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THERE is a "sound system" of checks and balances in place in Singapore's public sector to ensure that public funds are fully accounted for, and this is why it is regarded as one of the cleanest and most reputable administrations in the world, said Deputy Prime Minister Tharman Shanmugaratnam. He gave this assurance to Parliament on Monday as the House discussed the latest annual report from the Auditor-General's Office (AGO), which was made public last month.
Mr Tharman, who is also Finance Minister, said that the report for the 2014/15 financial year did not affect the AGO's opinion of the government's financial statements.
The report highlighted lapses in complying with the rules and procedures which the government imposes on itself to ensure proper conduct.
But, as in previous years, the AGO gave an "unmodified" audit opinion, meaning that the accounts of ministries, departments and organs of state are properly accounted for. The same is true for statutory boards, all of which received an unmodified audit opinion from their respective auditors for FY2014/15.
All the agencies take prompt action on lapses flagged by the AGO report and don't try to cover them up, said Mr Tharman. When there is suspicion of fraud or corruption, the investigations are thorough and errant officers face the "full measure" of the law, regardless of seniority.
"Public officers and agencies know they have a responsibility to safeguard the use of public funds. Internal controls are in place within each agency, audits by an impartial AGO are carried out regularly and rigorously, and the AGO's findings are made public," he added.
All the agencies cited in the report have conducted their respective investigations into the lapses. Mr Tharman stressed that, apart from one finding regarding an agency's procurement of event-management services, there were no repeat lapses.
He later made comparisons to the financial lapses uncovered by the AGO in the Workers' Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC). "The AGO gave an unmodified opinion of the government's audit statements, unlike on AHPETC," he said, noting that both AHPETC's own auditors and the AGO could not certify whether the town council's funds were safeguarded and properly used.
"The whole house of AHPETC's finances is unsafe, with many structural defects," said the minister, adding that the issue was not something to be "whitewashed". "When the house is structurally unsafe, one doesn't just go put a new coat of paint on the front walls. It needs a very hard look. The foundations need to be put in place. It's hard work but you've had a lot of time to do so."
Earlier, Aljunied MP and AHPETC chairman Sylvia Lim had pointed out that the town council has already filed a subsequent audited account for FY2013/14 on June 30. As at Monday, only three of the 13 disclaimers raised by the town council's previous auditors remained unresolved.
"Is DPM not aware that this recent audit that we did for FY2013/14, our auditors actually made the observation that, except for certain specific issues, the town council has complied with the Act in terms of keeping proper accounts and books?" she asked.
Mr Tharman replied that the AHPETC accounts were submitted very late to the Ministry of National Development (MND). They were produced by new auditors, who flagged eight areas of concern involving non-compliance with legal and regulatory requirements. He also noted that the examples given on the areas the auditor has qualified struck him as "fairly serious" in his role as finance minister.
In a separate statement, AHPETC took issue with what Mr Tharman had said about the way it managed its accounts. The town council claimed that he had said that "even if the operating grant withheld by the Ministry of National Development (MND) for FY2014/15 is paid in its entirety into AHPETC's sinking funds, it would not be sufficient to comply with AHPETC's sinking fund obligations for the financial year".
MND has withheld an operating grant of S$7.2 million, and AHPETC said that it would "more than fulfil" its obligations to transfer sinking funds for FY2014/15 if MND acceded to its request to deposit the entire grant into the town council's sinking fund.
Rebutting this, both MND and the finance ministry said that AHPETC misquoted Mr Tharman and had not provided the full picture as it chose to only focus on FY2014/15.
On top of the outstanding amount from FY2014/15, they said, AHPETC also owed sinking funds of S$4.5 million overdue since July 31 this year. Another S$4.5 million will be due each quarter by October 2015, January 2016 and April 2016 respectively, totalling S$18 million.
"MND is prepared to disburse the S&CC grants in full to AHPETC and to accede to its unusual request for the full sums to be paid into its Sinking Fund account, rather than be split between its Sinking Fund and Operating Fund accounts in line with the Town Councils Act and Financial Rules," said the joint MOF-MND statement.
"MND has asked AHPETC for its latest cash flow position, to assess the impact of AHPETC's proposal on its cash flow position and its ability to sustain essential services to residents. MND made the offer of a half grant on Oct 7, 2014 and the full grant on May 2, Jun 15 and Aug 6 (this year). But MND never heard back from AHPETC."