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People’s Association strengthens its processes, governance and oversight systems after internal checks and external review

Response to parliamentary question on the findings of the external consultant’s review and further checks done by People’s Association following AGO’s observations for FY 2020/21

  1. In its FY2020/2021 Report, the AGO made several audit observations on the development and facility maintenance (FM) phases of two of the People’s Association’s (PA) development projects, namely, Our Tampines Hub (OTH) and Heartbeat @ Bedok (HBB). 
  2. Following these observations, PA took immediate remedial actions. Some of these actions included the following: (a) inserting provisions in development contracts as standard form, to ensure greater clarity and compliance on price fluctuation adjustments for government projects; (b) undertaking a thorough check on all contract variation (CV) cases flagged by AGO; and (c) introducing several additional measures to improve the oversight and management of CVs. 
  3. PA also carried out a full audit of all CVs under OTH and HBB’s main development contracts, going beyond those sampled by AGO, and undertaking a review of the overpayments reported by AGO for CVs and price fluctuations at HBB and OTH.
  4. Beyond this, PA also appointed an external consultant, Ernst & Young (EY), to undertake a comprehensive, independent review, and to make appropriate recommendations to PA to strengthen its overall governance and oversight systems. EY’s scope of work extended to transactions at OTH and HBB beyond those flagged by AGO as well as to development projects apart from OTH and HBB.
  5. Both PA and EY have concluded their checks and reviews.

  6. Review Findings and Actions Taken

  7. Their findings suggest that one of the root causes for the lapses was due to human oversight and lapses, such as the non-adherence to the required systems and circumvention of established processes. PA is following up on this finding and has initiated disciplinary proceedings against the relevant officers after completing its internal investigations. 
  8. PA had also previously made a police report on this matter, and have been regularly providing relevant information to the police to assist in their investigations.
  9. On AGO’s findings on the management and oversight of CVs at OTH and HBB, PA’s review showed that there was a lapse in obtaining documented approvals for such variations. Whilst this is a breach of process, the audit also found that, in these transactions, the variations were in fact contemporaneously supported by the Superintending Officer’s instructions administered according to the conditions of contract, and that all the variation works had been completed on-site. Covering approvals have since been sought to regularise these CVs.
  10. EY was also instructed to review PA’s contract management process for several development and FM projects, apart from OTH and HBB, undertaken in the period April 2016 to July 2021. EY did not find evidence of similar contract management lapses outside of OTH and HBB.
  11. As to the overpayments arising from the above lapses, PA worked with project consultants to review and determine the amounts of overpayment and have recovered these amounts in respect of HBB. In respect of OTH, PA has finalised the computation of the overpaid amounts with its consultants and are working to recover them.
  12. In the course of the above review, several other outstanding additional claims from the contractors were surfaced, in respect of works carried out at OTH under the FM contract. PA is working with the relevant parties to review and settle verified claims.
  13. EY’s review of PA’s management and operations of its development projects beyond AGO’s scope shows that AGO’s findings were not systemic, outside of HBB and OTH. Notwithstanding this, PA has accepted and agreed to implement additional measures recommended by EY to improve its business processes and systems. These include enhancing processes and systems in respect of the procurement and contract management of development and facilities management in the IPOGs, as well as stepping up on the supervision of the managing agent to administer and verify FM work.
  14. PA will progressively implement the remaining recommendations by EY which require more in-depth review and structural changes, such as reviewing the organisational structure of IPOGs.
Last updated on 05 July 2022