FINANCE Minister Tharman Shanmugaratnam has directed the Auditor-General to audit the accounts of the town council run by the Workers' Party (WP).
The directive comes after the town council's auditors identified 13 items to be issues of concern, which led them to give a disclaimer of opinion on its FY2012/13 financial statements.
Mr Tharman, who is also Deputy Prime Minister, exercised his powers under the Audit Act, at the request of National Development Minister Khaw Boon Wan.
"As stewards of public funds, all town councils must keep proper accounts and records, and ensure adequate control over their assets," said a joint statement from the National Development and Finance ministries on Wednesday.
In his letter to the Auditor-General, Mr Tharman said that the report's observations raise serious questions about the reliability and accuracy of the town council's financial and accounting systems, and about whether public funds in the town council are properly applied.
The terms of reference for the audit allow the Auditor-General to, among other things, examine whether the Aljunied-Hougang-Punggol East Town Council (AHPETC) has taken "all reasonable steps" to safeguard the collection and custody of the town council's monies.
Among the problematic areas was AHPETC's failure to give details of project management service fees paid to a related party. This is where a key management personnel of the town council has a personal financial interest in the contracts given for projects.
Corporate governance experts said the disclaimer indicates a lack of proper records and procedures, resulting in the auditors being unable to give an opinion on the veracity of the statements.
This was the second year that auditors had not given AHPETC's accounts a clean bill of health.
The joint statement noted that "the auditor has raised several more issues of pressing concern this year, compared to last year".
WP secretary-general Low Thia Khiang told reporters he was certain no money was lost, and there were no illegal or unauthorised payments. Ms Sylvia Lim, chairman of the town council and WP, assured the Auditor-General's Office of their "full cooperation in this matter".
Additional reporting by Maryam Mokhtar
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