Auditor-General's findings on public agencies very different from those on AHPETC accounts

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said Government's accounts have been given a clean bill of health.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said Government's accounts have been given a clean bill of health.PHOTO: ST FILE

SINGAPORE - The findings by the Auditor-General's Office (AGO) on the Workers' Party's town council are fundamentally different from its findings on public sector agencies, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said on Monday.

While lapses have been found in both instances, the Government's accounts had been given a clean bill of health, he said.

On the other hand, Aljunied-Hougang-Punggol East Town Council(AHPETC)'s "entire system of accounts is a problem", he told Parliament.

He was replying to a supplementary question on the AGO's audits from Mr Liang Eng Hwa (Holland-Bukit Timah GRC) who had asked about the differences between the AGO's annual audits of various ministries and agencies, and the audit it had conducted on AHPETC.

Mr Tharman said the issues in AHPETC extend beyond poor accounting procedures, and urged the WP to focus on resolving the problems, instead of "whitewashing" them.

"When the house is structurally unsafe, one doesn't just go and put a new coat of paint on the front walls. I think it means a very hard look - the foundations need to be put in place. It's hard work but you've had a lot of time to do so," he said.

Ignoring the issues is akin to "saying that except for the fact that the pillars of my house are in serious danger of collapsing, that everything is fine", he added.

Drawing on the house analogy, Mr Tharman warned that "the whole house of AHPETC's finances is unsafe".

"Both the AHPETC's own auditor and the AGO could not certify the AHPETC house as structurally sound. Apart from it being unsafe and unsound, there are also many individual defects and problems," he said.

"By comparison, the government agencies audited by AGO do not have unsafe houses, the house is safe, and there is no question as to whether public monies are fully accounted for. There are some repairs needed to the house in specific areas but everyone can be confident that the house is safe. There's also full visibility, the curtains aren't drawn. This is the fundamental difference."

WP MP Sylvia Lim (Aljunied GRC) shot back with supplementary questions, adding that some of the issues at her town council had already been resolved.

Ms Lim, who is also WP and AHPETC chairman, asked if Mr Tharman had actually read her town council's audited accounts for the Financial Year 2013/2014, submitted to the Ministry of National Development in June.

She pointed out that of the 13 disclaimers - part of the reason AHPETC's accounts were given a qualified opinion - only three remain unresolved: "Our auditors actually made the observation that except for certain specific issues, the town council has actually complied with the (Town Councils) Act in terms of keeping proper accounts and books."

Affirming that he had indeed gone through the report by AHPETC's auditors, Mr Tharman noted that the accounts are "still qualified" and the new auditors appointed by AHPETC had flagged significant areas of concern.

These include matters to do with related party transactions and non-compliance with legal and regulatory requirements. He added that AHPETC had made late transfers to its sinking fund, "really putting the house at risk".

On the late transfers to AHPETC's sinking fund, Ms Lim said: "It's public knowledge that the town council has still not received its operating service and conservancy charges grants for FY 2014 and FY 2015."

A town council is required to transfer money into its sinking fund - designated for long-term maintenance projects - quarterly.

Responding, Mr Tharman said AHPETC had made "a rather unusual request" for the MND grants to be deposited into its sinking fund entirely. Going by the rules, the grant is typically split between a town council's sinking fund and operating fund.

He said despite this, the MND had been prepared to consider AHPETC's request, as long as the town council provided some of its cashflow information to make sure it would still be able to operate.

"That was an entirely reasonable request by MND. They are willing to entertain the suggestion you made but they would like some information to make sure the delivery of essential services is not compromised. AHPETC has not answered these questions," he said adding that the same situation had happened last year.

Mr Tharman said the sum owed to AHPETC's sinking fund by the town council was also substantial: "The amount that is owed to the sinking fund from the operating fund would not be solved by MND grants. There's a more fundamental problem."

He called on Ms Lim to focus on the substance of the problems at AHPETC, instead of the number of disclaimers.

"The examples that are given of the areas that auditor has qualified do strike me as, as a finance minister, as being fairly serious examples. They are not minor infractions, which you put a coat of paint over... A failure to transfer monies to the sinking fund, being unable to account for your service and conservancy charges after a few years - they are very serious matters to be taken seriously by everyone up and down the line," he said.

AHPETC on Monday posted a press release on its website saying that Ms Lim had wanted to clarify this point in Parliament, but that the Speaker of Parliament had not noticed her raised hand.

In the press release, Ms Lim said that the town council has already transfered $13.24 million of the $20.05 million it is required to transfer to its sinking fund for FY 2014/2015.

She added that the three transfers were made despite the MND withholding grants from the town council.

Since the balance left to be transferred works out to $6.81 million, the $7.2 million in MND grants withheld from AHPETC "would more than fulfil its obligations to transfer sinking funds for FY 2014/2015", she said.