Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam has directed the Auditor-General to conduct an audit of the accounts of a Workers' Party(WP)-run town council in charge of Aljunied GRC and two other wards.
The Aljunied-Hougang-Punggol East Town Council(AHPETC) has welcomed the government's decision to have its 2012 accounts audited by the Auditor-General's Office.
"We assure the Auditor-General's Office of our full co-operation in this matter," AHPETC chairman Sylvia Lim said in a statement on Wednesday.
The audit by the Auditor-General is at the request of National Development Minister Khaw Boon Wan. It comes after an independent auditor raised issues of concern regarding AHPETC's latest accounts.
In a joint statement on Wednesday, the Ministries of Finance and National Development said the observations in the independent auditor's report "raise serious questions about the reliability and accuracy of AHPETC's financial and accounting systems".
The ministries added: "As stewards of public funds, all Town Councils must keep proper accounts and records, and ensure adequate control over their assets."
They also noted that this is the second year running that AHPETC's auditor, Foo Kon Tan Grant Thornton, has submitted a disclaimer of opinion on its financial statements.
A disclaimer of opinion indicates a lack of proper records, and procedures, resulting in the auditor being unable to obtain the necessary evidence to provide an opinion on the veracity of the financial statements.
In his letter to the Auditor-General, DPM Tharman said he shared Mr Khaw's concerns over the independent auditor's report, and the questions it raises over the adequacy of AHPETC's systems and whether public funds in AHPETC are properly applied.
The terms of reference for the audit allow the Auditor-General to examine whether AHPETC has taken "all reasonable steps" to safeguard the collection and custody of AHPETC's moneys; ensure that this money was issued and paid in accordance with proper authority and that payments were properly chargeable and supported with sufficient evidence; and ensure that AHPETC had complied with any laws relating to its moneys, such as the Town Councils Act and Town Councils Financial Rules.
The audit will also investigate the causes of the auditor's disclaimer of opinion and ascertain the reliability and accuracy of AHPETC's financial management and accounting processes and systems, as well as understand the council's accounts.
In a statement last Friday, Ms Lim said some of the information gaps cited by the auditor were because the town council had been unable to get information from the former managing agent as well as government bodies like MND and Housing Board. She had also sought MND's help to verify and confirm some opening figures handed over by AHPETC's predecessor under the PAP.
However, in his letter to DPM Tharman dated Feb 18, Mr Khaw noted that several serious issues raised by the independent auditor relate to AHPETC's actions in 2012 and 2013, "well after the handover in 2011". These include the council not disclosing the full details of fees paid to a related party, managing agent FM Solutions and Services. It also did not transfer $12.46 million in conservancy and service charges into the bank account of its sinking funds, as required by law.
While Ms Lim had said that the breach has been rectified, Mr Khaw said it did not make available its latest management accounts and records of minutes to the auditor, which left it unable to ascertain whether the financial statements properly reflect the necessary adjustments and disclosures.
