AHTC receives KPMG’s first monthly report, submits to HDB; AHTC fulfils all outstanding Sinking Fund transfer obligations (Media Release 16 April 2016)
1. Aljunied-Hougang Town Council (“AHTC”) submitted to the Housing and Development Board (“HDB”) on 15 April 2016 the first monthly progress report issued by KPMG to AHTC. This report was issued in accordance with the Court of Appeal judgment in Attorney-General v AHPETC (Civil Appeal No. 114 of 2015) (the “Judgment”).
2. AHTC has decided to make this report accessible in full (click here for the full report).
3. To recap, on 1 Mar 2016, AHTC appointed KPMG LLP (“KPMG”) to comply with the orders in the Judgment. KPMG’s terms of reference for the engagement with AHTC were derived from:
- the aforesaid Judgment; and
- agreement between HDB and AHTC.
4. KPMG’s terms of reference are as follows:
- To assist AHTC in identifying all outstanding non-compliances with Section 35(c) of the Town Councils Act;
- To advise AHTC on the steps that must be taken to remedy such outstanding non-compliances;
- To produce monthly progress reports on the above until the accountant(s) is or are reasonably satisfied that AHTC is fully compliant with Section 35(c) for AHTC’s submission to HDB (which HDB may in tum make publicly available on the first day of every month). The first of these monthly progress reports is to be issued by 15 April 2016. Such reports are to provide sufficient details of: (i) AHTC’s outstanding non-compliances with Section 35(c) and (ii) the steps that AHTC is taking to remedy the outstanding non-compliances;
- To establish whether any past payments made by AHPETC [Aljunied-Hougang-Punggol East Town Council] and/or past payments made by AHTC between 1 October 2015 and 27 November 2015 were improper and ought to be recovered;
- To issue a report on findings as regards to past improper payments by 31 August 2016, or by such other date as may be agreed with AHTC (with the consent of the HDB); or as ordered by the Court; and
- For the avoidance of doubt, “outstanding non-compliances” refer to issues identified in the report of the Auditor-General’s Office and in subsequent accountant’s reports for FY 2013/2014 and FY 2014/15.
5. The Judgment requires KPMG’s monthly report to address the outstanding non-compliances (“Audit Points”), the steps that must be taken to remedy such Audit Points (the “Remediation Plans”) and the progress of AHTC in implementing the said Remediation Plans.
6. Since its engagement, KPMG has reviewed the relevant audit reports and identified the Audit Points thematically. These are as follows:
- Management of Sinking Fund;
- Governance of related party transactions;
- Management of Service and Conservancy Charges (“S&CC”) arrears;
- Internal controls and procurement; and
- Records management and accounting.
7. KPMG’s first report assessed that some root causes are fundamental to several of the Audit Points; and/or present systemic difficulties for AHTC in effectively and/or efficiently discharging its obligations under the Town Councils Act. These relate to the following areas:
- AHTC’s governance framework and policy management;
- AHTC’s accounting practices;
- The AHTC department responsible for finance and accounting’s (the “Finance Department”) capability and management personnel retention; and
- The accounting platform used by AHTC to record and account for its transactions (the “Accounting System”).
8. KPMG made recommendations to AHTC to address these root causes. To this end, AHTC discussed interim Remediation Plans with KPMG and agreed to implement a policy management process, a governance and internal control framework, guidelines for Finance Department staff, and an accounting manual, with target completion in July 2016. AHTC has also informed KPMG of remediation plans to address Finance Department capabilities and install a new Accounting System.
9. AHTC has been progressively implementing remedial measures to address the 17 Audit Points. KPMG considers two Audit Points to be resolved by the remedial measures undertaken by AHTC. KPMG also reports that AHTC has implemented remedial measures for 12 Audit Points and has made recommendations on further measures to be taken. Three Points are considered “open”, where AHTC has informed KPMG of its remedial measures and KPMG has not yet commenced reviewing and testing these measures. KPMG will report progress on the remaining 15 Audit Points in its next monthly report.
10. As of 15 Apr 2016, and in accordance with the Judgment, AHTC has instructed its bankers to transfer $9,134,374.06 to its Sinking Fund bank account. In effecting this transfer, AHTC has fulfilled all of its outstanding Sinking Fund transfer obligations under the Judgment (up to 27 November 2015) and thereafter (up to 15 April 2016).
ALJUNIED-HOUGANG TOWN COUNCIL
16 April 2016