AGO report flags several ministries for lapses

AGO report flags several ministries for lapses
The cover of the Auditor-General report
Published: 10:05 PM, July 26, 2016
Updated: 10:57 AM, July 27, 2016

SINGAPORE — When two universities failed to recover tuition-fee and study loans given to their students within a specified period,the Ministry of Education (MOE) did not take the necessary follow-up actions promptly.

Called out for its lack of oversight in administering schemes and programmes such as scholarship bonds and study loans, the MOE was one of 12 government bodies whose lapses were flagged by the Auditor-General’s Office’s (AGO) annual audit of the public sector.

Others cited for lapses in the AGO’s 61-page report, made public on Tuesday (July 26), included the Defence Ministry (Mindef) and the Housing and Development Board (HDB).

The AGO report highlighted four areas that public sector entities should improve on: Inadequate financial controls; weak governance of public funds; lack of oversight of external entities; and lapses in management of contracts.

As of June 30 last year, the two universities — National University of Singapore (NUS) and Nanyang Technological University (NTU) — saw an outstanding balance of loans totalling S$228.04 million. For 23.3 per cent — 27 out of 116 — of the outstanding loans audited by the AGO, recovery action was delayed by one to 3.5 years. 

The report found that the MOE was not prompt in following up on long outstanding loans to ensure that the banks had taken adequate recovery actions. It also noted discrepancies among records of loans in default kept by the MOE, the universities and the banks. The MOE was also rapped for lapses in monitoring and enforcing bonds related to scholarships disbursed by the two universities.

The universities lagged in sending out letters of demand to half of the scholars — 16 out of 30 test-checked — who were not serving the required bonds, with delays of up to 26 months.

The MOE over-contributed S$4.14 million over nine years to NTU’s sinking fund for replacement of MOE-funded buildings and facilities, a sum that the ministry said on Tuesday had been recovered.

In a statement, issued following the release of the AGO’s report, the MOE said it is working with the universities and banks to ensure prompt follow-up of loans in arrears. It may allow borrowers facing financial hardship to defer repayment of monthly instalments or temporarily reduce the amount payable in some cases. It added that measures are also in place to reduce default on scholarship bonds — such as working with government agencies to track bond service records — noting that many of the lapses flagged were from “earlier graduation batches”.

Default rates have come down significantly over the last three years, said the MOE, adding that 1 per cent of international scholarship recipients had intentionally defaulted.

As for the HDB, the AGO noted that final payments to contractors totalling S$37.62 million were delayed for up to 3.3 years — a move it described as an “unfair business practice” since it could have hurt the contractors’ cashflow. The HDB said it will implement new processes, such as a tracking system, to ensure that delayed accounts are brought to the management’s attention so that final payments can be made promptly. 

The AGO also found inadequate monitoring of car parks at industrial and residential estates, which allowed motorists to use the facilities without being charged. Of five industrial car parks audited, the AGO found 243 instances where the motorists, on multiple occasions, had manipulated the electronic parking systems to allow another vehicle to exit the car parks for free, such as through tailgating.

Mindef was cited for investing S$50.26 million in a United States real estate investment trust exchange-traded fund without approval from its board of trustees. It also failed to provide Central Provident Fund (CPF) contributions on bonuses paid to members on the Savings and Employee Retirement Plan. 

According to the AGO report, Mindef said that it had since obtained approval from the board of trustees for the investment, and will make the required CPF contributions — amounting to about S$324,000 for 215 members — by next month.

Other government bodies chided for lapses included the Land Transport Authority, whose weak controls over toll collection at checkpoints resulted in under-collection of S$13.9 million; and the Law Ministry for lapses in its handling of deceased persons’ assets received from nursing homes. The Ministry of Foreign Affairs was taken to task for continuing to subscribe to phone lines that were no longer needed, resulting in wastage amounting to S$80,744.