New code of governance for town councils to take effect from April 2020

New code of governance for town councils to take effect from April 2020

From April next year, town councils will have to abide by a new code of governance which aims to promote greater transparency and raise standards of management.

SINGAPORE: From April next year, town councils will have to abide by a new code of governance which aims to promote greater transparency and raise standards of management. 

The code was launched on Wednesday (Jun 19), said the Ministry of National Development (MND), adding that it will take effect from FY2020 (Apr 1, 2020) to give town councils time to implement it.

Town councils must declare their compliance with the code and submit a checklist to MND annually. 

"The code provisions set out best practices which TCs (town councils) are encouraged to adopt, through a comply-or-explain regime," said the ministry. 

The guidelines cover four main areas - council effectiveness, internal controls and processes, financial management, as well as vendor management.

For instance, town councils should have sound financial management practices to ensure that their funds and assets are properly safeguarded and accounted for, and are managed in compliance with the law. 

There should be a process to identify, assess, regularly monitor and review the town council’s key risks, including financial, operational, compliance and information technology risks. 

They should also have a performance evaluation system for the managing agent and all vendors.

Code of Governance for Town Councils
Code of Governance for town councils. (Table: MND) 

“Today, town councils collectively manage about S$2 billion worth of public and residents’ monies,” said MND in its media release.

“As public institutions entrusted with significant amounts of public funds, town councils should have good governance and management controls in place to remain transparent and accountable to their residents.”

In drafting the code, MND said it took reference from the Code of Charities and Institutions of Public Character, and the Code of Corporate Governance, where appropriate.

The drafting process involved MND's appointed consultant Ernest & Young Advisory, and an advisory panel comprising academics, governance experts and industry practitioners was consulted. 

The ministry added that it sought to introduce more robust governance standards whilst bearing in mind the cost of compliance and the differences in operating circumstances across town councils.

"If we were to follow this guidelines, then we have to reconfigure some of the standing committee in the respective town councils," said Dr Teo Ho Pin, Chairman of Holland-Bukit Panjang Town Council. 

"Some of them we may not have an Audit and Risk Management Committee. So they will have to appoint a new Standing Committee. And these are some of the changes which will affect the town council."

He added: "And of course, in terms of internal audit, we will have to most likely appoint an independent consultant to do an internal audit for corporate governance, and that will entail additional costs for the town council."

Speaking to TODAY, Mr Pritam Singh, chief of Workers' Party and vice-chairman of Aljunied-Hougang Town Council, said: “We were asked to give feedback and we have given our feedback.”

The first declaration for FY2020 will be due for submission in September 2021.  

“Where town councils opt not to comply or are in the process of working towards compliance with certain provisions, town councils will be required to provide meaningful explanations on how the governance standards in the code are achieved,” said MND.

Source: CNA/ad(gs)

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