S$1 million over-disbursement of grants by CAAS, weakness in controls at PA among lapses flagged by Auditor-General

SINGAPORE: The over-disbursement of grants by S$1 million (US$754,000) by the Civil Aviation Authority of Singapore (CAAS) and weaknesses in controls at the People’s Association (PA) were among the lapses flagged by the Auditor-General’s Office (AGO) in its report on Wednesday (Jul 19).

The AGO’s audit report of public agencies in Singapore for the financial year 2022/2023 also focused on four COVID-19 grants – the Jobs Support Scheme, Rental Relief Framework (Rental Cash Grant), Rental Support Scheme and the SingapoRediscovers Vouchers scheme.

The AGO audited 16 government ministries, eight organs of state, four government funds, eight statutory boards, four government-owned companies and two other accounts.

USING PERSONAL BANK ACCOUNTS FOR CASH DISBURSEMENTS

The report noted lapses in procurement and weaknesses in controls at the PA.

This includes lapses in the evaluation and award of three tenders. The scores given by the tender evaluation committee for certain sub-criteria could not be substantiated or were incorrectly assessed.

For two of the tenders, the evaluation sub-criteria and scoring methodology were determined only after the tenders had closed.

Three grassroots organisations had also awarded or renewed contracts with two debarred contractors.

The AGO also found inappropriate money management practices for welfare assistance schemes at two grassroots organisations.

One of these organisations transferred S$707,000 from April 2019 to May 2022 to personal bank accounts so staff could withdraw the money for cash disbursements to welfare assistance recipients at festive events. The money was transferred over seven instances, with amounts ranging from S$10,000 to S$200,000.

For the second grassroots organisation, S$334,500 was transferred from July 2020 to November 2021 to a staff member’s personal bank account. This was used to reimburse hawkers and merchants for their claims under a voucher assistance scheme.

This money was transferred over 46 instances, in amounts ranging from S$500 to S$21,200.

According to the PA, these practices were implemented due to operational needs, said the AGO report. It added that this practice of transferring grassroots organisations' money to personal bank accounts was “inappropriate”.

“While AGO’s test checks did not find any evidence of money being lost or misappropriated in the above two cases, such practices pose significant risk of loss or misappropriation,” said the report.

“It would also be unfair for the staff to bear the consequences should the money be unaccounted for during the process.”

For two community service projects that had been in operation for more than 10 years, the grassroots organisations did not enter into formal agreements with the external service partners, setting out the terms and conditions of the partnership arrangement.

In a separate press release, PA said it takes the AGO findings very seriously and is committed to resolving and improving its governance, procurement and oversight processes.

It said it has embarked on "major structural changes and projects" to strengthen key processes, and these were to address risks that were observed through past AGO audit findings as well as regular internal audits and reviews.

This includes rolling out a digital payment function using PayNow (NRIC) for welfare assistance disbursements to reduce the handling of cash, and setting up 17 field governance offices to "strengthen compliance for ground operations".

"As many of these measures require significant system implementation and change management efforts, it will take time to roll them out to all of PA and its close to 2,000 grassroots organisations.

"Some of these efforts were still being piloted or scaled up during the period of concern in AGO’s recent audit," said the PA.

It added that there was scope for improvement and that it will "actively take steps" to resolve the AGO audit findings.

OVER-DISBURSEMENT OF GRANTS

The CAAS administered several grant schemes to support the aviation industry during the COVID-19 pandemic.

The total amount disbursed for one of the grant schemes for Sep 1, 2020 to Mar 31, 2022 was S$114.52 million.

AGO’s test checks of disbursements made for this grant scheme for that period found over-disbursements amounting to S$1 million.

The lapses indicated that CAAS’ checks and controls were inadequate in ensuring that grants disbursed were valid, accurate and in compliance with grant terms and conditions, said the AGO report.

For the same scheme, the AGO also found that certain eligibility criteria were either stated inaccurately or not stated in the grant agreements with two companies.

“Without accurate and complete eligibility criteria, there was a lack of assurance that the disbursements were made based on the intended eligibility criteria,” said the report.

The over-disbursements were due to erroneous claims made by companies that had included ineligible employees and non-qualifying amounts in their grant claims.

A total of S$0.65 million was disbursed to five companies for 74 employees who were not eligible for the grant. Those employees did not meet the criteria such as citizenship or having a valid professional licence during the claims.

The remaining S$0.35 million were made to four companies for 447 employees. The companies had included non-qualifying amounts in their claims.

“CAAS informed AGO that it had required each company receiving the grants to appoint an external auditor to check and verify that claims were in accordance with the criteria in the grant agreements before the submission of claims,” said the report.

“The errors were however not picked up by the external auditors. CAAS would tighten its controls and processes for future grant disbursements. CAAS would also follow up to recover the amounts over-disbursed.”

COVID-19 RELATED GRANTS

The government spent S$72.3 billion on COVID-19 expenditure in FY2020/21 and FY2021/22. The AGO carried out thematic audits on COVID-19 spending over two parts.

In the first part, the audit in FY2021/22 covered selected COVID-19-related procurement and expenditure at the Ministry of Manpower, the Health Promotion Board and the Singapore Land Authority.

In the second part, a thematic audit in FY 2022/23 covered four COVID-19 grant schemes. 

Together, the COVID-19 expenditure subjected to AGO's audits was S$33.2 billion.

The AGO found that in general, the Ministry of Finance (MOF), Inland Revenue Authority of Singapore (IRAS) and Singapore Tourism Board (STB) had thought through the scheme design and put in place key processes and controls across the various grant stages.

These include disbursement, monitoring and review, and the cessation of the grant, among others. It noted several good practices implemented by these agencies in grant administration.

But it also noted that there were areas where improvements could be made, including in the documentation of key considerations, risk assessments and approval of risk scenarios.

There was also no segregation of roles between evaluator and approver for certain decisions in one scheme, and delays in communicating terms and conditions that give the government the legal right to recover erroneous payouts.

For the SingapoRediscovers scheme, the AGO found that some merchants were onboarded to the scheme even though there were inadequate supporting documents to show that they had met an eligibility criterion on tourist visitorship. A total of S$17.84 million was disbursed to these merchants.

“STB explained that given the large number of merchants and products and the urgency to onboard them, it had streamlined the onboarding process for operational feasibility within tight resourcing constraints,” said the report.

“STB acknowledged that the process of evaluating merchant and product eligibility should have been more systematic and documented more accurately. It would improve on them for any future scheme and also provide more clarity in its (standard operating procedure), including segregating the roles of the evaluator and approver."

In a separate press release, STB said that while it implemented checks to prevent abuse and detect wrongdoing, it recognises that some of the processes could have been more stringent.

It added that going forward, it intends to make better use of technology and digital tools when it launches new schemes. This will more comprehensively and efficiently document evaluation findings and record the eligibility checks conducted, the board said.