SINGAPORE: Several ministries and government agencies have been flagged by the Auditor-General for lapses in four categories - contract management, IT controls, financial controls and gaps in the management of R&D grants.
These gaps were laid out in a report by the Auditor-General's Office (AGO) released on Tuesday (Jul 17), after its audit of government accounts for the financial year 2017/2018.
The audit covered the financial statements of all 16 ministries and eight organs of state, five government funds, nine statutory boards, four government-owned companies and three other accounts.
Ministries and agencies singled out in the AGO report for lapses include the Ministry of Defence (MINDEF), Ministry of Education (MOE), the People's Association (PA), the Singapore Civil Defence Force (SCDF) and the Agency for Science, Technology and Research (A*STAR).
LAPSES IN CONTRACT MANAGEMENT
The PA was flagged for lapses in procurement and contract management for major events such as Chingay 2017 as well as Chinese New Year 2017.
For instance, AGO's checks found that the PA had allowed an officer to make overseas purchases for costumes and accessories worth S$142,200 for Chingay Parade 2017, using cash or through a remittance agent.
"AGO found that some of the cash sales receipts submitted by the officer had tell-tale signs which cast doubts on their authenticity," said the report.
"Thus, there was no assurance that the amount of reimbursement claimed by the officer was the actual amount of cash that was paid by the officer to the overseas vendor."
The AGO also found that the PA did not properly manage welfare assistance schemes which included vouchers and groceries to needy residents.
Irregularities in contract management were also observed at MINDEF, MOE and the Ministry of Home Affairs (MHA), according to the report.
In the case of MOE, lapses were found in school development projects managed by consultants engaged by the Education Ministry.
There were delays in payments to contractors ranging from three months to more than three years for 30 school construction projects. The final amount due to the contractors totalled S$13.61 million, AGO said.
There were also cases where modifications to construction contracts were not properly managed, resulting in an estimated overpayment of S$154,900, said the AGO.
"Given these lapses, there was no assurance that MOE had exercised adequate oversight of its consultants on issuance of final accounts and management of contract variations as well as financial prudence in the use of public funds in these development projects," it added.
In a statement on Tuesday, MOE said it is addressing the concerns raised by the AGO and is improving its internal processes.
"MOE acknowledges the importance of prompt issuance of final accounts in our school development projects. We are working with our consultants to issue the final accounts of all 14 outstanding contracts by end 2018," it said.
The ministry is also recovering the overpayment of S$154,900 arising from contract variations, it said.
SCDF OFFICERS BACKDATED RECORDS FOR VEHICLE MAINTENANCE
One of the lapses which the AGO described as "serious" was the backdating of records at SCDF relating to vehicle maintenance contracts.
The AGO noted that from the documents submitted for audit, records for 104 vehicle servicing jobs were not authentic. They included duplicated servicing records for the same job, as well as discrepancies between the two sets of records.
Said the AGO report: "SCDF investigated and found that these 104 servicing records had indeed been created and backdated to meet AGO's requests for the records. They were created by three SCDF officers and the contractors."
The officers responsible have been disciplined and the contractors taken to task by SCDF.
In addition, the audit found that SCDF did not have adequate procedures to ensure that two contractors had provided the required maintenance that cost a total of S$1.8 million a year.
AGO's test checks found that S$120,000 was paid out for services that were not provided.
SCDF had relied on servicing schedules provided by the contractors and did not have procedures to establish whether vehicles had been sent for the required servicing at the right frequency, AGO said. It also did not ensure that vehicles due for servicing had indeed been checked.
SCDF acknowledged that more checks were needed and said that an integrated logistics management system will be introduced by 2020. It will be recovering the wrong payments and tightening internal procedures so that it only pays for services rendered, according to the report.
WEAKNESSES IN IT CONTROLS
As in previous years, the audit found common weaknesses in IT controls which included lapses in user accounts and access rights.
The Education Ministry, for instance, was flagged for lapses in the monitoring of IT administrators' activities. This was for the two IT systems that support the management of financial transactions of student's Edusave and Post-Secondary Education (PSE) accounts.
"AGO noted that MOE did not log and review the activities of seven IT administrators who were responsible for scheduling and executing computer scripts to perform financial transactions on students' Edusave or PSE accounts," said the report, adding that the activity logs of 16 servers for the two systems did not capture details of the administrator's activities.
In the case of MINDEF, the AGO found that there were instances where 33 authorised users with rights to perform procurement activities might have shared their accounts with unauthorised individuals.
"All these lapses in IT controls exposed entities to the risk of unauthorised operation of the IT systems and of compromising the integrity and confidentiality of the data in the IT systems," said the report, noting that similar weaknesses were found in other public sector entities audited last year.
RENTAL NOT CHARGED FOR PHOTO BOOTH AT ICA
The Immigration and Checkpoints Authority (ICA) was found to have let a recreation club set up photo booths on its premises without charging rental.
The checks were conducted after a complaint alleging that money received from the public by the club was diverted to fund welfare activities and functions attended by ICA staff members.
ICA explained that the practice was a historical legacy and the Ministry of Finance (MOF) had given approval for the club to operate photo services back in the early 1980s. Funds were mainly used for sports and recreational activities for current or retired ICA staff, AGO found.
Given changes in government policy since, MOF advised that ICA should seek to recover about S$6 million in forgone rental dating back to 2002. ICA said it stopped allocating its space to the recreation club from Jul 1 and would use up club funds of S$2.45 million to pay for rents owed.
This year's report also focused the management of research funds in a thematic audit, or in-depth examination, of research and development grant projects managed by the Agency for Science, Technology and Research (A*STAR) and the National Research Foundation (NRF).
AGO observed that the Government's total R&D expenditure has expanded and the five-year grant budget for A*STAR was S$5.26 billion while that for NRF was S$3.65 billion.
It audited 286 of more than 1,000 projects with a value of S$1.48 billion, or 61.2 per cent of S$2.42 billion awarded in total.
It found that while A*STAR had adequate processes for inviting and approving grant proposals, as well as for monitoring grant utilisation, it was slow to recover underutilised funds and did not obtain audit reports for some projects.
Meanwhile, NRF had "significant control weakness" for the disbursement, monitoring and review of grants, AGO said.
Grant management practices among its directorates were inconsistent and most of them relied on annual declarations by grant recipients for fund requests and project deliverables.
It was lax in verifying fund requests totalling S$52.2 million and in some cases, discrepancies in project deliverables were not detected or not followed up on, AGO said.
The two agencies said in a joint release that they will address all of AGO’s findings and "will take the necessary action to enhance the processes for R&D grant management".
In response to AGO's observation that grant management practices were inconsistent, NRF added that it already has a guide to guide all its partners on the management of R&D grants and a "positive affirmation framework" established by NRF's audit committee.
However, it will now implement a system of selective checks to "provide stronger assurance".
In general, Auditor-General Willie Tan noted that some observations in this year's report were similar to those highlighted in the last few years, although the lapses involved different entities.
"More should be done to address these concerns so that the financial governance and controls of the public sector as a whole would be strengthened," he said.
The AGO added that it will continue to work with the public sector entities to ensure that follow-up actions are taken.