Sunday, 24 January 2016

Workers' Party town council ordered by Court of Appeal to appoint one of the Big Four accounting firms to examine its books

AHTC ordered to appoint Big Four firm
Court sets April 15 deadline for chosen firm to submit first monthly progress report to HDB
By Chong Zi Liang, The Straits Times, 23 Jan 2016

The Workers' Party-run town council has been ordered by the Court of Appeal to appoint one of the Big Four accounting firms within two weeks to examine its books.

The court said yesterday that it is a matter of public interest that should not be further delayed.

It also expects the first monthly progress report from the appointed accountants to be submitted to the Housing Board on April 15.

A Big Four firm will likely cost more than the choices named by the Aljunied-Hougang Town Council (AHTC), but HDB had said that it will pay the difference.

In delivering the court's decision, Chief Justice Sundaresh Menon said: "The concern now should be to appoint a firm of accountants which would manifestly have the ability, the experience and the resources to complete this task expeditiously".

* AHTC appoints KPMG to check books

* Workers' Party town council lapses detailed in KPMG's first report on accounts

The three-judge court, which included Justice Chao Hick Tin and Justice Andrew Phang, also said the appointed accountant should have to look into whether any past payments made by the town council "were improper and ought therefore to be recovered".

Law Minister K. Shanmugam said last year the town council had overpaid its then-managing agent, FMSS, about $6.4 million in four years as its fees were higher than those of managing agents in other town councils. Yesterday's court order came eight weeks after it ruled last November that AHTC had to hire accountants to address financial lapses uncovered by the Auditor-General's Office (AGO).

HDB has to agree to the accountant chosen, but it could not "unreasonably withhold" consent.

The town council initially picked Business Assurance - its financial consultant since last March - for the job. But HDB raised concerns about the firm's capability and asked for more information to determine its suitability.

The firm, however, pulled out on Jan 8. A second firm, MRI Moores Rowland, also withdrew after being nominated by AHTC.

Yesterday, the court heard that AHTC had picked yet another accounting firm called Ardent.

HDB again objected, saying that the firm did not have the relevant expertise, among other things.

In directing AHTC to appoint one of the Big Four, CJ Menon said "the task to be undertaken by the accountants who are to be appointed should not be underestimated" as they had to make sure a public body was fulfilling its legal obligations and using its public funds properly.

While the objection about the first two firms "cannot in and of themselves be the basis of objecting to the third", CJ Menon noted that AHTC's selection process had been unsuccessful so far, and that this "cannot continue indefinitely".

HDB submitted evidence to show that individuals from AHTC's first two choices, Business Assurance and MRI Moores Rowland, had failed the Practice Monitoring Programme (PMP).

Under the PMP, the Accounting and Corporate Regulatory Authority carries out inspections of public accounting firms and accountants to ensure compliance with standards and procedures.

The PMP report "calls into question their selection and due diligence process, their judgment in the selection of accountants, and there is no assurance proper checks have been carried out by them in relation to their latest nomination of Ardent", said Ms Aurill Kam of the Attorney-General's Chambers, acting for HDB.

AHTC tried to prevent the evidence from being submitted, arguing that it was irrelevant as both its nominations had pulled out.

PMP findings were also "private information" and revealing it may "discourage others from stepping forward if it is known this record will be made public", said the town council's lawyer Peter Low.

But the court allowed the evidence. It, however, said the firms - not the individuals - would be named in relation to the PMP results. The document was also sealed and made confidential, although HDB could apply to the court to make it public.

AHTC had told the court it did not want two of the Big Four firms - PwC and Deloitte.

Its reason: PwC took part in the AGO's audit of AHTC, while a partner in Deloitte was involved in grassroots work and had given a media interview on AHTC's accounts.

CJ Menon said, in the case of PwC, he was "unsure why this should be a concern" as AHTC had never challenged the AGO report.

When asked why the town council was unwilling to consider the other two - KPMG and Ernst & Young - Mr Low said AHTC had the right to choose the accountant it wanted.


HDB said it welcomed the court's decision and was looking forward to the town council's nomination.




Lawyer for HDB, Ms Aurill Kam asked, “Why have we spent two weeks looking for nominees that appear not to have met...
Posted by Singapore Matters on Friday, January 22, 2016






PAYING FOR THE DIFFERENCE

We are unable to see how the interests of the town council and the HDB are divergent on the question of the steps that should be taken to ensure compliance with the Town Councils Act, and this is manifest in the HDB's willingness to bear the additional costs involved by the appointment of a more experienced or more qualified firm of accountants.

- CHIEF JUSTICE SUNDARESH MENON, on requiring the Aljunied-Hougang Town Council to appoint a Big Four firm





Why HDB objected to nominated firms
By Chong Zi Liang, The Straits Times, 23 Jan 2016

The Housing Board had objected to the Aljunied-Hougang Town Council's (AHTC) nomination of accounting firms Business Assurance and MRI Moores Rowland, citing the Practice Monitoring Programme (PMP) inspection results of people in the firms.

HDB argued for the PMP record to be disclosed, saying it would show AHTC's selection process was not thorough.

But the town council said the information was unnecessary because both firms had withdrawn from consideration.

The Court of Appeal said the record was relevant and allowed it. But only the firms, and not the individuals, could be named in relation to the PMP results.

After yesterday's hearing, the HDB said in a statement: "This issue of appointing accountants could have been resolved much sooner had the town council carried out proper due diligence, or considered any of the Big Four accountants, as suggested by HDB in the first instance."

The PMP results revealed in court show:

BUSINESS ASSURANCE

• An accountant failed an inspection in 2010 and was put on a "hot review", meaning he or she could not sign off on a client's audit report unless a peer agreed it could be done.

• The accountant also failed a follow-up inspection in July and August 2014, and was placed on a six-month restriction on practice from July 13, 2015. This period covers the time when Business Assurance was being considered for appointment as AHTC's accountant.

• A second follow-up inspection has not taken place.

MRI MOORES ROWLAND

• An individual who was previously a public accountant failed the review from September 2009 to November 2009 and was put on a "hot review".

• He or she failed the follow-up inspection conducted from Nov 21, 2012, to Jan 11, 2013. The public accountant licence expired on Dec 31, 2013.

(At an earlier hearing, the court was told that in the team of five accountants MRI Moores Rowland was proposing, only one was a public accountant.)





Even Goh Meng Seng is laughing at WP.
Posted by Fabrications About The PAP on Thursday, January 21, 2016





Accountants for AHTC: Court sets Friday deadline
Apex court to make decision tomorrow if HDB, AHTC fail to agree; 2 nominated firms pull out
By Chong Zi Liang, The Straits Times, 21 Jan 2016

The Court of Appeal has ordered the Housing Board and the Workers' Party (WP)-run town council to decide by tomorrow the accountants to hire to look into the town council's books.

The two firms the Aljunied-Hougang Town Council (AHTC) picked, including its accountants now, had withdrawn from consideration.

Yesterday, Chief Justice Sundaresh Menon said he had expected the matter to be "expeditiously resolved" after the court hearing on Jan 7.

In giving the deadline, he said the court would make the decision tomorrow if both sides fail to agree.

It has been eight weeks since the apex court ruled last November that AHTC had to hire accountants to address financial lapses uncovered by the Auditor-General.

The hearing yesterday was held because AHTC's lawyer Peter Low had applied for guidance on seven questions on factors to consider when choosing the accountants.

CJ Menon said that "common sense'' would seem to suggest the town council should be appointing the most suitable and qualified candidate to expeditiously address the issues raised by the November court judgment, "instead of focusing on the minutiae of issues identified in Mr Low's letter to us".

He also noted the HDB would agree to any of the Big Four accounting firms, and had said it would pay for any extra costs.

It was disclosed in court yesterday that AHTC's pick for the job, Business Assurance, had pulled out on Jan 8. The firm has been AHTC's financial consultant since last March.

But the HDB had raised concerns about the firm's capability and asked for more information to determine its suitability for the job. AHTC agreed to provide the information by Jan 11.

On Jan 8, however, the firm pulled out owing to "intense media scrutiny" and phone calls from "concerned clients", said AHTC chairman Pritam Singh yesterday.

But Mr Low said Business Assurance managing partner Alex Chai withdrew his team because he did not want to reveal his Practice Monitoring Programme (PMP) grading.

This led CJ Menon to remark: "Hence, the assertion that the withdrawal was on account of media scrutiny only was perhaps half the story."

Under the PMP, the Accounting and Corporate Regulatory Authority (Acra) carries out inspections of public accounting firms and accountants to ensure compliance with standards and procedures.

The HDB had asked AHTC about Business Assurance's PMP report.

A second firm, MRI Moores Rowland, also withdrew after being nominated by AHTC. When asked if it was also over the PMP, Mr Low said he did not know and was not sure if AHTC had the answer.

But CJ Menon pointed to Mr Singh's affidavit filed two days ago, that stated the firm had told him its only public accountant, a Mr Lee, had not been selected for a PMP review by Acra.

Ms Aurill Kam of the Attorney-General's Chamber (AGC), acting for HDB, said it was "very disturbing" that both firms had "mysteriously recused themselves".

She suggested it had to do with the firms' PMP reviews, and said the AGC had applied for Acra to provide the PMP findings, to determine if the town council was nominating people with sound credentials.

Mr Low countered that it was "all water under the bridge" since the firms had declined the job.

Mr Singh also told the three-judge court, which included Justice Andrew Phang and Justice Chao Hick Tin, that he did not look at the firms' PMP status because, in his view, it applied only to auditors while the court-ordered appointment was for accountants to clean up the financial lapses.

CJ Menon said it was "troubling" that Mr Singh had failed to mention in two affidavits he filed on Monday that MRI Moores Rowland had pulled out on Sunday.

Referring to Mr Low's suggestion that this no longer mattered, since the firms had pulled out, CJ Menon said: "While he may be right in the technical sense... there remain concerns as to whether the court has been apprised of all the facts in a candid and forthright manner and whether the town council has in place a system to ensure due diligence in selecting candidates to do this work."

CJ Menon also turned down Mr Low's application for the court's guidance on the seven questions, including whether the town council has to pay heed to the PMP reviews of accountants.

He said it was "neither appropriate nor helpful to draw the court into a consideration of these questions", which are "a matter of common sense".

He added: "The HDB has indicated it would agree to any Big Four firm, hence the matter can be swiftly resolved with common sense and commitment."





Town council says
The Straits Times, 21 Jan 2016

Statement from Aljunied-Hougang Town Council chairman Pritam Singh:

The Court of Appeal noted today that while some aspects of their judgment of Nov 27, 2015 have been carried out by Aljunied-Hougang Town Council (AHTC), the issue of the appointment of the accountants has not been settled as yet.

AHTC will be looking to appoint new accountants as two accounting firms it previously nominated have indicated that they do not wish to continue with the assignment.

AHTC will endeavour to obtain HDB's consent on the accountants before the court reconvenes on Friday.

The town council also updated the court that it has already made one out of two outstanding sinking fund transfers it was ordered to make under the judgment.


HDB's statement

The Court of Appeal has turned down Aljunied-Hougang Town Council's (AHTC) application for directions on how it should go about choosing its accountants, adding that this is a "matter of common sense" and that it would be "neither appropriate nor helpful to draw the court into a consideration of these questions".

Instead, the AHTC's focus should be on appointing "the most suitable and qualified" accountants for the job.

CONCERNS OVER AHTC'SDUE DILIGENCE PROCESS

The Housing Board (HDB) is concerned over the AHTC's persistent failure to provide basic information on the expertise, capacity and resources of the accountants proposed by the town council for HDB's concurrence.

Such information should have been readily available if the town council had conducted due diligence before selecting and proposing their nominations.

The AHTC has not been forthcoming with information requested by the HDB regarding its nominated accountants, Business Assurance and subsequently MRI Moores Rowland.

The AHTC's nomination approach in both instances suggests a lack of rigour and basic due diligence - evident in the successive nominations and withdrawals of both their proposed accountants over a short period of time.

Hence, the HDB shares the Court of Appeal's concern on whether the AHTC "has done due diligence in making nominations", and that "all facts may not have been provided in a candid manner".

APPOINT THE MOST SUITABLE AND QUALIFIED ACCOUNTANT

The HDB is unable to understand why the town council is averse to considering any of the major accountancy firms, which clearly have the expertise, capacity and resources to carry out the assignment.

This continuing position is perplexing as the AHTC's concern about costs of a Big Four accounting firm has been addressed by the HDB's offer to bear the additional costs, given the public interest involved in this matter.

The HDB hopes that the AHTC will do all that is necessary to appoint the most suitable and qualified accountants to carry out the work ordered by the court.

As noted by the Court of Appeal, the appointment of the AHTC's accountants has been long outstanding. It is in the interest of all parties involved that this matter be resolved expeditiously.

If the AHTC is prepared to reconsider the HDB's earlier suggestion to appoint a reputable firm such as one from the Big Four, the HDB's offer to bear the additional costs of the appointment still stands.










AHTC wants more time to pick Big Four firm
By Lim Yan Liang, The Straits Times, 6 Feb 2016

The Workers' Party-run Aljunied-Hougang Town Council (AHTC) is writing to the Court of Appeal to ask for more time to appoint a Big Four accounting firm to examine its books.

On Jan 22, the court ordered AHTC to pick accountants from a Big Four firm within two weeks. The deadline was yesterday.

The town council said yesterday that while it initiated contact with one of the firms on Jan 23, it needed "more time to provide information relevant to the appointment of the accountants to the HDB".

AHTC added in a statement that it "will be writing to the court to request an extension".

In a separate statement, the Housing Board told The Straits Times that it had been informed by AHTC about the need for an extension to the court-mandated deadline.

The HDB said: "The Court of Appeal, in its judgment, stated that, as this was a matter of public interest and involving public funds, it should not be delayed further.

"AHTC has informed HDB that it requires more time before it can provide HDB with the relevant information concerning its proposed accountants. HDB has no objection to AHTC's request for time extension but has requested that AHTC write to the Court of Appeal to request that the deadline for appointment be extended."

In the Jan 22 ruling, Chief Justice Sundaresh Menon said the accountants' task "should not be underestimated" as they had to make sure a public body was fulfilling its legal obligations, and using its public funds properly.

The three-judge apex court also set April 15 as the deadline for the accounting firm to submit its first monthly progress report to HDB.

The town council saga hit the headlines last year when the Auditor-General's Office (AGO) highlighted lapses in governance and compliance with the law by the town council since 2011.

The National Development Ministry, and later HDB, applied to have the court appoint independent accountants to look into the town council's books. In November last year, the Court of Appeal ordered AHTC to appoint accountants to fix lapses uncovered by the AGO.

A combination of objections by HDB to the town council's choices - and withdrawals by two firms initially picked by AHTC - led to the Jan 22 order by the court that AHTC pick from a Big Four firm.

These would be PwC, Deloitte, KPMG and Ernst & Young.

Additional reporting by Chong Zi Liang







* AHTC appoints KPMG to check books
Move resolves long-running dispute; accounting team expected to produce first monthly progress report by April 15
By Walter Sim, The Straits Times, 2 Mar 2016

A long-running disagreement over the appointment of accountants to examine the books of the Workers' Party town council has been resolved, with the hiring of a team of accountants from KPMG.

Mr Pritam Singh, the town council's chairman who gave the news yesterday, said: "KPMG is the most suitable firm and is capable of performing an independent and objective review."

His announcement follows a Court of Appeal order, made on Jan 22, that the Aljunied-Hougang Town Council (AHTC) hire a 'Big Four' accounting firm to fix the lapses in governance and compliance with the law that were found in a special audit by the Auditor- General's Office (AGO).

The three other firms are PwC, Deloitte, and Ernst & Young.

The KPMG team is expected to produce its first monthly progress report by April 15, Mr Singh said.

It is the deadline the three-judge apex court had set for the submission of the first report to the Housing Board, to which all town councils have to submit annual reports on their financial statements.

Yesterday's statement by Mr Singh comes almost four weeks after the Feb 5 deadline the Court of Appeal had given initially for one of the Big Four to be appointed. It later agreed to AHTC's request for an extension.

The HDB said last night it had no objections to the choice of KPMG.

It, however, noted that KPMG had disclosed to AHTC potential conflicts of interest which could arise from the appointment, including the fact that the firm's managing partner Tham Sai Choy sits on the HDB board. Mr Tham has "recused himself from any deliberation and decision-making relating to AHTC", the HDB added.

It also said both parties have agreed on "safeguards to ensure that the objectivity of KPMG's engagement is not threatened by conflicts of interest".

"AHTC can confirm that such safeguards are, in its view, adequate," the HDB said.

"We look forward to AHTC giving its fullest cooperation to its accountants, including full and unimpeded access to the relevant records and personnel, so that the tasks ordered by the Court of Appeal can be completed expeditiously."

The saga of AHTC's accounts is a long-running clash between the opposition-run town council on one side and the National Development Ministry and HDB on the other.

In February last year, the AGO said its special audit unearthed major lapses at the then Aljunied- Hougang-Punggol East Town Council.

The ministry and the HDB subsequently applied to the courts to appoint independent accountants to inspect the town council's books and rectify the lapses.

Following a stalemate, they went to the Court of Appeal. Last November, it ordered AHTC to appoint accountants to fix the lapses.

When both sides could not agree on a firm, the court ordered AHTC to select one of the Big Four.

Chief Justice Sundaresh Menon said in a Jan 22 ruling that the accountants' task "should not be underestimated" because they had to make sure a public body was fulfilling its legal obligations and using its public funds properly.

They would also have to look into whether any past payments made by the town council "were improper and ought therefore to be recovered".





** AHTC must make sinking fund transfer by 15 April 2016
By Chong Zi Liang, The Straits Times, 4 Mar 2016

The town council run by the Workers' Party has been given an extension of the deadline for making an overdue transfer of money due to its sinking fund.

It has until April 15 to do so, said town council chairman Pritam Singh yesterday.

The Aljunied-Hougang Town Council (AHTC) had been ordered by the Court of Appeal to make all outstanding transfers to its sinking fund by Feb 27. In January, AHTC told the court it had made the first of two transfers. But it was unable to make the remaining transfer by the given deadline.

Mr Singh said in a statement yesterday that the town council was given the extension on Wednesday. He also said AHTC has been working with the Ministry of National Development to receive the government grants for the fiscal years FY2014/15 and FY2015/16.

The ministry has withheld $14 million in operating grants to the town council, saying it will hand them over once safeguards are in place to ensure their proper use.

AHTC has been in a long-running dispute with the ministry and the Housing Board over the appointment of accountants to fix lapses in the town council. The matter was taken to court and the Court of Appeal ordered the town council on Nov 27 to appoint accountants to examine its books.

Earlier this week, AHTC said it would hire a team of accountants from KPMG to do the job. The accountants must submit their first monthly progress report to HDB by April 15, a deadline set by the court.

Lapses in the accounts were uncovered in a special audit by the Auditor-General's Office. It reported in February last year it had found major lapses in governance and compliance issues, including the failure to make timely sinking fund transfers.








'Safeguards in place' so AHTC will get $12.9m of grants

WP-run council accepts all conditions set in relation to grants; Punggol East to get $1.8m
By Chong Zi Liang, The Straits Times, 15 Apr 2016

The town council run by the Workers' Party (WP) will be receiving long-awaited grants from the Ministry of National Development (MND), which says it is now satisfied that safeguards are in place to ensure the proper use of the money.

The Aljunied-Hougang Town Council (AHTC) will get $12.9 million, said the ministry without disclosing when the money will be handed over.

Another $1.8 million is earmarked for Punggol East constituency, which was previously part of the WP's Aljunied- Hougang-Punggol East Town Council (AHPETC).

This sum will go to the Pasir Ris-Punggol Town Council (PRPTC) as the constituency was won by the People's Action Party in last year's general election.

The ministry held back a total of $14.7 million in operating grants for the financial years 2014/2015 and 2015/2016. Yesterday, it noted that AHTC has said it "fully accepts all conditions set by MND in relation to the grants".

The conditions include appointing independent accountants, setting up segregated bank accounts to receive the grants, and getting the accountants to sign off on large payments from the accounts.

AHTC hired a team of accountants from KPMG last month to look into its books.

This followed a Court of Appeal order for the town council to appoint a Big Four accounting firm to help establish whether any past payments it made were improper and if money should be recovered, among other things.

"With these safeguards in place, the ministry will be disbursing the grants to AHTC," said MND.

When contacted, Punggol East MP Charles Chong welcomed the disbursement of the grants.

But he noted that PRPTC had not received the full amount of Punggol East's sinking funds due from AHTC.

He said in 2013, $22.5 million in sinking funds had been handed over to the WP-run town council, after the opposition party won Punggol East in a by-election that year.

But AHTC has so far transferred back only an "interim amount" of $10 million in sinking funds, he said, adding that the exact amount owed is still being worked out.

"The sooner this is resolved the better, as we have to get back what is due to us to be fair to the residents," Mr Chong said.

The WP did not respond to media queries by press time.

The MND had earlier withheld the grants due to lapses in financial governance in AHPETC identified by its own auditors and a special Auditor-General's Office report released in February last year.

The ministry and the Housing Board subsequently applied to the courts to appoint independent accountants to inspect AHPETC books and rectify the lapses.

After months of disagreements, the Court of Appeal ordered AHTC to select one of the Big Four accounting firms.

At a hearing on the issue, Chief Justice Sundaresh Menon said in January this year that the accountants' task "should not be underestimated" because they had to ensure a public body was meeting its legal obligations and using its public funds properly.

They would also have to look into whether any past payments made by the town council "were improper and ought therefore to be recovered".







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