1. AUDIT ON FOREST MANAGEMENT – MALAYSIAN EXPERIENCE
STATE AUDIT SECTOR
OFFICE OF THE AUDITOR GENERAL OF MALAYSIA

2. National Audit Department of Malaysia
CONTENTS
Audit Mandate
Previous Auditor General Report
Audit Planning Memorandum On Logging Management 2

3. National Audit Department of Malaysia
AUDIT MANDATE
Under Article 106 and 107 Federal Constitution and Section 6(d) Audit Act 1957, the Auditor General shall perform such other duties and exercise such powers in relation to the certifying accounts and compliance audit and shall in his audit make such examination as he may deem necessary to ascertain whether programme, activities and projects were carried out or managed in an efficient manner with due regard for economy and the avoidance of waste or extravagance. 3

4. National Audit Department of Malaysia PREVIOUS AUDITOR GENERAL REPORTNo
Year
State
Topic 1
2001
Perak
Audit On Logging Concession 2
2002
Kedah
Audit On Forest Plantation 3
2003
Pahang
Audit On Logging Management 4
Selangor 5
2004
Johor 6
Sabah
Audit On Issuance Of Timber License 7
2006
N. Sembilan 8
Kelantan 5

5. National Audit Department of Malaysia
AUDIT ISSUES
1. Audit On Logging Concession
- No tender
- Illegal logging
- Loss of revenue
- Lack of enforcement
- Delay in processing license
- Delay in issuing license
- No record of applicants

6. National Audit Department of Malaysia
AUDIT ISSUES
2. Audit On Forest Plantation
- Lack of manpower
- No soil investigation
- No EIA report
- Lack of enforcement
- Lack of coordination

7. National Audit Department of Malaysia
AUDIT ISSUES
3. Audit On Logging Management
- Delay In Process Of Gazetting Proposed PRF
- Logging activities carried out before EIA
- Lack Of Enforcement
- Lack Of Machinery
- Delay in taking court actions
- Delay in write-off confiscated timber
- Logging activities near water catchment area
- Lack of coordination between department
- Illegal logging

8. National Audit Department of Malaysia
AUDIT ISSUES
4. Audit On Issuance Of License
- Without Tender
- Lack Of Enforcement
- Incomplete Manual Operation Procedures
- Royalty, premium and cess not collected
- Wrong calculation on royalty
- No royalty marking

9. AUDIT PLANNING MEMORANDUM ON LOGGING MANAGEMENT –
National Audit Department of Malaysia
AUDIT PLANNING MEMORANDUM
ON LOGGING MANAGEMENT –
Concession, Operation
and Rehabilitation

10. National Audit Department of Malaysia AUDIT PLANNING MEMORANDUM
Background
Audit Objectives
Audit Scope and Methodology
Audit Criteria
Planning
Implementation
Monitoring
Work Schedule
Audit Team
Cost Estimation
Audit Programme

11. National Audit Department of Malaysia
Background
Role & Function of Forestry Department in Malaysia
Policy/Procedures & Legislations
Brief Information Relating To:
Forest Resources
Forest Management
Forest Development
Forest Conservation and Environment Protection
Forest Harvesting
Forest Industries
Forestry Education and Training
Forest Revenue

12. National Audit Department of Malaysia
Audit Objectives
To asses whether the logging management activities are carried out economically and efficiently in achieving their objectives.
To ensure the environment is conserved and protected.

13. National Audit Department of Malaysia
3. Audit Scope and Methodology
Scope
The study will be on concession, operation and rehabilitation by State Forest Department. The audit to be carried out for 3 years period (2006 to 2008).
Methodology
Conventional approach and GPS/GIS technology. The study will be carried out by analyzing the document and data at relevant department/agencies
Site visit and interview.
Appropriate method of data collection and data analysis/audit questionnaire will be conducted.
Study of Environment Impact Assessment (EIA) report.

14. National Audit Department of Malaysia
4. Audit Criteria
4.1 Planning
Government Policy
Legal Provisions Relating to Forest Matters
Types of Forest Revenue
Concession & Licensing
Concession Handover
Forest Plantations
Implementation Methods
Maintenance of Asset & Records
Machinery & Equipments
Financial Allocation
Enforcement
Human Resource & Training
Monitoring Mechanism

15. National Audit Department of Malaysia
.... Audit Criteria (Cont)
4.2 Implementation
Government Policy
Legal Provisions Relating to Forest Matters
Types of Forest Revenue
Concession & Licensing
Concession Handover
Forest Plantations
Implementation Methods
Maintenance of Asset & Records
Machinery & Equipments
Financial Performance
Enforcement
Human Resource & Training
Monitoring Mechanism

16. National Audit Department of Malaysia
4.3 Impact
Environmental
Water pollution – river, flood, erosion, water body
ii. Climate change
iii. Extinction of Flora and Fauna
Revenue
Social
Economic
4.4 Monitoring
Monitoring Mechanism
- GIS
- Airborne Hyper Spectral Sensing
Monitoring Schedule

17. National Audit Department of Malaysia
5. WORK SCHEDULE
No.
Stages
Year 2008
May
June
July
August
September
October 1
Overview On The Background 2
Prepare Audit Planning Memorandum/ Entrance Conference With Auditee 3
Carry Out Audit/Detailed Audit 4
Discussion With Auditee/Management 5
Exit Conference/ Management Letter Issued 6
Drafting Audit Report 30

18. National Audit Department of Malaysia
6. AUDIT TEAM
i. State Audit Director
ii. State Audit Deputy Director
iii. Auditor
iv. Assistant Auditor
7. AUDIT COST
8. AUDIT PROGRAMME 31

19. National Audit Department of Malaysia
THANK YOU 32