Handover procedure for town councils to be reviewed

KPMG has said that it found "pervasive" control failures in AHTC's accounts and processes over the past five years, spanning areas like governance, financial control, procurement and records management.
KPMG has said that it found "pervasive" control failures in AHTC's accounts and processes over the past five years, spanning areas like governance, financial control, procurement and records management.ST PHOTO: DESMOND FOO

Control failures at Aljunied-Hougang Town Council are cause for concern: Desmond Lee

The procedure for handing over town council accounts and documents to a rival party after an election looks set to change.

Senior Minister of State for National Development Desmond Lee indicated the possibility in Parliament yesterday, when he expressed "deep concern" over the pervasive control failures that auditors found at Aljunied-Hougang Town Council (AHTC).

"When boundaries change, especially across political lines, delays in submission of accounts and documents may impact the financial audits of the receiving town council," he said.

SERIOUS ISSUE

These control failures continue to paint a serious state of affairs in AHTC and are a cause for concern.

SENIOR MINISTER OF STATE FOR NATIONAL DEVELOPMENT DESMOND LEE, on the problems highlighted by KPMG.

"So, this is certainly something we need to look at in the course of this review."

Mr Lee was referring to the ongoing review of the Town Councils Act to address its weaknesses. If approved by Parliament, the changes would be in place by the year end.

The handover issue has come under the spotlight again after Mr Charles Chong of the People's Action Party won back Punggol East from the Workers' Party (WP) in last year's general election.

Yesterday, Mr Chong and Mr Zainal Sapari (Pasir Ris-Punggol GRC) asked, among other things, how the Ministry of National Development (MND) would better safeguard public monies and recover improper past payments made by AHTC.

In the saga over AHTC's accounts, there has been a long-running clash between the WP-run town council on one side, and the MND and the Housing Board on the other.

In February last year, the Auditor-General's Office said its special audit unearthed major lapses at the then Aljunied-Hougang-Punggol East Town Council.

AHTC's current accountant KPMG, appointed to fix the lapses, has found more.

Required to make monthly reports, KPMG said last month that it found "pervasive" control failures in AHTC's accounts and processes over the past five years, spanning governance, financial control, financial reporting, procurement and records management.

Citing these, Mr Lee said that despite repeated assurances from WP leaders, AHTC had been dragging its feet in remedying its accounts.

He noted that KPMG said AHTC had completed only a few of the steps it said it would take to correct its accounts.

KPMG also estimated that the review would take 18 months, not 15 months as said by AHTC.

"Instead of completing the remediation plans expeditiously, what we have seen from the town council in this past 1-1/2 years is a series of actions that have only slowed down, prolonged and frustrated the whole process," Mr Lee said.

His ministry is also concerned about the "systemic control failures" highlighted by KPMG, including highly irregular short cuts used to process $60 million paid to related parties and suppliers over five years, he said as he described some of them to the House.

"These control failures continue to paint a serious state of affairs in AHTC and are a cause for concern," he said, adding that the failures could conceal duplicate, fictitious or fraudulent payments that could have been made without being detected.

Ms Sylvia Lim (Aljunied GRC), who was chairman of the WP town council until last year, asked Mr Lee whether the MND knew of other town councils that also had control failures. She also wanted his ministry to make public its findings on other town councils' control failures "so that we can better benchmark ourselves" against others.

Mr Lee said he had no doubt that other town councils also made mistakes from time to time. The findings - as with their annual accounts - are published on their websites and set out in MND's annual report on town councils, he added.

But the issues at AHTC, he argued, are of a different nature because its accounts had never been given a clean bill of health by its accountants in the past four financial years.

Urging AHTC to cooperate fully with KPMG in reviewing past payments, he said: "Residents of Aljunied, Hougang and also Punggol East need to be assured on whether there were any improper past payments that ought to be recovered.

"The Singaporean public also needs to know as large sums of public monies and grants are at stake."

A version of this article appeared in the print edition of The Straits Times on August 17, 2016, with the headline 'Handover procedure for town councils to be reviewed'. Print Edition | Subscribe