The Auditor-General’s Office (AGO)'s report for the financial year 2023/2024 (FY 2023/2024) has been released on Jul. 17.

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

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

MOF said, "This 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."

MOF added that the government takes the AGO’s observations seriously.

"The audits by AGO are crucial for maintaining public trust, accountability and transparency in the management of public monies.

Where lapses have been identified, agency heads will review each case thoroughly to get to the root cause, and implement measures to address the issues promptly.

We also continuously undertake efforts to strengthen governance capabilities, processes, and systems across agencies.

Good practices highlighted will be shared across public agencies to raise governance standards."

Three areas for improvement

The report raised three areas that public agencies need to pay greater attention to, MOF said. These include:

1) Procurement and contract management, including maintaining proper oversight over contractors;

2) Management of grants, including risk management and the use of data analytics to improve oversight; and

3) Management of revenue and collections to ensure accurate and timely billing and collection of fees and revenue.

AGO's observations

The Auditor-General issued an unmodified audit opinion on the government's financial statements, as well as those of three statutory boards, four government-owned companies, and two other accounts.

AGO also conducted selective audits of five statutory boards and three government funds whose financial statements were not audited by AGO.

A thematic audit was also conducted on selected parenthood support measures managed by the Ministry of Social and Family Development (MSF) and the Early Childhood Development Agency (ECDA).

The report highlighted more significant audit observations in key areas:

Lapses in procurement and contract management

AGO found lapses in procurement and contract management at some public sector entities, including the National Parks Board (NParks), the Ministry of Education (MOE), the Building and Construction Authority (BCA) and the Sentosa Development Corporation (SDC).

National Parks Board (NParks)

AGO’s test checks found lapses in valuations and payments for 22 of 60 works orders (WOs) issued under two-term contracts.

The lapses included payments made in full for works not done according to WOs, lapses in the valuation of work done and duplicate payments for works.

One of the examples cited in the report involved bollard markers. While two WOs specified bollard markers of 5 mm-thick steel, the contractor installed distance markers of 3.2 mm-thick steel instead. NParks had paid the contractor using the rate for the thicker bollard markers, resulting in a possible overpayment of S$0.25 million.

According to AGO's report, the total amount of possible overpayment to the contractors due to the lapses was estimated to be S$1.93 million.

NParks' statement

NParks has responded to AGO's observations and said it is working to recover the overpayments.

Ministry of Education (MOE)

AGO conducted test checks on three school construction contracts managed by consultants — two from primary schools and one from a junior college.

AGO found lapses in contract management in all three contracts.

For all three contracts, AGO observed instances where payments had been made for works that were not carried out or that did not comply 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 contracts was estimated to be S$218,400.

MOE's statement:

MOE has responded to AGO's observations and said it is working to recover the overpayments.

Building and Construction Authority (BCA)

AGO found that BCA did not adequately monitor its appointed operator for Jurong Apartments to ensure that the operator had complied with contractual requirements before making payments.

The operator did not provide required maintenance schedules, weekly reports on works, or conduct mandatory quarterly safety inspections.

AGO’s site visit to 12 dwelling units in November 2023 found instances of poor maintenance for six of them, the report said.

BCA's response

In response, BCA acknowledged the gaps in monitoring contract requirements and the operator's work, particularly during the stepped-down operations from October 2022 onwards when the building was no longer occupied.

BCA has since verified that the operator performed the necessary works based on the maintenance schedules and proof of work done.

“This was a procedural lapse with no fraudulent activities nor malicious intent found,” it said.

BCA also said that it has tightened its contract management processes by ensuring regular inspections and verification of maintenance works are done before payment is made.

“Moving forward, we will conduct routine inspections and ensure all maintenance and services reports are reviewed.”

Sentosa Development Corporation (SDC)

AGO noted lapses in the management of two vehicle maintenance contracts at SDC.

Although the contractor did not perform or was late in performing some of the scheduled vehicle servicing jobs, SDC was unaware of this and did not consider that when evaluating the contractor’s monthly performance.

SDC informed AGO that, due to the design of the performance-based contracts, there was no mechanism for the monthly fee to be pro-rated or for the omission of fees when specific works were not done.

As such, the report found that SDC "effectively paid" for work that was not done.

AGO also found "tell-tale signs" that the contractor had created servicing job sheets for works not performed.

"AGO takes a serious view of any creation of records to give a false impression that works had been performed at the material point in time. Such actions are unacceptable," AGO said in its report.

Lapses in management of revenue and collections

AGO found revenue and collection management lapses at the Singapore Sports Council (also known as SportSG) and Nanyang Polytechnic (NYP).

SportSG

AGO noted that SportSG had inadequate controls over admissions to ActiveSG pools and gyms.

Data analysis and test checks by AGO found instances of abuse of ActiveSG members’ passes, such as sharing special passes for entry into pools and gyms, and using deceased members' accounts.

AGO noted that such control weaknesses would result in revenue leakage for SportSG.

SportSG's statement:

SportSG has responded to AGO's observations and said that it had tighten controls to prevent such abuse.

Nanyang Polytechnic (NYP)

AGO’s data analysis for NYP found delays in its issuance of bills for course fees.

Bills totalling S$8.98 million were issued only after the course commencement dates, with some issued as late as one year after the commencement date.

NYP also did not take prompt follow-up actions on outstanding course fees that were due.

"It is important that NYP exercise greater diligence and strengthen its procedures for prompt billing and collection of course fees. Otherwise, the longer the fees remain unpaid, the lower the likelihood of recovery," AGO said in its report.

NYP's response

NYP issued a statement on Jul. 17 in response to the AGO findings.

It acknowledged AGO’s observations on the delays in billing and inadequate debt recovery actions on outstanding course fees between 2020 and Jun. 2023, and said it coincided with the Covid-19 pandemic, when there was a rapid uptick in the number of Continuing Education and Training (CET) training places as part of upskilling efforts in Singapore.

The polytechnic had almost 53 per cent more training places in 2021 than in 2019.

NYP provided an update that as of Jul. 10, 68.3 per cent of the total outstanding course fee bills of S$237,000 have been accounted for.

On its new training portal, NYP said it was launched prior to the audit to automate billing and course fee collection and avoid similar lapses in the future.

The polytechnic added that it will closely monitor the portal's effectiveness while intensifying efforts to recover the outstanding bills by the last quarter of 2024.

Lapses in management of grants

BCA

AGO also found lapses in managing declarations of conflict of interest (COI) for two grant schemes administered by BCA.

AGO’s test checks found instances of inaccurate, incomplete, or missing COI declaration forms that were required to be submitted by panel members participating in the grant evaluation process.

BCA had not followed up on those instances, and it was unclear if panel members for the relevant grant applications were in COI positions.

BCA's reply

In response, BCA acknowledged the observations made by AGO regarding areas for improvement.

It said that follow-up checks had been conducted, and no actual conflicts of interest were detected.

“We have since enhanced the declaration process for a conflict of interest in grant administration.”

This includes using digital forms with mandatory fields to eliminate the possibility of incomplete declarations and tightening the Standard Operating Procedure (SOP) with an additional layer of internal checks to ensure the declarations are accurate.

Lapses in management of operations

Ministry of Home Affairs (MHA)

In its audit of MHA’s management of a contract for logistics services, which included warehouse management, AGO identified weaknesses in inventory and records management.

AGO conducted surprise stocktakes at three locations and found discrepancies between inventory balance records and physical counts at all three.

At two locations, AGO also noted deficiencies in how checks were conducted on physical inventory and maintained records.

Possible irregularities in records furnished for audit

AGO also noted possible irregularities in the records furnished for AGO’s checks in the MOE, NParks and NYP audits.

In the audits of MOE and NParks, AGO found possible irregularities in quotations provided for a substantial number of star rate items for construction contracts.

For NYP, AGO found possible irregularities in two annual fire hydrant test reports submitted to NYP by its maintenance contractor.

The agencies have lodged police reports following AGO’s audit observations.

Thematic audit on parenthood support measures

A thematic audit was also carried out on the parenthood support measures administered by MSF and ECDA.

The government disbursed a total of S$4.55 billion under the following grant schemes during the audit period:

MSF

• Government-Paid Leave Schemes (GPLS)
• Baby Bonus Scheme – CDA Benefits

ECDA

• Infant Care and Childcare (IC/CC) Subsidies
• Anchor Operator (AOP) Scheme and Partner Operator (POP) Scheme
• Kindergarten Fee Assistance Scheme (KiFAS)

In general, the AGO noted that MSF and ECDA had processes and controls in place across its various grant stages to ensure proper management of its schemes.

However, AGO flagged possible lapses under the grant schemes.

For instance, AGO found cases with unusual patterns in the declared employment income of parents which pointed to possible abuse of GPLS.

The AGO report highlighted that there were 55 cases involving 32 parents and S$1.16 million disbursed "with indications of possible abuse".

For the Baby Bonus Scheme, the AGO observed unusual withdrawals from Child Development Accounts (CDAs), fabricated records by one Approved Institution (AI) for audit purposes, and inadequate monitoring of AIs and CDA withdrawals.

The unusual withdrawals from CDAs include frequent withdrawals made within short periods of time, as well as purchases of items such as adult-sized sunglasses, which cast doubt on whether the purchase was made for the benefit of the child or his siblings.

In one case flagged by AGO, one parent made as many as 20 withdrawals totalling S$15,000 within three months.

MSF's statement:

MSF has replied to AGO's observations and said it has filed police reports against the misuse cases.

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