Past instances of lapses and mismanagement highlighted by AGO

Very well research article with a little humour, a little humbleness and sound argument but sadly the mainstream media chose to ignore it instead reported one-sided views from the ministers and the ruling party. Thus who can we blame the online media choosing to report the weaker parties who have no access to mass media and the Government machinery.

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Source: Workers’ Party Facebook

Debate on the Auditor-General’s Report on the Audit of AHPETC – MP Png Eng Huat

png.100x100By MP for Hougang SMC, Png Eng Huat
[Delivered in Parliament on 13 Feb 2015]

Madam Speaker, we all know what the Auditor-General’s Office (AGO) is known for and the values they represent. In every report that came out of AGO since time immemorial, entities under its scrutiny had to go through a baptism of fire whenever the AGO came knocking. I have full respect for their work.

Over the years, the AGO has found sad instances of over payments, payments without evidence that goods and services were delivered, duplicate payments and in one instance amounting to $18.6 million, and etc in many ministries and organs of states it audited.

One agency was found to have called for a quotation instead of a tender for a project that exceeded $70,000 in the 2010/11 AGO report. Another agency was cited to have issued purchase orders to the term contractor only after the contractor has started the work.

AGO also revealed that 10 statutory boards did not present their FY 2006/07 annual reports to Parliament within the six-month time frame and three of these boards had also been late the previous two year. One of them did not even present its audited financial statements to Parliament for the previous two financial years.

Awarding contract to sole tenderer despite the offer did not meet technical requirement specified in the tender and paying more than the contract price for extension of contract were all flagged. Even the agencies under the Ministry of National Development were cited for overpayment, late payment, mistaken use of waiver of competition.

The Ministry of Foreign Affairs was cited for not having complied with Government procurement principles of transparency, open and fair competition, and value for money when an overseas mission was audited.

The Public Service Division was also flagged for informing a bidder that it had secured a contract worth $455,000 13 days before the Tender Board made the award decision.

Some of these lapses were small in financial values while others were serious and the list goes on. Like what the ministers said yesterday, in some country, the CEO would take a deep bow, apologise, and resign but I guess this is not in our culture.

Madam, the Aljunied-Hougang-Punggol East Town Council (AHPETC) is also found by AGO to have erred in some of these areas and I am certain AHPETC will not be the last as well because good corporate governance is a work in progress.

The Workers’ Party takes the AGO findings very seriously. We have acknowledged our shortcomings in certain areas as well as defended our actions in others. On any other given day, this report may read like a typical AGO report on any entity under audit but today the spotlight is on AHPETC and we will explain the issues to the public.

Arrears of Service and Conservancy Charges

First, I would like to specifically address one of the major lapses mentioned by AGO under para 3.2(c) of the main report which states that AHPETC does not have “a system to monitor arrears of conservancy and services charges accurately and hence there is no assurance that arrears are properly managed”

We have explained to AGO that AHPETC does have a system to track every financial transaction in a resident’s account including HDB grants, monthly S&CC, payments, penalties, legal costs, and interests, if any, dating back to 1996 if the residents are from Hougang.

We have also explained how these S&CC payments are collected and uploaded into our financial and accounting system. Every transaction via cash, credit card, cheque, NETS, internet banking and inter-bank GIRO, is identified and posted into the respective resident’s record in the Accounts Receivable and General Ledger at the end of the day or whenever the collection agencies inform us. This has allowed AHPETC to monitor the arrears situation of an individual account ‘live’, up to date, and on demand.

AHPETC is able to account to residents as to whether they have paid their S&CC or whether they are in arrears if they were to enquire at the any of our branches across our town.

Madam, what AHPETC does not have is a program to generate aggregated S&CC data in the format requested by MND and to monitor them in that specific format. The computer system currently in use at AHPETC was an up-scaled version of the system from Hougang SMC and it was put into operation within a short span of one month. A lot of the features required to handle the operation of a GRC were not implemented then.

As we have mentioned in our media release, all reports submitted to MND up to April 2013 were prepared by staff based on data generated by the IT system and extracted through manual sorting and counting. AHPETC also acknowledges that this manual process is not ideal and efficient as the data set is huge. It is also tedious and subject to reporting and human errors.

AHPETC has made incremental improvements to the computer system over the years. Our system may be rudimentary in features compared to what was available before 2011 but it is certainly robust in keeping a reliable database. We took time to have the data and process reviewed internally and externally before we released our S&CC arrears rate of 5.66 per cent as at 30 September 2014 a few weeks ago. In short, we were not evasive when we said we would address the issue in due course. We will work towards providing timely data to MND in the coming weeks albeit not in the format the ministry required but nonetheless relevant enough to take a snapshot of the arrears situation at AHPETC.


Next, I want to highlight the challenging environment AHPETC is working in, some of which relate to the 13 points of disclaimers highlighted by the auditors of AHPETC for FY2012/13.

In Part 1 of the AGO report under one of the disclaimers on Receivables from Sundry Debtors, AGO revealed that AHPETC did not monitor and take timely follow-up action on its receivables.

In para 2.34 of the report, it was stated that most of the outstanding receivables as at 1 July 2014 were amounts due from HDB and NEA. While there were invoices under dispute, there were also instances where HDB was reviewing claims dating back to May and November 2012.

In subsection (ii) of the same para, NEA rejected four invoices from AHPETC because they were wrongly sent to one of the regional offices. NEA further explained that by the time the invoices were received by the relevant division, the period provided for payments or credit period had lapsed and NEA was unable to process the invoices for payment. The agency then requested AHPETC to re-issue the four invoices.

Madam, invoices do not carry expiry dates. The 30-day credit term listed on an invoice is to let the debtors know that they have to pay within the stipulated period or the creditors will reserve the right to impose penalties. It is common to replace a missing invoice under the same invoice number and date or to re-issue an invoice due to amendments but to request for new invoices due to expired credit terms is highly unconventional.

To void an invoice needs justification. Is it right to do that just so an agency can be seen to be prompt in making payments on paper?

Under the same report for Disclaimer 6(a) on page 23, AGO also revealed that AHPETC does have a Standard Operating Procedure (SOP) for non-routine works contrary to what the previous auditor had claimed. AGO was of the opinion that AHPETC should stipulate a timeline for verification works to be done by property officers after job sheets were received in the SOP, not that AHPETC does not have a SOP.

Oversight of Payments

Next, I would like to highlight what my colleague, Ms Sylvia Lim, has said yesterday on the oversight of payments.

The headline in the Lian He Wan Bao, “TC Secretary and GM pay their own company $6.6 million”, is very mischievous. Out of the $6.6 million, $6.4 million or 96 per cent is related to agreed monthly sums for services provided by the Managing Agent and Essential Maintenance Service Unit under contracts approved by the Town Council.

These are necessary recurring payments for critical services to keep our town running else rubbish will pile up three-storey high and lives will be endangered if residents are trapped in the lifts with no rescue effort carried out in the shortest possible time.

Our MA cannot make payments to themselves for the above services without the Chairman or one of the Vice-Chairmen to co-sign the cheque bearing in mind that at the same time, there are oversight committees to ensure work is done.

We monitor calls, complaints, conservancy issues, electrical issues, lift issues, customer services issues, and etc across our town and by divisions. Checks are done monthly at our Estate & Community Liaison Committee (ECLC) meetings and quarterly Town Council meetings.

So these are not payments for nothing or for unknown services or work done.

Safeguarding Public Funds

Last, I wish to touch on safeguarding public funds. It is a waste of public funds for an incoming administration to develop a new computer system that does essentially the same functions as the previous system, which was also develop with public funds.

I understand in the old days, HDB used to provide town councils with a centralized computer system. It makes perfect sense since town councils are set up to manage only HDB estates and the common areas. Who else would have the latest data on the number of flats in an estate, the types of flats, the residency status of the tenants, the amount of grant each flat should receive, when to start collecting S&CC and whether the unit is rented out whole or partial? All these information affects S&CC and grants.

And such systems are not cheap to develop. The old system at Aljunied Town Council cost over $20 million, hardware and software, split among the other PAP town councils. AHPETC has spent over half a million dollars just to replicate what the old system could do and we still have a way to go. Isn’t that a waste of resources and public funds? Setting up a centralized computer system will certainly safeguard residents’ interest and money, no doubt.


Madam, there are many observations made in the AGO report but at the end of it all, the buck stops at AHPETC.

I can’t remember if any minister has ordered any audit on any ministry or organ of state in recent times due to disclaimers or adverse opinions expressed by its auditors but nonetheless AHPETC had co-operated in this audit and will take lessons from the findings in the spirit of public accountability and good corporate governance.