WP-run town council seeks Court of Appeal decision on choice of accountant

The Aljunied-Hougang Town Council applied to the Court of Appeal to weigh in on which accountant it can hire.
The Aljunied-Hougang Town Council applied to the Court of Appeal to weigh in on which accountant it can hire. ST PHOTO: DESMOND WEE

SINGAPORE - The Court of Appeal on Thursday ordered the town council run by the Workers' Party (WP) to provide more information about the accountant it wants to hire, as part of a move to resolve a disgreement with the Housing Board (HDB) on which accountant it can hire to look into its books.

The Aljunied-Hougang Town Council (AHTC) had applied to the apex court for a decision on the matter. It wanted to appoint its current accountant, Business Assurance, but HDB objected as it felt the firm did not have the required experience and expertise.

Instead, HDB proposed that one of the four major accounting firms - Deloitte & Touche, Ernst & Young, KPMG and PricewaterhouseCoopers - be appointed.

The town council was ordered by the Court of Appeal last November to appoint accountants to look into its financial lapses.

At Thursday's hearing, Chief Justice Sundaresh Menon noted that AHTC had failed to provide certain information on its preferred accountant - such as its experience in auditing public institutions and in conducting forensic work - that the HDB had asked for.

As such, the three-judge court, which included Justice Andrew Phang and Justice Chao Hick Tin, directed AHTC to give the information by Monday.

The HDB has to review the data by Wednesday.

Hence, the next hearing is expected to be next Thursday or Friday.

According to court documents, Business Assurance was AHTC's choice because it had worked with the town council for two annual audits and knew its financial management issues well.

The town council added that Mr Alex Chai, who heads Business Assurance, had "extensive experience" as a chief financial officer of listed companies and had worked at accounting firms such as KPMG and Grant Thorton.

Business Assurance was also a less costly choice than the Big Four accounting firms.

But HDB had doubts about Business Assurance.

It noted the firm, registered in February 2014 , has been operating for fewer than two years. Mr Chai's resume also did not state how long he spent working at the various accounting firms cited, as well as the details of the forensic audits he was said to have done in the US.

HDB also said it is open to considering other firms with a proven track record, and is not insisting that AHTC pick one of the Big Four.

Another matter before the Appeal Court was the scope of the work of the accountants.

Both sides agreed the accountants should focus on issues flagged in the report by the Auditor-General's Office (AGO) and the audit reports of financial year 2013/2014 and 2014/2015.

The AGO report, released last February, highlighted "major lapses" in financial governance. Independent auditors the town council hired were unable to verify its accounts.

The Appeal Court also set an Aug 31 deadline for the prospective accountants to submit a report on whether any past payments of the town council were improper.

On costs, the Court ruled each party should bear its own legal fees.

After the hearing, AHTC said the court had not given the accountants "carte blanche to look into the town council's affairs".

It added that, in considering the issue of costs, the court had rejected HDB's argument that AHTC's conduct in the case were "egregious and somehow improper".

But HDB and the Ministry of National Development (MND) said in a joint statement that AHTC had presented only part of the picture.

They said AHTC had failed to disclose it had tried to seek legal costs from MND and HDB.

Also, the court disagreed with AHTC's bid to limit the accountants to reviewing only the lapses identified by the AGO, and improper payments relating to its former managing agent, FM Solutions & Services and FM Solutions and Integrated Services, they added.

ziliang@sph.com.sg