Grassroots orgs had inappropriate practices in handling money, but no evidence of lost funds: Edwin Tong on AGO audit

Tong stressed that all monies had been accounted for, and none had been misappropriated.

Tan Min-Wei | August 02, 2023, 06:44 PM


On Aug 2, Minister for Community, Culture, and Youth (MCCY) and Second Minister for Law Edwin Tong, answered questions in Parliament regarding recent audit findings by the Attorney General's Office, regarding the financial practices of some Grassroots organisations (GROs).

Tong said that MCCY will set up an independent review committee to look into the findings, including the transfer of sums of money to personal bank accounts for official operational needs.

AGO audit

Tong set out the background of the transactions audited by the AGO. GROs help administer certain schemes to help needy members of the public, and sometimes initiate their own local welfare assistance schemes for local residents with specific needs.

The AGO’s audit of the People’s Association (PA) for the financial year of 2022 to 2023, chose to audit welfare assistance schemes for the period between April 2019 and May 2022.

The AGO decided which of the nearly 2,000 GROs it wished to audit, and retained the discretion to determine which areas were covered in its audit, as well as the approach to take.

Tong said that two GROs were identified to have adopted inappropriate practices in the management of monies.

First case

The first involved a GRO which distributed welfare to low-income residents at festive events.

This was a local welfare assistance scheme initiated by the GRO in collaboration with Community Partners, meant to complement national schemes.

The audit found that the GRO had issued a staff member a crossed cheque, which was then taken to the bank, deposited directly into the staff member’s personal bank account, with the deposit amount then immediately withdrawn in cash.

The entire process was witnessed by a second staff member, and the distribution of the cash was fulfilled by a third who was not involved in the cash withdrawal.

Monies withdrawn had been distributed to the scheme's recipients with a proper record and accounting of the amounts given out.

The procedure should have been for the cheque to be issued uncrossed and instead had the words “or bearer” crossed out.

Otherwise, all other steps would have been identical.

Such a check would have then been withdrawn in cash without the need for the money to have entered a staff member's bank account, and afterwards could be used for scheme disbursement.

Tong noted that while the procedure was not correct, staff involved had said that the use of the crossed cheque was to take better account of the monies.

The monies drawn was checked and verified throughout the process by multiple different staff members, and the amount that had been deposited, withdrawn, and distributed was properly recorded and accounted for.

The GRO stopped this practice when the AGO noted this observation in the course of its audit.

Second case

The second case concerned the reimbursement of monies to hawkers and merchants under the CDC voucher scheme by another GRO, launched by the PA in 2020 to help low-income households, hawkers and heartland merchants.

The GRO in question was helping to administer the scheme by distributing physical vouchers to low-income households, as well as facilitating the reimbursement of voucher claims from the hawkers and merchants.

They then saw a need to set up a system to facilitate a prompt claims process for the hawkers and merchants under the scheme.

The process that it came up with was for staff to collect used physical vouchers from the hawkers and merchants, then tabulate the amount to be reimbursed to each of them on a weekly basis.

The transaction volume was high, with most claims between S$20 and S$30. During that time the CDC vouchers was entirely physical.

The GRO would issue a cheque to a staff member, who would withdraw cash and use it to reimburse hawkers and merchants, who would indicate receipt of the cash by signing a list prepared by a GRO staff member.

Similar to the first case, the process deviated from standard procedure because a crossed cheque was used instead of an uncrossed cheque, and the monies went through staff members’ personal bank accounts briefly.

Tong noted that despite the incorrect procedures, there were proper records and accounting of all the claims in the disbursement of the money.

"AGO had reviewed the records and found no evidence of loss or misappropriation of funds," Tong said.

PA's response

PA subsequently undertook checks similar in scope to the AGO audit for the same period, and identified three other cases where similar inappropriate practices had been adopted.

In these cases there was no loss of funds or any malfeasance found in staff conduct; and the processes have since stopped.

PA has taken note of AGO’s observations and has counselled the staff and volunteers involved on the need to adhere strictly to governance processes.

However, given the scale and volume of such transactions, PA recognised that staff and volunteers faced challenges when administering schemes and government programs.

PA will continue to identify ways to improve its structures, systems, and its processes.

Independent review committee

Tong also said that PA would set up an independent review committee to review the latest AGO findings, independent from existing staff and internal audit team.

The committee will review the AGOs findings, and will ensure that measures are put in place to strengthen the system. IT will also report on the progress to the PA board, as well as to MCCY, and the PA will update the public on the committee's progress.

Tong also said that the government took the findings of the AGO very seriously and will continue to take steps to address the gaps in processes.

Question on review committee

Tong addressed a question from Workers' Party MP He Ting Ru about the review committee’s make up, and whether it would publicise its findings.

Tong said that the committee had one PA board member, as well as several senior grassroots members who were not on the board; but otherwise they were not connected to the PA’s senior management.

Tong also said that he would discuss with the review committee on whether it would make its findings public.

Top image via MCI Singapore/YouTube