Saturday, 22 February 2014


More than 10 years of omissions in financial statements submissions by PA

The People’s Association (PA) has had the ratings of “adverse opinion” given to its annual audits by its auditors for the years 2008 to 2011, reported website TRE Emeritus.
Adverse opinion - A professional opinion made by an auditor indicating that a company’s financial statements are misrepresented, misstated, and do not accurately reflect its financial performance and health. Adverse opinions are usually given after an auditor’s report, which can be internal or independent of the company
However, The Online Citizen has viewed the annual reports of the People’s Association (PA), from the years of 2001 to 2010. In all these years, the PA’s auditors made some observations and noted that the financial statements of related organizations of the PA had omitted providing financial statements to the auditors.

As such, the financial statements of the PA did not include the statements of its related organizations, such as community clubs and community centres.

Low Thia Khiang’s question in 2008 on PA’s “adverse” accounts rating
PA clarifies on “adverse opinion” in financial statements since 2008
Town councils and the State – same old repertoire, or a new direction?
Secretary-General of Workers’ Party “Welcomes” the Audit
AGC must act fairly to address Straits Times’ Contempt of Court

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PA’s response to TRE’s exposé analysed

This revelation comes in the wake of the PAP government’s insistence that the opposition-run Aljunied-Hougang-Punggol East Town Council’s (AHPETC) accounts be audited by the Auditor-General. For 2 years running, AHPETC’s auditor has given their accounts a “disclaimer of opinion” rating, a grade above PA’s rock-bottom audit label.

TRE’s exposé was so shocking that the news exploded across cyberspace and prompted PA to issue a “press statement” (‘PA’s press statement in response to TRE’s exposé‘) within hours.

Since PA issued their reply, TRE has consulted a number of accountants and lawyers. This is what they had to say.

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PA responds to online reports on its accounts

The People’s Association (PA) on Thursday night responded to reports that independent auditors had raised concerns about its financial statements for four years, after stories about this began to circulate online.

It acknowledged that auditors had submitted an “adverse opinion” on its accounts from 2008 to 2011 because the financial statements of grassroots organisations under its charge were not included.

It said the matter had been raised in Parliament in 2008 and it had explained then its view that the funds in those accounts belonged to the grassroots organisations, which were operationally self-funding.

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Like many Singaporeans, I hope the government will stop wasting taxpayers’ money on trying to score political points using government agencies. With our limited resources, ministries and statutory boards do not have the time to play politics.

After MND’s expression of its concerns on AHPETC’s financial statements, link its adverse opinion ‘bullet’ seemed to have ricocheted off the WP and hit the People’s Association (PA).

From the table below, it can be seen that PA’s case deserves more public scrutiny than a town council’s.

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Accounts: PA fixed, WP got fixed?

The usual suspects and other anti-PAP netizens are outraged that Khaw’s ministry has highlighted various concerns regarding the auditor’s report on the financial statements of Aljunied-Hougang Town Council (AHTC) for Financial Year 2012, and Tharman has gotten the Auditor-General to investigate the matter, while no-one in govt is investigating why the PA’s “auditors have been giving an “adverse opinion” on the financial reports from the People’s Association (PA) for several years now.”

I won’t go into the rights and wrongs of the AHTC’s accounts because we will soon know the truth*, except tthat I found it puzzling that Auntie said bar one concern, they were related to handing-over issues. Some were, the others were not, even a cursory glance would have shown her, as it did me (both of us are trained lawyers). Anyway let’s wait for the report, though having witnessed at first hand how the AudG audits govt bodies, WP is in for a nasty report. It is hated and feared by the rest of the govt machinery. It works like the ISD: takes no prisoners. AudG is also very petty.

As to the PA’s accounts, I won’t go into details because the issue is one of consolidating accounts** and the PA had given up its row with its auditor and will be consolidating the accounts that the auditor wanted consolidated effective last yr’s accounts, due soon. It had resisted complying since the auditor raised the issue (“Auditor KPMG noted the omission of the financial statements of the community centres and community clubs”).in the accounts for FY 2001.

PA’s staff costs increased 50 per cent, $74 million in 3 years

The PA’s ‘economy’ seems to be in a bubble with skyrocketing staff costs. From $149 million in 2009, it increased to $223 million in 2012. At this rate of increase, it could be half a billion dollars in a few years time. Although the PA is funded by taxpayers, there was no breakdown of the 50 per cent increase within such a short span of time.

PA FY 2010 AR (FY 2009 and FY 2010 figures, grant – pg 86, staff costs – pg 88)
PA FY 2012 AR (FY 2011 and 2012 figures, grant – pg 100, staff cost – pg 102 )

Relative to other costs, staff costs have increased disproportionately. The government had resisted helping elderly Singaporeans and had to implement a package to provide assistance. It doesn’t seem fair to provide additional millions to the PA which is basically doing the same job.

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PA: Funds in GROs belong to them

Yesterday (20 Feb), TRE published breaking news of auditors of People’s Association (PA) giving “adverse” ratings to its financial reports the past number of years (‘BREAKING: Auditors give adverse ratings to PA’s financial reports‘).

The auditors said that they had submitted an “adverse opinion” each time because the grassroots organisations’ financial statements were not in compliance with accounting standards. An “adverse opinion” is the most negative among the few types of audit opinions.

In response, PA has given its reply which was duly published in the Straits Times (ST) today (‘PA responds to online reports on its accounts’, 21 Feb). In the ST article, PA attempts to explain why its auditors have given its financial reports an “adverse opinion”.

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In response to recent online reports that the People's Association (PA) has been receiving 'adverse opinions' for their financial records for several years, a spokesperson from the PA has come out to admit that the reports are true.

Adverse opinions are the worst of the 4 auditor responses, making it worse than the 'disclaimer of opinion' that the Aljunied Hougang Punggol East Town Council (AHPETC) had received for the last 2 years.

The AHPETC auditor's report has been repeatedly highlighted in mainstream media and the government has made a big deal of pointing out how 'serious' this is.

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Follow The Money

It has now surfaced, and confirmed by the People's Association (PA) this morning ("PA responds to online reports on its accounts"), that the PA accounts for 2008 through 2011 have been slapped it with an "Adverse Opinion" by auditors, year after unrepentant year. That's auditor lingo saying that PA financial statements do not present the true state of affairs of the Association. Specifically, the financial position of the 1,803 (as at 31 March 2011) grass-roots organisations (GROs) under its purview are not consolidated, and no audited financial information of the entities under its control are available.

Apparently Workers' Party chief Low Thia Khiang did raise a red flag in 2008, but the blinkered eyes of Parliament decided it "was fully responded to." Nevertheless, their spokesman is now responding with a confessional, "PA is on track to present  fully consolidated accounts for FY2013." Does that mean senior anti-graft officer Edwin Yeo does not have to go to jail for 10 years if he makes amends and undertakes to stop pilfering from the Corrupt Practices Investigations Bureau?

We are not dealing with peanuts here (unit of currency defined as $600,000 by Mrs Goh Chok Tong), PA’s operating expenditure for FY2012 increased by $46 million to $483 million, of which $434 million have been siphoned off from taxpayers in the guise of Government grants.

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People's Association Awful Accounts

Thanks to TR Emeritus, I found the PA annual report for 2010/11 from Parliament's website. Look at what the auditor KPMG had to say about how PA is keeping their financial accounts. Awful.

Looks like it is AIMS all over again, only worse. This is what the PAP and government is getting for going after WP AHPETC isn't it?

However this plays out it will look terrible on the PAP. Right now they must be running all over the place like headless chickens on how to respond because there is nothing in the ST today on this matter.

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BREAKING: Auditors give adverse ratings to PA’s financial reports

Yesterday (19 Feb), Minister for National Development Khaw Boon Wan requested Finance Minister Tharman Shanmugaratnam to direct the Auditor-General to conduct an audit of the opposition-run Aljunied-Hougang-Punggol East Town Council’s (AHPETC) financial accounts.

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.

Earlier, on 14 February 2014, the Ministry of National Development (MND) said that the auditor’s disclaimer of opinion “is more severe than a qualified opinion” [Link].

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PA clarifies on “adverse opinion” in financial statements since 2008

The People’s Association (PA) was reported to have received an “adverse opinion” in its latest financial statements, and has been receiving the same rating since 2008. The adverse opinion, purportedly the worst possible in the grading of financial statements, was caused by PA’s failure to include the financial statements of grassroots organisations (GROs) under its charge.

The revelation was made on news website TR Emeritus yesterday and has been spreading online since.

PA has subsequently issued a media statement to clarify that the adverse opinion was related to only “one reason”, in reference to the lack of clarity on the financial status of its GROs.

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It is not until now that the People's Association's 'adverse opinion' on their financial accounts has come into the spotlight, but in fact Workers' Party's Low Thia Khiang raised the issue when it first surfaced in 2008 while he was then MP of Hougang SMC.

He fielded the question in Parliament but got pretty much the same reply that we are getting now:

The adverse opinion was given for a single reason being that the Grassroots Organisations' financial records were not included and this is unimportant given that GROs are self-funded, meaning there is no use of public funds.

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PA’s audits’ “adverse opinion” for several consecutive years? No action taken? -Leong Sze Hian, 20 Feb 2014
I refer to the article “BREAKING: Auditors give adverse ratings to PA’s financial reports” (TR Emeritus, Feb 20).“Adverse opinion” vs “disclaimer of opinion”?

Several issues may be raised. For example, It may be one thing to have an adverse opinion – but to have an “adverse opinion” pertaining essentially to the same discrepancy, apparently for several consecutive years may raise the following questions:

What action did the Board of Directors take? What action (if any) was taken by the Board of Directors to address the “adverse opinion”? Why ‘same’ “adverse opinion” allowed to continue? Why was the ‘same’ “adverse opinion” allowed to continue for several consecutive years?Full story

Related: Auditors give adverse ratings to PA's financial reports - TRE

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While the PAP is busy making a big show of the disclaimer of opinion that the Aljunied-Hougang-Punggol East Town Council received on their audits, it would appear that there is just as many lapses being made by their friends at the People's Association.

According to the Financial reports published on the PA website, PA has been receiving adverse opinions on their audits each year since about 2008.

Each time, their auditors said that PA has failed to include in their financial accounts the financial records of the grassroots organisations working under the PA despite this being a specific requirement:

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People's Association (PA) given "adverse opinion" by it's auditor for several financial years? - report

TR Emeritus, 20 Feb 2014

For FY2007, PA did not include the financial statements of grassroots organizations (GROs) operating under itself. The auditor could not “assess the financial impact to the financial statements of the Association arising from the non-inclusion of the financial statements of the GROs”. As such, the auditor gave an “adverse opinion” against PA because its financial statements “[did] not present fairly” the state of affairs of the Association:

Full story



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Aljunied-Hougang-Punggol East Town Council to contest unlicensed trade fair charge

The Aljunied-Hougang-Punggol East Town Council (AHPETC) is contesting an allegation by the National Environment Agency (NEA) that it held an unlicensed trade fair at the Hougang Central Hub.

This comes after NEA applied for a court summons to be issued last month.

The charge states that AHPETC had failed to obtain a permit from the Director-General of Public Health before organising the fair.

WP Town Council claims trial over unlicensed fair allegations
Statement from Workers’ Party chairman, Sylvia Lim

“Aljunied-Hougang-Punggol East Town Council is facing a summons from NEA in relation to this Lunar New Year Community and Floral Fair that we held recently at the Hougang Central Park.”

“So today was the first mention and through our lawyers we told the court that we intend to claim trial to the charge, and we intend to mount a defence and seek justice from the court.”
“I would also like to clarify that the lawyers we have hired are from the same firm that I am associated with.” “But, we will not be touching any town council’s funds to mount this defence. We will be raising funds from elsewhere.”
“Neither me nor any Workers’ Party members will have any share in any fees that are paid to the law firm.”
AHPETC gets court summons after organising community fair
The Aljunied-Hougang-Punggol East Town Council (AHPETC) said it received a summons on Thursday to attend court in relation to the Lunar New Year Flora and Community Fair held at Hougang Central Hub.

The town council said it had contacted the National Environment Agency about its intention to run the event since December 20, 2013, with the nature of the community fair and the benefit to residents clearly stated. The event started on January 10 this year.

The town council said NEA has also issued notices to vendors at the trade fair, who are required to either attend court or pay fines.

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The Aljunied-Hougang-Punggol East Town Council has today received a summons to attend court in relation to the Lunar New Year Flora and Community Fair held at Hougang Central Hub, a venue under its management.

The TC had initiated communications with the National Environment Agency (NEA) over its intention to run the event since 20 December 2013, with the nature of the community fair and the benefit to residents clearly stated. The event commenced on 10 January 2014.

In addition to summons against the TC as the organizer of the fair, the NEA has also issued notices to attend court and to pay fines to residents and their family members assisting there on 28, 29 and 30 January 2014.


NEA is Contradicting Itself
AHPETC: NEA is Politically Motivated to Tarnish the Image of AHPETC

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MND gives AHPETC lowest rating in corporate governance

Aljunied-Hougang-Punggol East Town Council (AHPETC) has been given the lowest rating in corporate governance by the Ministry of National Development (MND) in its Town Council Management Report.

The Workers’ Party-run town council was not given a rating for corporate governance when the MND published its annual management report for all town councils last November, as it had failed to submit its financial audits. It submitted its audited financial statements on Feb 10.

Publishing an update on the report today (March 7), the MND said it awarded the town council a “red” grade as it had not complied with the provisions of the Town Councils Act and the Town Councils Financial Rules, and there were at least two counts of contraventions. AHPETC had failed to transfer S$12.46 million into the bank account of the sinking funds and failed to keep proper accounts and records of its transactions and affairs.

Keeping town councils honest and clean

The ongoing spat over town council contracts and appointments, with both sides trading charges of shenanigans and wrongdoings, is a worrying sign of things to come. The proposed strategic review of town councils that is under way is both timely and necessary. -- ST PHOTO: DESMOND WEE

We had lived in the Housing Board block in Yishun for several years when one day, a new signboard went up on the side of the red-brick building.

It was one of those illuminated signs that bore the block number. It was the first sign of the arrival of the new town council, which had also put up signs nearby to make clear to all of us in the neighbourhood that we were now part of this new public entity.

What a waste of resources, I recall thinking at the time, not just to install these, but to keep them burning bright through the night, every night.

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AIM deal begs questions: Tan Cheng Bock

Former long-time PAP backbencher Tan Cheng Bock has weighed in on the controversy surrounding the sale of computer systems used by town councils, raising several questions in a post on his Facebook page yesterday, including whether it was right and beneficial to give up ownership of software developed using public funds.

Dr Tan, who was chairman of West Coast-Ayer Rajah Town Council from 2001 to 2004, also questioned whether the town councils, as "public institutions" - a description that was disputed by Tampines GRC MP Baey Yam Keng, who said they were "political organisations" - did the right thing selling the system to Action Information Management (AIM), "a company owned by a political party with its own agenda".

But Mr Baey, who had to field several questions on the same issue during his regular Facebook chats on Sunday, felt the matter had been unnecessarily politicised. 

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PAP explains software sale to AIM

The circumstances under which the computer software of the People's Action Party (PAP) Town Councils was sold to a PAP-owned company, Action Information Management (AIM), were outlined in detail by Dr Teo Ho Pin yesterday in a four-page statement.

Among other things, Dr Teo, who is Coordinating Chairman of the PAP Town Councils, said that the town councils were advised by Deloitte and Touche Enterprise Risk Services (D&T) that the software was "obsolete and unmaintainable" - which could explain why no other company wanted to bid for the tender.

D&T also suggested the option of having a third party own the computer system, including the software, with the town councils paying a service fee for regular maintenance.

What are PAP’s Aims for Aljunied GRC?

After all this hoobalah over Aim and Aljunied GRC, we are no wiser as to what actually transpired behind what really went on.

Contrast this to PAP’s handling of the Michael Palmer incident and this Aim episode stands in huge contrast with how quick and efficient PAP had swiftly dealt with the whole Palmer incident and swept it right underneath the carpet.

Yet, with the Aim episode, why has PAP not been as swift in their actions? – because as much as PAP pride themselves as being able to anticipate and foresee future events, they haven’t actually anticipated the current Aim episode to occur.

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AIM operating out of a virtual business office

AIM's Chairman, Chandra Das

AIM came into prominence when it was revealed by AHTC Chairman, Sylvia Lim, that the computer and financial system had been developed jointly by the 14 PAP Town Councils over a period of more than 15 months. In Jan 2011, for some unknown reasons, it was sold to and then leased back from AIM. In other words, after Jan 2011, the 14 PAP Town Councils then started paying AIM rental fees so as to use the computer and financial system. The rental fees to pay AIM, of course, would have to come from the conservancy fees paid by residents. It is not known how much PAP sold the system to AIM and how much rental fees were paid to AIM for leasing the system back (‘PAP TC’s computer & financial system sold to and leased back from a $2 company‘).

Ms Lim also asked why the 14 PAP town councils, which had developed the system, had transferred the ownership to AIM, a third party.

And since now AIM owns the system and presumably has to maintain and provide technical support for the use of the system by the PAP Town Councils, how is it doing it if it is running from a “virtual office”? For example, as in all IT maintenance business, surely it must keep some spare hardware as backups in case computer systems fail at customer sites? Did it keep the spares in the virtual office? What about backing up precious data of residents who are paying their monthly conservancy fees? Where are their backup servers? In the virtual office as well? What sort of services are AIM providing in their lease of the computer and financial systems to Town Councils?

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AIM Before Damage Is Done

Alex Au is a blogger that is firmly in the pro-opposition side of the political divide here in Singapore. So I, like most Singaporeans, take whatever he writes with a pinch of salt. However in the latest case of the town councils’ computer systems being run by a little-known firm linked to the ruling party, I have to agree with him that the issue “has the potential to be a big story, causing enormous damage to the People’s Action Party (PAP)”.

The problem first began when the Ministry of National Development (MND) released its latest town council management report and singled out the opposition-run Aljunied-Hougang Town Council with a “red” rating for its handling of service and conservancy charge (S&CC) arrears. The byline from the MND was that the Workers’ Party (WP) was incompetent. 

The Workers’ Party (WP), who both the Hougang and Aljunied seats in the last General Elections (GE) in 2011, came out swinging. Chairperson of the WP, Sylvia Lim, released a statement noting the fact that the town council’s audit took longer than expected because of their need to develop a new computer and financial system from scratch.

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AIM Eternally Gratified

Commenting on the findings of the Town Council Management Review published on 14 Dec 2012, Aljunied-Hougang Town Council (AHTC) chairperson Sylvia Lim has inadvertently unearthed some unsavory goings on rivaling the extra-curricular activities at the Punggol East Monday nights meet the people sessions. Already MPS is now an acronym for Mate Per Schedule, code for sweetheart dealings under the umbrella of approved government transactions.

"After the GE in May 2011, the Town Council was served with a notice that the Town Council's Computer and Financial Systems will be terminated with effect from 1 August 2011 due to material changes to the member ship of the Town Council. This Computer and Financial Systems had been developed jointly by the 14 Town Councils over a period of more than 15 months but was in January 2011 sold to and leased back from M/s Action Information Management Pte Ltd, a company which was dormant."
That dormant company lists as directors former People's Action Party members of parliament, namely Chandra Das, Lau Ping Sum and Chew Heng Ching (Deputy House Speaker 2002-2006). That explains the "Action" in the company name "AIM". Whatever the original aim of the entity, it was incorporated in 1991 with a miserly paid up capital of $2. The first director (Lau) was appointed in 1998, Chandra Das (MP 1980 to 1996) was made director in 2010. Presumably those were the years they geared up for their "IT consultancy/hardware consultancy" business, and injected more funds to augment the token start-up investment. We are assuming, of course, the 14 Town Councils, will millions of reserves collected from S&CC, will not deal with a $2 company. Or entrust it with a costly computer system developed over 15 months.

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