National Development Ministry's concerns about town council accounts highlight old issues, says AHPETC

The Aljunied-Hougang-Punggol East Town Council (AHPETC) at Block 701, Hougang Ave 2.
The Aljunied-Hougang-Punggol East Town Council (AHPETC) at Block 701, Hougang Ave 2.ST PHOTO: KUA CHEE SIONG

SINGAPORE - The Aljunied-Hougang-Punggol East Town Council (AHPETC) says the areas of concern cited by the Ministry of National Development (MND) on its recently submitted accounts were "old issues" that have been explained previously, and that progress is being made to clear up other problems.

Although the Workers' Party-run (WP) town council met a newly imposed June 30 deadline to submit its accounts for the financial year (FY) 2013/2014, the MND noted on Wednesday that the accounts were already late by 10 months.

But AHPETC responded on Thursday night saying "this is an old issue previously explained inside and outside of Parliament ..."

AHPETC chairman Sylvia Lim had said in the foreword of the town council's annual report that its resources were taken up by an audit by the Auditor-General's Office (AGO) from March 2014 to January 2015. As such, it was only able to secure a commercial auditor to prepare the accounts after many months.

 

The MND said that AHPETC's own auditors, Audit Alliance, were unable to verify the accounts for the third year running.

The auditors flagged eight areas of concern, including the presence of related party transactions. This was a reference to two companies engaged by AHPETC, including managing agent FM Solutions and Services, being owned by some key officials of the town council..

Here, AHPETC's response was that related party transactions was "an old issue on which AHPETC has made progress".

It added that "any concerns will be completely removed after July 15, 2015, when the current managing agent contract expires and AHPETC is directly managed."

The town council also said "significant progress has been made on clearing past disclaimers". This was a reference to the 13 disclaimers - of which three remain unresolved - raised by previous auditors Foo Kon Tan Grant Thornton in its FY 2012/2013 report.

But AHPETC acknowledged that future audit reports were likely to still "contain qualifications relating to specific items especially handover opening balances, which remain unresolved even with the assistance of AGO, despite 10 months of extensive work".

MND on Wednesday also highlighted the state of the town council's operating surplus and deficit.

AHPETC had gone from an operating surplus of $1.1 million in FY 2011/2012 to a deficit of $1.53 million in FY 2012/2013.

By FY 2013/2014, the deficit hit $2.01 million.

But the town council said in its statement on Thursday that its operating deficit had increased substantially in FY 2013/2014, as operating expenses had risen.

Meanwhile, the additional revenue it received from the collection of service and conservancy charges (S&CC) in Punggol East - which the WP won in a 2013 by-election - were more than offset by increases in conservancy, cleaning, lift maintenance, and utilities, amongs others things.

AHPETC also took issue with the MND's statement the town council had understated its annual operating deficit in FY 2012/2013 by half.

"The annual operating deficit for FY 12/13 was restated in response to the findings of the AGO audit. The adjustments included corrections as well as provisions made for impairment," it said.

It added: "We believe that the trend in changes in AHPETC's financial position and results of operations will become clearer following the audit (for) FY 2014/2015."

These accounts are due for submission to the MND by Aug 31.

AHPETC also highlighted two points in its auditor's report that it wanted to "draw public attention" to.

First, that its auditors said the town council complied with the Town Councils Act in "the receipts, expenditure, investment of moneys and the acquisition and disposal of assets".

And second, that the auditors attested that "proper accounting and other records have been kept, including records of all assets of the Town Council whether purchased, donated or otherwise".

This was in response to the MND having said that AHPETC failed to comply with the Town Council Act and Town Council Financial Rules as there were lapses in tender specifications prepared by its managing agent; that sinking fund transfers were late; and that town improvement expenses were wrongly paid out of the sinking fund - points that were also made by AHPETC's own auditors.

ziliang@sph.com.sg