10 things to know about the AGO report

SINGAPORE - The Auditor-General's Office (AGO) released its report for the financial year 2015/16 on the proper accounting, management and use of public resources on Tuesday (July 26).

Here are 10 things to know about the report:

1. The AGO audited a total of:

- 16 ministries
- 11 statutory boards
- Eight organs of state
- Five government-owned companies
- Four government funds
- Three other accounts

Selective audits were conducted on the eight statutory boards and three government funds, which involves checks on selected areas like financial irregularities, excesses, extravagance, or inefficiency.

2. The Housing Development Board (HDB)

Inadequate financial controls were found in HDB's carparks which were outsourced to commercial operators. There were many instances where vehicles were not charged parking fees and motorists had evaded payment by manipulating the carpark system.

The AGO said that these problems could have been detected if HDB compared the monthly reports of these carparks from the operators with data from its carpark system.

HDB was also slow in making final payments to contractors handling construction and upgrading projects, which was unfair as it could affect the cashflow of these contractors, AGO revealed, with delays of up to 3.3 years uncovered.

3. Land Transport Authority (LTA)

A potential $13.93 million was under-collected by LTA at the toll booths at Tuas and Woodlands Checkpoints, resulting in potential loss of revenue.

The report also said there was a lack of effective system at the immigration booths to ensure motorists paid their fees.

4. The Ministry of Foreign Affairs (MFA)

MFA overpaid telecommunication providers $109,868 and wasted $80,744 as it failed to unsubscribe to lines that were no longer needed.

It added that MFA did not carry out proper verification of invoices to ensure that amounts billed were correct.

5. The Ministry of Law

Only one officer from the Public Trustee's Office under the Ministry of Law handled assets belonging to deceased persons.

Discrepancies in the recording of assets received from nursing homes were also discovered by the AGO.

There were no independent checks or proper accounting, resulting in the risk of misappropriation.

6. Nanyang Polytechnic (NYP)

Calling NYP practices "a disregard for financial controls and proper governance", the AGO highlighted conflicts of interest in transactions between the Polytechnic and its subsidiary, Nanyang Polytechnic International Pte Ltd.

NYP board members with vested interests in the subsidiary were involved in the evaluation and decision-making process on matters relating to the same subsidiary.

Market rates were also not charged to the subsidiary for using NYP's premises, resulting in hidden subsidies and excess funding totalling $8.38 million.

7. The Ministry of Education (MOE)

Controls by MOE, Nanyang Technological University, and the National University of Singapore to recover tuition fees and study loans were inadequate, AGO said. As of June 30, 2015, tuition fees and study loans amounting to $228 million were not recovered promptly.

The recovery of loans, carried out by third-party agents, were not timely.

There was also a lack of oversight by MOE on a scholarship scheme for NUS and NTU which disbursed $36.52 million in 2014/15. Prompt action was also not meted on scholars who did not serve their required bonds in 16 cases out of 30 scholarships tested, AGO said.

MOE responded in a ChannelNews Asia report that the monitoring and enforcement of scholarship bonds have since been tightened, and the problems flagged by the AGO were from earlier graduation batches.

Notably, the AGO also flagged MOE's six-year delay in reviewing its fee formula to banks for administering tuition fees and study loans as a concern, despite several requests by the AGO since 2010.

"The current agency fees formula does not incentivise the banks to put in their best efforts to recover outstanding loans," the AGO said, noting that outstanding loans and fees to institutions of higher learning amounted to $511.49 million.

"AGO noted that the target dates [to complete the review of agency fees] had been postponed several times. As at March 2016, the review had not been completed."

In a statement to The Straits Times, MOE said that Singaporean citizens make up most of students in tertiary institutions who take loans, and these schemes "ensure they do not miss out on tertiary education because of financial constraints."

"In cases where the delay in loan repayments is due to instances such as the borrower facing financial difficulty, MOE may allow the borrower to defer the monthly loan instalment repayment or reduce the monthly instalment payable temporarily," said MOE.

8. The Ministry of Culture, Community and Youth (MCCY)

The National Arts Council (NAC) paid a consultancy fee of $410,000 for the construction of a bin centre costing $470,000. This means the consultancy fee took up 87.2 per cent of the total cost of the construction.

The AGO labelled the expenditure as "inadequate assessment on the reasonableness of the exceptionally high consulting fee."

Explaining that the construction of the bin centre was complex, MCCY acknowledged in a ChannelNews Asia report that the cost assessment could have been "more robust".

47 out of 164 variation works were carried out for the Victoria Theatre and Victoria Concert Hall before approvals were given, with delays in obtaining approval amounting to 3.5 years.

9. The Ministry of Home Affairs (MHA)

The Singapore Police Force (SPF) had overpaid its Volunteer Special Constabulary (VSC) officers allowance, amounting to about $2.63 million over a span of over seven years from 2008 to 2015.

This was due to an unauthorised approval to increase the VCS officers allowance from $2.80 per hour to $3.60 by the Deputy Commissioner of Police and Permanent Secretary of Home Affairs, who were not authorised under legislation to do so.

10. What happens now?

After the report is submitted to the President and presented in Parliament, the Public Accounts Committee will deliberate on the report and may call upon the public sector entities to account for the lapses where it deems necessary.

grongloh@sph.com.sg