How $3.3m surplus turned into deficit

The Workers' Party (WP) yesterday sought to explain how its town council went from an operating surplus to a deficit in two years.

One key reason was a lift malfunction that sparked an overhaul of lift maintenance procedures in the Aljunied-Hougang-Punggol East Town Council (AHPETC), said Mr Pritam Singh (Aljunied GRC).

This resulted in a large increase in operating expenses.

Another reason was the town council's bigger population base, after Aljunied's town council was merged with Hougang's when the WP won the GRC in 2011.

Mr Singh was responding to Mr Hri Kumar Nair (Bishan-Toa Payoh GRC), who had asked how the former Aljunied Town Council's operating surplus of $3.3 million in financial year 2010 turned into a deficit of $734,000 in financial year 2012 underAHPETC.

"That money is not going to come back. This is something we still have not heard any explanation for," said Mr Nair. Minister for National Development Khaw Boon Wan had also raised this point in Parliament on Thursday. He noted that the town council's income rose 14 per cent over the two years, but its spending "shot up disproportionately" by 30 per cent.

Part of this was because Aljunied had absorbed Hougang "and its bad finances", Mr Khaw added.

He also attributed the deficit to "the abnormally large fees" that AHPETC paid to its managing agent, which was owned by some key town council officers.

Yesterday, Mr Singh responded that the town council's costs had risen partly because of its larger population.

Payments for cleaning work rose by $1.6 million in the two years, while water and electricity bills rose by $1.2 million.

But the largest increment was in lift maintenance costs, which jumped $2.2 million in that time. This was deemed necessary as a resident who had been in a lift when it malfunctioned had a "very jarring experience", Mr Singh said.

"We were quite concerned about safety issues involving lifts and... decided to invest a bit more money and try and ensure that our lift maintenance procedures and contracts are up to the mark and satisfaction of the MPs."

In his speech, Mr Singh also went into detail to account for the more than $20 million that the Auditor-General's Office (AGO) had said it could not explain after conducting its recent audit.

Included in this sum was money that was recorded as having been received, but without the necessary supporting documents.

Mr Singh also noted that the AGO had said the HDB and National Environment Agency still owes AHPETC about $376,000 - some of it for more than two years now.

He added that the town council is now regularly monitoring and following up with its debtors. "This due diligence will have a positive knock-on effect ensuring that receivables owed are captured in the accounts to accurately reflect the transactions and state of affairs in AHPETC."

This article was first published on Feb 14, 2015.
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