Accountability Index Monitoring System (AIMS)
Internal Audit Division

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
The Internal Audit Division (IAD), Ministry of Defence is responsible to undertake auditing of the Ministry’s financial operations in achieving Zero Financial Mismanagement. It is the duty of the Internal Auditors to advise the Secretary General of the Ministry on the status of the financial performance through effective internal control. Therefore, the IAD plays an important role to ensure money allocated to Ministry of Defence is spent efficiently and effectively according to financial regulations for only approved programs and activities planned for the fiscal year. Therefore, effective and timely annual auditing is a prerequisite for reducing financial mismanagement. However this responsibility could not be achieved every year on Responsibility Centres (RCs) and Cost Centres (CCs) because the Ministry has too many RCs and CCs. This has resulted in huge audit backlogs and consequently contributed to financial management shortcomings and non-compliance among officers in RCs and CCs which could lead to malpractice. The inefficiency of internal audit is attributed by the following challenges: 1. High Number of RCs and CCs. There are 568 RCs and CCs scattered throughout the country, which are responsible in controlling and spending the allocations given by the Ministry. Those RCs and CCs need to be audited annually by the IAD to ensure the allocation spent is in accordance with current financial rules and regulations. 2. Limited number of Auditors. The IAD has only 60 Auditors and this would make it impossible to audit all RCs and CCs in a given year. Apart from financial management audit of RCs and CCs, the IAD is also responsible for Performance Audits/Value for Money Audits, Follow-up Audits, Special Audits and Investigations. 3. Financial constraint. In-person audits or manual audit practice requires an Audit Team consisting of 4 to 5 Auditors to be onsite when inspecting documents. This has incurred high costs for travelling and accommodation. With the limited allocation given to the IAD, it is impossible for auditors to cover all RCs and CCs to complete the audit in a year. 4. Time Limitation. Based on good financial management practices, all institutions need to be audited annually based on the audit cycle. In this regard, the IAD has been tasked to audit all 568 RCs and CCs every year to comply with best audit practices. 5. Commitment. Low commitment among the heads of RCs and CCs oversee the financial operations of the respective Centres due to lack of knowledge and awareness in financial procedures. This was evident as limited action was taken by them to improve the financial performance as many common audit issues/findings were repeatedly highlighted every year. With these challenges, to complete a full audit cycle on all RCs and CCs would take six years. In short, there is a lack of effective internal control to promote transparency, integrity and accountability among RCs and CCs if full audit process was not completed in due time. Hence, it is difficult to achieve zero financial mismanagement objectives as determined by the Ministry of Defence.

B. Strategic Approach

 2. What was the solution?
The management of the IAD has taken an initiative in solving the problem. The IAD has taken an approach in solving this problem by forming a team known as the Innovative and Creative Circle (ICC) in early 2008. The ICC project was approved by the Ministry’s top management and headed by the Internal Audit Division (IAD). It was tasked to work on the following terms of references: 1. To identify the main problem of the audit backlog. 2. To reprioritize audit works and improve work procedures. 3. To use and maximize available resources in the IAD. 4. To work within available resources. The ICC’s proposal was to develop a computer base audit system known as the Accountability Index Monitoring System (AIMS). The AIMS is a transformation version of the present manual system into an online self-assessment auditing approach. The AIMS consists of full set of audit questions and assessments on Administration Management, Budgeting, Receipt and Revenue, Expenditure, Deposit/Trust Fund/Trust Account, and Asset/Inventory Management. Under the new approach, auditees will be responsible to answer all audit questions and these will have to be endorsed by the heads of the respective RCs and submitted online. This concept is similar to the customs self-declaration on exports and imports, e-Procurement and Inland Revenue self-assessment practices. By using the AIMS, auditing work has become more transparent and enhances the responsibility, integrity and accountability in financial management among the auditees as well as to the Ministry of Defence as a whole. In short, the AIMS was developed as a response toward increasing demand for better governance in financial management in view of limited resources (financial and human resource) in undertaking internal audits of high number of RCs and CCs to be audited. With the implementation of the AIMS, audits can be completed in a year as what we have targeted for our main objectives. Upon successful development of the AIMS in 2008 and the implementation of the pilot project in January 2009, this system was officially launched in May 2009 by the Secretary General of the Ministry of Defence. It was successfully implemented to 106 RCs and will be extended to another 100 CCs in 2014. The successful implementation of the AIMS was contributed by the following strategies: Managements Support. The AIMS success was due to the strong commitment and support from the top management of the Ministry of Defence. The involvement of the Secretary General, the Chief of Defence Forces, the Service Chiefs (Army, Navy and Air Force) were important during the development and implementation of this system. ‘Buy-in strategy’. The ‘buy-in strategy’ was used to engage all auditee at RCs and CCs to ensure the ownership of AIMS. The involvement of auditees by inviting their ideas and opinions about the AIMS right from planning and development stages has made the whole development process inclusive. Road shows and talks were conducted to convince auditees that the AIMS will not give them additional work but it is a shared commitment for mutual benefit. Recognition. Recognition is important for the success of the AIMS. RCs that receive 95% marks or more will be given a 4 STAR rating, representing the highest Accountability Index grading. The successful 4 star achievers will be awarded with certificates of achievement and an increase in their spending threshold of up to RM200,000. Low Cost High Impact. The AIMS was developed by using existing resources like manpower and ICT infrastructure. With the implementation of the AIMS, no additional manpower and allocations were required. All software used was either from open sources or existing software which also makes maintenance easier.

 3. How did the initiative solve the problem and improve people’s lives?
The idea of this innovation is to solve problems faced during the audit process that cannot be audited to all RCs, timely and efficiently. AIMS brings a new concept/approach in auditing, using online self-auditing (or self-assessment approach) by transforming audit process from manual to online that is to complement in-person audit practices. The uniqueness of AIMS is being an on-line self-auditing that was develops through following process. At the initial stage of the program, sets of audit questionnaires were printed and distributed to all RCs to reply. All the responses were compiled, reviewed and graded manually. Subsequently, RCs which has got low marks plus a few more which were selected based on previous records will be audited manually. With the progress of time, the ministry realized that the process of sending questionnaires can be further improved as government agencies were gradually equipped with ICT. Thus a new idea came across and IAD decided to develop and implement this new transformation of performing audit from manual to online. IAD developed the system from scratch using internal resources and expertise. No cost was incurred during development. IAD only use existing desktop, server, networkand was designed to be a user friendly system, manageable and upgradable according to user needs.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The development of AIMS involved three stages namely planning stage, development stage and implementation stage. 1. Planning Stage. At the planning stage, Innovative and Creative Circle (ICC) was formed at IAD that consists of 11 members of internal auditors to review the internal audit processes. Through brainstorming session, the team had identified 10 common problems that hindered the effectiveness and efficiency of the IAD. Using Force Ranking Approach (refer Table 1), the identified problems was ranked into ‘Very Serious’ and ‘Less serious’ problem, in which only 5 problems was regarded as ‘very serious’ namely the need to enhance audit procedure, expediting auditing processes and collecting audit feedback, reducing audit costs and improving audit efficiency. Further analysis using SMART technique (refer Table 2), only three problems were identified that needed immediate attention, namely enhancing the audit procedure, expediting auditing processes and improving audit efficiency. Using Matrix Analysis (refer Table 3), the problems identified has been further analysed against cost, time, objective and credibility, in which enhancing the audit procedure scored the highest marks, indicating the need for immediate attention by IAD. The team believed that enhancing the audit procedure could give positive impact in achieving the vision and mission of the Ministry, especially in achieving zero financial mismanagement. 2. Development Stage. Development stage involved the development of online self-assessment auditing to enhance the audit procedures and practices. The proposed solution should be able to address the problems namely limited time, manual audit practices, workload and shortage of staff, budget issues and location of RCs. The first step in designing the AIMS was to understand the whole work processes and how it can be automated. With the assistance from ICT Division, IT officers were seconded at the IAD to develop AIMS. The development stage took one year to be completed (refer Table 4) which involve identifying requirements, design, testing, improvement, evaluation, trial run and monitoring. 3. Implementation Stage. Implementation stage involves pilot project and road shows of AIMS. After completion and approval received from the management, AIMS was then tested at 12 RCs in January 2009. The purpose was to gather feedback from auditees on the shortcoming of the new system and to find further improvement to the system. The feedback was collected and brought to the attention of top management, especially on the internet connectivity, PCs requirement and audit questionnaires used in AIMS. Subsequently several sub-committee was formed to work on the feedback/proposal received from auditees. In May 2009, AIMS was officially implemented at all RCs following letter of instruction issued by Secretary General. AIMS successfully run every year performing financial management audit. 4. Future Plan: A Way Forward. AIMS was recognized by Public Service Department (PSD) and Auditor General Malaysia as new approach in auditing which set a new benchmark in audit system. Using all the feedbacks from users and interested organizations, AIMS will continue to be upgraded in line with present technology and regulations. Ministry of Defence believed that the system is applicable to most government agencies and private sector which deals in financial management. AIMS will constantly be promoted as an innovation to be shared for the best interest of a financial organization.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
In the implementation of the AIMS the stakeholders are as follows: Primary Stakeholders 1. The Secretary General of the Ministry of Defence, who is the process owner. 2. The Internal Audit and the ICT Division, who designed and implement the system. 3. The Programme Managers, heads of RCs and CCs who are given the powers by the Controlling Officer to carry out expenditures of the Ministry. They use the AIMS to revise their work and to comply with existing financial regulations. Management Stakeholders 1. The Chief of the Defence Forces, the Chiefs of Services (Army, Navy and Air Force). They monitor the respective RCs to ensure that the RCs carry out their audits using the AIMS within the stipulated period. They can see the responses from the RCs as well as the scores obtained. External Stakeholders. 2. The Auditor General and the Ministry of Finance (Treasury). These are the two external agencies which have contributed to the development of the AIMS. The IAD practises the Internal Audit Guidelines issued by the Auditor General’s Office. The financial regulations issued by the Treasury is used as a reference for each of the questions in the AIMS. Both these agencies receive the final AIMS report which is included in the annual IAD report.
 6. How was the strategy implemented and what resources were mobilized?
The resources used in developing and implementing AIMS can be summarized in term of Manpower, Machine, Material and Money. 1. Manpower refers to officers and staff in developing and implementing the system. The development of AIMS used in-house expertise, existing ICT facilities and staff. This project proves that smart partnership between IAD and ICT Division can share experience and expertise to develop an effective innovation. Furthermore, the success of AIMS could not be achieved without the commitment by top management. Participation of the top management at every stage consistently had facilitated the completion of the project. 2. Machine refers to equipment needed to develop and implement the system. AIMS uses server and desktop from respective offices and existing network within the organization. AIMS requires a minimum software application to run the system. AIMS used open source software such as PHP, MySQL and Extended JavaScript, as it is freely available and no third party license involved. As it was internally developed, there was no issue of source code and hence it is upgradable as and when required according to the user requirement as well as changes in financial procedures. 3. Material refers to the information needed to develop and implement the system. Questionnaires and vital information was derived from the Internal Auditing Guideline, Treasury Instruction, and Treasury Circulars. This information need to be reviewed and adopted in the AIMS, at any time the rule and regulation can be amended when changes occurred. 4. Money refers to the cost involved in developing the system. Even though AIMS as a new project, there was no special fund was allocated. AIMS was developed using internally available resources. Cost was only incurred during the initial stage of implementation which involved roadshow, promotion and training.These activities were provided with the knowledge how on the implementation of AIMS to the auditee.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
RC Being 100% Audited Simultaneously. AIMS have changed the conventional method of manual auditing to on-line auditing system. The numbers of auditees who are involved in financial practices and management that require to be audited at least once a year are 106 RCs and 436 CCs. Due to the limitation of manpower not all RC were able to be audited annually. With the implementation of AIMS in 2009, all RC were audited online annually. Subsequently, some RCs were selected for manual audit and within 3 years all will be manually audited. In the future, AIMS will be expanded to 436CC and Defence Attaché Offices around the world. Immediate Result Online.Through AIMS audit report can be generated immediately, accurately and timely. The reports are complete with star rating which enables the management to visualize the auditees' performance and their respective level of achievement. The system ensures that the report produce in a standard format, comprehensive and able to be used for continuous monitoring by auditors and management. Alert Financial Regulation. AIMS were designed with a list of questionnaires, rule and regulations. This information will not only help the auditee to conduct self-auditing but also to be used as a reference for daily task in financial management. The design of AIMS is in line with the call of the government towards improving the quality of the delivery system through the provision of circulars and regulations, as well as financial regulation either from the treasury or MinDef and either related government department. Therefore, AIMS will be able to increase the auditees knowledge with latest rules and regulations imposed on them. Low Cost High Impact. AIMS has reduced tremendously the movement of auditors to the various locations of RCs and CCs for inperson audit. However the on-line auditing provides the same audit result as per manual audit which are graded with star rating system. Audit Responsibility Is Shared By Auditee. In normal circumstances the audit work to be carried out by independent third party. However AIMS has changed the conventional method of manual auditing with partially transfer to the auditee responsibilities. AIMS had changed the auditee perception on auditors and self auditing since they are able to identify their strengths and weaknesses from the self-auditing. Auditees will then be able to improved and correct any mistake found during self-auditing. As a result, AIMS has improved auditee awareness, accountability and integrity in financial management.

 8. What were the most successful outputs and why was the initiative effective?
AIMS success was due to the strong commitment and support from the top management within Ministry of Defence. This support was initiated during the development and implementation of AIMS. Subsequently IAD constantly monitors the implementation of AIMS with the appointment of following working committees. a. Main Working Committee. The role of this committee is to provide policy, guidelines and directions to the implementation of AIMS. The committee is also responsible in endorsing the final results of AIMS. b. Technical Working Committee. The role of this committee is to develop, maintain and upgrade the functionality of the system. The committee is also responsible on information security and hardware at its optimum level. c. Questionnaire Panel Committee. The role of this committee is to compare, review and updating the questionnaire in line with current rules, regulations and International Audit Standards. d. Report Committee. The role of the committee is to analyze the result of AIMS and subsequently report the grading to the Main Working Committee for verification and approval. Apart from the committee set up to monitor the progress of AIMS, IAD also establish helpdesk team. The helpdesk is the direct link to the auditee who will assist them throughout on-line auditing period. Any issues raised will be dealt immediately and forwarded to the respective committee for prompt action. At the end of the AIMS’s session, auditees are required to provide the feedback on customer satisfaction survey. This survey is to evaluate the effectiveness and any comments, remarks and suggestion provided by the auditees will be used to improve the system. The performance of the RCs on AIMS will be used as one of the criteria for the selection of the best RC of the year. The selection committee is headed by Secretary General. The successful RCs will be awarded with certificate of achievement and increase in spending threshold up to RM200,000. This monitoring and evaluation mechanism has been documented in MS ISO 9001:2008 for the Ministry of Defence under the Procedures of Auditing Financial Management Online (AIMS) PK (O).KPM.BAD .01.

 9. What were the main obstacles encountered and how were they overcome?
1. Planning Stage. The main obstacle faced at this stage was low commitment among ICC team due to work priority that requires them to focus on their audit work. To overcome these problems, motivators and trainers were also invited to guide and inspire the team to complete the project. Management was advised to participate in the discussion to motivate the team. 2. Development Stage. The main obstacle was lack of ICT knowledge. IAD personnel do not have the skill and qualification in computer programming. To overcome this problem, fulltime/dedicated ICT officer from ICT Division of Ministry of Defence was seconded to IAD to lead, develop and test the system. Besides that, existing computer server does not support AIMS requirement. This was later solved by using high end PC and later sharing of server with other system in Ministry of Defence. Another obstacle was different level of understanding among auditees on their interpretation and understands the questionnaires resulting to wrong answer given. To overcome this problem, sub-committee was formed to review the questionnaires and helpdesk was created. 3. Implementation Stage. The main obstacle during implementation stage is the resistance to change and the feeling of complacency among some of auditees. AIMS as a new initiative in auditing, requires auditees support and commitment. To overcome this problem, training, road show and promotion was conducted involving auditees at RCs. During the pilot project, there was a problem regarding the request for new PC and internet coverage/connectivity for certain area of RCs. Digital divide issues among auditees was also a problem as not all auditees are ICT literate. Level of understanding among auditees and auditors are also different resulted in wrong interpretation of audit questionnaires used in AIMS. All these problems were overcome by providing training and road show.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
“Auditing definition by James A. Arens and James K. Loebbecke is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent independent person”. AIMS has changed the concept of auditing by third party to self auditing. AIMS has transformed the existing manual financial management audit practice to online self-assessment auditing approach. AIMS has a built-in mechanism to instil and develop the element trust. In other words, Auditors has transfer part the auditor’s responsibility to the auditee by doing self auditing. Auditee must now answer all the audit questions faithfully and truthfully. Disciplinary or legal action can be taken for false declaration. Therefore AIMS helps to develop and promote responsibility, transparency, integrity and accountability among the AIMS’s user. AIMS has changed the auditees’ perception on auditors and auditing since they are able to identify their strength and weaknesses from the self auditing. AIMS was designed to be user friendly, incorporated with updated rules and regulations. The purpose of AIMS is in line with the call of the government towards improving the quality of the delivery system through the provision of circulars and regulations, as well as financial regulations either from the Ministry of Finance (Treasury) or Ministry of Defence (MinDef) and other related government department. More importantly, AIMS helps to develop the awareness, responsibility, accountability and integrity of individuals that deals with financial management. After five years implementing of AIMS, the process of auditing has shown progressive improvement in managing the audit role. The audit process can be conducted concurrently, effectively and efficiently to all RCs. AIMS has removed the issues of backlog and the completion of financial audit cycle without the dependency on human resource. Thus, distribution of audit work can be prioritized to selected Financial Management Audits, Performance Audits, Investigations, Follow-Up Audits and ICT Audits. AIMS implementation which began in 2009 has shown an improvement in the quality, integrity, accountability and awareness to compliance with financial regulations. 4 Star is the highest score in the merit system of financial management. The performance measurement among RC has increased over the period 2009 to 2012. Achievers of 4 Star has increased from 9.2% in 2009 to 55.2% in 2010, further increased to 88.3% in 2011 and 2012 to 100%. The improvements in RCs’ performance have enabled MinDef in 2010 to jump to seventh place in the Star Rating System (SSR) competition between the ministries in Malaysia. In 2012, MinDef had achieved 5 Star rating and improved its previous position from seventh to second. The SSR competition was graded by the Malaysian Administrative Modernization and Management Planning Unit (MAMPU) The Auditor General’s Report also showed an improvement in MinDef’s financial management, in line with the performance of RC. Prior to the implementation of AIMS, MinDef only achieved 2 Star rating in 2007. Subsequently, the statistic shows a gradual improvement from 3 Star rating in 2008/2009 to 4 Star rating from 2010 to 2012. AIMS was credited with several awards won at numerous competition locally and abroad. Initially, AIMS won Quality Improvement Teamwork Competition at ministry and state level. Subsequently it participated at Financial Management Innovation Award at national completion and managed to third position. Internationally AIMS has won CAPAM’s International Innovation Awards 2012 under category of Innovations In Public Service Management. For details, please visit our website at

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The success of the AIMS was not the effort of IAD alone. Collaborations with internal and external organizations of MinDef help in development of AIMS. At the beginning, expertise on ICT came from ICT Division. Subsequently, references to Auditor General Office for Internal Audit Guideline and Treasury for financial regulations were sought during developing and designing the questionnaires. During the testing period, the selected RCs had provided useful feedbacks and suggestions. Continuous partnership within and external organizations helps in sustainability and the reliability of AIMS. MinDef has realized that AIMS can help any organizations as part of internal control in financial management. AIMS was build using existing resources and ICT infrastructure which readily available in all government agencies. Furthermore, Internal Audit Guideline and Treasury financial regulations are the legal documents which are govern under the Financial Acts 1957. AIMS was promoted at various occasions to share the success and experience. The ability and capability of AIMS has caught the interest by other government agencies and learning institution. IAD received numerous visits from Sepang Local Authority, Municipal Council of Penang Island, Universiti Utara Malaysia, Universiti Teknologi MARA, Legal Office of Prime Minister Department and Construction Industry Development Board. The highlight of all, AIMS was presented to Commonwealth’s public administrator at Commonwealth Association for Public Administration and Management (CAPAM) Biennial Conference 2012 held at New Delhi, India. Finally, in 2010, Public Service Department has adopted AIMS with slight variation to suit their procedure as part of their auditing practices and named it e-SPIA (Sistem Pengurusan Indeks Akauntabiliti) available at This year, the state of Kelantan launch it e-audit with e-SPIA Kelantan at

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Lesson Learnt Our experience in conducting this AIMS projects shows that challenges/problem can be overcome by creativity and innovation. The lesson learnt from this success can be summarised as follows: 1. Efficient internal control through effective audit system can detect financial risks in the organization and reduces financial management shortcomings and non-compliance. 2. To ensure the success of AIMS, management support and involvement are important at all level. 3. Strong teamwork and knowledge sharing can unleash staff potential and promote creativity and innovation. 4. Ownership is important to the success of AIMS. Ownership of AIMS was developed due to good teamwork and participation of all staff and management from the early stage of development that make implementation of AIMS easier. 5. Maximizing existing resources can minimize cost of doing business which will create new value in public delivery system and services. 6. Continuous improvement in public delivery system can improve productivity if staff can challenge the status quo (resistance to change) to be more innovative and creative. Challenging the status quo is the most difficult part in public services as they are complacent with what there are currently doing. The success of AIMS is the product of determination of staff at IAD to challenge the status quo.

Contact Information

Institution Name:   Internal Audit Division
Institution Type:   Government Agency  
Contact Person:   Che Mohd Shukri Che Hassan
Title:   Mr  
Telephone/ Fax:   +60340714011/+60340714564
Institution's / Project's Website:  
Address:   Level 1, Bangunan ZETRO, Jalan 9/27C, Seksyen 5, Wangsa Maju
Postal Code:   53300
State/Province:   Federal Territory

          Go Back

Print friendly Page