
Yesterday (19 Feb), Minister for National Development Khaw Boon Wan requested Finance Minister Tharman Shanmugaratnam to direct the Auditor-General to conduct an audit of the opposition-run Aljunied-Hougang-Punggol East Town Councilâs (AHPETC) financial accounts.
AHPETCâs auditor, Foo Kon Tan Grant Thornton LLP, had earlier submitted a âdisclaimer of opinionâ on AHPETCâs FY2012-13 financial statements, raising 13 issues of concern over the town councilâs accounts.
Earlier, on 14 February 2014, the Ministry of National Development (MND) said that the auditorâs disclaimer of opinion âis more severe than a qualified opinionâ [Link].
In yesterdayâs statement, the PAP government said that the observations in the auditorâs report âraise serious questions about the reliability and accuracy of AHPETCâs financial and accounting systemsâ.
âThis is the second year that the Auditor has submitted a disclaimer of opinion on AHPETCâsFinancial Statements. Moreover the Auditor has raised several more issues of pressing concern this year, compared to last year. AHPETCâs Auditorâs Report and Financial Statements are cause for serious concern.â
As it turns out, auditors have been giving an âadverse opinionâ on the financial reports from the Peopleâs Association (PA) for several years now.
PA oversees all the grassroots activities in Singapore. It is a statutory board under the Ministry of Community Development, Youth and Sports (MCCY). The Chairman of PA is none other than PM Lee Hsien Loong himself.
According to ACRA, there are a few types of audit opinions. A âdisclaimer of opinionâ means the auditor is unable to express an opinion on the financial statements but an âadverse opinionâ means qualification of the financial report is not adequate to disclose the misleading or incomplete nature of the financial statements [Link]:
| Types of Audit Opinion |
Explanation |
| Unqualified Opinion |
The auditor âconcludes that the financial statements give a true and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting framework.â |
| Emphasis of matter (EOM) |
This is to âhighlight a matter affecting the financial statements which is included in a note to the financial statements that more extensively discusses the matter. The addition of such an emphasis of matter paragraph does not affect the auditorâs opinion.â |
| Qualified Opinion* |
This is expressed when the âauditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion.â |
| Disclaimer of Opinion* |
It is expressed when the âpossible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial statements.â |
| Adverse Opinion* |
It is expressed when the âeffect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.â |
TREÂ has gone through PAâs financial reports on its website and found the following:
FY2007Â (07/08)Â [Link]
For FY2007, PA did not include the financial statements of grassroots organizations (GROs) operating under itself. The auditor could not âassess the financial impact to the financial statements of the Association arising from the non-inclusion of the financial statements of theGROsâ. As such, the auditor gave an âadverse opinionâ against PA because its financial statements â[did] not present fairlyâ the state of affairs of the Association:

(published by PricewaterhouseCoopers, 15 Sep 2009)
FY2009Â (09/10)Â [Link]
In FY2009, a new auditor, KPMG LLP, took over the audit of PA. The new auditor said, âWe do not have sufficient information to assess the financial impact to the financial statements of the Association arising from the non-inclusion of the financial statements of the GROs.â As such, the new auditor also gave an âadverse opinionâ:

(published by KPMG LLP, 15 Jul 2010)
Then, the format for the online version of PAâs financial reports for the next 3 years (FY2010 â 2012) changed [a href=”http://www.pa.gov.sg/about-us/annual-reports.html”>Link].
The public could no longer see the detailed opinions of the auditors. PA only published the âfinancial highlightsâ in these 3 reports. In other words, the financial reports became just financial summaries:
TRE then went down to the National Library to attempt to get printed copies of PAâs financial reports but the librarian was not able to find printed copies for the last 3 FYs (FY2010 â 2012). The library only has printed copies up to FY2009. The librarian told TRE to refer to the online versions instead.
Not giving up, TRE did a further extensive online search and managed to find an online version of PAâs FY2010 financial report. This copy was found on the Parliament website:
FY2010Â (10/11)Â [Link]
Comparing this with the online version on PAâs website [Link], they are essentially the sameexcept that the one found on the Parliament website discloses the detailed opinion of the auditor at the end:

(published by KPMG LLP, 15 Jul 2011)
Again, the auditor could only give an âadverse opinionâ for PAâs FY2010 financial report because the auditor â[did] not have sufficient information to assess the financial impact to the financial statements of the Association arising from the non-inclusion of the financial statements of the GROs.â
The relationship of PA and PAP is very close. Mr Lee Kuan Yew once proudly said that the Chinese have been sending teams of officials to learn from Singapore for years:
They discover that the Peopleâs Action Party has only a small office in Bedok. But everywhere they go, they see the PAP â in the RCs (residentsâ committees),CCCs (citizensâ consultative committees), and the CCs (community clubs).
The operating expenditure of PA is huge. According to its latest financial report (FY2012), PAâs operating expenditure for the year increased by $46 million to $483 million. Government grants which are taxpayersâ money given to PA amounted to $434 million in FY2012:

Dr Ernest Kan, President of the Institute of Singapore Chartered Accountants (ISCA) and Pasir RisPunggol grassroots leader, had earlier agreed with MND that the audit findings on AHPETC are âseriousâ (âPresident of ISCA: AHPETCâs audit report âseriousââ). It is not known what Dr Kan has to say about PAâs audit findings which have garnered âadverse opinionsâ from auditors.
It is also not known if the Acting Minister for Culture, Community and Youth (MCCY), Lawrence Wong, will request Finance Minister Tharman Shanmugaratnam to direct the Auditor-General to conduct an audit of PAâs financial accounts, since PA comes under MCCY.
Source:Â http://www.tremeritus.com/2014/02/20/breaking-auditors-give-adverse-ratings-to-pas-financial-reports/