THARMAN: GOVT ACCOUNTS SAFE, UNLIKE AHPETC'S

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam hit out in Parliament yesterday against the Workers' Party (WP) by characterizing its accounts for Aljunied Hougang Punggol East Town Council (AHPETC) as "structurally unsound".

He says there are fundamental differences between the Auditor-General's report on government agencies like the People's Association as compared to its findings on AHPETC.

According to Mr Tharman, Singapore's public sector has in place a sound system of checks and balances that ensures public funds are properly accounted for.

In contrast, he quoted from the special audit by the AGO of the AHPETC and accused that AHPETC's "entire system of accounts is a problem".

Mr Tharman then went on to lash out at AHPETC, saying that there can be no assurance that the town council's "accounts are accurate and reliable or that public funds are properly spent, accounted for and managed". He said it's "not just a matter of poor accounting procedures".

"This is not just a matter of poor accounting procedures. It arose because there are so many weaknesses and omissions in the AHPETC accounts that its own auditors and the AGO were not able to determine if monies in the account have been safeguarded and how they have been used. That is the heart of the matter: The entire system of accounts. There is no remotely similar problem in Government," he said.

As with past years, the Auditor-General gave government accounts a clean bill of health which left no doubt the public's money is in safe hands, he told Parliament.

Mr Tharman was responding to MPs' questions on lapses in some statutory boards that the Auditor-General's Office (AGO) had identified in its latest annual report and how these differ from those of the Workers' Party (WP) town council.

Mr Tharman added: "If I can put it simply, the whole house of AHPETC finances is unsafe, if you look at what the AGO findings say. Both the AHPETC auditor and AGO could not certify the AHPETC house as structurally safe, structurally sound. Apart from it being unsafe and unsound there are also many individual defects and problems."

He said in comparison, the Government agencies audited by the AGO "do not have unsafe houses".

"The house is safe and there is no question whether public monies are fully accounted for. There are some repairs needed to the house in specific areas but everyone can be confident that the house is safe and there is also full visibility. The curtains aren't drawn. There's full visibility. This is the fundamental difference."

This led Ms Sylvia Lim, the Opposition Workers' Party chairman, to question if Mr Tharman was aware that the town council has since filed a subsequent audited accounts for FY13/14.

"The auditors that audited our accounts which were recently submitted on June 30. Is he not aware that out of the 13 disclaimers that were put into our previous accounts the auditors have confirmed that only three remain unresolved?" said Ms Lim, who is also chairman of AHPETC.

"And last of all, does DPM ... Is he not also aware that this recent audit that we did for FY13/14, our auditors made the observation that except for certain specific issues, the town council complied with the Act in terms of keeping proper accounts and books?"

In his rebuttal, Mr Tharman said the accounts are still qualified with disclaimer of opinions. "They are qualified on several accounts. First, I should also note that these are new auditors appointed by AHPETC and they had flagged eight different areas of concern involving non-compliance with legal and regulatory requirements. Eight areas where there were non-compliance. And these were fairly basic areas. They were not minor areas of infractions. There were still matters to do with related-party transactions. Quite significant matters. There were lapses with regard to transfer to sinking funds which is an extremely important matter for all town councils. Failure to transfer monies to sinking funds when due, is really putting the house at risk."

The transfers that AHPETC made according to its own auditors' report were late, he said. "And as you recall from the AGO's previous report, errors were discovered in the computation only after AGO's audit. So there's something seriously wrong there," Mr Tharman stated.

"There were also problems to do with the accounts themselves. Problems to do with the opening balances, problems to do with the accuracy of the service and conservancy charges that were owed to the town council, problem to do with accounting for creditors and accrued expenses. So it's not something to be white washed, when the house is structurally unsafe, one doesn't just put a new coat of paint on the front walls. I think it needs a very hard look, the foundations need to be put into place, it's hard work, but you've had a lot of time to do so."

Ms Lim replied: "DPM has still not answered my question, whether he accepts that in the FY13/14 accounts, which our auditors approved, that they have noted that out of the 13 disclaimers in the past only three remain unresolved. So I would like to confirm whether he accepts that point."

"Secondly, does he also accept that some of the areas that the auditors highlighted were actually carried over from the previous accounts? Opening balance issues, for example.

"Third point, regarding the sinking funds transfers, I think it is public knowledge that the town council has not received its operating S&CC grants for FY14/15. So is DPM not aware of that as well? And last of all, does DPM not accept what I put to him earlier that the auditors opinion was that except for the specific observations, we have compiled with the Act?"

"That is like saying that except for the fact that the pillars of my house are in serious danger of collapsing, everything is fine," Mr Tharman said.

"The examples I have given of the areas that the auditors have qualified do strike me as Finance Minister as fairly serious examples. They are not minor infractions which you put a coat of paint over. They are very serious examples so I would very strongly advise not to get in the game of saying whether it's three or eight and so on, but to look into the substance of the matter," he went on.

"These are very serious issues, being able to transfer monies to your sinking fund, being unable to account for your service and conservancy charges, after a few years. They are very serious matters, to be taken seriously by everyone up and down the line. I would strongly advise that."

On the matter of grants, Mr Tharman said the AHPETC had made an "unusual request" that all of the Service and Conservancy Charges (S&CC) operating grants by the National Development Ministry go into its sinking fund.

He said under normal procedures, MND grants ought to be split between the sinking and operating funds of all town councils. MND has said it is prepared to consider the request if the AHPETC provides it with information on its cash flow.

"That was an entirely reasonable request by MND," Mr Tharman said. "They are willing to entertain the suggestion you've made but they would like some information to make sure that the delivery of essential services was not compromised."

He said AHPETC has not answered "very reasonable", "legitimate" questions. "Even if you take into account MND's grants which MND is willing to discuss with you and you have part of the MND grant that goes into the sinking fund, another part which goes into the operating fund, the amount that is owed to the sinking fund from the operating fund would not be solved by MND's grant. There's a more fundamental problem."

Following the press conference, WP's chairman Sylvia Lim told reporters that DPM Tharman's characterisation of AHPETC accounts as a house at risk of collapse is "a gross exaggeration".

Responding, the Government said she did not give the full picture and that by April next year, AHPETC could possibly owe its sinking fund another $18 million.