Auditor-General flags lapses in operations management, possible record irregularities

THE Auditor-General's Office (AGO) has listed the lapses in operations management, procurement contract management, as well as weaknesses in IT controls of public-sector entities in this year's FY2020/21 audit.

Possible irregularities in records furnished for the audit were observed at five public-sector entities in the annual audit report released on Thursday. The entities were the People's Association (PA), HDB, Ministry of Education (MOE), Ministry of Home Affairs (MHA) and the Ministry of Culture, Community & Youth. 

"There were instances where supporting documents contained signs that they had been photocopied and amended, altered, created or backdated," the AGO said. Following its observations, the relevant agencies carried out investigations and lodged police reports where appropriate, it added.

The AGO had audited two development projects under the PA - Our Tampines Hub (OTH) and Heartbeat@Bedok (HBB) - which are both community and lifestyle hubs. They were completed in 2017 at a total construction value of S$476 million and S$147 million respectively. 

The possible irregularities in documents related to payments and lapses in the management of facility maintenance contracts at OTH, and two critical tender requirements not explicitly incorporated into HBB's tenancy agreements. 

The AGO had sampled 36 payments of OTH totalling S$1.27 million, made to contractors engaged to carry out minor building works. Thirty-four of these payments had possible irregularities. 

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

Upon notification in March 2021 of these irregularities, PA said on Thursday that it began an internal investigation, lodged a police report and suspended its staff. 

The PA, MOE and MHA said in separate statements that they take a very serious view of these irregularities and have lodged police reports. 

Meanwhile, the Ministry of Finance said such actions weaken the system of public accountability. It added that the government takes a zero-tolerance approach to fraud and corruption and every case will be thoroughly investigated. 

"We will throw the book at officers involved in suspected fraud and corruption, including lodging police reports for criminal investigations to be conducted,” MOF said. 

In the AGO's report, nine public-sector entities were highlighted to have had lapses in operations management and weakness in controls.

Notably, the Health Promotion Board (HPB) had an excess of 341,000 fitness trackers with a value totalling S$5.39 million from its National Steps Challenge initiative, resulting in public funds wasted over the last five years.

HPB also had lapses in the management of its loyalty programme member accounts which exposed the agency to the risk of making payments for unauthorised or ineligible transactions. 

The loyalty programme allows members to earn and accumulate "healthpoints" through the Healthy 365 application, through which they can take part in HPB programmes like the National Steps Challenge and Eat, Drink, Shop Healthy Programme. 

HPB said in a separate statement on Thursday that the excess in fitness trackers purchased was due to an overestimation of demand. It said it would be more conservative in its projection for future seasons of the National Steps Challenge. Accounting for the stocks is now done on a daily basis, and audits and physical stock checks will be done twice a year instead of annually, it added. 

HPB said it has conducted a clean-up exercise for its loyalty programme to block the use of unauthorised accounts, such as those registered using the NRICs of deceased persons. 

"HPB is ascertaining the amount of overpayments for such unauthorised accounts and will take action to claw back the rewards from those who had made improper redemptions," it said. 

The AGO also found 9,500 possible erroneous medical and dental claims paid to ineligible officers or pensioners from January 2018 to March 2020 by the Prime Minister's Office (Public Service Division). Although the claims were only 0.3 per cent of the three million claims processed, they amounted to S$500,000.

The other public-sector entities which which had lapses in operations management and weakness in controls include the Ministry of Culture, Community and Youth (MCCY), the Ministry of Defence, the National Arts Council, National Heritage Board, the Health Sciences Authority (HSA), the Housing and Development Board (HDB) and the Land Transport Authority. (See Clarification note)

When it came to procurement and contract management, seven public-sector agencies were singled out for lapses, namely the National Library Board (NLB), NHB, PA, Singapore Polytechnic, HSA, HDB and the Maritime and Port Authority of Singapore (MPA).

Weaknesses in IT controls continued to be a cause for concern this year, especially for the Ministry of Finance (Accountant-General's Department, or AGD), the Accounting and Corporate Regulatory Authority (Acra), the HSA and MHA.

The AGO noted weaknesses at the AGD and Acra over the management of the most privileged operating system (OS) user accounts.

These are "powerful" accounts that give the user full-access privileges to the OS, including the ability to make changes to the OS' audit logs, user access and security settings. Unauthorised activities could compromise the respective servers and affect the processing and recording of financial transactions in the servers.

MHA was also observed to have a lack in segregation of duties for the person reviewing administrator activities and the person performing those activities for its integrated logistics management system.

Lastly, improvements are also needed for MOE and MHA in the management of facility-management contracts, the AGO said. It observed that both ministries had a number of good practices when it came to managing these facility-management contracts.

While the AGO gave an unmodified opinion - a clean report - for the government finances for the year, it said public-sector entities should pay greater attention to the outsourcing of services, straight-through processing and records management and documentation.

"The Auditor-General noted that the entities audited by AGO took the audit observations seriously and were committed to rectifying the lapses and weaknesses," the AGO noted.

Clarification note: The article has been amended to clarify which public-sector entities had lapses in operations management and weakness in controls.