In a report made public yesterday, the Auditor-General's Office (AGO) highlighted five areas of lapses in the accounts of the Workers' Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC).
One of the main areas of concern was not disclosing that the owners of the companies hired to provide services to the town council were also on AHPETC's management team.
This meant the owners of the companies, in their capacity as town council officials, were signing off on cheques to pay their own companies.
Minister for National Development Khaw Boon Wan will be moving a motion in Parliament on Thursday based on the Auditor-General's report.
In a statement issued yesterday, AHPETC said it will be responding to the AGO report in Parliament. There were also responses from AHPETC within the AGO report.
The Auditor-General was directed to conduct the audit in February 2014 by Finance Minister and Deputy Prime Minister Tharman Shanmugaratnam.
This came after AHPETC's own independent auditor raised 13 issues of concern in a disclaimer of opinion in a report on the town council's accounts in the financial year (FY) of 2012-13.
In the AGO's 17-page report, it said AHPETC did not "adequately manage" conflicts of interests with FM Solutions and Services (FMSS) and FM Solutions & Integrated Services (FMSI) - the town council service providers.
Both companies were hired to provide managing agent services and essential maintenance and lift rescue services.
Senior officers of AHPETC - secretary Danny Loh Chong Meng, general manager How Weng Fun, and deputy general managers Yeo Soon Fei and Johnson Lieow Chong Sern - are also directors and shareholders of FMSS.
Furthermore, Mr Loh is the sole proprietor of FMSI, and is married to Ms How.
The AGO's report stated that this was not made clear in town council minutes seen by auditors.
In fact, in the August and September 2011 minutes, it was only recorded that Mr Loh and Ms How said they were married to each other, and were directors and employees of FMSS. However, it did not state Mr Loh's role in FMSI.
Cheques signed off by Mr Loh were co-signed by either the chairman or vice-chairmen of the town council - Ms Sylvia Lim, Mr Png Eng Huat and Mr Pritam Singh.
But the AGO's report said there was "no documentary evidence" to show what the chairman or vice-chairmen had checked or verified before signing off on the cheque payments.
In their response within the report, AHPETC said it had no intention of hiding any information, and that it was common practice for managing agents to hold key positions within the town councils they manage.
It also asked for the relevant authorities to specify on when managing agents and town councils are considered "related parties", and to what extent town councils must disclose information.
"What is clear from the AGO findings on the disclaimers is that no money has been found to be missing, nor has there been any criminal or dishonest activity uncovered," the town council wrote.