The Royal Audit Authority (RAA) conducted the Forum on ‘Internal Controls and Irregularities: From the perspective of Executives’ on 19th May, 2025. Around 45 government executives have attended the forum. One of the causes for the never-ending irregularity is the lack of proper understanding of internal controls in the agencies.
In his address, the Auditor General noted that audit irregularities have shown a declining trend over the years, an encouraging indication of the government’s increasing commitment to sound financial management and accountability. He further highlighted the growing number of nil observation reports (audit reports without any findings), which reflects the concerted efforts of government agencies and executives in addressing and curbing audit irregularities.
The Auditor General pointed out that the majority of remaining irregularities are linked to the construction sector, primarily due to excess payments, closed works, additional works and defective construction.
The core message of the forum was the urgent need to strengthen internal controls. Executives were encouraged to put in place robust policies and procedures, adopt effective risk management practices and improve communication and information sharing within and across agencies. Emphasis was placed on meticulous record-keeping and strict adherence to due diligence requirements. In situations where deviation from established protocols is unavoidable, the Auditor General advised that such actions must be properly documented and well justified to ensure accountability.
As part of the forum, the Auditor General also introduced the Fraud Triangle, a recognised model developed by criminologist Donald Cressey. The model identifies three key factors that lead individuals to commit fraud:
Pressure: Motivations such as financial hardship, addiction or unrealistic performance expectations.
Opportunity: Situations where weak internal controls or access to assets provide a chance to commit fraud.
Rationalisation: Justifications used by individuals to excuse their actions, such as “I’ll repay it later” or “I deserve this.”
“When opportunities are reduced, even those under pressure are less likely to commit fraud,” the Auditor General remarked. “However, when opportunities are abundant, even minimal pressure can lead individuals to act unethically.” He called on executives to work towards creating an environment where opportunities for fraud are minimised through stronger systems and oversight.
The RAA reiterated its openness to dialogue and urged executives to share concerns or unresolved audit issues. Executives were encouraged to contact the RAA in instances where accountability may be misdirected, when strong justification exists or where corrective action is not feasible.
He concluded his presentation by calling on all executives to strive towards achieving zero audit observations by the end of the 13th Five Year Plan, reaffirming that collective effort and leadership commitment are key to enhancing good governance. The session concluded with a question-and-answer session, where many executives acknowledged the positive role of audits in improving internal controls and streamlining procedures. Similar session is schedule for the second batch of executives on 26th May 2025.