Inadequate financial controls, weak governance uncovered in AGO report

Inadequate financial controls, weak governance uncovered in AGO report

There were cases of inadequate controls resulting in loss of revenue to the Government, as well as weak governance over the management of public funds in a public sector entity where the "principles of good governance and financial controls were disregarded in several areas".

SINGAPORE: The Auditor-General's report for Financial Year 2015/2016 was released on Tuesday (Jul 26), and it uncovered instances of inadequate financial controls over Government operations and weak governance.

In a media release, the Auditor-General's Office (AGO) said that, as a whole, it audited the Government Financial Statements - incorporating the accounts of all 16 Government ministries and eight organs of state - and the financial statements of three statutory boards, a Government fund, five Government-owned companies and three other accounts. Selective audits were also carried out on nine statutory boards and three Government funds.


The audit observations in this year's report relate to six ministries, including the Ministry of Education and Ministry of Defence, and six statutory boards such as the Housing and Development Board (HDB) and Nanyang Polytechnic, AGO said.

The Auditor-General observed a number of instances of inadequate financial controls over Government operations, including those outsourced to external operators. There were cases of inadequate controls resulting in loss of revenue to the Government, he added.

For example, the AGO found that HDB did not have adequate oversight of the operations of its car parks at industrial estates and residential estates, which were outsourced to commercial operators.

"There were many instances where vehicles were not charged parking fees and motorists had evaded payment by manipulating the car park system," the AGO report stated. "HDB could have detected these instances if it had examined the data from its car park system and the monthly reports from the operators of the car parks."

The AGO also found that the Singapore Police Force (SPF) had overpaid its Volunteer Special Constabulary (VSC) officers allowance amounting to about S$2.63 million from Apr 1, 2008, to Dec 31, 2015.

It said that since early 2008, SPF had been paying its VSC officers a revised allowance rate of S$3.60 per hour - S$0.80 higher than the rate stipulated in the Police (Special Constabulary) Regulations.

Additionally, the Deputy Commissioner of Police and Permanent Secretary of Home Affairs, who approved the revised rate, were not authorised under legislation to do so, the report said.

SPF acknowledged the lapse in not seeking the Minister's approval to amend the regulations, and has since initiated action to amend the regulations to regularise the overpayments and to provide for payment of of allowances to VSC officers for the full period of their duty.

LAPSES IN CONTRACT MANAGEMENT

The Auditor-General also observed weak governance over the management of public funds in certain areas, noting in a summary to the report that "in one public sector entity, the principles of good governance and financial controls were disregarded in several areas, resulting in a lack of financial accountabilty".

For one, an audit of Nanyang Polytechnic found that the school did not have a proper governance framework to manage transactions with its subsidiary, Nanyang Polytechnic International, including situations of conflict of interest.

The AGO also found that the Land Transport Authority had "weak" control over the collection of tolls at the Woodlands and Tuas Checkpoints, and estimated that the under-collection could be about S$13.93 million for FY2014/15.

Other areas of concern noted were inadequate oversight of external entities administering schemes and loans on behalf of the public sector entities, and lapses in the management of contracts including variations, according to the AGO.

For instance, in the audit of the National Arts Council (NAC), the Auditor-General found from its checks of contracts for the Victoria Theatre and Victoria Concert Hall Redevelopment project that 47 out of 164 variation works were carried out before approvals were given. The delays in obtaining approval were up to 3.5 years, it added.

"The large number of instances indicated a breakdown in the controls put in place to ensure that variations were properly justified and approved before works commenced," it added.

AGO also found that NAC had paid a consultancy fee of S$410,000 for the construction of a bin centre costing S$470,000. "There was inadequate assessment on the reasonableness of the exceptionally high consultancy fee, at 87.2 per cent of the cost of construction," it said.

The Ministry of Culture, Community and Youth (MCCY) had told AGO that the construction of the bin centre was more complex and required significantly more design expertise, technical consultancy services and effort to coordinate with multiple parties and these were the reasons for the fee to be above the norm.

The ministry acknowledged that the cost assessment could have been "more robust" and that it would adopt the norm for cost assessment of consultancy fees for future development projects and provide justifications where there are grounds for deviating from the norm, the AGO report revealed.

Source: CNA/kk