Standardised financial reporting practices for NGOs handling public funds needed

The Companies Commission of Malaysia (SSM) says a legal framework is needed to standardise financial reporting practices for NGOs handling public funds in the country.

SSM chairman Ahmad Sabki Yusof said this followed concerns that some charities were not complying with financial rules, leading to a lack of transparency in using public funds for charitable purposes.

“We believe a study is necessary to establish a legal framework that can standardise the governance of welfare organisations.

“This will ensure organisations, especially those receiving public funds, adhere to the same standards,” a Bernama report said.

“At present, the way these organisations make their reports is similar to other companies despite using public funds for welfare purposes.

“This is an area where improvements can be made,” he said during the opening of the 2023 entrepreneur mentoring programme for Kedah and Perlis at the Sultan Abdul Hamid College in Alor Setar yesterday.

Home minister Datuk Seri Saifuddin Nasution Ismail had also spoken of the need for the Registrar of Societies to enhance the compliance level of NGOs and take firm action if they fail to submit their financial, annual and activity reports. This was to prevent them from misusing funds collected from the public.

Bukit Aman commercial crime investigation department director Ramli Yoosuf also said these NGOs should be regulated by a government agency to ensure the funds collected reach the intended recipients.

Sabki said SSM was actively monitoring the situation to guarantee transparent operations by organisations under its purview.

“While various jurisdictions permit the registration and regulation of non-profit organisations collecting public funds, the crucial question is whether there exists a unified governance framework to regulate the financial management of all these charitable organisations.”