Workers' Party town council failed to comply with sinking fund requirement

The Aljunied-Hougang-Punggol East Town Council (AHPETC) failed to transfer monies to its sinking fund several times. When it did, there were occasions when the transfers were late - or short of the required amount, the Auditor-General's Office (AGO) said.

There were other instances of non-compliance with the Town Councils Act, involving the wrong use of money in sinking fund bank accounts.

"AHPETC did not transfer monies as required to the sinking fund bank accounts and did not manage its sinking funds properly. This included not transferring conservancy and service fees and grants allocated to sinking funds... accurately and promptly for the FY 2012/13."

A town council is required by law to have a sinking fund which it can draw on for the improvement and long-term maintenance of properties it has charge of.

The AGO said the AHPETC did not comply with the Town Councils Financial Rules.

It did not transfer a total of $7.9 million to its sinking fund for the last three quarters of the financial year 2011/12, until it was queried by the AGO.

The following year, it did not transfer funds amounting to about $4 million to its sinking fund on time or in full. In most instances, the transfers were made only after auditors' queries.

The AHPETC also wrongly used or transferred money to the sinking fund, the AGO said.

For example, it paid for a Housing Board-approved upgrading programme with money from the sinking fund, instead of the operating fund as was the right way.

The AHPETC said that the AGO's report showed that, "at all times", money meant for the sinking fund was still in the town council's bank accounts, except it was left in an operating fund account without being transferred.

Acknowledging that this complicated accounting processes, the AHPETC said it would abide by the advice on transferring money meant for the sinking fund first, before making relevant payments out of that account.

Responding, the AGO said it did not conclude that the money was in the AHPETC's accounts "at all times". What it found was that the town council failed to transfer monies to the sinking fund in the last three quarters of FY 2011/12 and that, for some transfers in FY 2012/13, it was late or did not make some deposits in full.

Among improvements the AHPETC says it will now make is working with its IT system vendor to identify sinking fund items that attract goods and services tax. This would ease the calculation of GST refunds later from the Inland Revenue Authority of Singapore.

On the importance of clearly demarcated accounts, People's Action Party MP Zainal Sapari, chairman of the Pasir Ris-Punggol Town Council, said: "If you leave everything in the operating fund, there's a tendency to overspend."

rachelay@sph.com.sg