BBPC 4103

PUBLIC SECTOR ACCOUNTING

MAY SEMESTER
2021
 Table of Contents

1.0Introduction of Accountability

1.1 Importance of Public Accountability

2.0 Discussion on the Internal Control Mechanisms in Public Sector

3.0 Discussion on the Recommendations to enhance the Quality of Internal Control in the effort

to improve the Public Accountability

Summary

References

1.0Introduction of Accountability
Accountability, in terms of ethics and governance, is equated with answerability, blameworthiness,
liability, and the expectancy of account-giving.As in an aspect of governance, it's been significant to
discussions associated with troubles in the public region, nonprofit and personal (corporate) and
character contexts.In management roles,responsibility is the acknowledgment and assumption of
obligation for movements, merchandise, decisions, and rules together with the management,
governance, and implementation within the scope of the role or employment function and
encompassing the obligation to report, give an explanation for and be accountable for resulting
outcomes. There are seven types of accountability in the workplace.Thats are Professional
Accountability,Corporate accountability,Personal accountability,Public
accountability,Financial accountability,Ethical accountability,and Administrative
accountability.

1.1 Importance of Public Accountability

Public Accountability is an crucial pillar of any Parliamentary Democracy.Any public frame that
uses and manages public funds and assets is accountable to parliament.It is crucial that they
understand and guide the processes and structures that ensure public responsibility. Accountability is
mentioned as one of the critical standards and an vital factor of good administration. The guidelines
governing duty are essential and vital in the public sectors and consequently, they have to be
discovered and practiced through all civil servants in Malaysia.

Accountability is great inside the public zone since it includes public cash. If these precepts aren't
given the due priority within the management of public services in Malaysia, economic fraud,
wrongful behavior, corruption and abuse of electricity may want to easily occur. The nexus to the
principles of accountability has a giant contribution to the nice of provider and photo of governmental
government and departments.The best benefits accruing from appropriate duty practices are ‘waste
reduction’ of each financial and other resources .The Malaysian government is committed to uphold
public region duty, not simply due to its responsibility to the public, however to preserve public
believe and confidence inside the government.

Accountability is described as a without a doubt identified employee duty for the exceptional behavior
of a precise function and be answerable for overall performance fulfillment. The public anticipates
higher ethical expectations from the general public servants as they constitute the government and
paintings for the gain of the public. Those expectations enlarge beyond the demarcations of monetary
accountability to encompass respecting the rights and dignity of all the citizens and
stakeholders.Codes of ethics, requirements of conduct, and different internal pointers for pleasant
paintings function regulatory measures for channeling and influencing the behaviour of personnel in
the provision of offerings is an responsibility practices views that evaluating this views may want to
lessen the mistrust in the government’s shipping device.
Various new approaches and transformation programmers had been added to enhance the operations
and duty of the general public zone in Malaysia.For example, the authorities has observed the
worldwide trend by means of introducing effects-based management by adopting the concept of ‘new
public control’ and managerial ISM in the early1990s.The authorities has brought diverse nice
enhancement programmers for its agencies and departments.The programmers consist of the
productiveness improvement projects in 1991, total fine control in 1992, patron’s charter in 1993, ISO
in 1996, benchmarking in 1999, key overall performance indicators (KPIs) for government-linked
groups in 2004, key performance signs (KPIs) for all different government companies in 2005,
treasury strategic effects location and strategic KPIs in 2007, auditor popular’s famous person scores
on monetary management or responsibility index in 2007, mampu’s big name score gadget on public
control in 2008, government transformation programmers in 2009 and key performance indicators
(KPIs) for the ministers and the ministries in 2009.

The targets of these programmers are premised on providing a valid basis for government
corporations to supply first-class service to the public. These plans have been initiated to elevate the
ability of presidency departments to supply first-class control and services.High administrative
expenses are incurred to adopt those programmers and the expenditure continues to increase.

Accountability in the public sector requires public participation and cooperation. The public performs
a substantial function circuitously in notifying any negligence, misconduct, dereliction of duty or
mismanagement by means of civil servants in assignment their obligations and duties. A branch called
the public lawsuits bureau (PCB) was hooked up to resolve complaints from the general public and it
represents one of the obligations of the government to the general public to ensure that they
continually receive remarkable and fine services from authorities departments and organizations.
Through PCB, the general public or interested events should ahead their proceedings or grievances
concerning the exceptional of the offerings of presidency corporations including unprofessional
behavior, mismanagement, negligence and misuse of strength and are searching for remedial
measures on their court cases from the relevant groups.

Any other degree released by way of the authorities of Malaysia to enhance accountability of civil
servants is the establishment of Malaysian anti-corruption fee (MACC) in2008, formerly referred to
as the anti-corruption company. This commission plays a main position in preventing corruptions with
the intention to assure independence and transparency of public area’s services. Due to the fact that
then, macc has found out and solved many instances related to corruptions within the public region of
Malaysia.

Accountability is an important element of true authorities.It's far approximately the relationship

among the state and its residents, and the volume to which the country is chargeable for its actions.
The concept of responsibility refers back to the legal and reporting framework, organizational shape,
approach, tactics, and actions to help make sure that any businesses that use public money and make
selections that have an effect on humans's lives may be held liable for their actions.

Public sector responsibility isn't always led through any individual corporation however a number
entities, businesses, and establishments. As an instance, accountability for overseeing how public
sources are used entails participants of parliament, public entities, courts and tribunals, inquiry
groups, and, often, monitoring by civil society businesses and the media.the ideas and concepts vital
to public zone accountability encompass transparency, equity, integrity, and accept as true with.

The importance of the concept of accountability inside the public region is to make sure that each
member inside the public provider who is answerable for spending the public money is needed to
comply with the system, legal guidelines, techniques and regulations set through the enterprise.
Moreover, it's far a assure that the general public cash spent is managed successfully and efficiently.

Thru the method and mechanism of the idea of responsibility practiced in an business enterprise might
be able to decide compliance with the allocation expenditure that has been given to the company
properly, allocation expenditure for applications accomplished, sure activities or projects according to
plans and estimates, systems, strategies and rules. predetermined modern.

Responsibility can make sure the collection of revenue effectively and quickly in addition to help to
get the pleasant return for every expenditure incurred for a software or task finished. Green and proper
protection of assets and shops may be executed properly to avoid useless waste.

2.0 Discussion on the Internal Control Mechanisms in Public Sector

Internal control is a processes protect governments from fraud,corruption,waste and abuse.They help
governments to measure value for money,assess risk and ensure compliance with laws,regulations and
policies. Managers are the first responsible for internal control activities.Others,including risk
managers,inspectors and internal auditors,also contribute,providing advice and independent
assurance.

Internal control consists of some interrelated Components

 Control Environment
 Risk Assessment
 Control Activities
 Monitoring
 Communication and Information
1)Control Environment

The Control Environment sets the tone of an business enterprise, influencing the manipulate focus
of its staff. It's far the foundation for all different components of inner control, presenting discipline
and shape. Factors of the manage surroundings are:

(1)Non-public and expert integrity and moral values of control and workforce, together with a
supportive mindset toward internal manage at all times in the course of the organisation;

(2)commitment to competence;

(3)Organizational Structure

4)human resource policies and practices

The personal and professional integrity and moral values of control and personnel the personal and
professional integrity and moral values of control and body of workers decide their alternatives and
price judgments, that are translated into standards of conduct.

They must show off a supportive mind-set in the direction of internal manipulate at all times in the
course of the business enterprise.

Every person involved in the corporation amongst managers and personnel has to preserve and
demonstrate non-public and expert integrity and moral values and has to conform with the applicable
codes of behavior always. As an instance, this can encompass the disclosure of private financial
pastimes, outside positions and items (e.g. via elected officers and senior public servants), and
reporting conflicts of interest.

Commitment to Competence

Commitment to competence commitment to competence includes the level of understanding and

ability had to assist ensure orderly, ethical, inexpensive, efficient and powerful overall performance,
in addition to an awesome know-how of individual obligations with recognize to inner manage.
Managers and personnel are to keep a degree of competence that permits them to apprehend the
importance of developing, enforcing, and keeping accurate internal manage and to perform their
responsibilities with a view to accomplish the overall inner control goals and the entity’s task. All
people in an organisation is worried in internal manage along with his personal unique obligations.

Organizational Structure

The organizational structure of an entity provides:

•Venture of authority and obligation;

•Empowerment and responsibility;

•Suitable traces of reporting.

The organizational structure defines the entity’s key regions of authority and obligation.
Empowerment and accountability relate to the manner in which this authority and obligation are
delegated at some stage in the business enterprise. There may be no empowerment or accountability
without a form of reporting. Therefore, appropriate traces of reporting want to be defined. In
outstanding instances, different traces of reporting should be feasible further to the everyday ones,
consisting of in instances where management is involved in irregularities.

Human Resource Policies and practices consist of hiring and staffing, orientation, schooling (formal
and on-the-task) and schooling, comparing and counseling, promoting and compensating, and
remedial actions. An vital aspect of internal control is employees. Equipped, straightforward
employees are necessary to offer effective manipulate. Therefore, the strategies through which men
and women are employed, educated, evaluated, compensated, and promoted, are an essential part of
the manage surroundings. Hiring and staffing selections have to consequently consist of warranty that
people have the integrity and the right schooling and enjoy to carry out their jobs and that the
important formal, on-the-task, and ethics schooling is furnished. Managers and employees who've an
excellent expertise of inner manipulate and are willing to take duty, are essential to powerful internal
control.

Threat evaluation is the system of figuring out and analyzing applicable risks to the fulfillment of the
entity’s targets and figuring out the best response. It implies:

(1)Chance Identity: • related to the objectives of the entity; • comprehensive; • includes dangers
because of external and inner elements, at both the entity and the activity degrees;

(2)Risk Assessment: • estimating the significance of a threat; • assessing the likelihood of the hazard
incidence;

(3)Assessment of the risk urge for food of the organisation;

(4)Improvement of responses:

•4 types of responses to hazard need to be taken into consideration: switch, tolerance, treatment or
termination; of these, threat treatment is the most relevant to those hints because powerful inner
manage is the primary mechanism to treat danger;

•the proper controls worried can be both detective or preventive.

As governmental, economic, industry, regulatory and working situations are in regular trade, chance
evaluation should be an ongoing iterative technique.It implies figuring out and analyzing altered
situations and possibilities and dangers (chance evaluation cycle) and modifying internal manage to
address converting risk.

2)Risk Activities

A strategic technique to threat evaluation relies upon on identifying risks in opposition to key
organizational objectives. Dangers applicable to those targets are then taken into consideration and
evaluated, resulting in a small quantity of key dangers. Figuring out key dangers is not best vital in an
effort to become aware of the most crucial regions to which assets in hazard. Assessment must be
allotted, however also in order to allocate obligation for management of those risks.

Risk Assessment

A good way to determine a way to cope with risk, it's far essential now not only to discover in
principle that a sure form of risk exists, however additionally to assess its significance and examine
the probability of the chance occasion going on. The methodology for reading dangers can range, in
large part due to the fact many risks are tough to quantify (e.g. popularity risks) at the same time as
others lend themselves to a numerical diagnosis (mainly monetary dangers). For the previous, a much
more subjective view is the most effective possibility. On this feel, risk assessment is extra of an art
than a technology.But, the use of systematic risk rating standards will mitigate the subjectivity of the
technique through providing a framework for judgments to be made in a constant way.

Assessment of the “Risk urge for food” of the organization

An vital trouble in thinking about response to risk is the identity of the “risk appetite” of the entity.
Chance appetite is the amount of threat to which the entity is prepared to be exposed earlier than it
judges motion to be necessary. Selections about responses to threat need to be taken along with an
identification of the amount of danger that can be tolerated.

Improvement of responses the result of the actions mentioned above might be a chance profile for the
corporation. Having developed a danger profile, the enterprise can then take into account an
appropriate reaction.
3)Control Activities

Control Activities are the regulations and approaches established to address risk and to gain the
entity’s targets. To be powerful, manipulate activities need to be suitable, feature continually in
accordance to plan for the duration of the period, and be value effective, complete, affordable and at
once relate to the manipulate objectives. Manipulate activities arise in the course of the corporation, in
any respect degrees and in all functions. They include a range of detective and preventive manipulate
sports as various, as an example, as:

(1)Authorization and approval approaches;

(2)Verifications;

(3)Reconciliations;

(4)Reviews of Operating performance;

Authorization and approval methods

Authorizing and executing transactions and activities are only performed with the aid of individuals
performing inside the scope of their authority.Authorization is the most important method of making
sure that most effective valid transactions and activities are initiated as meant via management.
Authorization techniques, which must be documented and genuinely communicated to managers and
personnel, must include the unique situations and phrases under which authorizations are to be made.
Conforming to the phrases of an authorization way that employees act in accordance with directives
and inside the boundaries established by means of management or rules.

Verifications

Transactions and sizeable activities are validated before and after processing, e.g. whilst items are
introduced, the number of goods furnished is validated with the quantity of goods ordered.
Afterwards, the quantity of goods invoiced is verified with the number of goods obtained. The stock is
demonstrated as nicely through appearing stock-takes.
Reconciliations

Information are reconciled with an appropriate documents on a normal basis, e.g. the accounting
information relating to financial institution bills are reconciled with the corresponding bank
statements.

Reviews of operating Performance

Operating overall performance is reviewed towards a fixed of requirements on a everyday basis,

assessing effectiveness and performance. if performance critiques decide that actual accomplishments
do now not meet mounted objectives or requirements, the processes and sports mounted to achieve the
objectives ought to be reviewed to determine if enhancements are wanted.

4) Monitoring

Internal manage systems should be monitored to evaluate the quality of the system’s overall
performance over time.Monitoring is completed via habitual activities, separate evaluations or a
combination of each.

(1)Ongoing Monitoring

Ongoing tracking of inner manage is constructed into the regular, ordinary working sports of an
entity. It includes normal control and supervisory activities, and other movements personnel take in
acting their obligations. Ongoing monitoring sports cowl each of the inner control components and
involve action in opposition to abnormal, unethical, uneconomical, inefficient and ineffective internal
manage structures.

(2)Separate Evaluation

The scope and frequency of separate opinions will depend by and large on an assessment of dangers
and the effectiveness of ongoing tracking procedures.Precise separate reviews cowl the assessment of
the effectiveness of the internal manage device and ensure that internal control achieves the desired
effects primarily based on predefined techniques and tactics. Internal manipulate deficiencies ought to
be said to an appropriate stage of control.

Monitoring internal manage is aimed at making sure that controls are operating as meant and that they
are changed appropriately for modifications in conditions. Monitoring should also examine whether,
in pursuit of the entity’s task, the general goals set out inside the definition of internal control are
being done.That is carried out through ongoing monitoring sports, separate reviews or a mixture of
both, as a way to help ensure that inner control continues to be implemented at all ranges and across
the entity, and that inner manipulate achieves the favored consequences. Monitoring the internal
manage activities themselves should be truly prominent from reviewing an organization's operations
that is an internal control interest.

5)Communication (and Information)

Communication exchange is the trade of beneficial statistics among and amongst humans and
companies to aid decisions and coordinate sports.Inside an organisation, information must be
communicated to management and other personnel who want it in a form and within a time body that
allows them to carry out their duties. Communique also takes place with outdoor events inclusive of
clients, providers and regulators.

Standards for communication and statistics

- makes use of applicable information

- communicates internally

- communicates externally

3.0 Discussion on the Recommendations to enhance the Quality of Internal Control in the effort
to improve the Public Accountability

1.Clarifying what Public offerings residents get for their cash

Currently, there is too little independent undertaking and scrutiny of the hyperlink between the
funding allotted to public services, how properly they carry out, and how sustainably they can run.
Obligations for most policy regions are overlapping, with ministers and different political leaders
figuring out what services ought to be furnished. Meanwhile, the treasury decides how a whole lot
cash to allocate, and nearby leaders such as police chiefs and health facility executives decide how a
provider is administered. This arrangement generally consequences in failure to recall how spending
affects performance.To address this, we propose that authorities and parliament should make sure that
obvious, authoritative facts and records underpins the spending evaluate system, which sets
departments’ budgets for the subsequent 3 to five years.

Departments need to post statements at the give up of every spending overview that set out any
modifications to planned spending, and the way those will be brought in practice.Those ought to be
independently scrutinized to check the pleasant of financial and overall performance fashions utilized
by departments to underpin the proposed statements. This thought would make certain that choices are
based greater simply on proof.It'd growth know-how of spending selections which in any other case
may appear arbitrary, and inspire non-stop development inside the information that underpins decision
making.

2.Ensuring that Responsibility throughout Public Services Works in Practice

There are numerous examples of instances while responsibility arrangements have did not protect the
general public. Specific accountability arrangements vary among coverage regions, however
occasionally responsibility isn't built in from the begin or is dismantled through the years.In both
condition, this will motive damage to precise corporations or people. However, ministers do no longer
constantly take duty for making sure that regulations have effective responsibility preparations
constructed into them.This ought to exchange.

We endorse that there ought to be a systematic way to evaluate the effectiveness of responsibility
arrangements.To do that in the location of financial management, the treasury need to in addition
broaden its steering to evaluate the exceptional of accounting officer device statements (the
documents prepared by way of each accounting officer which define all the accountability
preparations in the department and its groups).To do that extra broadly, mainly in relation to policy,
departments should assessment other accountabilities on an ongoing basis. The findings from these
opinions need to be published and signed off through the minister accountable. These changes might
inspire authorities departments and groups to ensure that powerful accountability preparations are
installed area and maintained.This would help to make sure that guidelines paintings as supposed.
3.Parliamentary Scrutiny that Promotes getting to know and development

Parliamentary pick committees are the last shape of scrutiny, checking the work of presidency. But
scrutiny typically comes late and, too frequently, at the factor of political disaster.In doing so, it could
pass over opportunities to pressure development. This is in part because of lack of resources, and the
confined time that MPS have available. It also outcomes in few issues being observed up over the
medium and long time.These inherent weaknesses are compounded with the aid of the temptation for
MPS to engage in political theatre, as opposed to in-intensity scrutiny.

There are two approaches to promote enhancements in scrutiny. Pick committees ought to follow
scrutiny earlier – the use of the new statistics generated with the aid of our proposed feasibility
assessments, gadget statements and reinforced ombudsman services, exact somewhere else in this
document – to get issues onto their agendas earlier than they escalate. Also, whilst failure takes place
no matter early intervention, committees ought to be capable of observe up issues over the long time,
to decrease the threat that similar failure may reoccur. This would contain scrutinizing the
authorities’s efforts to put into effect the guidelines made by public inquiries.To help these efforts, we
additionally recommend that the committees are given greater group of workers sources. Those
upgrades could have several blessings.In advance scrutiny might prevent troubles from growing into
crises which might be solved by punishing those appeared to be accountable. This additionally would
enable committees to act as a discussion board where the ones responsible can study from their errors,
and accurate their route of action.

4.Strengthening Scrutiny of the Hyperlinks between nearby public offerings

Government offers a wide range of services on which the general public rely. Lots of those services
should be added in a joined-up way, on a recurring basis, to benefit the general public. This is tough,
because selections made in a few areas have an effect on others in ways that aren't continually nicely
understood.At the same time as obligation for each service is vested in a particular individual, there
may be no basic responsibility for inspecting the hyperlinks among offerings.This creates
responsibility gaps, which may be detrimental to performance.

Our recommendation is that the government must increase local capacity to tune the hyperlinks
between distinctive nearby public offerings, and to examine how these relationships have an impact
on the respective performance of offerings. to achieve this, it must assessment the case for putting in
neighborhood public money owed committees (percent) – first of all in mixed mayoral authorities – to
function a discussion board to convene the nearby leaders responsible for one of a kind offerings to
speak about provider overall performance and the hyperlinks among services.
We also want potential to track the links between exclusive nearby public offerings, and to take a look
at how these have an impact on carrier overall performance.This will take the form of new
performance assessment units, that may mixture records independently and percentage this statistics
as a part of a community. These adjustments could now not absolve local public carrier leaders in
their obligations, especially where offerings fail. However, they might enhance nearby leaders’ ability
to pre-empt failure by means of permitting earlier discussions approximately how offerings vicinity
pressure on each different.It also would promote getting to know about how carrier leaders can work
collectively better to mitigate those demanding situations, and supply higher offerings to the public.

Summary

Responsibility is an crucial thing of public quarter reform. Expanded accountability can help put an
stop to waste, inefficient use of assets and corruption, and can also enhance transport of
services.Statistics generation (it) and facts systems (is) have had a vast effect on the general public
quarter, and there may be an expectation that they will create more accountability.

The definition of the concept of inner control turned into summarized.The prison framework that
courses the inner manipulate characteristic was outlined in detail.The motives for implementation
(goals) and components of internal manage had been treated in detail. Different aspects on internal
manage had been additionally mentioned. Those included traits, operational means, feasible troubles
and position players in internal manipulate.

Recommend public duty and while it works, it advantages everybody. It enables human beings to
understand how the authorities is doing, and a way to gain redress whilst matters go wrong. It ensures
that ministers and civil servants are appearing within the pursuits of the humans that they serve.
Accountability is part of proper governance, and can boom the trustworthiness and legitimacy of the
nation in the eyes of the public.
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