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Counting the cost of repeated public sector audit lapses

Public servants do not seem to be learning from the mistakes of others, and that needs addressing

Once a year, the image of Singapore's ultra-efficient public service takes a hit when the Auditor-General publishes the findings of its annual audit of government accounts.

The exercise by the Auditor-General's Office (AGO) invariably throws up lapses in the processes of government ministries and statutory boards. The latest audit report released on Tuesday was no different.

The report found shortcomings in controls over information technology systems, lack of financial controls and inadequate oversight of large-scale development projects.

The government agencies named in the latest AGO report were the Ministry of Health, the Ministry of Social and Family Development (MSF), Sport Singapore (the former Singapore Sports Council), Singapore Corporation of Rehabilitative Enterprises, Central Provident Fund (CPF) Board, National Parks Board and Economic Development Board. They have acknowledged their lapses and promised to fix them, if they have not already done or started doing so.

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Still, one can expect similar lapses in the future, perhaps not at these government bodies - the spotlight on them will surely motivate them to buck up and avoid repeating their mistakes - but possibly in other agencies. That is not speculation but a statement backed by past records.

The AGO posts on its website audit reports dating as far back as 2008/2009. These reports show some telling trends. For example, in the 2008/2009 report, then Auditor-General Lim Soo Ping said: "Every year, we see instances of lack of financial prudence in procurement and poor management of contracts."

Consider the latest report, which says: "The AGO found instances of inadequate financial controls over payments, management of assets and contracting in public sector entities."


ST ILLUSTRATION: MIEL

If the two statements sound similar, that's because they are.

Another common theme in the AGO reports over the years is that despite proper procedures and systems of checks in place, public servants were found not to have followed them. In other words, lapses occurred due to human error.

One cannot help but wonder: Why do the same mistakes keep being made? One of the stated aims of the public release of the AGO report is for agencies to learn from one another's mistakes, so why have the lessons not sunk in?

REPEATED MISTAKES

The causes of repeated lapses may be many but here are three observations, based on my 18-year stint in the public sector, including seven years as a director, before I joined The Straits Times in 2011.

The first is that public policies and programmes have expanded and that means more scope for error.

Take as an example the Baby Bonus, a scheme that was named in this year's AGO report. The AGO found that the MSF, which is responsible for Baby Bonus payments, did not track how its staff and vendors use the IT systems that run the scheme, giving rise to the possibility that confidential information is leaked or data corrupted when subsidies are computed.

If public sector agencies cannot give the assurance that they can learn from past mistakes and avoid them in future, it is not just the image of the public sector that takes a hit, public confidence in the Government may take a beating too.

The Baby Bonus Scheme, which was first introduced in 2001, has grown substantially over the years. The latest update of March last year means qualifying babies now automatically receive $3,000 in their Child Development Accounts.

Workfare is another example. The AGO found in its 2013/2014 report that the CPF Board, which runs the Workfare Income Supplement Scheme, was given incomplete data by other government bodies, possibly leading to eligible workers not getting their payments. Workfare was introduced in 2007.

And the expansion of programmes is set to continue, especially in the social affairs sector, as the population ages.

My second observation is that even as policies and programmes have expanded, the number of public servants has not ballooned.

The Singapore Public Service is 145,000-strong, up from 124,000 in 2010, or about 17 per cent bigger. Over the same period, government expenditure - an indicator of what the Government spends on policies and programmes - grew 62 per cent from $46.39 billion in the 2010 financial year to an estimated $75.07 billion this financial year.

Essentially, public officials are now expected to do more or manage more resources. That means more room for error.

A third reason for mistakes by public servants is the sector's policy of rotating its staff. New staff coming through the doors are more prone to making mistakes.

In my 18 years in the civil service, I had seven different postings of between one and five years each. When I was first appointed to the equivalent of a director's post in 2004, I became nervous when I had to pay a contractor more than $100,000 for a project. I studied endless pages of what civil servants call the "instruction manual" before I mustered the confidence to sign the payment order.

In the end, apart from the manual, I also learnt from a veteran colleague who told me: "Do not do anything in private that you are not prepared to explain in public." In other words, expect to be scrutinised. That was what he meant. I benefited from his generous mentoring.

Apart from understanding the causes of the lapses, it is important to also put them in proper context. The latest AGO audit found no criminal wrongdoing. The lapses were silly, but not part of a larger criminal enterprise.

That said, some of the reactions of the agencies named in the latest audit bother me. While all of them acknowledged the lapses highlighted by the AGO and pledged to tighten their internal processes, none apologised for its mistakes. Only the MSF came close to an apology, saying it "regrets that some employers were incorrectly reimbursed".

Some agencies even issued qualified responses. For example, national sports body Sport Singapore, which dragged its feet in paying contractors for more than three years, said: "Where necessary, disciplinary inquiries have been initiated."

That suggests inquiries in some instances are not necessary.

Such half-hearted and even defensive attitudes will not do.

WAYS TO REDUCE LAPSES

There are at least three ways to reduce future lapses. For a start, government agencies can ditch defensiveness and say sorry for their mistakes. If they do not apologise for their shortcomings, sceptics will understandably doubt their desire to change.

Also, I found it shocking that some of the lapses took so long to come to light. For example, Sport Singapore took more than a year to pay nearly $1 million to contractors who did work for the 2015 28th SEA Games and the 8th Asean Para Games. One wonders why the contractors kept quiet for so long.

There ought to be more channels, including confidential hotlines, for contractors and the public to report lapses to the Ministry of Finance.

A third way to reduce mistakes is to use both carrot and stick. The annual expose by the AGO puts pressure on the agencies which have made mistakes to correct them, buck up and avoid future mistakes. In a similar vein, the AGO can consider highlighting those agencies that have done well in fixing their mistakes or in staying off the annual lists.

The public sector is such a huge body - it is the largest employer in Singapore - and one cannot expect it to be perfect. That said, while there may be mitigating factors for the lapses, the importance of audit findings cannot be overestimated. After all, public servants are essentially guardians of public money.

If public sector agencies cannot give the assurance that they can learn from past mistakes and avoid them in future, it is not just the image of the public sector that takes a hit, public confidence in the Government may take a beating too.

That is the real cost of such repeated mistakes, and it is not the path the public sector wants to go down.

A version of this article appeared in the print edition of The Straits Times on July 20, 2017, with the headline 'Counting the cost of repeated public sector audit lapses'. Print Edition | Subscribe