Workers’ Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC) had earlier submitted the town council audited reports of Financial Year 12/13 to Ministry of National Development (MND) on Tuesday (30 Jun).
The deadline for the town council to submit the report was set during the parliamentary debate held in February this year over the reports by Attorney General’s Office on the town council.
On 1 July, media reported on MND’s statement in regards to the submission of reports by AHPETC.
MND said it will study the financial statements and reports, but noted that AHPETC’s FY13/14 financial statements are still qualified, with disclaimers of opinion.
Apart from that, MND also made several comments on AHPETC which the town council took issues with.
In response, AHPETC issued a statement this evening to state their response towards the comments by MND as earlier reported by mainstream media.
Late Filing of Accounts by ten months
MND: After “repeated reminders and a delay of 10 months”, AHPETC has finally submitted its Financial Year (FY) 2013 audited financial statements and reports.
AHPETC: This is an old issue previously explained inside and outside of Parliament, and in the TC Chairman’s Message in the Annual Report. AHPETC had to focus its resources on the audit by the Auditor-General’s Office (AGO) from March 2014 to January 2015. The town council also had difficulties securing an auditor till late 2014, which was approved by MND in December 2014.
The town council is currently working on completing the audit of FY 14/15.
Third Consecutive Year of Qualified Accounts from Independent Auditors
MND: This is the third straight year that AHPETC has received qualified statements from its independent auditors. It highlighted that Audit Alliance LLP, newly appointed as independent auditors by AHPETC, had flagged eight areas of concern in the town council, including non-compliance with legal and regulatory requirements.
AHPETC: The town council said that there has been significant progress has been made on clearing past disclaimers. The town council also expects future audit reports of AHPETC to continue to contain qualifications relating to specific items especially handover opening balances, which remain unresolved even with the assistance of AGO, despite 10 months of extensive work.
Related Party Transactions
MND: 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: This is an old issue on which AHPETC has made progress. In any event, any concerns will be completely removed after 15 July 2015 when the current Managing Agent contract expires and AHPETC is directly managed.
Annual Operating Surplus / Deficit
MND: AHPETC’s financial position has “consistently deteriorated” between FY2011 and FY2013, even though it received full Government grants from MND in those three years.
“AHPETC’s latest financial statements and reports reinforce MND’s existing concern about the TC’s state of financial affairs,”
AHPETC: The annual operating deficit for FY 12/13 was restated in response to the findings of the AGO audit. The adjustments included corrections as well as provisions made for impairment.
In FY 13/14, the operating deficit increased substantially as a result of higher operating expenses. Increases in revenue from service and conservancy charges due to the inclusion of Punggol East SMC with effect from May 2013 were more than offset by increases in conservancy/cleaning, lift maintenance, and utilities, amongst others.
The town council believes that the trend in changes in AHPETC’s financial position and results of operations will become clearer following the audit FY 14/15.
Compliance with the Town Councils Act
MND: AHPETC had not complied with the Town Councils Act and Financial Rules in areas.
MND said, “AHPETC went from an annual operating surplus of S$1.1 million in FY2011 to a deficit of S$1.53 million in FY2012 and a larger deficit of S$2.01 million in FY2013. The TC had previously understated its annual operating deficit in FY2012 by half,”
“AHPETC had an accumulated deficit of S$1.42 million in FY2013, compared to a small accumulated surplus of S$853,000 in FY2012. The TC had previously overstated its accumulated surplus in FY2012 as S$1.84 million.”
AHPETC: Pointed to the report on qualified opinion in the financial report, which the auditors have stated;
- the receipts, expenditure, investment of moneys and the acquisition and disposal of assets by the Town Council during the financial year are, in all material respects, in accordance with the provisions of the Act; and
- proper accounting and other records have been kept, including records of all assets of the Town Council whether purchased, donated or otherwise.
The full Annual Report for AHPETC’s FY 13/14 can be found here.