SINGAPORE - The process of handing over town councils after an election will be given a fresh look, as part of an ongoing review of the Town Councils Act.

Senior Minister of State for National Development Desmond Lee revealed this in Parliament on Tuesday (Aug 16), as he registered concern about the Aljunied-Hougang Town Council (AHTC) making little progress in fixing its governance and financial lapses.

On the handover process, he said: "We understand that when boundaries change especially across political lines, delays in submission of accounts and documents may impact the financial audits of the receiving town council. So this is certainly something we need to look at in the course of this review (on the Town Councils Act)."

He did not give further details.

Mr Lee was addressing a supplementary question after responding to Mr Charles Chong (Punggol East), who had asked what the Ministry of National Development (MND) would do to better safeguard public monies and to recover any improper past payments made by AHTC.

The Workers' Party-run town council is undergoing an audit by accounting firm KPMG, which comes on the back of a special report by the Auditor-General's Office (AGO) in February last year that flagged significant lapses in finance and governance.

In its July progress report, KPMG - who was appointed by the AHTC to look into its books - said it found "pervasive" control failures in AHTC's accounts and processes over the past five years, spanning governance, financial control, financial reporting, procurement and records management.

Citing this, Mr Lee said that despite repeated assurances from Workers' Party (WP) leaders, AHTC had been dragging its feet in remedying its troubled accounts.

KPMG had said in the July report that AHTC had only completed a few of the remediation steps it had promised to take, he said. The accounting firm also estimated that its review would take 18 months, instead of the 15 months that AHTC had promised.

Mr Lee said: "Instead of completing the remediation plans expeditiously, what we have seen from the town council in this past one and a half years is a series of actions that have only slowed down, prolonged and frustrated the whole process."

He added that the MND was concerned about the "systemic control failures" highlighted by KPMG, including highly irregular shortcuts used by AHTC to process $60 million paid to related parties and suppliers over five years.

"These control failures continue to paint a serious state of affairs in AHTC and are a cause for concern," he said, adding that these failures could conceal duplicate, fictitious or fraudulent payments, which could have been made without being detected.

In a supplementary question, Ms Sylvia Lim (Aljunied GRC), who was the chairman of the WP town council until last year, asked Mr Lee if the MND knew of other town councils that also had control failures.

"Now, we appreciate all this attention on us and how bad we are, but in order for us to get a proper perspective is MND saying that the auditors of the other town councils have not picked up control failures in the other town councils?" she said.

"Would MND be prepared to share the findings regarding the other town councils with us or with the public so that we can better benchmark ourselves and perhaps adopt some of the best practices that may be available in the other town councils?"

Mr Lee said he had no doubt that other town councils too would make mistakes from time to time and that these too would be picked up in the annual town council audits.

He added that the issues at AHTC were of a different scale and pointed out that the town council's accounts had never been given a clean bill of health by its own accountants in the past four financial years.

He called on AHTC to cooperate fully with KPMG in reviewing past payments made. The findings on this are due at the end of August.

"This matter has dragged on for many years, with multiple court hearings and not much actual progress made. For four financial years consecutively, AHTC has not had accounts that had passed accountant's muster", he said.

"Residents of Aljunied, Hougang and also Punggol East, need to be assured as to whether or not there were any improper past payments that ought to be recovered. The Singaporean public also needs to know as large sums of public monies and grants are at stake."