AHTC ordered to appoint Big Four firm

Workers' Party MPs Sylvia Lim and Png Eng Huat (centre) with lawyer Peter Low, who is representing Aljunied-Hougang Town Council, arriving at the Supreme Court yesterday. AHTC has said that it does not wish to make use of two of the Big Four accounti
Workers' Party MPs Sylvia Lim and Png Eng Huat (centre) with lawyer Peter Low, who is representing Aljunied-Hougang Town Council, arriving at the Supreme Court yesterday. AHTC has said that it does not wish to make use of two of the Big Four accounting firms - PwC and Deloitte.ST PHOTO: MARK CHEONG

Court sets April 15 deadline for chosen firm to submit first monthly progress report to HDB

The Workers' Party-run town council has been ordered by the Court of Appeal to appoint one of the Big Four accounting firms within two weeks to examine its books.

The court said yesterday that it is a matter of public interest that should not be further delayed.

It also expects the first monthly progress report from the appointed accountants to be submitted to the Housing Board on April 15.

A Big Four firm will likely cost more than the choices named by the Aljunied-Hougang Town Council (AHTC), but HDB had said that it will pay the difference.

In delivering the court's decision, Chief Justice Sundaresh Menon said: "The concern now should be to appoint a firm of accountants which would manifestly have the ability, the experience and the resources to complete this task expeditiously".

The three-judge court, which included Justice Chao Hick Tin and Justice Andrew Phang, also said the appointed accountant should have to look into whether any past payments made by the town council "were improper and ought therefore to be recovered".

Law Minister K. Shanmugam said last year the town council had overpaid its then-managing agent, FMSS, about $6.4 million in four years as its fees were higher than those of managing agents in other town councils. Yesterday's court order came eight weeks after it ruled last November that AHTC had to hire accountants to address financial lapses uncovered by the Auditor-General's Office (AGO).

HDB has to agree to the accountant chosen, but it could not "unreasonably withhold" consent.

The town council initially picked Business Assurance - its financial consultant since last March - for the job. But HDB raised concerns about the firm's capability and asked for more information to determine its suitability.

The firm, however, pulled out on Jan 8. A second firm, MRI Moores Rowland, also withdrew after being nominated by AHTC.

Yesterday, the court heard that AHTC had picked yet another accounting firm called Ardent.

HDB again objected, saying that the firm did not have the relevant expertise, among other things.

In directing AHTC to appoint one of the Big Four, CJ Menon said "the task to be undertaken by the accountants who are to be appointed should not be underestimated" as they had to make sure a public body was fulfilling its legal obligations and using its public funds properly.

While the objection about the first two firms "cannot in and of themselves be the basis of objecting to the third", CJ Menon noted that AHTC's selection process had been unsuccessful so far, and that this "cannot continue indefinitely".

HDB submitted evidence to show that individuals from AHTC's first two choices, Business Assurance and MRI Moores Rowland, had failed the Practice Monitoring Programme (PMP).

Under the PMP, the Accounting and Corporate Regulatory Authority carries out inspections of public accounting firms and accountants to ensure compliance with standards and procedures.

The PMP report "calls into question their selection and due diligence process, their judgment in the selection of accountants, and there is no assurance proper checks have been carried out by them in relation to their latest nomination of Ardent", said Ms Aurill Kam of the Attorney-General's Chambers, acting for HDB.

AHTC tried to prevent the evidence from being submitted, arguing that it was irrelevant as both its nominations had pulled out.

PMP findings were also "private information" and revealing it may "discourage others from stepping forward if it is known this record will be made public", said the town council's lawyer Peter Low.

But the court allowed the evidence. It, however, said the firms - not the individuals - would be named in relation to the PMP results. The document was also sealed and made confidential, although HDB could apply to the court to make it public.

AHTC had told the court it did not want two of the Big Four firms - PwC and Deloitte.

Its reason: PwC took part in the AGO's audit of AHTC, while a partner in Deloitte was involved in grassroots work and had given a media interview on AHTC's accounts.

CJ Menon said, in the case of PwC, he was "unsure why this should be a concern" as AHTC had never challenged the AGO report.

When asked why the town council was unwilling to consider the other two - KPMG and Ernst & Young - Mr Low said AHTC had the right to choose the accountant it wanted.

In a statement after the hearing, town council vice-chairman Sylvia Lim said AHTC would "act on" the court's direction.

HDB said it welcomed the court's decision and was looking forward to the town council's nomination.

A version of this article appeared in the print edition of The Straits Times on January 23, 2016, with the headline 'AHTC ordered to appoint Big Four firm'. Print Edition | Subscribe