The Internal Audit Unit (UAD) is an independent function that provides assurance and consulting services objectively to add value and enhance the operational level of the organization.

Since the establishment of KEJORA, internal audit functions have been conducted by auditors individually without the formal establishment of an Internal Audit Unit. According to General Circular Letter No. 3 of 1998, every Ministry and Agency is recommended to establish an Internal Audit Unit. In line with this directive, KEJORA’s UAD was officially established in 2001.

Throughout its establishment, various developments and significant roles of UAD have emerged. Consequently, the Ministry of Finance issued Treasury Circular No. 9 of 2004, which took effect on 12 October 12. This circular aims to clarify the roles and responsibilities of the Internal Audit Unit.

This Treasury Circular is also aligned with the  Regional Development Authority Financial and Accounting Directive (AKP LKW) 2022 (Chapter 11 – Internal Audit), issued by the Ministry of Rural and Regional Development (KKDW). This directive took effect on 1 May 2022.

Most recently, General Circular Letter No. 5 of 2024, which came into effect on 30 April 2024, has further strengthened the role of the Internal Audit Unit.

The Internal Audit Unit shall be functionally accountable to the Audit Committee and administratively to the General Manager to ensure the effectiveness of the Internal Audit Unit.

The scope of UAD covers the review and evaluation of the activities and operations of interested organizations and subsidiaries. The tasks of UAD are as follows:

1. Assess the reliability and effectiveness of the organization’s financial system and internal controls;
2. Assess the level of compliance with all policies, laws, regulations and directives in force;
3. Review the activities of the organization to ensure that they are managed prudently, efficiently and effectively;
4. Review the assets and interests of the organization are protected in terms of loss, fraud and misappropriation;
5. Provide advice/ views on internal controls on all systems including information technology systems;
6. Review the risk assessment process in the organization if management has been established.

UAD is responsible for conducting financial management audits and performance audits. A financial management audit includes an examination of the financial system, internal controls and financial records to determine whether expenditure, revenue, assets and stores have been managed in accordance with relevant laws, regulations and directives. While performance auditing includes an evaluation of the activities of an organization to determine its goals have been achieved and resources are used prudently, efficiently and effectively. The UAD audit covers all Divisions / Units in KEJORA.

1. Prepare the Annual Plan of UAD
2. Perform the Auditing Process
3. Managing the KEJORA Audit Committee Meetings
4. Prepare the Annual Report

The Regional Development Authority Financial and Accounting Directive (AKP LKW) 2022, paragraph 11.8, outlines the authority granted to the Internal Audit Unit (UAD) as follows:

1. Authorized to enquire anyone to provide any explanation or information required during the course of audits and investigations;
2. Authorized to search for and/or obtain books/documents/records or extracts from books/documents/records at the auditee’s office;
3. Authorized to review all records, books, files, minutes, accounting documents, cash, stamps, securities, inventory, or other assets subject to audit;
4. Authorized to consult with Board officers, public officers, or subsidiary officers regarding matters under audit; and
5. Authorized to conduct audits either with prior notice or through surprise inspections from time to time.

The establishment of the Audit Committee according to the Regional Development Authority Financial and Accounting Directive (AKP LKW) 2022 is as follows:

1. The Audit Committee shall be established through a resolution of the Board of Directors outlining its terms of reference.
2. The Audit Committee shall consist of three (3) to five (5) members who are non-executive members of the Board of Directors, including its Chairman. The Chairman of the Audit Committee may be appointed by its members or by the Board of Directors.
3. The quorum for meetings is as follows:
   i. At least two (2) members for a committee with three (3) or four (4) members; and
   ii.At least three (3) members for a committee with five (5) members.
4. The Audit Committee shall meet at least four (4) times per year

The main functions of the Audit Committee are:

1. Review the requirements of the UAD including its charter.
2. Assess the effectiveness and capability of the internal control system
3. Review the planning of audit activities by the Internal Auditors which covers the scope of work, schedule, membership and coordination between the Auditors and the Internal Auditors of the Ministry.
4. Review the reports from the Internal Auditors and the Auditors as well as certify the necessary follow-up actions to the Board.
5. Review and advise the Board in relation to the Financial Statements, prospectuses and other financial reports issued.
6. Review and advise the Board in relation to quantitative performance information on activities subject to audit and other matters involving responsibilities as determined by the Board.
7. Track compliance with rules set by the Board.
8. To ensure that the Board constantly updates the implementation of work in line with professional changes that occur in the field of accounting as declared by the Malaysian Accounting Standards Board (MASB).
9. Perform functions set by the Board from time to time.
10. Report to management on officers found to be committing misappropriation for suitable action to be taken.