MEDIA RELEASE: AHTC’S RESPONSE TO TCMR FOR FY2016
- AHTC improved its banding for S&CC Arrears Management from red to amber, for the first time since 2011.
- AHTC has been banded red for Corporate Governance for having more than 2 audit observations.
- The 3 audit observations of non-compliance with the Town Council Financial Rules (TCFR) and the remedial actions taken by AHTC are:
a. The fixed asset count report was not certified as required.
Action: AHTC has drawn up a fixed asset checklist with a column specifically requiring certification.
b. A waiver of quotation was done to continue with a service provider with the same charges.
Action: AHTC called for quotations in August 2017, inviting six vendors, and only the existing service provider responded.c. One quarterly transfer to the sinking fund was late by 3 days due to staff oversight in signing the bank instructions.
Action: AHTC enhanced internal system to monitor key deadlines.
- AHTC has appointed Baker Tilly Consultancy (Singapore) Pte Ltd as internal auditor for a two-year term to check on the AHTC’s internal control procedures.
- AHTC recorded an operating surplus of about $4m this financial year and plans to devote a portion of this surplus to town improvement works next year.
1. We refer to the Ministry of National Development (MND)’s press release on the Town Council Management Review (TCMR) for FY2016. The Aljunied-Hougang Town Council (AHTC) has been banded amber for S&CC Arrears Management for the first time since 2011, an improvement from our previous red bandings. However, AHTC has been banded red for Corporate Governance as 3 observations were made by our statutory auditor, Audit Alliance, in the Town Council’s FY 16/17 Financial Statements. In order to move out of the red band for Corporate Governance, the AHTC cannot have more than 2 audit observations in its financial statements.
2. The 3 observations and the remedial actions taken by AHTC are as follows:
a. Fixed Assets Count Report not certified: Two separate fixed asset sightings were conducted during the financial year together with our statutory auditor and another with KPMG (as reported in the KPMG report dated 20 July 2016 monthly progress report) with no adverse findings or anomalies. However, the fixed asset count report was not certified as required by the Town Council Financial Rules (TCFR). To prevent a repeat of such administrative non-compliance, the Town Council has drawn up a fixed asset checklist with a column specifically requiring certification by a Key Officer of AHTC.
b. Waiver of Quotation not done in accordance to the TCFR: AHTC exercised a waiver of quotation for Human Resource payroll processing services, attendance and e-leave tracking services in view of the preliminary one-time set-up costs sunk in July 2015. In view of these sunk costs, the Town Council assessed it would have been more viable to continue with the existing service provider for one more year, as the service provider had confirmed it would not increase its charges for services rendered. AHTC called for a Request for Quotations (RFQ) in August 2017, inviting six different vendors to quote for the same services. Only the existing service provider responded with a quote which was accepted.
c. Late Quarterly Transfer to Sinking Fund: In accordance with the TCFR, a sinking fund transfer must be effected every quarter of the financial year. During the financial year under audit, one transfer was late by 3 days. The amount to be transferred was certified in mid-Oct 2016. However, due to a staff oversight, the bank instructions sanctioning the transfer were only signed on 3 Nov 2016, 3 days after the deadline to effect the transfer. The Town Council has since enhanced its internal system to monitor key datelines, including the transfer of sinking funds to minimise the prospect of such administrative oversights.
3. AHTC has reviewed our statutory auditor’s comments. We will strive to keep all inadvertent administrative errors to a minimum and comply with the TCFR.
4. AHTC has also appointed Baker Tilly Consultancy (Singapore) Pte Ltd as the Town Council’s internal auditor for a two-year term to check on the Town Council’s internal control procedures. For the first year of the internal auditor’s assignment, the Town Council’s audit committee has directed that the internal auditor look into matters related to compliance of governance controls, project management, procurement and payment management, and IT management.
5. Separately, over the course of FY2016, AHTC continued to work with KPMG to rectify a list of control matters previously identified for resolution. To date, KPMG has determined that 76% of the audit points have been resolved. The Town Council expects to resolve the outstanding audit points by early 2018. In the interests of transparency and public accountability, AHTC has made public all the relevant reports submitted to it by KPMG. These reports are available at www.ahtc.sg.
General Observations on AHTC’s Financial Health
6. AHTC continues to exercise fiscal prudence and this has seen its financial position improve significantly as a result of a number of new contracts secured at favourable rates. For example, the total amount of savings arising from the Town Council’s contestable energy contract is about $1.2m over two years. As a result of such savings, the Town Council recorded an operating surplus of about $4m this financial year. AHTC plans to devote a portion of this surplus to town improvement works next year.
7. However, AHTC has observed a distinct pattern of rising lift expenses with lift maintenance companies raising their maintenance and part replacement charges across the board. We anticipate these higher charges to have a significant impact on the Town Council’s operating costs in the years to come.
8. FY2016 also saw AHTC making another installment of $12.35m for the Town Council’s contribution of the Lift Upgrading Programme (LUP) to the HDB. With the payment of this installment, the Town Council has paid $46.78m from its sinking fund to facilitate the installation of new lifts and replacement of old ones under the LUP over the course of the last 6 years. While the Town Council’s contribution to the LUP has improved vertical accessibility throughout Aljunied-Hougang town, this has inevitably come at a price and reduced our sinking fund surpluses which will require replenishment in due course.
9. AHTC would like to thank residents for paying their S&CC promptly, and believes there remains room for improvement for our performance under the TCMR, including cleanliness and lift performance for which we were banded green. We will continuously work with residents and service providers to achieve positive outcomes for Aljunied-Hougang town and thank all residents, contractors, and staff of external agencies for your cooperation and support.
Aljunied-Hougang Town Council
20 November 2017