AHTC needs more staff to fix lapses, say auditors

KPMG highlighted AHTC's slow progress in investigating the items in the accounts to drive home the point that the town council needed more qualified manpower to remedy its lapses.
KPMG highlighted AHTC's slow progress in investigating the items in the accounts to drive home the point that the town council needed more qualified manpower to remedy its lapses.ST FILE PHOTO

No duplicate or fictitious payments found when the use of 'dummy' vendor code was checked

Aljunied-Hougang Town Council (AHTC) needs to have more staff with the relevant expertise for it to resolve the problems in its accounts in a timely manner, said its auditors, KPMG, yesterday.

KPMG also said that no duplicate or fictitious payments were found when it checked on AHTC's use of a "dummy" code, a problem it had flagged in an earlier report.

The auditors noted that the town council, run by the Workers' Party, has resolved three of the 17 audit points raised in the previous monthly report.

The remaining 14 outstanding remedial measures fall into two categories.

One comprises implemented measures that are being tested by KPMG to see whether they are effective.

The other is made up of yet-to-be- implemented measures which are being finalised with KPMG's help.

The auditors gave these latest updates on the town council's accounts in their fifth report, which AHTC put on its website yesterday.

One major area among the 17 points is the town council's temporary clearing accounts.

KPMG highlighted AHTC's slow progress in investigating the items in the accounts to drive home the point that the town council needed more qualified manpower to remedy its lapses.

Of the more than one million transactions in 18 temporary accounts to be cleared - a task KPMG said would take about a year - AHTC had cleared only 599 in the past two months.

"The rate of progress has increased since our July 2016 report; however, AHTC needs to increase the available staff with the requisite expertise so that it could complete investigation prior to the migration of accounting data to AHTC's new accounting system," it said.

Last month, AHTC awarded a $750,000 contract for a new accounting system to Anacle Systems, one of two companies that bid for the job.

AHTC had hired KPMG to look into its books following significant lapses in governance found by its own auditors and the Auditor- General's Office (AGO) in a special report in February last year.

KPMG said last month that it found "pervasive" control failures in the town council's accounts and work processes over the past five years, and estimated that AHTC will take at least 18 months to rectify all the lapses and weaknesses.

The AGO and AHTC's earlier auditors found 115 control failures that were grouped under the 17 audit points, which grew later by another 71 control failures found by KPMG.

AHTC had said it aimed to complete its rectification plans in 15 months.

In last month's report, KPMG said the use of a "dummy" vendor code for making payments makes it easier for duplicate or fictitious payments to be made without detection.

Created last year by AHTC, the code is used for refunds of tender deposits and other purposes.

KPMG said it had reviewed all 207 payments using this code - totalling $271,598.20 - and no duplicate or fictitious payments were made.

However, in 41 instances, totalling $248,346.07 in transactions, AHTC should have used a supplier account instead of the "dummy" code, said KPMG.

It also found seven invoices, totalling $23,197.40, where payment was made without AHTC confirming the goods and services were received. This is a breach of the Town Council Financial Rules.

AHTC chairman Pritam Singh noted in a statement yesterday that KPMG, after checking its use of the dummy code, did not find any duplicate or fictitious payments.

"AHTC accepts the control shortcomings in the use of these codes and will be reviewing its processes to ensure their proper use in future," he added.

A version of this article appeared in the print edition of The Straits Times on August 19, 2016, with the headline 'AHTC needs more staff to fix lapses, say auditors'. Print Edition | Subscribe