MND grades AHPETC “red” for corporate governance in TCMR

By Terry Xu

The Ministry of National Development (MND) released an update on FY2012 Town Council Management Report (TCMR), following Aljunied-Hougang-Punggol East Town Council’s (AHPETC’s) submission of its FY2012/13 financial statements, auditors’ report, auditor’s management letter and self-declared corporate governance checklist on 10 February 2014.

MND has indicated these documents as material for its assessment. Prior to the submission, the corporate governance assessment of AHPETC in the TCMR was marked as “pending”.

MND noted from the report of AHPETC’s auditor, Foo Kon Tan Grant Thornton LLP, that AHPETC had not complied with the provisions of the Town Councils Act and the Town Councils Financial Rules, and that AHPETC had at least two counts of contraventions.

These contraventions are failure to transfer funds into the bank account of the sinking funds as required under Rule 4(2B)(a) of the Town Councils Financial Rules; and failure to keep proper accounts and records of its transactions and affairs, as required under section 35 of the TCs Act.

MND has therefore graded AHPETC’s corporate governance as “red” for the FY2012 TCMR and has updated accordingly in the TCMR. The ministry added that to date, AHPETC has not submitted its auditor’s management letter to MND, despite multiple reminders and that it has reminded the TC to do so as soon as possible.

On 24 February, the Auditor-General’s Office announced that it has started work on its audit of AHPETC. The Auditor-General was tasked by Minister for Finance Tharman Shanmugaratnam to conduct an audit of AHPETC’s latest financial statements which came at the request of Minister for National Development Khaw Boon Wan, due to the “disclaimer of opinion” by independent auditors engaged by the AHPETC to audit their financial statements.

Chairman of AHPETC, Ms Sylvia Lim noted MND’s statement to indicate the Town Council’s banding for corporate governance under the TCMR framework as no surprise.

She added, “The factors that MND took into consideration included matters on which we had provided information in our statement of 14 February 2014 and in the Town Council’s Annual Report itself. These matters are the subject of an ongoing audit by the Auditor-General’s Office, and we will respond further, if there is a need to, after the audit.”

In the earlier response by AHPETC on the disclaimer of opinion pertaining its accounts, it was stated that the auditors had tried to request information from former auditors of the previous town council, unsuccessfully, in both FY2011 and 2012.

AHPETC is run by Workers’ Party and the former town council was managed by the People’s Action Party.

MND’s latest media release on this issue is available here, and AHPETC’s response available here.