The Auditor-General Office (AGO) earlier released its audit report for the financial year 2020/21 on 22 July, which flagged a number of lapses in payments made by various ministries and public agencies.

In its report, AGO stated that it aims to “audit and report to the President and Parliament on the proper accounting and use of public resources so as to enhance public accountability and help strengthen the financial governance of the public service”.

Here are some of the key lapses and overpayments uncovered in the report.

AGO found “tell-tale signs” on MCCY supporting documents, overpayment of S$792

AGO found “tell-tale signs” on supporting documents provided by the Ministry of Culture, Community and Youth (MCCY), which indicated that some records could have been photocopies with alterations made to the dates and duration of services rendered.

Its test checks on 10 claims – which amounted to S$1,812 – made between April 2019 and March 2020 found that 6 of the 10 softcopy attendance records provided as supporting documents contained tell-tale signs.

Similar tell-tale signs of pre-printed signatures were also found on 151 claim forms totalling S$7,248.

AGO also noted that there were no supporting documents for 46 claims amounting to S$4,872, and no evidence of checks made by the Payment Verifying Officer on 41 attendance records and 210 claim forms for 251 claims amounting to S$15,060.

It also found duplicates or incorrect payments for 17 claims, which resulted in an overpayment of S$792.

AGO found S$84,300 in overpayment by MINDEF

According to AGO, the Ministry of Defence (MINDEF) has entered into a 10-year contract with a national healthcare institution in October 2018, with the annual contract valued at S$8.91 million.

It found that an overpayment of 323 bills totalling S$84,300 was made between 30 September 2019 to 18 March 2021, which had occurred due to the healthcare institution incorrectly billed MINDEF at the private non-subsidised rate.

MINDEF informed AGO that the billing error had occurred because the staff at the healthcare institution had wrongly removed the government subsidy for the two tests during a fee review on 28 September 2019.

The ministry also argued that it was difficult to verify whether the prices charged were correct as the healthcare institution did not give MINDEF the pricing rate for tests not found in the contact list.

MINDEF said it would complete the recovery of overpayment from the healthcare institution by July this year.

An overpayment of S$494,600 by Public Service Division

The Public Service Division (PSD), which is listed under the Prime Minister’s Office (PMO) section, is the policy owner for medical and dental benefits for the Civil Service.

PSD works with the Accountant-General’s Department (AGD) to administer medical and dental benefits for officers/pensioners and their eligible dependents.

According to AGO, there were 3 million medical and dental claims processed for 177,190 officers/pensioners and their dependents from 1 January 2018 to March 2020, with the total government expenditure on these claims amounted to S$463.58 million.

It noted that the total Medisave contributions made by the government under the civil service medical benefits framework during the same period was S$316.25 million.

AGO found that 2,405 possible claims were incorrectly paid to 705 ineligible officers/pensioners and their dependents because their medical benefits entitlement records in the IT systems were outdated, which resulted in S$208,400 of the government expenditure on these claims.

The audit findings also revealed that 184 officers were wrongly paid a total of S$194,500 in Medisave contributions during the period of 1 January 2018 to 31 March 2020, even though they were not eligible for Medisave contributions.

AGO went on to note that 5,231 claims totalling S$99,800 were incorrectly reimbursed to officers/pensioners as those were claims for expenses incurred at entities that were not on the list of approved medical institutions for claims.

It also found indications of possible duplicate claims, split claims and bypassing of dental claim rules during the period of 1 January 2018 to 31 March 2020, in which the government expenditure for the 1,914 claims amounted to S$48,300.

Based on the table above, the estimated net possible overpayment from 1 January 2018 to 31 March 2020 amounted to S$495,400, but given there were claims which fell under more than one category of audit observations, AGO said the estimated figure is S$494,600.

Overall, AGO’s audit found around 9,500 possible erroneous payments for medical and dental benefits.

“While this amounted to only 0.3 per cent of the total 3 million claims processed for the period audited, the estimated possible overpayment by the government is not small, at around S$0.50 million,” it highlighted.

AGO flagged tendering issues by NLB

AGO found lapses at various stages in the National Library Board’s (NLB) procurement of a digital film projection system worth S$4.75 million, noting that there was “inadequate assurances” that principles of value for money, fairness and transparency had been adhered to.

It noted that the NLB had discussed its requirements with a company related to the awarded tenderer eight months before the tender was published, during which the said company submitted several budgetary quotes to NLB.

NLB claimed that it had requested a budgetary quote from another company but did not receive any response.

Nevertheless, AGO said NLB has failed to provide any documentary evidence to substantiate this.

It also highlighted that NLB had worked with the awarded tenderer prior to the publication of tender, to develop the tender specifications for one of the tender items, with the approved procurement amounted to S$0.19 million.

Eight potential tenderers had attended the tender briefing conducted by NLB. But AGO discovered that NLB did not share with the other potential tenderers its clarification relating to costing information.

Of the three bids received at the close of tender, only one qualifying bid by the awarded tenderer was evaluated, which was deemed reasonable by NLB based on comparison with the Estimated Procurement Value (EPV).

AGO said it was “a self-to-self” comparison because about 52 per cent of the EPV was derived based on a budgetary quote from the related company of the awarded tenderer, while another 45 per cent was based on NLB’s own cost estimates which cannot be substantiated.

“There was also no assessment conducted on the reasonableness of the maintenance costs (ranging from S$133,594 for the second year to S$310,728 for the fifth year),” said AGO, noting that there was a 44 per cent increase in the maintenance costs.

AGO found serious lapses in the People’s Association

AGO found lapses in the management of contract variations for two development projects worth S$623.96 million, which indicated “weaknesses in the monitoring of contract variations” and “inadequate oversight of the consultants” by the People’s Association (PA).

“The high number of cases with no evidence of approval also pointed to poor documentary trails, which increased the risk of irregularities not being detected,” AGO said.

It highlighted that the lack of independent sources to assess the cost reasonableness of star rate items and the failure to properly account for variation works also did not provide assurance that PA had obtained full value for the public funds spent.

AGO did a sampling test and found lapses in 252 variations out of the 465 contract variations it checked, which amounted to $13.62 million. These lapses include:

• No evidence of approval for the 109 out of 465 contract variations, amounting to $8.06 million.
• Approvals for 142 out of 356 contract variations amounting to $5.44 million were obtained from the approving authority 1 month to 5.5 years after works had commenced or were already completed.
• No evidence that approval was sought for the increase in variation cost for six contract variations from the total approved amount of about $500 to $800K. The increase for each variation ranged from 21.6 per cent to 226.6 per cent.

AGO also found that assessments of cost reasonableness of star rate items totalling S$1.26 million were not based on independent sources for 8 out of 14 contract variations it test-checked.

There was an estimated overpayment of $621,700 and underpayment of S$161,600, it added, as AGO found 26 instances of variation works items in 10 contract variations with lapses.

It also found two instances where the contract was not adjusted to account for contract variations, which involved works that were not carried out in accordance with contractual provisions. The estimated overpayments amounted to S$279,300.

Possible irregularities in documents relating to payments

According to the report, PA had engaged contractors to carry out minor building works at the facility with the contract value amounted to S$6.50 million, and also engaged a managing agent to assist it in managing the facility.

For star rate items, three quotations were to be obtained to assess price reasonableness.

However, AGO discovered possible irregularities in the supporting documents for 34 payments – which amounted to S$1.17 million – out of the 36 payments it test-checked, of which each involved one or more star rate items.

“The possible irregularities include possible falsification of quotations, alteration of hardcopy payment supporting documents and creation and backdating of documents to give the false impression that proper processes had been followed,” said AGO.

Furthermore, AGO’s test check of the same 36 payments revealed other possible lapses and irregularities in 35 payments totalling S$1.26 million:

• Splitting of Purchase Orders (POs);
• Works carried out before issuance of POs;
• Winning quotations approved by PA officers retrospectively;
• Star rate items formed bulk of payment and possible inflation of the price of star rate items; and
• Inappropriate use of contract rates and/or inflated quantities.

AGO flagged tendering issue involving Singapore Polytechnic

AGO noted that Singapore Polytechnic (SP) did not put up required reports to the central government authority concerning two tenderers who had withdrawn their bids – total approved procurement valued at S$0.57 million – after the close of tenders, but before the tenders were awarded.

The two tenderers had submitted the lowest tender bid for the respective tenders. For the first case, the tenderer’s bid price was 33 per cent lower than the next lowest bid.

For the second case, the tenderer’s bid price was 15 per cent lower than the next lowest bid.

AGO said the two tenderers had requested to withdraw their bids 7 days and 35 days respectively after the close of tenders, with the reasons that they had erroneously underquoted the bids.

“Withdrawal of tenders after the close of tender but before the tender award is a serious matter and a ground for debarment of tenderers,” it stated.

Audit findings also revealed that one of the two tenderers was subsequently awarded government tenders totalling S$2.40 million by four public sector entities – including SP – within a period of about one year after its withdrawal.

For the subsequent tender – approved procurement value of S$0.40 million – that SP awarded to the tenderer who had previously withdrawn the bid, AGO noted that the submission to SP’s Tender Approving Authority did not mention the fact that the tenderer had withdrawn its previous tender bid to SP.

“There was thus no full disclosure of information to the Tender Approving Authority,” it added.

AGO found 341,208 fitness trackers worth over S$5mil left unused by HPB

During its checks, AGO found that about 268,191 excess fitness trackers bought for the National Steps Challenge (NSC) were not put to use even though the seasons had ended between one and five years earlier.

The trackers were given free to eligible participants who signed up for the challenge to encourage people to exercise more. Each tracker cost between S$10.38 and S$24.90, depending on the model.

It also found that some of the trackers had mouldy straps and watch faces, adding that the two-year warranty for the remaining 35 per cent will expire by December 2021.

“Excess trackers not put to use by HPB had resulted in a significant sum of public funds wasted over the last five years, as the usability of these trackers would deteriorate over time due to the expiry of warranty and technology obsolescence,” it asserted.

Following AGO’s observation, HPB carried out a full stock account in January this year and uncovered the full stock showed that the number of excess trackers was 341,208, which amounted to S$5.39 million in total.

AGO also said HPB’s processes were “inadequate” in ensuring that the movement of fitness trackers was properly monitored and the trackers properly accounted for.

The receipt and distribution of the devices involved manual processes and multiple external parties such as suppliers and event organisers.

“However, there was no proper process to centrally monitor and account for the movement and stock of trackers. The records maintained were fragmented and incomplete, and there was no periodic reconciliation of the records with the stock on hand,” it noted.

There was also no documentary evidence on the scope or results of the annual stock checks carried out by HPB at an outsourced vendor’s warehouse.

AGO said that its test checks of the warehouse stock showed a shortfall of trackers compared to records maintained by HPB and the vendor.

Following AGO’s checks, HPB consolidated its records and found that there was an estimated shortfall of 17,909 fitness trackers worth S$720,000 in total.

“However, given the fragmented and incomplete records, there was inadequate assurance that this represented the actual shortfall,” AGO stated.

HSA’s total expenditure on small value purchases was substantial at S$8.02mil

AGO found that the Health Sciences Authority’s (HSA) total expenditure on small value purchases between 1 April 2018 to 30 June 2020 was substantial at S$8.02 million.

It noted that although HSA required items such as chemicals, laboratory devices and consumables – which totalling S$1.54 million – on a regular basis, it had been buying these items on an ad hoc basis via small value purchases instead of aggregating and procuring them through quotations or tenders.

For example, AGO said HSA had purchases S$0.35 million worth of chemicals, reagents and solvents from one vendor via 453 small value purchases over the 27-month period.

“As specified in the government instruction manual on procurement, small value purchases should be used only for ad hoc and low-value purchases,” it noted.

HDB distributed housing grants totalling S$405,000 to ineligible applicants

The report explained that CPF Housing Grants, which include Family Grant, Single Grant, Enhance CPF Housing Grant and Proximity Housing Grant, are distributed to eligible households for the purchase of HDB flats.

However, AGO conducted data analysis on resale applications with Family Grant and Single Grant from 1 April 2018 to 30 September 2020 and found out that 1,152 applicants “might not be eligible” for the grants.

“Of the 1,152 applicants, AGO test-checked 97 applicants and found that HDB had distributed Family Grants or Single Grants totalling (S$405,000) to 13 ineligible applicants (or 13.4 per cent),” it said, adding that these applicants failed to meet the eligibility criteria such as non-ownership of private property and income ceiling.

AGO also found lapses in the price reasonableness of single bids. It explained that four limited tenders (procurement value amounting to S$18.47million) of the 13 limited tenders awarded from 1 April 2017 to 31 March 2020 were “inadequate”.

For the three limited tenders (procurement value totalling to S$16.3million) with similar scope of works and requirements, AGO detected that although HDB had compared the single bid received by each tender against its own estimates, HDB failed to “take into account the volume of services which the tenderer was expected to handle”.

AGO noted that no assessments were done by HDB to determine any good reasons on why two of the single bids were priced much higher than the third bid.

As for the fourth limited tender, HDB issued one contractor tender documents with details like as-built drawings and technical requirements for enhancement works to roof fixtures, and has also asked a second contractor to provide a quotation in order to get a comparison quote.

However, it failed to provide the second contractor with any written specifications on the requirement of enhanced works, resulting in “inadequate assurance” of price quoted by the second contractor, which is used to assess the reasonableness of the price given by the single bid.

Irregularities in quotations

AGO test-check 194 quotations for 53 contract variations and one work order approved between July 2017 and November 2020, involving star items amounting to S$3.88 million under nine construction contracts.

Out of this, possible irregularities were noted in 40 quotations, which were for 16 contract variations and one works order involving star rate items amounting to a total of S$0.35 million.

HDB had appointed consultants to manage its construction contracts as well as to supervise contractors.

For contract variations and work orders involving star rate items, the consultants were supposed to assess the “price reasonableness” of the rates listed in the contractors’ invoices or quotations using different methods like verifying against one or more quotations from other sources, the report noted.

However, AGO checks found out that 40 quotations might have been “created or altered to give the impression that they were obtained from other suppliers and were reflective of fair market rates.”

LTA delayed refunding advance payments amounted to S$1.65mil

AGO found 36 instances where the Land Transport Authority (LTA) had delayed refunding advance payments amounting to S$1.65 million to individuals or companies that requested works such as shifting or removal of streetlights, bus shelters or traffic lights.

The delays ranged from 11 months to 12.6 years after the works had been completed.

Following AGO’s audit, LTA refunded all 36 cases in March 2021. For 12 cases, the amount refunded was more than S$50,000 each with the highest refund amount at S$232,200.

AGO noted that the delays in refund arose due to the lack of coordination between LTA divisions, and a lack of monitoring of the advance payments received.

AGO flagged tendering issues by MPA

AGO carried out checks on a S$0.43 million tender for event and venue management services for a 2018 event organised by the Maritime and Port Authority of Singapore (MPA), and found the following lapses:

• Discussions with a tenderer to make significant changes to its proposal and informing the tenderer to start work before the Tender Approving Authority (TAA) had decided on the tender award;
• A significant error in the tender evaluation report

AGO noted that the MPA officer in charge had also engaged in detailed discussions with one tenderer that was later awarded the contract before TAA made a decision.

The MPA officer had also asked the tenderer to proceed with the fabrication of the props and assisted the tenderer to source for book alternative venues.

AGO also found that there were changes made to all four games and all four venues stated in the tenderer’s proposal, but these changes were not reflected in the Tender Evaluation Report (TER).

“Furthermore, no approval for contract variations was sought, nor were variation orders issued for the changes made to the four games and four venues that the tenderer was awarded for,” it noted.