WP town council’s shambolic finances

Okay, the Auditor-General’s Office report on the Workers’ Party town council is better examined by bean-counters and those who can make sense of the various financial regulations required by law and the Town Council Act. My eyes glazed over the figures. To recap, the AGO was ordered by the Finance Minister to go over the TC’s accounts after the TC’s own auditors said it couldn’t an express an opinion on them because it didn’t have enough info to do so.

Actually, all I wanted to know if there was money missing or anything underhand in the town council which comprises two single-seat wards and a GRC. The Aljunied/Hougang/Punggol East town council is gigantic. Maybe a small outfit can run a small place like Hougang, but can it do the same for a bigger entity with big money?

We’re not getting any definite answers on what sort of money is really in the TC bank accounts or whether anything has been lost because the short answer is that even the AGO can’t tell based on the information it has.

“Unless the weaknesses are addressed, there can be no assurance that AHPETC’s financial statements are accurate and reliable and that public funds are properly spent, accounted for and managed.’’

So it’s shoddy financial and management practices, lack of transparency, no followups, wrong figures entered, tardiness, confused accounting, no oversight, little or lost or no documentation…you name it, the WP committed it, going what the AGO said.

Its main report is a catalogue of sins:

a. failure to transfer monies into the sinking fund bank accounts as required by the Town Councils Financial Rules;

This is a very complicated thing about what sort of money goes where and what can be taken out from where for what purpose. Seems that when the WP got Aljunied and Punggol East in 2011, everything went topsy turvy so all the numbers were mixed up and you don’t even know where some money came from or went to.

b. inadequate oversight of related party transactions involving ownership interests of key officers, hence risking the integrity of such payments;

This is about how the members of the company managing the estate also sit as town council officers and therefore are more or less paying out from the town council to themselves. It’s a conflict of interest which the G has raised time and again, especially over large project management fees. The WP didn’t have a system in place to make sure no hanky panky took place.

c. not having a system to monitor arrears of conservancy and service charges accurately and hence there is no assurance that arrears are properly managed;

This is a big issue because the arrears chalked up were so large it was frightening. The AGO doesn’t say if its recent account that the arrears are about 5 per cent is correct. But it does take issue with WP’s reasons about IT failure, the G format of giving arrears reports.

d. poor internal controls, hence risking the loss of valuables, unnecessary expenditure as well as wrong payments for goods and services; and

This is a crazy patchwork of how the TC could have over-billed, under-billed or over-recovered or under-recovered money. Parties don’t just involve tenants and vendors but also the HDB, NEA, and the previous PAP-run town councils and the Citizens’ Consultative Committee. Also over who signs payment vouchers, cheques and access to the safe.

e. no proper system to ensure that documents were safeguarded and proper accounts and records were kept as required by the Town Councils Act.

Some documents got, some don’t have. Some supposed to have but don’t know where. (I don’t even know where to begin)

As I said, I don’t even know where to begin. The kindest thing I can say about the Workers’ Party is that it was overwhelmed by having to run a far bigger place than just Hougang. The WP put up a defence for some of its tardiness and keeps insisting that the AGO found no money missing nor “any criminal or dishonest activity’’. To which the AGO rather tersely countered that the town council’s “broad conclusion cannot be derived” from its audit.

The WP also said, quite cheekily, that it was thanks to the AGO and the Audit Act that it got more information from G agencies, which also benefitted other town councils. But the AGO said most of the information came from what documents the TC had and it could have got the info too if it had bothered to find out.

Some of the WP’s defence is pretty familiar. It goes somewhat like this:

WP: When we got Aljunied and Punggol East, we had so much to do to align everything. Remember there were boundary changes as well? We’re inexperienced. In any case, we wanted the previous managing agents to stay but they wouldn’t even extend their contract by six months. Then some of our staff involved in the handover resigned.

AGO: Aiyoh, you were given six months lead-time and you still couldn’t settle everything? You didn’t make sure you looked at what documents were handed over and kept them safe?

WP: Plus there were all these complications about what we owe or can claim from HDB, NEA and the CCC. These fellas seemed to be deliberately stalling or rejecting our stuff. As for service and conservancy charges, we relied on an IT system to account for service and conservancy charges but it had a bug in it. We needed some historical data from the old vendor but could only get some bits – not everything. What made it worse was that the silly G wanted a complicated format so we had to do some manual work. That’s how the mistakes came about. Anyway, it’s been cleared up now.

AGO: Oi. You could have followed up with these people.

WP: As for the managing agent, we already know they wear two hats – so it’s not as though we were clueless. The G should lay out some clear specs on this thing called Related Third Party transactions.

AGO: Errr, it’s in the Singapore Financial Reporting standards.

WP: But we’ve noted what the AGO said. In fact, we had already started making some changes and then had to stop when the AGO stepped in. We’re such a small outfit but we still went on looking after the TC even as we were helping the AGO.

So there you have it. A quick and dirty account of the town council’s tangle. I’m sorry if I sound too casual. You can be sure that the words used were far more elegant than this. But I think I’ve got the gist of it – please correct me if I am wrong.

What to make of the report then? So the AGO went in, and found that the WP’s auditor was right that it can’t pass an opinion on the results.

What happens now? The Finance Minister has the report and he surely has to do something with it right? What? Punish it with some penalty that will also rebound on the residents? Send in reinforcements to …hmmm…help a political party he doesn’t belong to?  I suppose the G and the PAP MPs are now sharpening their knives. But you know the phrase….people in glass houses…They should hope/know that their own TC finances are in good shape before throwing stones.

For me, this whole exercise has been an education in town council financing. I wonder what it will mean to the residents in Aljunied, Hougang and Punggol East….

We’ll probably know soon. At least by January 2017.