Steps taken to enhance compliance with financial rules

Question

Mr Png Eng Huat: To ask the Minister for Culture, Community and Youth in respect of the audit on the People's Association that is reported in the Report of the Auditor-General for FY2014/15 (a) what are the 13 businesses or services that have been given tenancy contracts totalling $3.67 million without competition and what are the reasons given; and (b) what are the seven claims totalling $114,767 made by the Chairman of the CCC to himself and what is the total amount of the three claims that have no supporting documents.

Response

1. Minister Lim Swee Say, Minister (Prime Minister’s Office) and Deputy Chairman of People’s Association: The Auditor-General’s Office audited the People’s Association (PA) and the Grassroots Organisations’ (GROs) compliance with financial rules set by the PA for GROs.
   
   (a) Tenancy contracts
   

2. PA’s financial rules allow Community Club Management Committees (CCMC) to seek the approval of PA HQ for the waiver of competition for the award of tenancy contracts where they have valid reasons to do so for the benefit of residents.

3. Unfortunately, there were 13 tenancy contracts cited by AGO for waiver of competition without prior approval from PA HQ. These are:

   1. Five contracts by two CCs with poor locations to provide children enrichment, food and entertainment services. One CC is in a housing estate under redevelopment and the other is in  a new housing estate in its early stage of development;

   2. One contract for the installation of an ATM machine by a particular local bank to complement ATMs of two other local banks in the neighbourhood;

   3. One contract for the renewal and continuation of childcare services for the convenience of the parents and their children;

   4. Three contracts for the introduction of new community lifestyle concepts to encourage family bonding and to inject vibrancy in the neighbourhood;

   5. Two contracts for food outlets that are popular with heartlanders, including youths and families with young children; and

   6. One contract for a non-profit community organisation that promotes healthy lifestyles, in particular for senior residents. 

4. Notwithstanding the good intentions of the CCMCs in bringing in these services for the benefit of residents and that they had benchmarked the rental rates offered against similar rental rates in the area, they did contravene the financial rules of PA in not seeking prior approval from PA HQ for the waiver of tender.

5. PA acknowledges our shortcomings in this area and has taken immediate steps to enhance compliance.
   
   (b) Claims by CCC Chairman

6. The seven claims made by the Chairman of the CCC to himself were:

   1. One case of immediate financial assistance for a needy family at a funeral wake.

   2. A working dinner; and an appreciation dinner for volunteers and community partners; and

   3. Four claims for workplan retreats.
      

7. The claim for financial assistance presented to the needy family at a funeral wake had no supporting document. The amount was however witnessed by a few other volunteers who were present.

8. The two claims for the working and appreciation dinners were supported by receipts. 

9. As for the four claims related to two workplan retreats, one had supporting documents. Even though the original receipts for the other three claims amounting to $56,050 were misplaced, the CCC had subsequently verified the amounts claimed with proof of payment from the vendor.

10. Although there was no evidence of dishonesty, the CCC Chairman concerned has taken personal responsibility for these lapses and resigned from his position.
    
    (c) High level of vigilance over integrity of public sector’s financial management

11. As a statutory board managing public funds, PA takes our financial governance seriously. Our accounts are subjected to annual statutory audits. The last time our accounts received an adverse opinion was for FY2012. The adverse opinion was issued not for financial irregularity, but because the grassroots organisations’ accounts were not included in PA’s financial statements. PA has since consolidated all the GROs’ accounts into our financial statements. We have received clean opinions for our FY2013 and FY2014 financial statements.

12. This AGO audit is over and above our annual audits. By having multiple layers of checks and transparency, we ensure a high level of vigilance over the integrity of our financial management. While we cannot completely eradicate human error, being vigilant means these are the exceptions rather than the norm.

13. The AGO is doing its job and has done an impartial audit. PA takes the AGO findings seriously. We have taken swift and decisive action to put things right immediately. When things go wrong, we do not shy away from taking responsibility and tough action to put things in order.