Friday, 13 February 2015

Lapses in Governance And Compliance

Audit of Aljunied-Hougang-Punggol East Town Council

Summary of Key Observations by the Auditor-General’s Office
  1. Lapses in Management of Sinking Funds
  2. Lapses in Governance of Related Party Transactions
  3. Lapses in Management of Arrears of Conservancy and Service Charges
  4. Lapses in Internal Controls and Procurement
  5. Inadequacies in Record Management and Accounting System
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Official audit finds 'major lapses' in Workers' Party town council books

THE Auditor-General's Office (AGO) has found several major lapses in the governance of the Aljunied-Hougang-Punggol East Town Council (AHPETC) run by the opposition Workers' Party (WP).

The AGO concluded in a report released on Monday: "Until the weaknesses are addressed, there can be no assurance that AHPETC's accounts are accurate and reliable, or that public funds are being properly spent, accounted for and managed."

Observers told The Business Times that the "damning" findings will inevitably create a dent in the public's confidence in the WP, and urged the government to strengthen its powers for regulatory oversight. Several of these commentators described the existing Town Councils Act as "toothless".

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Auditor-General's Report on Aljunied-Hougang-Punggol East Town Council's FY2012-13 Accounts

AHPETC’s Auditor, M/s Foo Kon Tan Grant Thornton LLP, had submitted a disclaimer of opinion on AHPETC’s FY2012-13 Financial Statements, raising 13 issues of concern over the Town Council’s accounts. The Auditor also issued a qualified opinion on AHPETC’s other legal and regulatory requirements, stating that AHPETC had not complied with the provisions of the Town Councils Act and Financial Rules in various respects.


As stewards of public funds, all Town Councils must keep proper accounts and records, and ensure adequate control over their assets. The observations in AHPETC’s Auditor’s Report raised serious questions about the reliability and accuracy of its financial and accounting systems. It was the second consecutive year that the Auditor had submitted a disclaimer of opinion on AHPETC’s Financial Statements. Moreover, the Auditor raised several more issues of pressing concern in the second year, compared to the first year.


As AHPETC’s Auditor’s Report and Financial Statements were cause for serious concern, the Minister for National Development requested the Minister for Finance on 18 February 2014 to exercise his power under section 4(4) of the Audit Act to direct the Auditor-General to conduct an audit of AHPETC’s FY2012-13 accounts. The terms of reference for the audit are provided in the Annex.


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WP Town Council saga: What it's all about

FEB 10, 2014: Aljunied-Hougang-Punggol East Town Council (AHPETC) submits its audited FY2012/13 accounts to the Minister for National Development six months late and after seven reminders.

FEB 13, 2014: The Ministry of National Development (MND) expresses concern that it is the second year that AHPETC's auditors had made a submission with a note saying they were unable to fully verify the accounts.

FEB 14, 2014: AHPETC chairman Sylvia Lim says the MND's statement is incomplete and misleading, as the Workers' Party (WP) has not been able to get data from the former managing agent after it took over Aljunied GRC in 2011, as well as from the authorities like the MND.
related:
Audit of WP-run town council flags major lapses
Lack of governance over transactions with related parties
Poor monitoring of S&CC arrears
Many hats for two WP supporters
Insufficient internal controls

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Independent body to manage town council could prevent conflict of interest: Experts

The recent report by the Auditor-General following its audit of the Aljunied-Hougang-Punggol East Town Council (AHPETC) revealed that key individuals running the town council also have stakes in companies it hired to manage its estates.

Experts have said that in cases where there are such conflicts of interests, a possible solution may be to have an independent body overseeing some of the town council's management processes, such as when it calls for tenders.


Lapses in the management of related party transactions were among the findings in the Auditor-General's report that was released on Monday (Feb 9).

related:
AHPETC audit report could lead to strengthening of Town Councils Act: Law expert
In Parliament this week: AHPETC audit, public transport fares on the agenda
AHPETC findings: MND to call for stronger legislative framework for town councils
Auditor-General finds 'major lapses' in Workers' Party-run town council accounts

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Parliament to discuss strengthening of Town Councils Act on Feb 12
The Auditor-General's Office (AGO) has found several major lapses in the governance of the Aljunied-Hougang-Punggol East Town Council (AHPETC) run by the opposition Workers' Party (WP). PHOTO: SPH

A STRENGTHENING of the Town Councils Act - which has been described by commentators as "toothless" - will be discussed at the Feb 12 Parliament sitting.

A Ministry of National Development (MND) spokesperson told The Business Times that the Minister for National Development, Khaw Boon Wan, has indicated to the Clerk of Parliament that he wishes to introduce the following motion:

"That this Parliament: (i) notes with concern the Auditor-General's Report on the Audit of Aljunied-Hougang-Punggol East Town Council (AHPETC), specifically its findings on:

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No assurance that public funds are properly spent: AGO audit of Aljunied-Hougang-Punggol East Town Council
THERE is currently no guarantee that the Aljunied-Hougang-Punggol East Town Council's (AHPETC's) accounts are reliable or that public funds are being properly spent, said the Auditor-General's Office (AGO) on Monday. PHOTO: SPH FILE

Highlighting several lapses in governance by the AHPETC - which is run by the Workers' Party - the AGO said in a report: "Until the weaknesses are addressed, there can be no assurance that AHPETC's accounts are accurate and reliable, or that public funds are properly spent, accounted for and managed."

One major error pertains to AHPETC's failure to transfer monies into the sinking fund bank accounts as required by the Town Councils Financial Rules. These funds cannot be used to pay for daily operating expenses, and must be separately maintained for the long-term maintenance of properties. Transfers are to be made within one month from the end of each quarter.

The AGO report shows that AHPETC failed to make the required transfers to sinking fund bank accounts for the last three quarters of FY2011/12, and that the transfers it made for FY2012/13 were late and under the required amounts. "In most instances, the transfers were only made after auditors' queries," the AGO report noted.

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Getting to bottom of town council saga

It is obvious that the Auditor-General's Office has taken pains with both the audit of the Aljunied-Hougang-Punggol East Town Council (AHPETC) and its carefully-worded 59-page report. Given the ready assumptions of cynics that the ruling party is out to discredit the opposition-run council, it was important to get to the facts of the long-running issues. This was an exercise the Auditor-General was legally bound to conduct as public funds were involved. Indeed, if the Government had deemed it impolitic to probe the Workers' Party's (WP's) management of the council, that would have been a dereliction of duty, especially after the council's own auditors had declined to give the accounts a clean bill of health for two years running. Such a finding would have caused a legitimate stir among a company's shareholders or stakeholders of a charitable organisation had it applied to them.

Even after giving the AHPETC the benefit of the doubt - for inexperience, mistakes and IT system limitations - one is left with disturbing questions after perusing the audit report. These must be answered fully, as WP leaders have said they would when the report is debated in Parliament this week. For example, there are some glaring numbers that are mystifying, such as how the council went from an operating surplus of $3.3 million in 2010 to an operating deficit of $734,000 by 2012, after it took charge. Just how did this happen? And what would it portend if this trend continued unchecked?

Equally troubling is the A-G's account of the web of relationships that created conflicts of interest in the way the council was managing transactions, with a husband and wife at the helm and senior managers who are also owners of companies awarded contracts by the council. The picture painted was not of small sums, as the related-party contracts flagged by the A-G amounted to $25.9 million, and with some fees paid being nearly a third higher than previously charged. Similarly, questions will be raised about why the party failed to set aside millions into its sinking fund for essential maintenance, as was required under the law.

Workers' Party 'needs to clear air over AGO's report'
Aljunied-Hougang-Punggol East town council at Block 810, Hougang Central. The reputation of the Workers' Party (WP) in managing a town council has been dealt a blow by the Auditor-General's report this week, but it remains to be seen if its political fortunes will be affected, observers and residents said. -- ST PHOTO: KUA CHEE SIONG

The reputation of the Workers' Party (WP) in managing a town council has been dealt a blow by the Auditor-General's report this week, but it remains to be seen if its political fortunes will be affected, observers and residents said.

They added that the ball is now in the WP's court to account for and explain in Parliament the lapses that the Auditor-General's Office (AGO) found in its audit of the financial statements of the Aljunied-Hougang-Punggol East Town Council (AHPETC) for financial year 2012/13.

The House will debate the report when it sits tomorrow.


Full Coverage:
Straits Times: Workers' Party 'needs to clear air over AGO's report'
TODAYonline: Parliament to discuss governance, safeguards for all town councils
TOC: Managing agents in key positions in town councils – a common practice
AsiaOne: AHPETC, single parents, drones, to be discussed in Parliament tomorrow
CNA: In Parliament this week: AHPETC audit, public transport fares on the agenda
Straits Times: Getting to bottom of town council saga
Straits Times: Audit of Workers' Party-run town council flags major lapses

TODAYonline: Major lapses in governance, compliance found at AHPETC
Yahoo!: Auditor-General finds ‘lapses’ in AHPETC’s FY2012-13 financial accounts
AsiaOne: AG finds several lapses in governance, compliance in audit of AHPETC
Business Times: Official audit finds 'major lapses' in WP town council books
CNA: MND to call for stronger legislative framework for town councils
Straits Times: Auditor-General's report on WP-run Town Council finds lapses

Channel News Asia: Auditor-General finds 'major lapses' in Workers' Party-run town
TODAYonline: Major lapses in governance, compliance found at AHPETC
AsiaOne: Auditor-General finds several lapses in governance, compliance
Yahoo Singapore: Auditor-General finds 'lapses' in AHPETC
TODAYonline: Auditor-General Report on AHPETC: Examples of key lapses
AsiaOne: AGO: Lapses in WP's town council accounts
Straits Times: Auditor-General identifies five areas of concern; WP responds
TODAYonline: Auditor-General finds governance lapses at WP-run town council
TODAYonline: Conflict of interest, lack of internal controls most serious lapses
TODAYonline: AHPETC deposited money into sinking-fund bank accounts late
Channel News Asia: AHPETC findings: MND call for stronger legislative framework
TODAYonline: Background to the AHPETC audit
TODAYonline: WP to give full response in Parliament on Thursday

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Managing agents in key positions in town councils – a common practice

The Auditor General’s Office (AGO) report on its audit of the Workers’ Party-led Aljunied-Hougang-Punggol East Town Council (AHPETC) has raised the issue of a conflict of interest in the management of the town council.

The AGO said AHPETC “did not adequately manage the conflicts of interests of related parties arising from ownership interests of its key officers.”


Essentially, the AGO pointed to the two companies engaged by AHPETC to provide managing agent services and essential maintenance and lift rescue services.

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Not uncommon for PAP or Workers’ Party supporters to be hired by town councils

One of the major lapses by Aljunied-Hougang-Punggol East Town Council cited in the supposedly damning report put out by the Auditor-General’s Office on Feb. 9, 2015, is that conflicts of interests were not managed properly.

For the AHPETC’s case, it involved transactions worth $25.9 million between the town council and its managing agent.

And these conflicts had arisen as four of the town council’s senior officers had stakes in its managing agent FM Solutions & Services (FMSS) and had verified work and approved payment on behalf of AHPETC to their own company in some instances.

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AHPETC: AGO REPORT SHOWS WE HAVE NOT BEEN CORRUPT OR MISUSING FUNDS

Responding to media queries in general, AHPETC explained that “The past months since the commencement of the audit by the Auditor-General’s Office (AGO) have been very challenging, as the Town Council (TC) dedicated its limited resources to facilitating the audit, including searching for voluminous information, some collated before the current management took over. This onerous task was undertaken concurrently with running a live operation.”

The AHPETC also shared that the report has been useful in highlighting areas they need to improve on. They also pointed out that the report also showed some mistakes on other bodies including other TCs and HDB. It agreed that it needed improvements in reporting standards and they said that they are currently working on this issue. In fact, they said that they had already implemented some changes before the audit started.

Overall, AHPETC highlighted that there has been no money found missing and only uncovered mistakes and omission due to "inadvertence, human error, IT system constraints and a lack of experience in dealing with certain scenarios".

related:

According to the Straits Times “Auditor-General’s report finds lapses in governance, compliance by WP-run Town Council” (Feb 9) – “In a report issued on Friday and made public on Monday, the Auditor-General’s Office (AGO) highlighted “weaknesses” like the failure of AHPETC to transfer money into its sinking funds as required, and inadequate oversight of transactions where conflicts of interest were present.

In response, AHPETC, which is chaired by WP chairman Sylvia Lim, said that it would benefit from the AGO’s findings.

“What is clear from the AGO findings is that no money has been found to be missing, nor has there been any criminal or dishonest activity uncovered. Instead, the observations show mistakes and omissions due to inadvertance, human error, IT system constraints and a lack of experience in dealing with certain scenarios,” said AHPETC.

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AHPETC will respond to AGO report in Parliament

The Auditor-General’s Office (AGO) has completed its audit of Aljunied-Hougang-Punggol East Town Council’s (AHPETC) accounts for the Financial Year 2012-13, under the direction of Finance Minister Tharman Shanmugaratnam in Feb last year.

Mr Tharman directed AGO to conduct the audit at the request of National Development Minister Khaw Boon Wan then.

According to a joint press release from MOF and MND today (9 Feb), AGO submitted its report to both ministries on 6 Feb. A copy of the report was made available to AHPETC the following day


Workers’ Party to give response in parliament on AGO’s report of its town council’s lapses

Chairman of Aljunied-Hougang-Punggol East Town Council (AHPETC) Ms Sylvia Lim has said that the Workers’ Party will respond to the audit finding by the Auditor-General Office (AGO) in the parliament on Thursday and would not comment on the matter for the time being.

The Auditor-General was directed by the Ministry of Finance on 19 February last year to look into AHPETC’s accounts, this was requested by the Minister of National Development Khaw Boon Wan.

The two ministries said that the AHPETC’s auditor, Foo Kon Tan Grant Thornton LLP, had earlier submitted a disclaimer of opinion on AHPETC’s FY2012-13 financial statements, raising 13 issues of concern over the Town Council’s accounts.

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WP RESPONDS TO AUDITOR-GENERAL'S REPORT
Aljunied Hougang Punggol East Town Council has issued some responses to the Auditor-General's Office report, which had reported on 5 "major lapses" in AHPETC's accounts

AHPETC's responses are appended to the AGO report below: Lapses in governance of party-related transactions
  • The AGO said AHPETC could not provide any evidence to show it had properly evaluated the conflicts of interest before entering into contracts worth $25.9 million with its managing agent FM Solutions and Services (FMSS).
  • AHPETC's senior officers - secretary Danny Loh Chong Meng, general manager How Weng Fun, and deputy general managers Yeo Soon Fei and Johnson Lieow Chong Sern - are also directors and shareholders of FMSS.
  • In addition, Mr Loh is the sole proprietor of FM Solutions and Integrated Services (FMIS), hired by AHPETC to carry out lift rescue and maintenance services.
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AGO's report on AHPETC: All are black pots

If you assume the WP is the equal to the PAP in resources then the WP don't look good. But if you feel that Singapore need to nurture credible and viable alternatives to the PAP because recent history have shown that when they have too much power, they treat us badly then for our own sake, cut some slack but not too much to the alternatives.

I have learned when not to and to trust the PAP. Anything that threatens their position they cannot be trusted and do not hesitate to bully others. You can trust them for kicking out any MP for committing adultery, but many other issues are more difficult to judge. They cannot afford any alternative party to appear whiter than them. It is imperative especially after the AIM saga that if they are pot, others must be made to look like black pots too. They cannot do in their competitors this way but at least level the playing field.

I urge the CAD or CPIB to charge those responsible for AHPETC. If they can't then don't waste my time.

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SYLVIA LIM: DON'T BE FOOLED BY MAINSTREAM MEDIA HEADLINES, READ FULL AGO REPORT

The Auditor General has released its report on the accounts of Workers' Party's town council and highlighted that there were several major lapses in the way accounts were kept.

Responding to the report, WP Chairman Sylvia Lim explained that since it has been announced that Khaw Boon Wan would file a motion in parliament, they would discuss it in detail in parliament. Ms Lim explained that in the meantime, the public should read through the whole report rather than just reading the headlines features in Mainstream Media which just summarize selected points of the report.

She said that this could give people "a better understanding of the issues”.

related: AUDITOR-GENERAL FINDS “MAJOR LAPSES” IN WORKERS’ PARTY TOWN COUNCIL ACCOUNTS

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AHPETC Audit AGO Findings - All in the Family

SINGAPORE. Auditor-General's Office (AGO) founds major lapses in governance and compliance by the Aljunied-Hougang-Punggol East Town Council (AHPETC). Specifically, the AGO found several major lapses in Governance of Related Party Transactions.

"The Auditor-General's Office (AGO) found that AHPETC did not have the necessary checks and balances in payment to related parties. PwC observed 84 invoices amounting to $6.61 million from FMSS and FMSI which were issued and signed by the General Manager and Secretary of AHPETC in their roles as director of FMSS and owner of FMSI respectively. Of these, 11 invoices amounting to $1.69 million were certified (for work done) by the General Manager on behalf of AHPETC and 9 invoices amounting to $264,000 were verified by the Deputy General Manager who is a shareholder of FMSS. For these invoices, the General Manager also approved the payment vouchers and / or the cheques before the cheques were handed over to the cheque signatories for signing. The Secretary was also one of the signatories for some of the cheques."

In essence, the husband and wife team of Mr Danny Loh Chong Meng (Secretary for AHPETC) and Ms How Weng Fan (General Manager for AHPETC), could freely issue invoices for "work", get it "certified as completed" and then "pay themselves". This is an ideal arrangement that allowed them full access to any amount of money they needed.

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WP town council’s shambolic finances

Okay, the Auditor-General’s Office report on the Workers’ Party town council is better examined by bean-counters and those who can make sense of the various financial regulations required by law and the Town Council Act. My eyes glazed over the figures. To recap, the AGO was ordered by the Finance Minister to go over the TC’s accounts after the TC’s own auditors said it couldn’t an express an opinion on them because it didn’t have enough info to do so.

Actually, all I wanted to know if there was money missing or anything underhand in the town council which comprises two single-seat wards and a GRC. The Aljunied/Hougang/Punggol East town council is gigantic. Maybe a small outfit can run a small place like Hougang, but can it do the same for a bigger entity with big money?

We’re not getting any definite answers on what sort of money is really in the TC bank accounts or whether anything has been lost because the short answer is that even the AGO can’t tell based on the information it has.

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EX-ST REPORTER: WP TOWN COUNCIL HAS SHAMBOLIC FINANCES

Okay, the Auditor-General’s Office report on the Workers’ Party town council is better examined by bean-counters and those who can make sense of the various financial regulations required by law and the Town Council Act. My eyes glazed over the figures. To recap, the AGO was ordered by the Finance Minister to go over the TC’s accounts after the TC’s own auditors said it couldn’t an express an opinion on them because it didn’t have enough info to do so.

Actually, all I wanted to know if there was money missing or anything underhand in the town council which comprises two single-seat wards and a GRC. The Aljunied/Hougang/Punggol East town council is gigantic. Maybe a small outfit can run a small place like Hougang, but can it do the same for a bigger entity with big money?

We’re not getting any definite answers on what sort of money is really in the TC bank accounts or whether anything has been lost because the short answer is that even the AGO can’t tell based on the information it has.

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Conflicts of interest? What conflicts?

Two months ago, I pointed to evidence that indicated that AHPETC did not have an IT monitoring system https://atans1.wordpress.com/2014/12/16/does-ahpetc-have-a-21st-century-it-system/

Turns out I was spot-on because the Auditor-General pointed out, inter alia, that AHPTEC did not “a system to monitor arrears of conservancy and service charges accurately and hence there is no assurance that arrears are properly managed”.and “No proper system to ensure … proper accounts and records were kept as required by the Town Councils Act.” Trumpets pls. And what does WP say?
We understand that there will be a motion filed in Parliament to debate the matter on Thursday 12 February 2015.  That being the case, the Town Council will give its response in Parliament.
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Lapses In Governance

It's a sad day when the Auditor-General’s Office (AGO) is roped into the shenanigans of the political foray. The bureaucrats should remember that they are civil servants first and foremost, and they are accountable to the government of the day, and governments do change. In 1997, Law Minister S. Jayakumar directed then  Attorney General Chan Sek Keong to express a legal opinion on the Workers' Party complaint about Goh Chok Tong, Dr Tony Tan and Brigadier-General (NS) Lee Hsien Loong being caught inside a Cheng San GRC polling station on Polling Day. The conclusion,  "while it is illegal to be within 200 metres of a polling station unless you are voting, IT IS NOT ILLEGAL IF YOU ARE INSIDE" will continue to haunt the parties involved for a long long time.

In the AGO's highlights of the "lapses" in the Aljunied-Hougang-Punggol East Town Council’s (AHPETC) accounts for Financial Year 2012-13, most were qualified comments e.g. "as required by the Town Councils Financial Rules", "inadequate oversight", "no assurance that arrears are properly managed". These are accusations easily turned on a subject closer to the citizens' hearts, after all the original CPF rules did require that full withdrawal is available at age 55. And we are yet to be comforted that there is adequate oversight and proper assurance that our life savings are properly invested and managed. How did they put it? When you point a finger at someone, many more at pointing backwards at yourself.

AHPETC is wise to choose to give its response in Parliament, since a motion filed to debate the matter on Thursday 12 February 2015. That way the wild accusations will be recorded in the Hansard for posterity. Only kids resort to Facebook postings to trade barbs.

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Major Screw-Ups At Workers Party Run Town Council – Auditor General

Based on its audit observations, the Auditor-General concluded that the “financial statements for FY 2012/13 prepared by AHPETC did not accurately reflect the state of affairs and transactions of AHPETC.

“Until the weaknesses are addressed, there can be no assurance that AHPETC’s accounts are accurate and reliable, or that public funds are properly spent, accounted for and managed,” the AGO said.

“Does that mean I now have to pay my conservancy charge?” said Florence Tong f/43 a housewife when interviewed at Bedok Reservoir market.

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5 failures of AHPETC in plain English

1) Failed to manage sinking funds
AHPETC did not transfer enough money into their sinking funds. What this means for the residents is that the Town Council did not set aside enough money for major projects like fixing lifts, changing water tanks and repainting blocks.

2) Failed to notice conflict of interest
The same people who runs the Town Council is the same people who own the Town Council’s vendor, FMSI. Basically, it means that the Town Council people gave contracts to their own company, and approved the payment to themselves.

3) Failure to manage S&CC collection
We keep hearing about AHPETC’s failure to collect S&CC, and today’s revelation today sounds like AHPETC does not even know how many people owe S&CC! No wonder the radio silence.

4) Failed to control procurement
This means that the way AHPETC procure, or bought, things were suspicious. For example, they waived off the need to have vendors compete for a contract with no clear reason. I wonder who they awarded the contract to…

5) Failure to manage records
AHPETC don’t know how to do filing, and cannot find documents that AGO needed. Seriously, FILING SO DIFFICULT MEH?!

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AHPETC AGO Report - Something is Wrong

The Auditor-General's Office (AGO) audit of AHPETC's financial records revealed some interesting facts. One of the most interesting is that the Managing Agent (MA), an employee of AHPETC, was allowed to set-up and run companies which were eventually awarded multi-million dollar contracts from AHPETC.

In quite a few instances, the AGO found evidence that the MA initiated invoices for work to be done (some without an open tender), certified that the job was completed, and then paid themselves. To those who work in any organization, this is indeed a very strange arrangement. Essentially, it means that as the MA I can defraud my employers. In this case, the "employers" being the residents of Aljunied, Hougand and Punggol East.


The AGO also found evidence that FMSI, a sole-proprietorship owned by the Secretary of AHPETC, was awarded a contract (without an open tender) that was 30% more than what the previous vendors charged. All this within months of taking over AHPETC.

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The Daily Singapore

PAP vs AHPETC: Round 3
- TOC: Shanmugam’s chart raises questions about PAP TCs’ MA rates
- Mothership: WP chief explains shortcomings of PAP’s town council handover process
- Bertha Harian: Fire crackers and poppers in Parliament
- Blogging for Myself: AHPETC: How much slack to cut them?
- My Singapore News: In Politics a matter of whiter than white
- My Little Corner: Questions have become very political
- Singapore Notes: The Fury Unleashed
- Fresh Grads: Calling Attention Away from Budget Day 2015
- Sg General Elections16: AHPETC Taken to Court Over Delayed Refund of S&CC
- SG Hard Truth: Pritam really know how to “Siam” AHPETC audit lapses saga 2015
- Sg Beacon: Right Hand Pays Left Hand, HeadActs BlurAHPETC Saga In Simple Term
- Zhun Bo, Singapore?!: Govt ministries should take a leaf from the WP playbook

- New Nation: Numerous MPs put on 24hr suicide watch after Khaw said commit suicide
- Sg General Election 2016: AGO Special Audit, A reasonable man’s response
- My Little Corner: Why the focus on AHPETC when there are other issues?
- Zhun Bo, Spore?!: The underdog should learn to bite, or at least try to bark a little
- SG Hard Truths: What True Blue Singaporean thinks about the Major Lapses

- Bertha Harian: Tomorrow’s pre-CNY fireworks
- Singapore General Elections 2016: AHPETC AGO Report – Something is Wrong
– Thoughts of a Cynical Investor: Conflicts of interest? What conflicts?
– Blogging for Myself: AGO’s report on AHPETC: All are black pots
– Spore General Elections 2016: AHPETC Audit AGO Findings – All in the Family
– Zhun Bo, Singapore?!: 5 failures of AHPETC in plain English
– Spore Beacon: Major Screw-Ups At Workers Party Run Town Council – AG
– Singapore Notes: Lapses In Governance
– New Nation: PAP fails to keep WP in check despite 50 years of continuous rule


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AIM: What is it all about?


AT THE centre of the dispute between the People's Action Party (PAP) and the Workers' Party (WP) is a company called Action Information Management (AIM).

Three of its directors are former PAP MPs.

The WP said AIM terminated its contract with Aljunied-Hougang Town Council (AHTC), which is why the council got a red grade for service and conservancy charge arrears.

related:
Town council's red grade fuels debate
PAP, WP in war of words over IT firm
Exchange of letters between AIM and Aljunied-Hougang Town Council
WP reiterates question on public interest


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AIM refutes Aljunied-Hougang Town Council's claims

Action Information Management chairman Chandra Das has refuted Aljunied-Hougang Town Council's (AHTC) claims that it had to fight for a service extension to continue using the existing town council management system.

In a statement issued on Christmas Eve, Mr Chandra Das, a former PAP MP said that the Workers' Party intended to develop its own management system after it took over the town council and that Aim readily gave it the two extensions it sought.

He added that Aim would have willingly granted further extensions if the AHTC had asked for it.

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IT deal done to benefit town councils: Teo Ho Pin

THE coordinating chairman of the PAP town councils, Dr Teo Ho Pin, yesterday explained in detail why they had sold the software rights of their computer system to a company.

The reason: it would have been cumbersome for an IT service provider to negotiate separately with each of the 14 town councils (TCs) on the maintenance and upgrading of the system.

He also described how the tender for the sale was called in 2010 and the process by which it was awarded to Action Information Management (AIM), a company owned by the People's Action Party.

5 GOVERNMENT AGENCIES WHO WASTED TAXPAYERS MONEY
A Public Accounts Committee (PAC) report submitted on 4 February has drawn attention to “irregularities” in the usage of public funds. The report is in response to a July 2014 Auditor-General’s report. Yup, public funds as in the taxes that we all have to pay.

PAC hinted that government agencies were not using our hard-earned money wisely, as they called for “greater diligence in managing public resources” so as to “optimise their use and minimise wastage”.

So, who were the incriminating government agencies that were caught red-handed?

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More than 100 procurement irregularities found in NRF

The Auditor-General’s Office (AGO) has just released the “Report of the Auditor-General for the Financial Year 2012/13″ [Link]. In the report, the Auditor-General revealed that there were more than 100 instances of irregularities in National Research Foundation’s (NRF) procurement and payment process while constructing its building.

One of the most glaring was the waiver of tender for project management services to build its building. The contract value for the service was $2.25 million. It was awarded to a vendor “based mainly on a recommendation”.

This happened when Dr Tony Tan was the Chairman of NRF. He was NRF Chairman since the Foundation’s inception in Jan 2006. Dr Tan resigned from NRF on 31 Aug 2011. He was sworn in as President of Singapore on 1 Sep 2011.

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Auditor General: Breaches of Law in Prime Minister’s Office

Barely a week after Lee Hsien Loong spoke of integrity and the importance of admitting ones mistakes, the Auditor General released his annual report and gave the PM the perfect opportunity to practice what he preached.

The report for 2012/13 cites more than two dozen incidents relating to contracts worth almost S$300M where the PMO’s National Research Foundation appear to be in violation of The Building and Construction Industry Security of Payment Act. While the PM himself is not directly implicated, the failure of a department under his oversight to abide by its legal and contractual obligations clearly raises significant questions.

Will the PM or his office stand up for their integrity and admit to these mistakes – as the PM has urged his political opponents to do over much smaller matters – or will a hypocritical silence be maintained? To quote the Auditor General’s report directly, under the heading “Prime Minister’s Office”:

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Why So Long?

In the latest case of financial and criminal wrongdoing by a member of the Singapore Police Force (SPF), a senior officer from the Corrupt Practices Investigation Bureau (CPIB) was charged in court this morning for misappropriating $1.76 million between 2008 and last year.

Edwin Yeo Seow Hiong, 39, was the head of field research and technical support at CPIB when the Commercial Affairs Department (CAD) caught wind of his gambling activities in Marina Bay Sands (MBS) casino. Mr. Yeo was then suspended his duties at the CPIB amid an investigation into his suspected financial wrongdoings.

Once the news broke this morning, the Singapore government launch in damage control mode. Prime Minister Lee Hsien Loong has appointed an independent review panel to look at the possible lapses into the agency's audit system and financial procedures, while Deputy PM Teo Chee Hean

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Public sector procurement lapses: stop throwing away public money

I’m not in the least surprised by the procurement lapses by government agencies and ministries. This is in keeping with lapses elsewhere with government policies eg. the influx of foreigners, the granting of PR and citizenship, phantom workers issues and so on.

One of the reasons is that there is too much money flushing around in the system, and government agencies and ministries are too preoccupied with raising revenue to be able to exercise proper oversight.

That is how the Singapore Land Authority and two other public agencies could be swindled to the tune of millions of dollars. And this could be the tip of the iceberg.

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A civil service report card

Going through the Auditor-General’s report is always good fun. As fun as going through the MP-driven Public Accounts Committee report. Lest anyone thinks they are all about numbers, they are more than just that. They give us a peek at the workings of the public service and tell us what went wrong, rather than what went right. This is a trifle unfair, you may think, because our public service is simply excellent and a byword for efficiency. Internationally lauded. Number 1. Yadayada.

So perhaps mere mortals can be forgiven for smirking at lapses…

The media went to town with the report, highlighting in particular that Auditor-General’s concern over “procurement lapses”. In a year when tenders and contracts are making the news in all the bad ways, it’s no wonder that the Auditor-General’s Office (AGO) has trained his sights on this aspect. Then again, he’s been doing so for the past seven years or so.

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Government continues to suffer procurement lapses: auditor-general
Despite attempts in recent years to improve, numerous government agencies and affiliated organisations continue to suffer from procurement lapses, said the Auditor-General on Wednesday in his annual report. (AFP file photo)

The government, its statutory boards, agencies and affiliated companies continue to flout procurement rules despite efforts in recent years to improve, said Singapore's auditor-general's office (AGO).

In his annual report based on the financial year ending March 2013, Auditor-General Willie Tan noted that "some entities were not sufficiently diligent in ensuring compliance with procurement rules".

These lapses included waiving competition on weak grounds, allowing certain bidders to make key changes to their bids after the closure of tenders, not disclosing evaluation criteria up-front in tender documents, not evaluating tenders properly and obtaining approvals after actions had already been made

related: 
Committee raises concerns over procurement ‘lapses’ in public sector

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Government agencies still prone to lapses
Government agencies still prone to lapses
A man using a fitness corner for training. The Auditor-General’s Office observed that there were many lapses in procurement processes by government agencies, including the Defence Ministry, which was in charge of handling the improvement of certain fitness facilities (Photo: Screen grab from YouTube) 

The latest annual report from the Auditor-General’s Office, which audits the Government and the  public sector, shows that there are irregularities and slip-ups in procurement processes in ministries and government agencies.

While efforts have been made to enhance procurement rules over the last few years, some government bodies have not been diligent enough in ensuring compliance, Auditor-General Willie Tan said.

An example is in improving fitness corners authorised by the Ministry of Defence. Instead of enhancing 50 of these facilities, SAFRA, the organisation in charge, exceeded the number by 58.

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Auditor-General flags procurement lapses

SOME companies could have enjoyed an unfair advantage in tendering for public sector contracts because of the failure of certain public bodies to follow procurement policies, according to the Auditor-General's latest annual report.

Among the largest tenders in which the bidding process was deemed unfair was a $19.14 million project by Republic Polytechnic to develop an integrated academic system. After the deadline, it allowed one vendor to submit a revised proposal. It was a substantial change from the original tender, but the fact was not disclosed to the tender-approving authority and the company got the contract.

Auditor-General Willie Tan noted that the polytechnic did not consider re-calling the tender or inviting other shortlisted tenderers to submit revised bids, though this is required under government rules

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Public agencies' procurement procedures still 'prone to lapses'
Public agencies’ procurement procedures still ‘prone to lapses’
The SCDF was cited for lapses in tender evaluation while selecting vendors for works on its fire stations. TODAY file photo

Procurement irregularities continued to plague public agencies as the Auditor-General’s Office (AGO) flagged these as an area “prone to lapses” for the seventh consecutive year, in its latest annual report released yesterday.

The report, which covers the 2012/13 financial year, also cited management of computer access controls, monitoring of performance of contractors, oversight of projects managed by external consultants, management of stocks and stores as other areas that require improvement.

Auditor-General Willie Tan noted that while the public sector had put in effort to enhance its procurement rules and procedures over the last few years, some public entities were “not sufficiently diligent” in ensuring compliance with the rules

related:
Among the lapses the Auditor-General’s Office report highlighted
Public agencies’ procurement still ‘prone to lapses’: Auditor-General Office

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Lapses In Procurement

The Auditor-General's report for FY2012/13 revealed lapses in the Government's procurement:
  • PRIME MINISTER'S OFFICE — NATIONAL RESEARCH FOUNDATION
  • MINISTRY OF DEFENCE — SAFRA
  • MINISTRY OF FOREIGN AFFAIRS
  • MINISTRY OF HOME AFFAIRS — SINGAPORE CIVIL DEFENCE FORCE
AUDITOR-GENERALReport of the Auditor-General for the Financial Year 2012/13

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Why the focus on AHPETC when there are other issues?

I have been busy recently but even then I am quite tired of listening to the continuous reporting of Aljunied Hougang Punggol East Town Council (AHPETC) conflict of interest (COI) issue. No matter how much reporting is done, it does not deviate from the understanding is that there was COI but there wasn't any wrong doing. However, the AGO report is also out and in it, there is even an instance of misuse of funds. I never heard any reporting of those issues.

Below are some excerpts from the AGO report which you could also view here:
  • MINDEF: Lapses in the Licensing of Land
  • MOE: Lapses in Tender Evaluation and Contract Management
  • MOE: Lapses in Appointment and Monitoring of Former Staff Engaged for Projects
  • MFA: Contracts Made Outside Singapore Not Signed by Authorised Signatories
  • SCDF: Lapses in Controls over Financial Commitments and Payments
  • SCDF: Misuse of Funds Stored in Cash Cards
  • MDA: Lapses in Evaluation of Projects for Funding
  • NHB: Irregularities in Management of Variation Works
  •  HSA: Contracts Awarded to Incumbent Contractors that Did Not Meet Tender Requirements
  • NPARKS: Creating and Backdating of Documents Furnished for Audit
  • NCSS: Irregularities at Various Stages of Procurement
  • SPRING: Lapses in Procurement of Services to Administer an Award
Seriously, those examples that I've extracted out would have more learning points than AHPETC.

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Report of the Auditor-General for financial year 2013/2014

The Auditor-General's report for FY2012/13 (page 12) observed instances of lapses and weak management of resources:
  • Administration of grants;
  • Commitments of public funds;
  • Administration of schemes and programmes;
  • Management of land and assets;
  • Procurements;
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50 shades of white, PAP government’s house needs cleaning

It was shocking indeed to hear Khaw Boon Wan use the example of  Japanese senior management who would resign and even commit hara-kiri (suicide) over wrongdoings. I doubt he was actually asking the WP MPs to kill themselves over AHPETC but Khaw was certainly playing to the gallery to exaggerate and  sensationalise the lapses committed by WP during its learning curve of managing its first GRC.

Those who live in glass houses should be sure their homes are clean of filth before they lob accusations at others for not doing proper housekeeping.  In the 2013/2014 report by the AGO, irregularities were found in various agencies under the Ministry of National Development headed by Minister Khaw who has been spearheading the Parliamentary attacks on WP.

The report said the National Parks Board’s transgressions included creating and backdating some documents relating to the development of Gardens by the Bay to give the impression that they existed at the time when the relevant transactions took place. The AGO said “creating and backdating documents to satisfy audit queries is a serious irregularity. It also casts doubts on the authenticity of other documents and information provided to AGO.”

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Debate on the Auditor-General’s Report on the Audit of AHPETC – MP Png Eng Huat

Madam Speaker, we all know what the Auditor-General’s Office (AGO) is known for and the values they represent. In every report that came out of AGO since time immemorial, entities under its scrutiny had to go through a baptism of fire whenever the AGO came knocking. I have full respect for their work.

Over the years, the AGO has found sad instances of over payments, payments without evidence that goods and services were delivered, duplicate payments and in one instance amounting to $18.6 million, and etc in many ministries and organs of states it audited. One agency was found to have called for a quotation instead of a tender for a project that exceeded $70,000 in the 2010/11 AGO report. Another agency was cited to have issued purchase orders to the term contractor only after the contractor has started the work.

AGO also revealed that 10 statutory boards did not present their FY 2006/07 annual reports to Parliament within the six-month time frame and three of these boards had also been late the previous two year. One of them did not even present its audited financial statements to Parliament for the previous two financial years.

related:
Debate on the Auditor-General’s Report on the Audit of AHPETC: MP Low Thia Khiang
Debate on the Auditor-General’s Report on the Audit of AHPETC: MP Sylvia Lim
Debate on the Auditor-General’s Report on the Audit of AHPETC: MP Png Eng Huat
Debate on the Auditor-General’s Report on the Audit of AHPETC: MP Chen Show Mao
Debate on the Auditor-General’s Report on the Audit of AHPETC: MP Pritam Singh
Debate on the Auditor-General’s Report on the Audit of AHPETC: MP Muhamad Faisal
Debate on the Auditor-General’s Report on the Audit of AHPETC: MP Lee Li Lian
Debate on the Auditor-General’s Report on the Audit of AHPETC: Full Report

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related:
Auditor-General's Report FY2013/2014
Auditor-General's Report FY2014/2015
AGO Report 2015/2016
'Pervasive' lapses in WP town council
Lapses in Governance And Compliance
MPs debate "Lapses in Governance And Compliance"
Town Council Grants And Surplus Issues
From Adverse-Opinion, Ceiling-Cleaning to Unlicensed-Fair
Paying high salaries to mitigate corruption