The Ministry of National Development (MND) has taken issue with a claim by the Workers' Party-run town council that it could not submit its service and conservancy charges (S&CC) arrears report because its staff were tied up with work for an audit by the Auditor-General's Office (AGO).
It pointed out yesterday that the Aljunied-Hougang-Punggol East Town Council (AHPETC) stopped submitting its monthly S&CC arrears report to MND after April last year.
"This was many months before the AGO audit, which started only in February 2014," the ministry said in a statement.
As a result, it does not know AHPETC's current rate of arrears, MND said, adding that the last available report shows an arrears rate of 29.4 per cent.
The MND statement is the latest response in an exchange sparked by the release last week of the annual Town Council Management Report.
AHPETC received a red banding - the worst - for the management of S&CC arrears, and for corporate governance. It was the only one of 16 town councils to get the banding.
WP chief Low Thia Khiang had reportedly said that the poor financial management did not impact the council's operations and services, and thus did not affect the safety and the living environment of the residents.
This prompted Minister of State for National Development Desmond Lee to express concern last Friday about the town council's financial health and its "shocking" arrears rate.
Responding to Mr Lee earlier this week, AHPETC chairman Sylvia Lim cited the AGO audit as a factor for her town council not being able to submit its arrears reports on time.
She said that "in order to get the arrears reports into the format MND required, our staff needed to spend time doing manual sorting and counting".
But, she added: "Our finance team had to prioritise the audit by our commercial auditors and then the AGO audit."
Last night, Ms Lim told The Straits Times she had offered to submit the data as is to the MND in July, but was told it had to be in its required format.
The MND, in its response, said "all town councils report their S&CC arrears rate monthly, using a simple table, stating how many households owed S&CC and for how long".
It added that AHPETC had done so as well, until April last year.
The AGO's audit of AHPETC's financial statements for the financial year 2012/2013 was ordered by Finance Minister Tharman Shanmugaratnam in February this year, after an independent auditor expressed concern about its accounts. The audit is still ongoing.
Besides the arrears report, Mr Lee also raised other issues related to the arrears in his statement last Friday.
He said the arrears rate of 29.4 per cent effectively meant that 39,000 households were subsidising 16,000 households, and warned that the town council's finances "must surely decline" if the trend continues.
He also noted that when Hougang Town Council was run separately, under Mr Low, it had the highest arrears rate among all town councils and had almost run into cash-flow problems, he added.
This was avoided, he said, only when Hougang Town Council merged with that of Aljunied GRC after the 2011 General Election, and their finances were co-mingled.
Ms Lim replied that the town councils had merged to take advantage of economies of scale.
She also said AHPETC was studying data on its overdue S&CC, and would address the issue after the AGO's audit on its financial statements was completed and made public.
She declined to give more details on the numbers cited by Mr Lee.
This article was first published on Nov 14, 2014.
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