Yesterday (17 Aug) in Parliament, NCMP Lina Chiam from the Singapore People’s Party (SPP) spoke at length about financial lapses by the People’s Association (PA) and the grassroots organizations (GROs) under its umbrella which the Auditor-General’s Office (AGO) has flagged in its recent report.
Mrs Chiam said the litany of financial lapses deserves close attention, given that PA and its GROs play a large part in the lives of ordinary Singaporeans.
“Many citizens for example, have attended events and lessons organized by the GROs at the community centers,” she said.
She noted that this is only the second time, since the financial year of 2000/2001, that the GROs have had their financial statements audited. In other words, the last time the GROs were audited was a good 14 years ago.
“Although the PA has its own independent auditor engaged for annual audits, the PA has, however failed to provide the financial statements of related GROs for audit for more than 10 years,” she said.
“The omissions have led the PA’s own auditors to issue adverse opinions in the financial years of 2006 to 2013. The PA has previously responded to this adverse opinion on the basis that (and I quote) the auditors had given an adverse opinion on the financial statements of the PA for one reason – not including the accounts of its grassroots organizations in the PA accounts.”
It was only in FY2013/14 that PA provided the financial statements of the GROs to their own auditors.
“The failure to provide GRO’s financial statements meant that the PA’s financial statements reflected in the annual audit do not accurately represent the financial state of affairs of the Association between the financial years of 2006 and 2013,” she said.
Failure of GROs to provide financial statements for audit purposes for more than 10 years
Singaporeans deserve to know the financial health of the GROs, not just moving forward, but also for the past 10 years, Mrs Chiam said in no uncertain terms.
“In any case, the failure to provide the GROs’ financial statements for audit for more than 10 years is completely unacceptable. It is shocking that the PA has continued to do so for such a long time, and has failed to provide oversight of GRO’s compliance with its Financial Rules, as noted by the AGO,” she argued.
Indeed, AGO itself has highlighted that “common lapses found in most of the GROs test-checked indicate that the GROs may not be familiar with PA’s financial rules, even up till today”.
Mrs Chiam opined that the absence of any auditing of GROs before 2014 has cast doubts on whether their funds have been used in accordance with the relevant financial rules during the years in question.
She then asked the ministry overseeing PA to disclose the financial statements and records of the various GROs for those years and have them audited. She said that PA’s submission of the financial statements of GROs for just FY2014 is “clearly belated”. PA, as an accountable and responsible body, should have done so 10 years ago, and should have “the obligation to continue to do so”.
Mrs Chiam took the opportunity to highlight some of the notable irregularities in PA, which AGO uncovered:
Lapses in management of tenancy contracts and procurement – for example, 10 out of the 35 CCMCs test-checked did not obtain relevant approvals for the direct award of 13 tenancy contracts (totaling $3.67 million) without competition
Lapses in procurement – out of the 9 GROs that were test checked, 5 had awarded contracts without obtaining approvals from the relevant authorities and some approvals were even backdated after the contracts were awarded.
Lapses in engagement of training operators – including the failure to call for competitive bids involving contracts worth millions of dollars.
Failures to manage conflict of interest in related-party transactions
The less than prudent manner in which funds were handled by the GROs has severe implications, the most important being whether such lapses have compromised the interests of residents. Mrs Chiam pointedly asked:
How can residents be sure that the awards of such contracts are indeed the ones who can provide the best quality of services and products for the residents?
She added, “Even in the face of time pressures, procedural compliance still ought to be observed as much as possible. The purpose of procedures is to safeguard and protect the interest of relevant stakeholders – in this case, the residents. Further, procedure compliance provides a measure of transparency and accountability.”
Checks on a mere 6.5% of GROs have already uncovered significant lapses
Mrs Chiam then told the House her concerns about how pervasive such poor financial accounting and practices are across the 1,800 GROs.
“The AGO has only test-checked a small sample size of GROs, a mere 6.5 per cent,” she noted. “Yet, the audit has already turned up significant lapses. There is reason to believe that financial lapses of similar nature may be found in the other unaudited GROs. The worry of course, is that the lapses flagged out by the AGO are only the tip of the iceberg.”
Besides external audit being absent, the findings of AGO imply that the internal audit of GROs is severely lacking.
She questioned the effectiveness of PA’s Grassroots Finance Review Committee when the committee is chaired by 3 grassroots leaders.
In other words and in local parlance, kaki nang.
“This calls into question the independence of the review committee and an independent body should be preferred instead. Also, an audit of the other GROs that have yet been test-checked by the AGO should be conducted,” she said.
Close relationship between PA and PAP
Singaporeans cannot be blamed for sharing Mrs Chiam’s concerns with regard to PA, especially when it is closely linked to PAP.
PA has up to 1,800 GROs comprising grassroots volunteers. The GROs include Citizens’ Consultative Committees (CCC), Community Club/Centre Management Committees (CCMC) and Residents’ Committees (RC) and their sub-committees. PA sets the Financial Rules for GROs and provides administrative support to them, among other things.
The relationship between PA and PAP is a close one. The Chairman of PA is none other than PM Lee Hsien Loong, who is also the Secretary-General of PAP.
The late Lee Kuan Yew once said that China has been sending teams of officials to study Singapore for years. He told of a lesson the Chinese learnt, “They discover that the People’s Action Party has only a small office in Bedok. But everywhere they go, they see the PAP – in the RCs, CCCs and CCs.”