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Tag: KPMG

  • WP Chief Low Thia Khiang: KPMG Report On Past Payments & Transactions ‘Inconclusive’

    WP Chief Low Thia Khiang: KPMG Report On Past Payments & Transactions ‘Inconclusive’

    The audit report on the Aljunied-Hougang Town Council’s (AHTC) past payments and transactions remains “inconclusive” despite the manpower and resources spent, said Workers’ Party (WP) chief Low Thia Khiang on Wednesday (Nov 2).

    Mr Low was making his first comments on audit firm KPMG’s finding that flawed governance in the WP-run AHTC had exposed millions in public funds to improper use, to the extent there could be criminal conduct if lapses were deliberate.

    “The report seems to have a lot of answering (to do) despite the fact that they had deployed a lot of manpower, public monies (were) used, and eight months spent,” said Mr Low, who was speaking to reporters before the start of his fortnightly Meet-the-People Session at the void deck of Block 522 Hougang Avenue 6. “The town council also spent a lot of manpower responding to their queries. The MPs were also being interviewed to satisfy their questions, but unfortunately the report seems to be inconclusive in that sense. So that’s it.”

    KPMG’s 68-page report, which was made public by AHTC on its website on Tuesday, flagged “serious conflicts of interest” and a “failed control environment” which exposed millions of dollars in public funds to improper use, including in payments to its former managing agent FM Solutions & Services and service provider FM Solutions and Integrated Services.

    The owners of these two companies concurrently held key management and financial control positions in the town council and approved 132 payment vouchers amounting to more than S$23 million from the town council to the company.

    KPMG also said improper payments to FMSS and FMSI alone amounted to over S$1.5 million, of which at least S$600,000 ought to be recovered by the town council.

    The improper payments to FMSS and FMSI included overpayments for project management fees, overpayments to FMSS for purported overtime and CPF contributions payments to FMSS without certification that work had been performed, as well as payments made without the requisite co-signature of members of the town council.

    AHTC also overpaid when it appointed FMSS as its managing agent by more than S$1.2 million.

    Responding to these issues, Mr Low reiterated the points in a statement issued by his party on Tuesday, saying KPMG had found “no fictitious, fraudulent, nor duplicate payments”.

    “So that is what is important for the public to know,” he added.

    Mr Low also said the report “has not said anything” about conflicts of interest among the WP Members of Parliament, the town councillors, FMSS, and other contractors it appointed.

    “To me, the report is simply more detailed than AGO’s report, in terms of the framework, and the kind of lapses they found are basically as the AGO’s but in more detail, yes, because they had spent a lot of time going through the records. It is a forensic audit,” he added.

    Mr Low was referring to a special audit by the Auditor-General’s Office that found major lapses in compliance and governance in AHTC. The finding led to a High Court ordering AHTC to appoint auditors to fix these lapses.

    After fielding questions for five minutes, Mr Low ended the doorstop interview, saying the town council was still studying KPMG’s report and would issue media releases on the matter, if necessary.

    Meanwhile, Nanyang Technological University accounting professor El’fred Boo said the proposed amendments to the Town Councils Act would help strengthen governance in a few ways, such as how to avoid conflict of interest situations. But he felt that there could be other changes, such as a requirement to set clear objectives and performance milestones to make it easier to assess them and hold them accountable.

    More regular compliance audits could also be made a requirement to boost the Ministry of National Development’s ability to monitor the situation at individual town councils, said Associate Professor Boo. At the same time, there should be a channel for people to report matters of concern to the town council chairman and/or MND, he added.

     

    Source: www.todayonline.com

  • KPMG: ‘Pervasive Control Failures’ In AHTC

    KPMG: ‘Pervasive Control Failures’ In AHTC

    Independent auditors have found that flawed governance in the Workers’ Party-run Aljunied Hougang Town Council (AHTC) led to improper payments running into the millions to various parties, including to its former managing agent FM Solutions & Services (FMSS) and service provider FM Solutions and Integrated Services (FMSI).

    In a report made public on the town council’s website on Tuesday (Nov 1), KPMG said improper payments to FMSS and FMSI alone amounted to over S$1.5 million.

    AHTC also overpaid when it appointed FMSS as its managing agent by more than S$1.2 million, said KPMG, which was appointed by AHTC on court orders to help fix compliance and governance lapses uncovered in a special audit by the Auditor-General’s Office.

    Flagging “serious conflicts of interest” and a “failed control environment” at the town council, the auditing firm also warned that if the issues involving FMSS and FMSI were deliberate, “they could amount to criminal conduct, the implications of which the Town Council should consider”.

    KPMG’s latest report centred on improper payments made by the council to various parties, in particular to FMSS and FMSI, which were appointed between 2011 and last year.

    Their appointments “exposed the Town Council to serious conflicts of interest as the direct owners of FMSS and FMSI (with a profit motive) concurrently held key management and financial control positions in the Town Council (charged with a service motive)”, said KPMG.

    For example, Mr Danny Loh – who died last year – was secretary in the town council as well as shareholder of FMSS, and sole proprietor of FMSI.

    “The situation of FMSS is unlike that of the Town Council’s previous managing agents. In the former case, those approving payments for the Town Councils were not beneficiaries engaging in a profit-motive transaction with the Town Council,” said KPMG.

    In the case of FMSS, the “conflicted persons” were in effect “approving payments to themselves”.

    Meanwhile, the Town Councillors relinquished an “unacceptably high degree of financial responsibility” to the conflicted persons.

    “In this regard, payments with an aggregate financial value of at least SG$23 million involved approvals by the conflicted persons of payments in effect to themselves through payment vouchers, which is an important gateway in the Town Council’s payment approval process,” KPMG said.

    In this “failed control environment”, the improper payments to FMSS and FMSI included amongst others, overpayments to FMSS for project management fees, overpayments to FMSS for purported overtime and CPF contributions payments to FMSS without certification that work had been performed, as well as payments to FMSS that were made without the requisite co-signature of members of the town council.

    These amounted to about S$1.5 million, of which at least S$600,000 ought to be recovered by the town council, said KPMG.

    The firm also said the tendering out of the contracts to FMSS and FMSI was “deficient in numerous respects”.

    For one, for the first managing agent contract, FMSS was more expensive than the comparable contract with the former Aljunied Town Council managing agent.

    When the contract was renewed — the second managing agent contract — the rates increased significantly. The increase in the managing agent’s costs in the first year under FMSS amounted to approximately S$500,000, while under the second managing agent contract the rates were, conservatively, S$700,000 million more that what might have cost to retain CPG as the managing agent.

    Overall, KPMG reported “pervasive” control failures cutting across key areas of AHTC’s governance, financial control, financial reporting, procurement and records management over the audit period. Such flawed governance has potential to “conceal and hinder the detection and identification of all instances of proper payment”, said the accountants.

    As a result, KPMG said it was unable to conclude whether the improper payments and the amounts that ought to be recovered identified in the report are exhaustive.

    Noting that it is beyond the auditors’ mandate to conclude whether an offence has been committed, KPMG said: “While our work was not focused on identifying potential criminal acts arising from the issues we observed, we are advised that, had the shortcomings (identified in) this report been committed deliberately, they could amount to criminal conduct, the implications of which the town council should consider.”

    AHTC said it is studying the report and will respond in due course.

     

    Source: www.todayonline.com

  • KPMG Names Singapore’s Intelligent Transport System Among Best Infrastructure Development Globally

    KPMG Names Singapore’s Intelligent Transport System Among Best Infrastructure Development Globally

    Developing countries should take a leaf from the republic’s book.

    Singapore’s Intelligent Transport System has been named among the best infrastructure developments currently under way around the world, according to KPMG International’s latest Infrastructure 100: World Markets Report 2014.

    The republic’s pay-as-you-use system was described by judges as “clever” for the way it maximizes the capacity of the road network and shapes motorist behaviour with sophisticated electronic road pricing (ERP) tolls that vary according to traffic flows and are controlled in real time from an operations centre.

    With a total estimated value of over US$1.73 trillion, the 100 projects illustrate a range of infrastructure investment, some with a potentially transformative impact that could change the face of nations, particularly developing ones.

    Several other ASEAN projects were also selected among the 100.

    These include Myanmar’s brand new communications network being built by an international consortium which, when completed, would improve internet connectivity for three main cities. It would enable Myanmar to leap directly to a wireless-driven society faster than a more mature market, empowering business and e-commerce.

    Cambodia’s US$10 million Hak Se Mill Biomass Gasification which generates more affordable renewable power by turning rice husks into biogas too, was recognised for its innovation and social impact.

    Alongside Singapore’s Transport System, Indonesia’s upcoming second line of its Mass Rapid Transit system in Jakarta was also honoured for the way it is designed to improve urban mobility.

     

    Source: https://sg.finance.yahoo.com