Possible overpayments, weakness in controls among lapses flagged in AGO report

Singapore's national auditor has flagged several public agencies for lapses in areas such as procurement and contract management, in its latest annual audit of the government's accounts.

The Auditor-General's Office (AGO) had carried out audits and issued unmodified opinions on the government financial statements of 16 ministries and eight organs of state. The same was done for the financial statements of three statutory boards, four government-owned companies and two other accounts.

Selective audits were carried out on five statutory boards and three government funds, along with a thematic audit on selected parenthood support measures.

In a report released on Wednesday (July 17), the AGO found lapses in procurement and contract management in four agencies.

They are the National Parks Board (NParks), the Ministry of Education (MOE), the Building and Construction Authority (BCA), and Sentosa Development Corporation (SDC).

Sport Singapore (SportSG) and Nanyang Polytechnic (NYP) were found to have revenue and collection lapses, while BCA recorded lapses in grant management.

The Ministry of Home Affairs (MHA) was also flagged for weakness in its inventory and records management.

NParks: Possible $1.9 million overpayment

For NParks, lapses in valuations and payments for work orders had possibly led to an overpayment of $1.9 million to contractors. These lapses included full payments made for works not done according to work orders, lapses in the valuation of work done and duplicate payments.

The AGO had test-checked two term contracts with an approved procurement value (APV) of $81.4 million for development and upgrading works at parks and open spaces.

In a separate statement, NParks said it has taken action to recover $290,000 as at May 2024 and is working with its contractors to recover the remaining in the next few months.

Internal investigations have also concluded that there are no indications of fraud or ill intent by staff, who have since been met with disciplinary action for the oversight.

MOE: Lapses in contract management

AGO also found lapses in MOE's contract management for three school construction contracts following test checks.

The Auditor-General had flagged valuation lapses in contract variations. The education ministry had also paid for works not carried out or not completed per contract requirements. These lapses resulted in an estimated possible overpayment of $317,000 to MOE's contractors.

In a statement, MOE said it has recovered $68,000 out of the estimated total net overpayment of $317,000 to its contractors. It is targeting to recover the remaining funds by the end of 2024.

Other lapses flagged by AGO include obtaining approvals only after variation works have been completed and long delays in the finalisation of accounts for 20 school construction contracts.

SDC: Paid for works not done

The national auditor also observed lapses from SDC in managing two performance-based vehicle maintenance contracts. SDC was unaware that its contractor did not perform or was late in performing some scheduled quarterly servicing jobs, which led to the payment of works not yet done.

BCA: Trouble over conflict of interest forms

BCA was flagged for inadequate performance monitoring before paying its Jurong Apartments operator, who failed to fulfil contractual requirements.

There were also lapses in management when it came to declaring the conflict of interest for two grant schemes BCA administered.

The stat board had failed to follow up on instances of inaccurate, incomplete or missing conflict of interest declaration forms needed from members on the grant evaluation panel.

Revenue and collection lapses

SportSG was flagged for inadequate controls over admissions to its ActiveSG pools and gyms.

There were instances of abuse of ActiveSG members' passes, including sharing non-transferable special passes and using special or per-entry discounted passes by ineligible persons. Members' accounts of the deceased were also being used for admissions.

"Such control weaknesses would result in revenue leakage for SportSG," the AGO said.

NYP, meanwhile, faced delays in issuing bills for course fees. Some $8.98 million bills were only issued after courses commenced, with delays as long as one year. AGO also noted that NYP failed to follow up on outstanding course fees promptly.

MHA: Weakness in inventory, records management

The AGO also discovered weaknesses in MHA's inventory and records management after auditing the contract for logistics services and warehouse management services.

Discrepancies were found between inventory balance records and physical inventory at all three locations checked by AGO. In two of these sites, weaknesses in the way checks were conducted on physical inventory and the records maintained existed.

Thematic audit on parenthood support measures

Thematic audits were also conducted on selected parenthood support measures managed by the Ministry of Social and Family Development (MSF) and the Early Childhood Development Agency (ECDA).

Support measures audited include the Government-Paid Leave Schemes (GPLS) and Baby Bonus Scheme, which falls under MSF. Measures that fall under ECDA include Infant Care and Childcare subsidies, Kindergarten Fee Assistance Scheme and the Anchor Operator Scheme and Partner Operator Scheme.

Overall, the Singapore government disbursed $4.6 billion under these schemes from Apr 1, 2021, to Jun 30, 2023. The audit also covered withdrawals from Child Development Accounts, which totalled to $1.5 billion during the audit period.

The AGO found that MSF and ECDA had put in place key processes and controls across the various grant stages and had in place several good practices when administering grants.

However, possible irregularities in the GPLS were observed, including fraudulent behaviour and system abuse. Under the Baby Bonus Scheme, the AGO flagged "unusual withdrawals" from CDAs. One approved institution had also fabricated records for audit purposes.

There were also delays in the processing and disbursement of grant claims. ECDA-commissioned audits on anchor and partner operators were also delayed.

AGO also observed system errors and lapses that affected the eligibility assessment of preschool subsidies. Preschools also fell short when it came to documentation for subsidy applications, and there was also backdating or alteration of documentation for audit purposes.

The AGO report was submitted to the President on July 2, and presented to Parliament on Tuesday.

AGO noted that public sector entities should pay greater attention to procurement and contract management, grant management, and revenue and collections management.

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This article was first published in The Business Times. Permission required for reproduction.