Accountants for AHTC: Court sets Friday deadline

Apex court to make decision tomorrow if HDB, AHTC fail to agree; 2 nominated firms pull out

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The two firms the Aljunied-Hougang Town Council (AHTC) picked, including its accountants now, had withdrawn from consideration.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

  • Town council says

  • 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.

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."

A version of this article appeared in the print edition of The Straits Times on January 21, 2016, with the headline 'Accountants for AHTC: Court sets Friday deadline'. Print Edition | Subscribe