Sustainable development is a balance between the development, economy, and environment. There is need to conserve the environment while at the same time maintaining the sustainable level of development and economic route. This special report presents the Malaysia perspective on environment auditing for sustainable development. It highlights the Malaysia’s commitment to the implementation of SDGs and its international commitment in environment conservation; National Audit Department of Malaysia (NADM) experiences in conducting environmental audit in terms of mandate, standards and guidelines, auditing tools, audit topics and performance audit examples; and the Department’s international involvement on environmental matters. 

The report also mentioned on the issues and challenges of environmental audit related to the environmental data, subjectivity of sustainability, cost-benefit analysis, environmental issues, audit competencies and audit criteria. Several measures are recommended to address the issues and challenges which include redefining the nature and scope of audit, term of references with new audit approaches and techniques, integrated environmental auditing, appropriate mix of auditors with technical skills, cooperation with other SAIs and use of technology in facilitating the environmental audit.


1.1 Sustainable development is a philosophy which encourages the conservation and enhancement of the resource base while meeting the basic needs of employment, food, energy, water and sanitation. It has been taken up as the team of the 1992 UN conference on environment and development in Rio de Janeiro better known as the Earth Summit and it inspired Agenda 21 the summit’s sustainable development blueprint for the global community. This was followed by the 2002 World Summit on Sustainable Development in Johannesburg. Twenty years later leaders from 192 nations renewed their sustainable development commitment in a non-binding document called “The Future We Want”.

1.2 Malaysia started its journey on sustainable development since 1970s when the New Economic Policy (NEP) was introduced in 1970 to eradicate poverty and restructure societal imbalance. All the subsequent 5-year Malaysia development plans have underscored the elements of sustainable development encompassing sustainable economic growth, growth with equitable distribution to all sections of society, access to basic infrastructure and utilities, access to education and healthcare services and mainstreamed environmental conservation.

1.3 The importance of environmental sustainability was highlighted in the Third Malaysia Plan 1976-1980, and it mainstreamed sustainable development into national development agendas. In 1991, Malaysia launched Vision 2020, the national aspiration of becoming a fully developed country by 2020, in economic, political, social, spiritual, psychological and cultural terms alike.

1.4 In 2009, Malaysia formulated the New Economic Model (NEM) which further cemented Malaysia’s commitment to pursue sustainable development based on three pillars, namely high income, inclusivity and sustainability, which mirrors the three elements of the SDG, namely economy, social and environment. The NEM provides the basis for 5-year Malaysia development plan until 2020. The current 5-year Malaysia plan i.e. the 11th Malaysia Plan (2016-2020) is premised on the three pillars of NEM. The theme of 11th Malaysia plan is “Anchoring

Growth on People” where people is the centrepiece of all development efforts and ensuring that no section of society is left behind in participating and benefiting from the nation’s development.

1.5 Malaysia is, therefore not starting anew on its pathway to sustainable development but it is a process already in motion. The Agenda 2030 will further drive the journey on sustainable development more aggressively.


2.1 Malaysia together with other world leaders adopted the 2030 Agenda for Sustainable Development (2030 Agenda) at the United Nations General Assembly in New York on 25 September 2015. This is a global commitment towards a more sustainable, resilient and inclusive development, with 17 Sustainable Development Goals (SDGs), 169 targets and 232 indicators. The 2030 Agenda has been shaped by relevant United Nations (UN) agreements and Conventions as well as the experiences and achievements gained through the Millennium Development Goals (MDGs), the global development agenda spanning the period 2000–2015. The 2030 Agenda transcends the MDGs to include wider economic, social and environmental objectives, and with a greater focus on peace, participation and inclusiveness.

2.2 Malaysia has presented a Voluntary National Review (VNR) report of its SDGs’ progress at the 2017 global High-level Political Forum (HLPF). The VNR takes into account Malaysia’s efforts to align key elements of the SDGs with the latest five-year development plan, the Eleventh Malaysia Plan 2016 – 2020 (11MP), and a series of baseline studies, engagements and consultations that culminated in the development of a National SDG Roadmap 2016–2020.  The Roadmap also documents the participatory processes involved in these efforts. Participation was received from states, Government agencies, non-government organisations (NGOs), civil society organisations (CSOs) and the private sector, driven by the Economic Planning Unit (EPU), and supported by the United Nations Country Team (UNCT) in Malaysia.

2.3 The Government of Malaysia has implemented specific efforts to incorporate SDGs into national frameworks by mapping the SDGs to the Eleventh Malaysia Plan (11MP). This mapping exercise was intended to reveal interactions between the goals within a

cluster, which may cut across economic, social and environmental dimensions. The mapping of the 11MP thrusts to the SDGs were as follows:



2.4 The Government of Malaysia has formalised the institutional mechanisms in the form of inter-agency coordinating bodies. The two main focal agencies responsible for coordinating and monitoring the implementation of SDGs are the Economic Planning Unit, Prime Minister’s Department and the Department of Statistic, Malaysia. A multi-stakeholders, participatory governance structure was established. A National SDGs Council was formed and chaired by the Prime Minister of Malaysia and supported by a National Steering Committee (NSC).

2.5 Under the National Steering Committee, there are five (5) SDGs Cluster Working Committees (CWCs) to identify indicators for each SDGs, developing and implementing programmes, and reporting progress to the NSC. Each CWC is represented by various ministries/agencies, civil society, private sector, academics, United Nations agencies and youth representatives. One of the Working Committee cluster is on Environment and Natural Resources in charge of 6 Sustainable Development Goals which are Goal 6 – Clean Water and Sanitation; Goal 7 – Affordable and Clean Energy; Goal 12 – Responsible Consumption and

Production; Goal 13 – Climate Action; Goal 14 – Life below Water; and Goal 15 – Life on Land.

2.6 Other initiatives undertaken to embrace and implement the 17 SDGs in a systematic and measurable manner are:

  1. Organising various national and international seminar, conference, dialogs and discussion to promote participation of stakeholders;
  2. Conducting studies on data readiness and gap analysis;
  3. Established a National SDG Roadmap to guide the implementation of Agenda 2030 and the SDGs.


3.1 The Ministry of Water, Land and Natural Resources (KATs) was established on March 27, 2004, with a broad mission on natural resources management, conservation and management of environment and shelters as well as on the management of land survey and mapping administration. Amongst its functions are formulating legislative policies, laws, procedures and guidelines related to natural resources management and environmental conservation, ascertaining and maintaining boundary issues to assure national interest, sovereignty and security, ensuring natural resources planning and development with

environmental conservation are well integrated as well as enhancing public awareness and public support in identifying the importance of well-balanced utilization of natural resources and conservation of the environment. These tasks and responsibilities require the involvement of other ministries such as Ministry of Transport, Ministry of Energy, Technology, Science, Climate Change and Environment.

3.2 KATs have participated in international conventions such as the 22nd Conference of the Parties to the United Nations Framework Convention on Climate Change of the Organization (UNFCCC COP 22), the 13th meeting of the Conference of the Parties to the Convention on Biological Diversity (CBD COP13) and Like-Minded Mega-diverse Countries (LMMC). KATs also conduct events and conferences on environmental issues at the national and international levels. In addition, KATs also coordinates several key meetings at the national level such as the Ministerial Meeting on the Environment and the members of the State Executive Council for Responsible on the Environment (MEXCOE), the National Land Council (NLC) and the National Water Resources Council (NWRC).

3.3 At the international level, Malaysia has signed the following international environment accords:

  1. International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (MARPOL 73/78), London 1973 and 1978
  2. Putrajaya Declaration of Regional Cooperation for the Sustainable Development of the Seas of East Asia, Malaysia, 2003.
  3. ASEAN Agreement on Trans-boundary Haze Pollution (2002) for tackling trans-boundary haze pollution resulting from land and forest fires. It has also been considered as a global role model for the tackling of trans-boundary issues.
  4. Convention on the International Trade in Endangered Species of Wild Flora and Fauna, (CITES), Washington D.C., 1973
  5. Ramsar Convention on Wetlands of International Importance, especially as Waterfowl Habitat, Ramsar 1971.
  6. Kyoto Protocol – Greenhouse Gas Emission Reductions, Japan 1997
  7. Minamata Convention on Mercury, Minamata 2013 is a global treaty to protect human health and the environment from the adverse effects of mercury.
  8. Convention on the Control of Trans-boundary Movements of Hazardous Wastes and their Disposal, Basel, 1989
  9. Protocol on Preparedness, Response and Co-operation to Pollution Incidents by Hazardous and Noxious Substances OPRC-HNS Protocol, London, 2000


4.1 NADM has a legislative mandate to conduct Performance Audit under the Audit Act 1957. The Performance Audits include the audit of environmental related matters with the objective to ensure the accountability, effectiveness and efficiency of programmes and activities of government ministries/departments/agencies as well as compliance with environmental laws. In view of the increasing importance of environmental audit, NADM established the Environmental Audit Division in 2008 and for the past 10 years, NADM conducted more than 50 audits on environmental matters the federal and states levels.

4.2 The environmental audits are carried out in accordance to International Standards of Supreme Audit Institutions (ISSAIs) environmental auditing guidelines, INTOSAI Working Group on Environmental Auditing (WGEA) guidelines and NADM’s auditing guidelines. The ISSAIs related guidelines include ISSAI 5110 – Guidance on Conducting Audits of Activities with an environmental perspective; ISSAI 5120 – Environmental Audit and Regularity

Auditing; ISSAI 5130 – Sustainable Development –The Role of Supreme Audit Institution (SAI) and ISSAI 5140 – How SAIs May Cooperate on the Audit of International Accords.

4.3 INTOSAI WGEA guidelines include guidelines on audit of waste management, environmental impact assessment, auditing water issues, sustainability reporting, auditing mining, forest and sustainable fisheries management. Since 2005, NADM has issued 13 guidelines to assist the environmental auditors which include guidelines on environmental and water management auditing (drinking water, water supply services, water supply project management, distribution of water, non-revenue water, flood mitigation plans for dams and rivers, coastal erosion, urban drainage system, sewerage treatment plant and piping system and water resource monitoring).

4.4 NADM utilised remote sensing technology and geographical information system for sampling and analysis in the environmental audit. A Memorandum of Understanding was signed with the Malaysia Remote Sensing Agency (MRSA) on 3rd August 2012 for the transfer of technology and expertise.
4.5 The environmental audit topics includes internal environmental management by ministries/ department/agencies, waste management, forest management, fishery, environmental impact management, pollution,  green technology and so forth. Examples of environmental audits conducted by NADM from 2005 – 2016 are as follows:

Highland Activities

Disasters, tragedies as well as landslides due to extensive development at highlands and hill slopes have given rise to the public concerns in recent years. Recently, developments of highlands and hill slopes have increased the risks of landslides which have caused substantial loss of human lives and damages to properties and infrastructures. In Malaysia, there are various legal instruments to regulate the laws, acts and procedures related to land development which includes the guidelines for highlands and hill slopes development. Lack of enforcement, supervision and adequate knowledge by respective officers has raised the risks of environment disaster.

Mangrove Forest Management

The coastal areas of Peninsular Malaysia were covered by mangroves. Over the years, the mangroves have been depleted due to development activities and illegal logging. The 2004 tsunami disaster had triggered an awareness and understanding of the significance of mangrove forest as a buffer zone. In realizing the importance of preserving the mangrove swamp forest, the federal government and the various states governments have worked with various agencies, universities and NGO’s to replant the mangrove along the coastal areas nationwide. The Government of Malaysia has allocated a substantial amount of allocation for the conservation and rehabilitation of mangrove forests. The auditing was focused on the replanting of the mangrove trees to create strong barriers and cost savings on coastal protection against erosion and disaster. NADM has discovered that the use of compressible mats and compressible pillows as an innovative planting technique to assist the growing of the mangrove trees.

Marine and Its Environment

The fisheries sector plays an important role as a major contributor of nutrition and economics. Fish consumption per capita is expected to increase from 46kg to 55kg with a growth of 1.9% per annum for the period from 2010 to 2020. In addition, fish demand is expected to increase due to increase in population, health awareness and the development of downstream processing industry. Therefore, fishery resources need to be managed well so that it can be exploited in a sustainable way by creating an appropriate strategic planning and getting strong institutional support to enable the sector to meet the anticipated demand and overcome the constraints. Illegal, Unreported and Unregulated (IUU) fishing is fishing activity that does not comply with national, regional or global fisheries conservation and management obligations and it is an important factor undermining the sustainability of fisheries. Audit Findings for IUU fishing are encroachment, illegal fishing, over exploitation of fisheries resources, destructive fishing, depletion of fisheries resources, ecosystem destruction and disposal of waste in fisheries waters.

Green Technology Financing Scheme

Green technology is viewed as a sustainable method for coping with climate change. It provides an opportunity to increase Malaysia’s capacity for innovation and enhance the country’s competitiveness in the global arena. The Green Technology Financing Scheme (GTFS) programme was established to provide assistance to the national manufacturing and service industries that produce green technology products and services for local and international markets. The programme also strives to provide green jobs.

The GTFS strategy outlines the need for green technology development in four main sectors: energy, waste and wastewater management, building, and transportation. GTFS will fund projects that meet private financial institutions’ requirements and also meet programme-specific green technology criteria. The national aspiration is to grow more local green businesses and contribute to sustainable development which will promote social and environmental benefits in Malaysia.

The GTFS programme is an example of a best government practice which involves all stakeholders in decision-making and ensures the best value for money. Various agencies responsible for implementing the GTFS programme conduct intensive monitoring to ensure its integrity and accountability. Due to the complexity of environmental issues and challenges in managing them, collaboration among agencies and ministries should be strengthened that requires a concerted efforts, commitment and cooperation of all individuals and

non-governmental organizations to support sustainable efforts.

Water Resources Management

Since 2015, National Audit Department Malaysia has conducted 10 audits relating to Water Resources Management where the scope of audits cover the management of the Water Regulatory Body on the control of raw water resources comprising quantity, quality, licensing, an enforcement and gazetting of catchment area as shown in 10 states in Malaysia. Amongst the audit findings for water resource management are:

(i) No action being carried out to measure the flow rates of major rivers in order to determine the availability of  waters resources at any given specific time

(ii) Alternative water resource such as Hybrid Off River Augmentation System (HORAS) reservoirs only concentrated on the Selangor River Basin.

(iii) Groundwater abstraction rate was small compared to availability from the source.

(iv) Shut down of water treatment plants due to water sources being contaminated by ammonia, earthworks and oil spills.

(v) Inventory of water pollution activities was not available to facilitate monitoring and prevention.


5.1 Under the flagship of the Memorandum of Understandings (MoU), NADM and Board of Audit of Indonesia have conducted four parallel environmental audits since 2008. The topics were the Audit of Forest Management and It’s Important to Environment; the Audit on Management of Mangrove Forest Along the Coastline of the Straits of Malacca; the Audit on Illegal, Unreported and Unregulated Fishing and Its Environment; the Audit on Forest Management and Land Use Planning in Mitigating Climate Change; the Audit on Management of Quarry Activities and Its Impact to Environment and the Audit on Land Use Management on Oil Palm Plantation

5.2 NADM and Board of Audit of Indonesia are currently conducting a two years (2018 – 2019) parallel research on the country and SAI’s preparedness in the implementation of SDGs. The purpose of the research is to provide insights and foresights on the preparedness level of both countries and SAIs in the implementation of SDGs through the exchange knowledge, experiences and best practices. Particular attention will be given on the readiness of national system and data aspect as case studies.

5.3 NADM is actively involved with the activities of the ASOSAI WGEA and INTOSAI WGEA. Several papers on environmental audits have been presented at the working groups meetings.

5.4 NADM has also contributed several articles in INTOSAI News Brief Greenlines INTOSAI on the parallel audits topics with Board of Audit of Indonesia.

5.5 NADM has also participated in the IDI blended capacity development programmes in the Performance Audit on Preparedness for Implementation of SDGs in Jaipur, India in December 2017 and Nanjing, China in May 2018.

5.6 NADM participated in the ASEAN Supreme Audit Institutions (ASEANSAI) SDGs Awareness in Jakarta in April 2018 to increase the skills of auditing.


In conducting the environmental audit, NADM experiences several issues and challenges as follows:

  1. Environmental data can often be lacking, diffused, or incomplete at the local, regional, and international levels;
  2. Sustainability is a core dimension which is fundamentally difficult to address;
  3. Environmental problems and abatement evolve over a long term;
  4. Cost-benefit analysis of the long-term benefits of environmental engagements is crucial but difficult;
  5. Environmental issues are multinational and multi-disciplinary;
  6. Fieldwork requires specific audit competencies and knowledge;
  7. Identifying audit criteria at the national level is difficult, and it is also difficult to persuade the government to adopt international criteria; and
  8. Auditing generally has a retrospective focus, but environmental issues require vitality in assessing the potential future impact of policies and programmes.


7.1 It is observed that many government programmes and activities are carried out on a large scale and involved massive resources. However, these programmes and activities did not take into consideration the environmental consequences or the impacts on environments are not properly understood and accounted for. Environmental audits highlight the short comings and the recommendations help to improve the performance of the government ministries and departments. Though environmental auditing has been conducted since 2005, it is still in the state of development.
7.2 NADM has incorporated the importance of auditing and tracking the implementation of SDGs in the Strategic Plan 2016-2020. Subject matter experts or task force on SDGs has been formed in 2016 and several measures as follows need to be undertaken to enhance the quality of environmental audit:

  1. The nature and scope of audit has to be redefined in line with SDGs;
  2. The terms of reference for auditing need to be comprehensive with a new approaches and techniques;
  3. There should be an integrated to environmental auditing considering the social, economic and environmental aspects for sustainable development;
  4. Appropriate mix of auditors with technical skills in view of emerging issues to audit such as biodiversity, climate change, trans-boundary environmental hazards and so forth;
  5. Cooperate with other SAIs on environmental management, environmental accounting and environmental performance management;

F. Use of information technology to facilitate environmental audit


  1. Auditor General Reports of Malaysia (2008-2016)
  2. Eleventh Malaysia Plan (2016-2020)
  3. International Organization of Supreme Audit Institutions (INTOSAI), ISSAI 3000: Standards and Guidelines for Performance Auditing Based on INTOSAI’s Auditing Standards and Practical Experience
  4. Performance Auditing Guidelines from Environment Perspective by Malaysia National Audit Department
  5. Strategic Plan of Malaysia National Audit Department
  6. Malaysia SDGs Voluntary National Review (VNR) 2017
  7. Abdul Hamid, Z (2018, May). Sheikh Zayed, Early Leader in Sustainable Development. New Straits Times, p.17.

https://www.environmental-auditing.orgas at 05 September 2018

www.issai.orgas at 05 September 2018

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