Gov’t should freeze all funds to PA until full audit is done

Gov’t should freeze all funds to PA until full audit is done

Most of you would have heard about the “lapses” of the grassroots organisations under People’s Association that was uncovered in the Auditor General’s Office (AGO) annual audit for 2014/15 by now.

But for those who have not, the AGO found lapses in the management of tenancy contracts in 35 community club/centre management committees (CCMCs) and common procurement irregularities among the GROs.

In total, the AGO test-checked 115 GROs.

One of the lapses involved the CCC chairman of the Admiralty branch, who was found to have approved the awards of two contracts totalling $32,000 to a company.

Another member of the CCC and who was also a member of the company was involved in approving one of these contracts.

The two men held senior positions at the company at the time, and had failed to declare the conflict of interest. In addition, one of the members was involved in approving payments of the two contracts to the company as well as seven of his own claims amounting to $114,767.

Some may consider the findings of AGO alarming, but in reality, it should be extremely horrifying and serious.

More than ten over years of adverse opinions and non-audit

This year is the first year the GROs have appeared on the AGO’s annual audit of the government bodies and the reason for that is likely because PA has just included GROs into the PA’s financial reports.

Last year, TR Emeritius pointed out in a report that PA’s auditors had submitted “adverse opinion” on its accounts from 2008 to 2011 because the financial statements of GROs under PA were not included.

The Online Citizen (TOC) later found that in fact these “adverse opinion” from the PA’s own auditors spanned across 10 years, from 2001 to 2010.

PA has not included its full financial statement in its annual report since FY2011 but submitted it as parliamentary records. In the annual reports we can see that PA was given an adverse opinion of its report all the way up to 2012/2013.

adverse 20122013
Adverse opinion from PA’s auditor in its 2012/2013 annual report

An “adverse opinion” is the most negative among the four types of audit opinions.

This was subsequently acknowledged by the PA in response to queries by local media but it said the matter had been raised in Parliament in 2008 and it had explained then its view that the funds in those accounts belonged to the grassroots organisations, which were operationally self-funding.

PA stressed that the auditors had given an adverse opinion “for one reason – not including the accounts of its grassroots organisations in the PA’s accounts”.


The tip of the ice-berg

Everyone has to note that PA has over 1,800 grassroots organisations (GROs).

In 2012, the Ministry of Social and Family Development said that there were 87 Citizens’ Consultative Committees (CCCs), 106 Community Club Management Committees (CCMCs), 567 Residents’ Committees (RCs) and 128 Neighbourhood Committees (NCs) as at 31 July 2012.

Going back to the findings by the AGO, we have the below table.

Involved amount
Tenancy contracts 91 CCMCs
No prior approval 35 $17,780,000
Direct award of contract 10 $3,670,000
Procurement 4 CCMCs 3 CCCs 2 RCs
Award contracts before approval 3 2 $152,600
Wrong approving authorities 2 3 $565,300
No approval 1 3 $53,700
No quotations 1 1 1  $187,900
Training operators/course 3 CCMCs 4 RCs
No competitive bids 1 3 $311,800
No tender 1 $1,111,000
No audit checks on course fees 4 $1,260,000
Delayed handing over of course fees 1 $414,700
Accuracy and completeness of fund utilisation reports 8 CCCs
Errors and omissions of disbursements 7
No accounting of cancelled and expired cheques 5 $84,394 excess claim

It would seem that the AGO had conducted audits on only 115 GROs out of the 1,800 over GROs, which is only 6.39 percent of the total GROs which PA is in charge of.

If one were to refer to the above table, the findings from the sample checks by AGO showed a high rate of GROs having improper accounting practices which might open up possible misappropriation and conflict of interest cases by GRO volunteers, as seen in the case involving the Admiralty Branch CCC chairman.

Considering that the financial accounts of all the GROs have not been audited by AGO till the last financial year, how many of the mentioned financial lapses have gone unnoticed for the past ten years (and more) and how many more GROs have such serious lapses which are yet to be uncovered?

Should funds be withheld from PA till all accounts are audited?

Through its parliamentary response in 2012, MSF also shared that from 2005 to 2011, on average, each of the GROs received the following amount of government funds:

– CCC: $152,872 per year

– CCMC: $46,114

– RC $9,457

– NC $4,043.

Straits Times, March 2015
Straits Times, March 2015

In the budget debate earlier this year, the PA’s expenditure was increased 51.3% to over S$1 billion.

Minister Lim Swee Say, Minister (Prime Minister’s Office) and Deputy Chairman of PA, said that the budget allocated to the PA “reflects a higher level of commitment by the Government towards promoting social cohesion and racial harmony.”

He added that out of the $339.6 million or 51.3% increase in the estimated Financial Year (FY) 2015 expenditure of the PA, $239.3 million (70.5%) is meant for the development of facilities for residents’ use.

These include the building of the Tampines Town Hub, construction of nine new CCs and two Water-Venture outlets; as well as to upgrade 28 existing CCs under PA’s 15-year upgrading cycle.

The increase of $100.3 million or 29.5% in operating expenditure will go into implementing the Pioneer Generation Ambassador programme where staff and volunteers reach out to seniors where they live, as well as supporting the work of the grassroots organisations (GROs) and Community Development Councils (CDCs) in assisting the needy and in building and bonding our multi-racial and multi-cultural communities.

But with the recent findings by AGO on the GROs, one would have to be concerned or extremely concerned that public money may be misused or misappropriated due to the lack of understanding of proper accounting practices set by PA’s financial rules.

When AHPETC received two consecutive disclaimers of opinion, Minister of National Development, Khaw Boon Wan saw it as a serious issue and applied to Ministry of Finance to have AGO move in to audit the town council.

To recap:

There are 1,800 grassroots organisations under the People’s Association’s umbrella.

The Auditor General audited only 115 of them.

That’s a mere 6.4% of all the GROs.

And already, the AGO found almost 40% of them with financial irregularities.

Lawrence Wong, MCCY Minister
Lawrence Wong, MCCY Minister

So while PA has said that it would conduct internal investigations and audits of its GROs, a more prudent method to ensure public monies would be lawfully used, is to get AGO along with a 3rd party auditor to audit the whole group of GROs under the PA.

In the meantime, the Minister of Culture, Community and Youth, Lawrence Wong, who oversees the PA, should be accountable and freeze the funds that are meant to be given to PA until the auditors can be sure that proper accounting process can be put in place for the GROs – and that public funds are duly protected from misuse.

Update of article: Adverse opinion by PA’s auditors continued till FY2012 based on submission to parliament

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