KPMG identified another 70 lapses in the way Aljunied-Hougang Town Council (AHTC) was governed. Here are the key areas of weakness.
Lack of accountability
• Until earlier this month, AHTC did not have a code of conduct that sets out its expectations of staff. Its code of business conduct is in draft form.
• A control mechanism in AHTC's work order system to prevent work that exceeds the gazetted budget was bypassed on several occasions, mainly for lift-related work. KPMG said town councillors appeared not to know of this circumvention.
Commitment to competence
• Changes made in May to AHTC's accounting system for reporting service and conservancy charges arrears were done without documentation of program changes, "jeopardising the accuracy" of the system.
Town councillors' participation
• AHTC's finance and investment committee met an average of four times a year between 2014 and this year when they were supposed to meet eight times. Given four years of qualified audit reports and the Auditor-General's special report, "they should have been meeting more frequently to address these issues".
• AHTC has 18 temporary clearing accounts, which have a total of more than one million transactions valued at over $648,000. Some were from before 2011. It is standard practice for such transactions to be cleared swiftly, but that was not done until after KPMG began its review.
• Extensive use of manual journal entries to record payments to third parties. Over 48,500 such manual entries involving more than $60 million were recorded from 2011 to last year.
• Accounts payable balances were not regularly reviewed, resulting in duplicate entries, incomplete processing, mismatched payments and other inaccuracies. A 2012 vendor invoice for more than $52,000 was recorded twice, while there has been no investigation of 48 payable accounts totalling over $105,000.
• AHTC's procurement policies allow the use of a "dummy" vendor code, which has been used for more than $270,000 in transactions since it was created last year. There is no monitoring mechanism to ensure such transactions are bona fide payments to one-time suppliers.
• KPMG said these failures of management can conceal duplicate or fraudulent payments.