The Auditor-General's report on accounting lapses in the financial statements of the Aljunied-Hougang-Punggol East Town Council (AHPETC) will be the focus of debate in Parliament tomorrow.
National Development Minister Khaw Boon Wan will present for debate a motion that calls on Parliament to note "with concern" the report, specifically its findings in four areas. These are:
The deficiencies in AHPETC's financial and accounting systems, record-keeping and safeguards;
Uncertain accuracy and reliability of its accounts;
Lack of proper disclosure and oversight by its town councillors, especially over related-party transactions and conflicts of interest; and Risk that AHPETC has not properly managed and spent public funds.
In addition, the motion wants the House to call "on all town councils to uphold high standards of accounting, reporting and corporate governance so as to safeguard residents' interests".
MPs will also be asked to support stiffer laws for town councils, "in order to hold those responsible for their good management to proper account".
Several MPs and ministers are expected to join the debate on Mr Khaw's motion, which follows a year-long audit of AHPETC's financial report for financial year 2012/13 and comes amid an ongoing review by the Ministry of National Development (MND) of the laws governing town councils.
The Town Councils Act gives the Minister for National Development powers to intervene in a failing town council, but only when a certain threshold is crossed. But there is no penalty if a town council fails to submit information, like the monthly reports on arrears in service and conservancy charges paid by residents.
The Auditor-General's Office report identifies five areas of weakness in AHPETC's accounting practices, including a failure to transfer monies to its sinking fund. It also failed to properly manage potential conflicts of interest from related party transactions amounting to $25.9 million by its senior staff, such as its secretary and general manager, who owned companies that the town council had contracted to provide estate management services.
The staff who were involved in reviewing work and approving payment also had ownership interest in the company that was receiving the payment.
The report concludes: "Unless the weaknesses are addressed, there can be no assurances that AHPETC's financial statements are accurate and reliable, and that public funds are properly spent, accounted for and managed."
Ms Sylvia Lim, chairman of AHPETC and the Workers' Party, said on Monday that the council will give its full response at the Parliament sitting.
This article was first published on February 11, 2015.
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