State audits flag governance weaknesses despite clean financial opinions

KUALA LUMPUR, Oct 5 — Six states received an Unmodified Opinion, while another six received an Unmodified Opinion with an “Other Matters” paragraph; one state received an Unmodified Opinion with both an “Emphasis of Matter” paragraph and an “Other Matters” paragraph.

The National Audit Department (JAN), in a statement regarding the Auditor General’s Report (LKAN) 2/2026 today, announced that these findings follow the completion of audits on all 13 State Government Financial Statements for the year ending Dec 31, 2025.

JAN also issued Auditor General’s Certificates for 298 State Agencies for the 2024 financial year and reported the results of performance audits conducted on 22 State Government programmes and activities.

Additionally, the audit of State Government-owned companies reported the results of detailed audits carried out separately on 12 such companies across 11 states: Sabah, Sarawak, Selangor, Johor, Kedah, Pahang, Kelantan, Terengganu, Perak, Melaka and Negeri Sembilan.

According to JAN, significant issues were identified, revealing weaknesses in corporate governance compliance that require the attention of management and the State Governments.

LKAN 2/2026, covering the Federal Government Financial Statements for 2025, activities of Federal Government Ministries/Departments, State Government and State Agency Financial Statements, activities of State Ministries/Departments/Agencies, and the management of State Government-owned companies, was tabled in the Dewan Rakyat today.

Meanwhile, as of September 28, 2026, a total of 12,117 or 94.4 per cent of the 12,835 issues followed up by JAN have been successfully resolved.

JAN said follow-up actions regarding audit issues have contributed to revenue collection and repayments to the government totalling RM920.91 million; this includes funds recovered through penalties, outstanding rent, Liquidated Ascertained Damages (LAD), land lease arrears, as well as the collection of duties and taxes.

According to JAN, all issues raised in LKAN are continuously monitored via the Auditor General’s Dashboard (AGD) online portal until the responsible parties implement resolution measures.

The department noted that the Auditor General has submitted 38 audit recommendations through LKAN 2/2026 for implementation by the audited Federal Ministries and Departments; these recommendations can be accessed on the AGD portal at Auditor General’s Dashboard.

LKAN 2/2026 reports a total of 650 issues within the AGD system, comprising 347 issues still under follow-up, 23 resolved issues and 280 issues requiring no further action (NFA).

“The Auditor General remains independent and firm in providing audit opinions and reporting findings without compromise.

“The LKAN does not merely record shortcomings; it serves as an instrument to drive corrective action, strengthen governance and ensure accountability for every ringgit of public funds in the interest of the people,” the statement read. — Bernama

* Editor’s note: JAN is the abbreviation for Jabatan Audit Negara (National Audit Department), while LKAN stands for Laporan Ketua Audit Negara (Auditor General’s Report).