AHTC’s dummy code not fictitious, but processes weak: KPMG

SINGAPORE — A review of 207 payments Aljunied-Hougang Town Council (AHTC) made using a “dummy” supplier code has turned up no fictitious or duplicate payments, auditing firm KPMG said in its latest audit report on the Workers’ Party-run town council.

These payments, amounting to S$270,000, were all supported by documentation relating to the purchase and receipt of goods/services, the auditor said.

Nevertheless, KPMG found “weak accounting procedures and supervision” in the review. On 41 occasions involving nearly S$250,000, AHTC should have used the supplier account rather than the “dummy” code. 

Payment was also made for seven invoices (totalling almost S$24,000) when there was no confirmation of the receipt of the goods and services. This is contrary to AHTC’s controls that require staff to review, stamp and sign off on invoices, as well as Town Council financial rules.

KPMG had flagged the use of the “dummy” code for refunds of tender deposits and other purposes in its previous report, saying this made it easy for duplicate or fictitious payments to be made without being detected.

In a media release on Thursday (Aug 18), AHTC chairman Pritam Singh said: “AHTC accepts the control shortcomings in the use of these codes and will be reviewing its processes to ensure their proper use in future.”

KPMG was brought in by AHTC on court orders to help fix compliance and governance lapses uncovered in a special audit by the Auditor-General’s Office. The latest KPMG report showed that 14 of the 17 audit points identified, or 82 per cent, still remain unresolved — unchanged from July.

One major area it has to clear up is the more than 1 million transactions it had recorded in 18 temporary clearing accounts. So far, AHTC has investigated only 599 of these transactions after two months.

A clearing account holds amounts for transactions that are in transit or have not been properly recorded yet. In AHTC’s case, for instance, there are clearing accounts for service and conservancy charge rebates they had credited to residents and reimbursements that come from the Ministry of National Development.

Commenting on AHTC’s progress in investigating these transactions, KPMG said AHTC “needs to increase the available staff with the requisite expertise” to complete investigations so it can migrate data to a new accounting system.