Opining on the disclaimer of opinion

I think a lot of people learnt a new phrase this week: disclaimer of opinion. It refers to how there’s not enough information or evidence for an opinion to be formed. Odd. I would have thought the absence or lack of such info or proof would be enough for anyone to form an opinion which will be : How can leh?

Question: Is a “qualified’’ auditor’s report that has a disclaimer of opinion consider better or worse than an “adverse’’ report?

I am no accountant or auditor so I guess I’ll have to speculate on why there are missing pieces in the Aljunied-Hougang-Punggol East financial report that defied the auditor’s ability to give a view.

1. The dog ate the minutes and records that the auditors wanted
2. They were destroyed in a flash flood or blackened by the haze
3. Some of the missing stuff is with the previous owner/agent and they don’t want to give them to us for some reason.
4. They contained some embarrassing stuff so they were hidden from sight.
5. We misplaced all the receipts or threw them down the rubbish chute or recycled them.
6. So long as residents don’t complain, why do we need to keep complicated accounts that will take time away from doing what the residents really want?
7. The more info we give, the more fault people will find with us.
8. Hmm… what are receivables anyway?

All is guesswork and as such, cannot form the basis of an opinion by the way.

Anyway, the battle is afoot! There goes the G in the form of the National Development ministry making hay of the independent auditor’s report on the Workers’ Party’s past work. Snipe! Counter-snipe! Snipe! Counter-snipe! You can expect the People’s Action Party to add to the exchange of fire, to rock the confidence of voters in their elected members’ ability to manage their housing estate in a financially prudent and competent manner.

The WP is feeling pretty aggrieved at what it called insinuations in the media that it had not been aboveboard in its town council dealings. There have been hints of dishonesty or favouritism, yes. If so, the WP should the right thing: sue the offending parties for libel. Or the MND as regulator should take the town council to task in some way under the powers accorded to it.

Yet, there seems to be stalemate. One which started ever since Aljunied GRC came under the WP.  To be sure, it has been entertaining. The PAP seems to be hitting back after the WP exposed the existence of a PAP company which managed its information systems. Tables have been turned and the WP looks to be on the defensive. The opposition seems to be digging in, or is it digging a hole for itself?

Efficiency and effectiveness have been a hallmark of PAP governance and when the town councils were instituted years ago, it was to impress that fact into voters. They were told their votes would have immediate consequences on their living environment as the elected political party would be running their neighbourhoods. Sure, Potong Pasir and Hougang, small, single-member constituencies were wrested from the PAP and they too had some teething problems, including the fact that the grassroots structure is entirely in the G’s hands. But over the years, residents reckoned that they were still good enough to run their estates, thereby voting the opposition in again and again. (Until the last GE when Potong Pasir went back into PAP hands)

It was a different ball game when a whole GRC was lost. It represented an opportunity for the WP to tackle bigger game. If it does well, then the PAP would have lost a key card: that only the PAP can manage estates in such a way that rubbish doesn’t pile up storeys high in the chutes. (Remember?) If it doesn’t, then the PAP can crow that it is right. If an opposition party cannot manage a GRC, would voters in GRC keep them or would those elsewhere vote them in? And how could it manage even bigger game, like the government of a country?

The problem, however, is that residents-cum-voters have never quite been inducted into town council work. All they care about are clean corridors, working lifts and low service and conservancy charges. How all three components come together, and are linked, are like alchemy to most people who are too busy making a living. And what role does the G, or the HDB, or the National Environment Agency or the People’s Association or the town council, or the Community Development Council or the political party branch play in the neighbourhood?

To residents, the work of the town council had seemed no different from pre-town council days. Talk of engaging residents in estate maintenance appear to be confined to getting them to vote on whether to get their blocks upgraded or a new colour scheme or fancy name for the neighbourhood. Perhaps, there was a jolt during the Lehman Brothers crisis when it appeared that town councils had lost money in investments. Maybe that year, more residents bothered to look up their TCs’ financial reports.

In any case, the PAP TCs seemed to be working like a collective most of the time although there are variations in the amount of S&C charges among the town councils and estate maintenance levels.

In recent time, I daresay residents have been getting an education in grassroot politics and financial management. Parochial matters like who pays for hawker centre cleanings, who gives out licences and the political connections of a managing agent would never have made big news in the past. Nor would the role of the Citizens Consultative Committee – and its advisers – be questioned as much as now.  Even the cancelled invite of Dr Tan Cheng Bock to an Istana party threw some light on grassroots politics.

You almost wished the HDB was back in charge so that residents can just go on living quietly without needing to get grimy.

The WP has been having a hard time of it.

It has had to face an entrenched grassroots system with significant financial muscle and oversight over some areas in the estate, and which has a member of the ruling party as its adviser. The system comes under the purview of the People’s Association headed by a minister. It is common to find key grassroots leaders wearing both the party and community hats.  

From four instances in its annual report that independent auditors queried in the WP’s first year as a mega-TC,  the number has now grown to 13. It seemed that the four instances which refer to the “handover’’ of Aljunied GRC from the PAP to the WP have still not been resolved. In a interesting riposte, the WP suggested that MND help it get the information from the previous auditors and other parties:  “Unless those agencies with the required information furnish them to the Town Council, it is likely that information gaps will remain and the accounts will continue to be qualified every year…In this regard, we note that the MND could well be the best party to assist the Town Council to resolve some of the key information gaps.”

No, MND did not say it would help out, but merely pointed out that the WP had pledged earlier that it would resolve them.

Question: Would the previous auditor, the CCC and the previous PAP TC please respond?

As for the other nine instances, the WP doesn’t seem to have an answer for the state of its financial accounts.

In its responses, it focused on tackling what looked like a direct contravention of TC rules, that it transfer funds into the sinking account. This was described as an oversight which had since been rectified. That is just one “save’’.

The bottomline is that more than $20million worth of funds seemed to be in question. A few instances cited refer to its employment of its managing agent FM Solutions who comprised party supporters. This is where the hints of “cronyism’’ are concentrated. The WP noted that the MND and auditors took issue with how the town council did not provide details of project management service fees paid to the agent. It said it was surprised as it was “standard practice for town councils to include project management fees in the managing agent services awarded’’.

Question: Is that true?

The WP gave an interesting piece of background on the hiring of the agent. When it opened job for tender, there were three interested parties but only one applicant, the incumbent who had ties with the party. One wonders what would have happened if no one wanted to take on the job?  Re-tender again and again? MND steps in? Or is it the responsibility of the political party to iron out that wrinkle, which means it would most probably turn to its supporters – and that’s wrong?.

But there have been other charges of over-payment and of projects awarded without tender. Allegations of impropriety. Various sums have been put out and it is likely that only close political observers would keep track, not the residents in Aljunied and Hougang.

The image painted, however, is that there is something not quite right in the town council, and that this is not in the interest of residents. What of next year’s financial statement when the TC would have to factor in the management of Punggol East?

Both the WP and the MND should stop the sniping and settle questions of illegality, irregularity or impropriety.