Wednesday 19 August 2015

Government accounts safe, unlike AHPETC's: Tharman

By Tham Yuen-C, Assistant Political Editor and Wong Siew Ying, The Straits Times, 18 Aug 2015

Singapore's public sector has in place a sound system of checks and balances that ensures public funds are properly accounted for, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said yesterday.

As with past years, the Auditor-General gave government accounts a clean bill of health which left no doubt the public's money is in safe hands, he told Parliament.

Mr Tharman was responding to MPs' questions on lapses in some statutory boards that the Auditor-General's Office (AGO) had identified in its latest annual report and how these differ from those of the Workers' Party (WP) town council.

There is a fundamental difference, he said, likening it to a house.

One house needs specific repairs but is structurally safe, while the other has multiple defects and is structurally unsound.

His characterisation is based on the public-sector accounts getting an "unmodified audit opinion" from the AGO while in Aljunied-Hougang-Punggol East Town Council (AHPETC), "the entire system of accounts is a problem", Mr Tharman added.

The House also heard a detailed account of the lapses at the People's Association (PA), one of the statutory boards highlighted in the AGO's FY2014-15 report.

PA deputy chairman Lim Swee Say spelt out the seven payment claims a grassroots leader had made and approved to himself. The House heard as well the details of 13 tenancy contracts that community clubs handed out without competition, which was against PA's rules.

Mr Tharman, however, noted the agencies involved had done their own investigations and taken corrective steps, including enhancing their IT systems to enable better tracking.

Said Mr Tharman: "Let me reassure Members that we have a sound system of checks and balances in place in the public sector, which is why it is regarded as one of the cleanest and most reputable administrations in the world."

After the sitting, WP's chairman Sylvia Lim told reporters that his characterisation of AHPETC accounts as a house at risk of collapse is "a gross exaggeration".

Responding, the Government said she did not give the full picture and that by April next year, AHPETC could possibly owe its sinking fund another $18 million.

[Parliament Sitting]MOF and MND issued a joint statement in response to AHPETC’s media release following a...
Posted by Ministry of Finance (Singapore) on Tuesday, August 18, 2015

'Big difference' in findings on public sector and AHPETC
Tharman: Govt bodies just need repairs, WP town council is structurally unsound
By Tham Yuen-C, Assistant Political Editor, The Straits Times, 18 Aug 2015

One house needs some repairs, but is safe and stable, while the other has multiple defects and is structurally unsound.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam painted this picture in Parliament yesterday, to explain the fundamental difference between the Auditor-General Office's (AGO) findings on the public sector and the Workers' Party-run town council.

In both instances, lapses were found. But the key difference, he said, is the AGO had given the accounts of the government agencies a clean bill of health, but had found the Aljunied-Hougang-Punggol East Town Council's (AHPETC) accounts unreliable.

The minister was replying to Mr Liang Eng Hwa (Holland-Bukit Timah GRC), who wanted to know how the AGO's routine audit of ministries and agencies differed from its year-long audit of AHPETC.

Mr Tharman said the AGO had found "there can be no assurance that AHPETC's accounts are accurate and reliable or that public funds are properly spent, accounted for and managed".

On the other hand, "there's no remotely similar problem in Government", he said.

"There's also full visibility, the curtains aren't drawn," he said in an apparent comparison to WP's lack of transparency on AHPETC.

He urged the WP to focus on resolving AHPETC's problems instead of "whitewashing" them: "When the house is structurally unsafe, one doesn't just go and put a new coat of paint on the front walls. I think it means a very hard look - the foundations need to be put in place. It's hard work but you've had a lot of time to do so."

WP chairman Sylvia Lim (Aljunied GRC) told reporters before her Meet-The-People session last night that "the DPM's characterisation of AHPETC as a house in danger of collapse is a gross exaggeration".

Rather, she said, it is "a house in need of repairs", adding that improvements have been made and "Rome wasn't built in a day".

At the Parliament sitting earlier, Ms Lim, who is AHPETC's chairman, had said of the 13 disclaimers that caused the town council's accounts to be given a qualified opinion, only three remain unresolved.

"Our auditors actually made the observation that except for certain specific issues, the town council has actually complied with the (Town Councils) Act in terms of keeping proper accounts and books," she said of its latest audited accounts for FY 2013/14.

But Mr Tharman said the accounts were still qualified and the new auditors AHPETC appointed had also flagged significant areas of concern. These include non-compliance with legal and regulatory requirements, like late transfers to its sinking fund, he said.

On this, Ms Lim said it is "public knowledge" the Ministry of National Development (MND) had withheld $14 million in grants from AHPETC for FY2014 and FY2015.

Mr Tharman said this was because AHPETC had refused to accede to an "entirely reasonable request" by MND for more information on its cash flow situation, because the town council made "a rather unusual request" for all the grants to be transferred into its sinking fund. As this was against the rules, MND wanted to be sure AHPETC would still be able to deliver its essential service, but AHPETC has not answered the questions.

He added: "The amount that is owed to the sinking fund from the operating fund would not be solved by MND grants. There's a more fundamental problem."

He called on Ms Lim to focus on the substance of the problems at AHPETC.

"The examples that are given of the areas the auditor has qualified do strike me, as a finance minister, as being fairly serious examples. They are not minor infractions, which you put a coat of paint over... They are very serious matters to be taken seriously by everyone up and down the line."

In a statement yesterday, AHPETC disputes this, saying Mr Tharman "is incorrect", and only $6.81 million is needed to be transferred to its sinking fund for FY2014/2015. The $7.2 million in MND grants withheld "would more than fulfil" this obligation, it added.

Ms Lim also said that since the financial year had ended in March, "there's no reason for MND to ask these questions".

But a joint statement by MND and the Finance Ministry said Mr Tharman was not referring only to the sinking fund obligations for FY2014/2015. "By focusing only on FY 2014/2015, AHPETC has not provided the full picture," it said.

In addition, it also has to transfer $18 million for FY2015/2016. Of this sum, AHPETC has missed the first transfer of $4.5 million, due by July 31, said the statement. Another $4.5m will be due each quarter: by this October, January and April next year.

Meanwhile, the MND grants withheld for both financial years total $14 million.

The statement, quoting a High Court judge, said AHPETC had itself to blame for failing to make the sinking fund transfers on time, as it had refused to accept MND's conditions for disbursing the grants.

The MND had applied to the High Court earlier this year for independent accountants to be appointed to the town council to oversee its grants, but this was rejected. It is appealing against the decision.

MND also said it was prepared to accede to AHPETC's "unusual request" about the grants.

It made the offer along with the request for the town council's cash flow position, on four occasions last year and this year, but MND never heard back from AHPETC, it said.

Additional reporting by Chong Zi Liang

Firstly, the Auditor General is appointed by the Government. It is not some foreign, independent body.So when the AGO...
Posted by Calvin Cheng on Monday, August 17, 2015

Swee Say: PA took swift action to set things right
By Wong Siew Ying, The Straits Times, 18 Aug 2015

When the Auditor-General found lapses at the People's Association (PA), immediate and decisive action was taken to set things right, its deputy chairman Lim Swee Say said yesterday.

He also stressed in Parliament that the PA, as a statutory board using public funds, took its financial governance seriously.

"When things go wrong, we do not shy away from taking responsibility and tough action to put things in order," he said as he fleshed out the lapses and pointed to the layers of checks on how money is managed at PA.

The Auditor-General's Office (AGO), in its annual report last month, identified lapses in financial procedures, tender contracts and related-party transactions in several grassroots organisations.

One of them is the seven claims, totalling $114,767, the chairman of the Citizens Consultative Committee (CCC) in Sembawang GRC's Admiralty ward made to himself.

One was money for a funeral wake a needy family required immediately. There was no supporting document for the claim but the amount given was witnessed by a few volunteers.

Two claims were for a working dinner and an appreciation dinner for volunteers and community partners. These had receipts.

Four claims were for retreats to discuss workplans. Only one had supporting documents. The receipts for the other three, totalling $56,050, were misplaced but the CCC later verified the sums with proof of payment from the vendor.

"Although there was no evidence of dishonesty, the CCC chairman has taken personal responsibility for these lapses and resigned from his position," Mr Lim said.

He did not identify the chairman, who is Mr Tonic Oh.

Another major lapse involved 13 tenancy contracts, amounting to $3.67 million, which the management committees of community centres or clubs awarded without competition. This went against PA's financial rules, Mr Lim said.

The contracts include:

• Five for children enrichment, food and entertainment services that were given by two community clubs with poor locations.

• One to renew childcare services.

• Two for food outlets, and

• One for a non-profit community organisation that promotes healthy lifestyles, especially for seniors.

Despite their good intentions and using similar rental rates in the area as a guide, they contravened PA's financial rules in not getting permission first, Mr Lim said.

He also disclosed that the last time the PA got an "adverse opinion" in its annual audit was in FY2012, when accounts of grassroots organisations were not included in the PA's financial statements.

Since consolidation, PA's financial statements got "clean opinions" in FY2013 and FY2014.

Mr Lim also said the PA's accounts are subjected to annual statutory audits. The AGO audit is over and above these audits.

"By having multiple layers of checks and transparency, we ensure a high level of vigilance over the integrity of our financial management," Mr Lim said.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam told the House the lapses of the government agencies were not repeat cases except for one: an agency's procurement of event management services.

Prompt action is taken when problems are found and there is no attempt to cover them up, he said.

Errant officers face the full brunt of the law, he said. Even if there is no evidence of fraud or corrupt intent, an officer may face serious disciplinary action, including being barred from promotion for a few years.

But it was not possible to avoid human lapses completely, he said. Neither is it ideal to have more rules.

"We must continue to maintain a sensible balance of rules, subject ourselves to regular and thorough audit, and take thorough enforcement actions whenever necessary."


During the severe haze in 2013, a community hospital appealed to a grassroots organisation for air purifiers for patients in its non-air-conditioned wards. The item was in great demand and was out of stock across all major retail outlets. The grassroots leaders and volunteers went all around Singapore. Finally, they found a small store which had limited stock. They quickly purchased the air purifiers without asking for three quotations (as is the norm in procurement) as they were in a great hurry to alleviate the discomfort of the patients. Madam Speaker, is this a case of non-compliance of financial procedures and rules? The answer is yes. Is this a case of grassroots leaders and volunteers compromising the interests of the community? The answer is certainly no... Far from compromising the interests of the residents as the member (NCMP Lina Chiam) has asserted, the grassroots organisations which committed these lapses were actually doing their best to serve the interests of the residents and meet the urgent needs of the community.

We can fault them for their non-compliance of financial procedures, but please do not doubt their passion and commitment in always doing their best for the community.

- DEPUTY CHAIRMAN OF THE PEOPLE'S ASSOCIATION (PA) LIM SWEE SAY, on whether the PA's lapses compromised the interests of residents

Lina Chiam raises questions over PA lapses
By Wong Siew Ying, The Straits Times, 18 Aug 2015

Non-Constituency MP Lina Chiam yesterday expressed concern about lapses at several grassroots organisations (GROs) under the People's Association (PA) that were flagged by the Auditor-General's Office (AGO) in its report, and wondered whether these were "only the tip of the iceberg".

Moving an adjournment motion in Parliament, Mrs Chiam said: "The AGO has only test-checked a small sample size of GROs, a mere 6.5 per cent. Yet, the audit has already turned up significant lapses."

She asked if financial lapses of a similar nature might also be found in the other unaudited GROs, and was concerned about a recurrence of lapses in other statutory boards.

In response, Senior Minister of State for Finance Josephine Teo said public agencies are subjected to annual audits by internal auditors as well as external auditors or the Auditor-General. Lapses are investigated, and action is taken to prevent a repeat. Referring to a case of a repeat lapse in the AGO's latest findings, Mrs Teo said it arose as steps put in place to address the lapse were not up to the AGO's expectation. "That is the rigour of the system that we have," Mrs Teo added.

Another concern raised by Mrs Chiam was on the adequacy of training and the competency of the officers involved in procurement.

Here, Mrs Teo outlined various initiatives, including a new procurement competency framework, that can help improve the skills of finance and procurement officers.

Mrs Chiam suggested centralising procurement activities in one agency. Mrs Teo said procurement rules are calibrated to the value and risk of the purchases. Projects over $80 million must be approved by the Development Planning Committee, comprising three Cabinet ministers, after rigorous scrutiny by senior Finance Ministry officials and the ministry concerned before tenders are called. Approval of lower-value procurements is decentralised for greater efficiency, but it is also governed by a clear set of rules and complemented by regular audits, she said.

Mrs Chiam also asked if the "less than prudent manner" in which some GROs handled funds has compromised residents' interests.

The answer is no, said PA deputy chairman Lim Swee Say, who cited examples where grassroots leaders went against financial procedures with residents' interests in mind.

Town councils set to be major election issue
Battle for hearts and minds as 2 ministers cross swords with 2 WP MPs over finances
By Lydia Lim, Associate Opinion Editor, The Straits Times, 18 Aug 2015

His tone was measured but his words sharp as Deputy Prime Minister Tharman Shanmugaratnam took the Workers' Party (WP) to task yesterday for the state of its town council's accounts, saying "the whole house of AHPETC's finances is unsafe".

With election season in full swing and yesterday's sitting likely to be this Parliament's last before the coming polls, Mr Tharman came well prepared to hammer home the opposition party's financial failings.

Opposition members came prepared too.

WP chairman and Aljunied GRC MP Sylvia Lim was quick to counter Mr Tharman's criticisms while her party colleague, Mr Png Eng Huat (Hougang), took aim at a government weak spot - namely, lapses in financial compliance by the People's Association (PA) and its grassroots organisations.

Non-Constituency MP Lina Chiam also chimed in with an Adjournment Motion in which she said that the fundamental issue was "the lack of accountability by respective ministries in exercising supervision over how taxpayer monies have been used and misused".

But the real battle for hearts and minds is between the Government and the WP and yesterday's parliamentary exchange between two ministers and two WP MPs during question time served only to confirm that the People's Action Party (PAP) plans to put town council management front and centre in the coming election campaign.

Perhaps aware that the public has found it hard to follow convoluted government statements on financial accounts, Mr Tharman - the cerebral Finance Minister - yesterday sought to boil it down to this: When it comes to finances, the government house is safe. The Auditor-General's Office (AGO) gave an unmodified audit opinion on its financial statements.

That means the accounts of all government departments are reliable and public funds are properly accounted for.

Some repairs, however, are needed in specific areas due to lapses in compliance. These include lapses by certain agencies regarding administration of grants and management of procurement contracts, among others.

By contrast, the finances of the opposition-run town council are in such a state that neither its own auditor nor the AGO could certify the Aljunied-Hougang-Punggol East Town Council's (AHPETC) house as structurally sound, Mr Tharman said.

"This is not just a matter of poor accounting procedures. It arose because there are so many weaknesses and omissions in the AHPETC accounts that its own auditors and the AGO were not able to determine if monies in the accounts have been safeguarded or how they have been used. That is the heart of the matter - it's the entire system of accounts. There's no remotely similar problem in government," he said.

Ms Lim, who is also AHPETC's chairman, rose twice to clarify that in the latest set of accounts submitted by the town council, its auditors' opinion was that except for certain specific issues, it had complied with the Town Council Act. As for the sums AHPETC has yet to transfer to its sinking fund, which Mr Tharman also highlighted, Ms Lim said: "I think it's public knowledge that the town council has still not received its operating S&CC (service and conservancy charges) grants for FY14 and FY15 (from the Ministry of National Development). So, is DPM not aware of that as well?"

The Government, on its part, was eager to set the record straight on the PA's accounts and those of its grassroots organisations, including lapses related to seven claims by the chairman of one Citizens Consultative Committee (CCC) totalling $114,767.

Manpower Minister Lim Swee Say, who is deputy chairman of the PA, made clear that the CCC chairman in question had stepped down to take responsibility for the lapses, which involved submitting claims without supporting documents.

He also addressed the lapses over 13 tenancy contracts cited by the AGO. "We have taken swift and decisive action to put things right immediately. When things go wrong, we do not shy away from taking responsibility and tough action to put things in order," Mr Lim told the House.

This is a line that PAP ministers are likely to draw between themselves and the WP as election season heats up.

As for Mrs Chiam's charge that financial lapses by grassroots organisations compromised residents' interests, Mr Lim issued a strong comeback in defence of grassroots leaders who have become an easy target for government critics, including those online.

He cited an example of grassroots leaders who sprang to the aid of a hospital in need of air purifiers during a bad episode of the haze.

Air purifiers were in short supply then and when they finally found a small store that had some, they bought them without calling for competitive bids. Yes, that was in breach of financial rules but it certainly did not compromise residents' interests, Mr Lim said.

Indeed, many of the grassroots organisations that breached financial rules were "doing their best to meet the interests of residents and the urgent needs of the community", he added.

Yesterday's sitting has set the stage for the coming campaign. Next up for Parliament? Most likely dissolution, at a time to be decided by the Prime Minister.

No comments:

Post a Comment