The lack of a proper record-management and accounting system was why the Aljunied-Hougang-Punggol East Town Council (AHPETC) failed to produce accurate financial statements, said the Auditor-General's Office (AGO) yesterday.
The AGO said AHPETC did not adequately safeguard accounting documents for April to July 2011. Thus, its auditor was unable to conclude that its FY 2011/12 financial statements were true and fair. This in turn affected the town council's opening balances for the subsequent financial year.
Part of this arose because AHPETC did not properly manage the transition between its two managing agents - CPG Facilities Management, which ran the Aljunied Town Council when it was under the People's Action Party (PAP) before the May 2011 General Election, and FM Solutions & Services, which ran the Workers' Party's town council later.
The AGO said AHPETC did not put in place a system to account for the relevant documents. It also did not have a formal handing- and-taking-over process when finance staff resigned.
But the problem persisted even for transactions that took place after AHPETC took over, the AGO said. For example, it said it could not locate some requested documents and was looking for others, although such requests had been made at least three months earlier.
An inadequate accounting system also affected AHPETC's ability to provide information on its receivables and advance receipts to its auditor. It also led to incorrectly recorded payments in some instances, which had the effect of reducing the amount of money owed to the town council.
AHPETC also used wrong bill codes for some transactions, resulting in inaccurate accounting. Therefore, its auditor could not determine the validity and accuracy of some of its accounts.
Among other examples, AHPETC overstated its liabilities by over $160,000, said the AGO.
Replying to the report, AHPETC said one of the main challenges was the lack of an IT system that could keep track of things on a larger scale. The previous vendor, the PAP-owned Action Information Management, had terminated its services at short notice.
While it acknowledged that it should have been more vigilant, AHPETC pointed out that a turnover of finance staff in 2011 and 2012, as well as an audit conducted during the handover period of April to July 2012, affected its ability to keep better records.