A day after the Aljunied-Hougang-Punggol East Town Council (AHPETC) submitted its overdue financial statements and report for FY2013, the Ministry of National Development (MND) issued a response, saying that the documents reinforced its concerns about the town council’s state of financial affairs.
The MND, noting that the statement and report — submitted on Tuesday (June 30) — were 10 months late and that AHPETC required repeated reminders, said it will study the report. But it pointed out the auditors engaged by AHPETC had disclaimers of opinion in their report — the third consecutive year the town council has received qualified statements from its independent auditors.
Audit Alliance, the auditors appointed by AHPETC, had flagged eight areas of concern, some of them similar to issues raised by the Auditor-General’s Office (AGO) in its report on AHPETC accounts for FY12/13.
The auditors found that there was no segregation of duty between the person certifying invoices from FM Solution and Services (FMSS) for Managing Agent services, and the person approving related payment vouchers. AHPETC’s deputy general manager, who is a shareholder and director of FMSS, certified 12 invoices received from FMSS for Managing Agent services totalling S$2.1 million, and approved the related payment vouchers. The total value of related party transactions increased to S$8.5 million in FY13, from S$6.8 million in FY12.
The auditor also found that in the case of three tenders called, the Managing Agent failed to declare whether the specifications gave preference to any particular tenderer.
There was also no documentation on whether the tender specifications were approved by the Tenders and Contracts Committee of the town council.
AHPETC also breached the Town Council Financial Rules by failing to make transfers into the bank account of the sinking funds as required. Its transfers were up to 15 months late and errors were discovered in the computation only after the AGO audit.
And it paid for town improvement expenses out of its sinking fund, which is not allowed under the Town Councils Act.
The auditor also said it could not verify whether certain items in the accounts were accurate, such as the FY13 opening balance, and the completeness of the town council’s liabilities as at March 31 2014.
All town councils must submit their audited financial statements, auditors’ reports and annual reports to the MND by August 31 each year. These are then tabled to Parliament and a copy of the audited financial statements and any report made by the town council’s auditor is also forwarded to the Auditor-General.
The MND noted that AHPETC went from an annual operating surplus of S$1.1 million in FY11 to a deficit of S$1.53 million in FY12 and a deficit of S$2.01 million in FY13. The town council also previously understated the annual operating deficit in FY12 by half.
“AHPETC’s financial position has consistently deteriorated between FY11 and FY13, even though the (town council) received full government grants from MND during these three years,” the MND said. “AHPETC’s latest financial statements and reports reinforce MND’s existing concern about the (town council’s) state of financial affairs.”
Source: www.todayonline.com
