The Auditor-General’s Office (AGO) has flagged possible lapses in the Ministry of Education's (MOE) management of school projects, as part of its report for the financial year 2023/2024 (FY 2023/2024), on Jul. 17.

The AGO is an independent office that audits all of Singapore’s government entities’ accounts.

The "more significant audit observations" were highlighted in the report, including possible overpayment to contractors by MOE, amounting to approximately S$317,100 (US$236,000).

MOE recovered S$68,000

In a statement, MOE shared that it has recovered S$68,000 out of the estimated total net overpayment of S$317,100 to contractors, and targets to complete the recovery of the remaining funds by the end of 2024.

MOE stated that it acknowledges and takes a serious view of the observations made by AGO and has since taken immediate steps to rectify the lapses and put in place measures to address them.

The Ministry of Finance (MOF) noted in a separate statement that the Auditor-General issued an "unmodified audit opinion" on the government financial statements.

This, MOF said, is "an independent verification that the government’s accounts are prepared, in all material aspects, in accordance with the law and public funds have been properly accounted for".

However, MOF added that the government takes AGO's observations seriously, saying lapses would be reviewed thoroughly, while good practices would be shared across agencies to raise standards.

Possible overpayments by MOE

Test checks were conducted by AGO on three school construction contracts managed by consultants for two primary schools and one junior college.

AGO found lapses in contract management in all three contracts.

Approvals obtained after works started or completed

AGO test-checked 71 contract variations under the three construction contracts, and found that approvals for 45 of those contract variations (amounting to S$4.4 million or 64 per cent of the total approved value of variations test-checked) were obtained only after variation works had commenced or had been completed.

The delays ranged from one month to more than four years after the commencement or completion of works, AGO said.

AGO also noted that in the approval papers for 27 of those variation works, there was no mention to the approving authority that the variation works had already commenced, and that covering approvals were being sought.

AGO said:

"The delays in obtaining approvals for variation works undermined the role of the approving authorities whose duty was to ensure that variations were justified and costs involved were acceptable.

To ensure that financial prudence and discipline are maintained, it is important for proposed contract variations to be properly assessed and approvals sought from the appropriate approving authorities on a timely basis with all relevant facts disclosed."

Lapses in valuations of contract variations

AGO also found 55 instances in nine contract variations where variation works were not properly valued.

These included instances of the use of incorrect rates or quantities to value variation works, failure to deduct costs for works not done and payments for works not installed on-site.

The total net possible overpayment to the contractors was estimated to be S$98,700.

Payments for works not carried out or not in accordance with contract

AGO also conducted site visits and test-checked works done under the three construction contracts.

For all three contracts, AGO observed instances where payments had been made for works not carried out or not carried out in accordance with contractual requirements.

AGO highlighted a few examples, including payments of S$49,400 for 900 student lockers which were not installed, and S$28,700 for textured spray coating that was not applied to staircases.

The total net possible overpayment to the contractors for two of the contracts was estimated to be S$218,400.

For the remaining contract, MOE informed AGO in May 2024 that the assessment of cost difference was still in progress.

Delay in finalisation of accounts

AGO flagged up 20 construction contracts with delays in the finalisation of accounts.

MOE said that it paid its contractors for all work certified complete by its appointed consultants before the audit.

This amounted to 98.3 per cent of the total contract sum.

Of the outstanding balance of S$6.41 million (equivalent to 1.7 per cent of the total contract sum), MOE said that it has since paid a further S$1.8 million to the contractors.

"Our appointed consultants were unable to recommend MOE to pay the remaining sum as discussions with the contractors on the valuation of work done was still ongoing. We will engage the respective consultants and contractors directly, and pay the remaining balance by end-2024."

MOE acknowledges report

MOE said that besides the projects audited by AGO, it will also check through all other ongoing school development projects for possible overpayments and other contract management lapses.

MOE has also issued "stern warnings" to the consultants of the audited projects for not adhering to MOE’s procedures.

Lapses by consultants will be taken into consideration in the Building and Construction Authority’s Consultants Performance Appraisal System, MOE said.

As such appraisals are shared with other public sector agencies, it would impact the consultants’ chances of securing future tenders.

To strengthen oversight, MOE also will step up on-site supervision and reviews for its projects.

MOE will also be recruiting more specialised officers to verify and assess the reasonableness of rates and computations used by consultants.

MOE has also reported the issue of "potential irregularities involving possible falsification of quotations submitted by appointed consultants and contracts" to the police.

MOE said:

"MOE will continue to review and strengthen our management of processes and procedures, exercise greater oversight over consultants, and raise officers’ competency in audit and procurement to prevent recurrence of the lapses highlighted and inculcate a stronger compliance mindset."

Top photo from Mothership.