Workers' Party-run Aljunied-Hougang Town Council (AHTC) has taken steps to resolve concerns over related-party transactions and conflicts of interest, a report by auditor KPMG last week showed.
The report comes a month after KPMG flagged the town council's shortcomings in governance framework and accounting practices.
In its latest report, dated Friday May 13 and released by AHTC on Saturday night, it said work on resolving 15 out of 17 audit points flagged last month is still ongoing.
AHTC chairman Pritam Singh said in a statement that the 15 outstanding audit points "are now subjected to remedial measures" and KPMG is reviewing them.
The town council had submitted the 30-page report to the Housing Board on Saturday, as required by the Court of Appeal. The apex court had directed AHTC to appoint a Big Four accounting firm to establish whether any past payments it made were improper, and ensure it complies with the laws, in the wake of a report by the Auditor-General into the town council's finances.
HDB told The Straits Times last night that it is reviewing the latest progress report.
"Preliminarily, we note that AHTC has started to introduce some remedial measures to address the audit points previously flagged by the Auditor-General's Office and AHTC's auditors in the Town Council's FY13/14 and FY14/15 financial statements," an HDB spokesman said. "However, much work remains to be done as a majority of the audit points (15 out of 17) remain unresolved," the spokesman added.
KPMG had, in its first report last month, flagged AHTC's shortcomings in managing related-party transactions. The shortcomings include incomplete disclosure of transactions with the related parties, and waiver of open tenders for services provided by these parties.
In response, the town council has drafted a policy to remedy the incomplete disclosures of transactions with the related parties.
KPMG then reviewed the policy and recommended, among other things, that the document cover a wider range of activities instead of just the tender process, and tighten certain definitions, such as "arm's- length transaction".
The town council has submitted its policy on procedures for the calling of tenders and quotations. KPMG said in the latest progress report it is still reviewing the policy, and testing the effectiveness of AHTC's tender and quotation procedures.
AHTC has also updated its conflict-of-interest policy, which now requires town council staff, including town councillors, to declare any paid and unpaid engagements or employment with external parties, as well as personal financial interests and gifts, KPMG noted.
The policy did not previously cover town councillors.
Other updates include documents defining more clearly the powers of each committee to beef up the town council's governance framework.
AHTC has also boosted its finance department by hiring a second deputy finance manager and engaging two external consultants.
They are remediating outstanding bookkeeping matters and preparing for the next statutory audit.
In its report last week, KPMG noted that AHTC had transferred a sum of $3,755,044.86 to its Sinking Fund bank accounts on April 29, in time for the January to March 2016 period. KPMG also highlighted a duplicate transfer of $157,141.01 to a Sinking Fund bank account for the October-December 2014 period.
Yesterday, HDB noted that new details had emerged from KPMG's review on lapses in AHTC internal processes, such as the duplicate Sinking Fund transfer and various weaknesses in internal controls.
"These may have remained unresolved had the court not ordered the TC to appoint auditors to look into its accounts," it said.
HDB said AHTC must take active and urgent steps to close the gaps, and comply fully with the rules. "We also expect AHTC to extend its fullest cooperation to the auditors for the other court-ordered checks on whether any past payments were improperly made and ought to be recovered," it said.