's financial position, which is important for assessing its ability to continue to provide services to the
This would attract more foreign investments and encourage local entrepreneurs to embrace the digital economy. public.
Key Performance Indicators:  To provide government opportunity to put forward statement of its achievement to influence users and the public.
Financial reporting provides an opportunity for the government to highlight its achievements and showcase its
 Increase in foreign investment in the digital sector success in managing public resources. This information can be used to influence users and the public and enhance
 Increase in the number of local entrepreneurs adopting digital technology the government's reputation.
2. Distinguish between the Federal Financial Statements and the Financial Statements of public listed companies. (10
marks)
Federal Government (Public Sector)
It is required to prepare its financial statements It is required to prepare its financial statements
in accordance with the Malaysian Public in accordance with the Malaysian Financial
Sector Accounting Standards (MPSAS).
Known as Federal Government Financial
Statements
Financial statements are audited by the Auditor
General.
It is not required to disclose this information.
Components:
 Statement of Financial Position
 Statement of Cash Receipts and payments
 Statement of Financial Performance
 Statement of Memorandum Accounts
 Notes to the Financial Statements
The objectives of its financial reporting are to
demonstrate accountability and transparency
in the use of public funds.
The objectives of its financial reporting are to
provide information that is useful for making
economic decisions about the company.
It is required to follow the accounting policies
and standards set out in MPSAS.
Financial statements are presented in a format
that is designed to meet the requirements of
MPSAS.
Public Listed Companies (Private Sector)
Reporting Standards (MFRS).
Known as annual report
Financial statements are audited by an external
auditor.
It is required to disclose information on its
shareholders, including the number of shares
held by each shareholder, as well as
information on its directors and key
management personnel.
Components:
 Statement of Financial Position
 Statement of Comprehensive Income
 Statement of Cash Flow
 Statement of Changes in Equity
 Notes to the Financial Statements
 Consolidated Financial Statements
The objectives of its financial reporting are to
provide information that is useful for making
economic decisions about the company.
It is required to prepare and publish its
financial statements annually.
It is free to choose its accounting policies
within the framework of MFRS.
Financial statements are presented in a format
that is useful for investors and other
stakeholders.