Although this blog has little confidence in the audit findings by the Auditor General on 1MDB, we shall nevertheless give it the benefit of the doubt.
But only if we know beforehand, what will the AG be auditing on.
For every audit, there should be a pre-determined scope of work and terms of reference before the audit can be executed.
As for the audit on 1MDB which was announced so many times by the Prime Minister, what are the scope of its work and the tasks it being asked to do?
Does any minister sitting in the cabinet know about it? Because, this is very important.
Malaysians want to know if the so called AG Report will be comprehensive enough and wide enough to answer all the questions raised by the people for the past two years.
For instance, can the AG investigate how the PM’s stepson had allegedly bought multi million dollar apartment in New York and financed the production of a multi million Hollywood movie? All these were suspiciously accomplished after 1MDB’s money amounting to USD700 million was remitted to Good Star Ltd in 2009.
With little trust given by Malaysians towards the leadership, and the admission by MACC that they are powerless to probe the mismatch of income and assets on any individuals unless preliminary investigations have been carried out, the importance of this upcoming AG report cannot be underestimated.
With so many bright and intelligent cabinet ministers, some even graduated from prestigious universities around the world, we would assume they are competent enough to know what are the parameters and deliverables of the Auditor General in auditing 1MDB.
The man behind the AG report (Tan Sri Ambrin Buang). Will the scope of work cover everything?
Because God forbid, if the AG Report fall short of unearthing the answers we had asked, then we do not want to hear the cabinet ministers whining and admitting that they got to know the pre-determined scope of work ONLY DURING the presentation of the report. That would be grossly incompetent.
Therefore, what is the scope of work and terms of reference of the AG Report?
The Prime Minister seemed to be hiding behind the mantra “wait for the AG report” as his only mode of defence. But does he know the AG’s scope of work? Or will that too be answered with, “wait for the AG report”?
In a news report last month, the PAC had revealed that the AG’s terms of reference is determined by the Finance Ministry. Thus, can the Finance Minister who happens to be the Advisor of 1MDB governs how the AG should investigate? In Malaysia, where the public (and the politicians) are ignorant, it is sad that issues on this conflict of interest do not arise.
The same news report stated, “if the scope of work is to only determine and verify the figures that are already in the annual reports of 1MDB, the Auditor-General cannot do a better job than what has already been done by the fund’s current auditor – Deloitte. Also, there is no deadline set for the report to be ready.”
Again, what is the exact scope of work? This should be made transparent to the public.
The Cabinet has meetings frequently. Can any ministers tell us if the Auditor General’s scope of work is comprehensive enough? What are they? Should a forensic audit be needed? And if it does, will that take till the year 2017 to complete?
The last thing we want is for the Prime Minister and his entire cabinet destroying the credibility of the Auditor General with incorrect terms of reference and vague scope of work to begin with.
jebatmustdie 
Sdra JMD,
I am with you. Just for your info, i am apolitical. As an ordinary citizen and a registered voter, i want to know the truth nothing but the truth.
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You are totally correct. That the AG audit has been going on for more than a couple of months without any stated terms of reference is crazy. This is a good article on this issue, a bit outdated from 2 months ago, but brings up pertinent points about the kind of terms of reference the AGs work should be based on.
http://www.themalaysianinsider.com/sideviews/article/1mdb-in-financial-distress-a.h.-manaf
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For a methodical approach demonstrating credibility to the public, deadlines and timeframes should be established, as well as clear terms of reference for the audit which should be made publicly available. These are crucial to allay public fears about the efficacy and intent of the public audit. The terms of reference should include but not be confined to the following:
– determine adherence to principles of corporate governance by 1MDB’s board and management;
– assess all evidence to determine any incidences of corporate malfeasance;
– determine the authenticity and validity of a number of 1MDB’s controversial transactions and the extent of potential prejudice the company may have suffered through such transactions.
This includes: the joint venture with Petrosaudi; portfolio investment in offshore Caymans funds;
the bond issue via Goldman Sachs; the option agreement with Aabar and compensation thereof relating to the proposed IPO;
the joint venture with Aabar undertaken by 1MDBs former subsidiary SRC involving RM4 billion KWAP funds, including investigating the reasons for and circumstances surrounding the transfer of the company’s ownership to the MOF;
and, quantify the magnitude and timing of 1MDBs current obligations and likely restructuring and financing cost.
All of the above will necessitate extensive work to i. trace the flow of funds and other assets ii. construct a detailed chronology in order to understand and trace complex sequence of events of the company’s various transactions iii. identify relevant persons to interview, and conduct and document the interviews without fear or favour.
The interviewees should include current and previous management, current and previous members of the board of directors and advisory board, current and previous external auditors, any other persons including external advisors and associates who may be directly involved in the company’s transactions under investigation and any other persons who may be directly implicated by corporate malfeasance and fraudulent activities.
In view of the international nature of the company’s transactions and flow of funds and assets, the AG needs to assess the possibility of early referrals to criminal authorities to facilitate cross-borders investigations.
Assistance from and cooperation with PDRM, its overseas counterparts, Bank Negara and other relevant authorities will be essential.
In other words Tan Sri Ambrin Buang, good luck! The nation is depending on you to conduct this complex and critical undertaking with courage, integrity and professionalism. – March 17, 2015.
* A.H. Manaf reads The Malaysian Insider.
– See more at: http://www.themalaysianinsider.com/sideviews/article/1mdb-in-financial-distress-a.h.-manaf#sthash.uZL8kQVC.dpuf
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Good questions. Report cannot be objective if AG reports effectively to PM who is both customer, actor, perpetuator of acts ultravires the constitution and terms of his office as well as fraud and misrepresentation. The only just way to resolve this is to resign or be dismissed from office. Even then, PM also has been in office a good six years and this makes the tangled web of fraud and misrepresentation difficult to audit.
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Is there a standard procedure where the suspect in an investigation should be suspended from duties?
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In normal company practice, a staff would be suspended pending a domestic inquiry. If there is ground for suspicion for criminal breach of trust, a police report will be made. Suspension is made so that the staff may not exert any influence during fact gathering and also limit his/her ability to alter/change/destroy evidence. All this depends on the HR’s policy.
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Thanks JMD
There is a press statement by the Minister of FInance II that “1MDB has entered into a binding agreement with the International Petroleum Investment Company (“IPIC”) and its subsidiary Aabar Investments (“Aabar”). As part of this agreement, IPIC will make a payment of USD 1 billion, on or before 4 June 2015.”
This decision need not wait for AG report?
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One word: Enron. If they could get away with annual audits by one of the Big Four for several years, then what is IMDB. Someone elsewhere said Enron is not the same as IMDB because blablabla but the fact remains: if certain people want things to remain under the carpet, a simple audit is not going to change that. They are not stupid, after all.
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