‘Significant progress’ made in clearing audit issues, says AHPETC

SINGAPORE — Aljunied-Hougang-Punggol East Town Council (AHPETC) said it had made “significant progress” in clearing disclaimers made by auditors in past reports, even as it acknowledged that qualifications would continue to be expected in its future audit reports.

The Workers’ Party-run town council was responding to a statement by the Ministry of National Development (MND) yesterday (July 1), which pointed out that AHPETC’s latest audited accounts again contained qualifications from its auditors — for the third straight year. A disclaimer of opinion is issued when an auditor is unable to express an opinion on the financial statements, which could be due to an inability to obtain sufficient appropriate evidence to provide a basis for audit opinion.

AHPETC’s auditors, Audit Alliance, had flagged eight areas of concern in its latest report, some of which were similar to issues raised by the Auditor-General’s Office (AGO) in its report on the town council’s accounts for FY12/13. But it noted that other than these issues, AHPETC had complied with the Town Councils Act.

In its statement today, AHPETC said it expected the auditors to continue including qualifications, particularly on handover opening balances, because these “remain unresolved even with the assistance of the AGO, despite 10 months of extensive work”.

The town council, however, brushed aside other issues highlighted by the MND. It said the late filing of its FY13/14 accounts, done 10 months overdue on Tuesday, was “an old issue” for which it had previously explained.

“AHPETC had to focus its resources on the audit by the AGO from March 2014 to January 2015. We also had difficulties securing an auditor till late 2014, which was approved by MND in December 2014,” it said, adding that it was working on completing the FY14/15 audit. AHPETC did not say if it would meet the Aug 31 deadline required of all town councils.

Similarly, the town council brushed off the MND’s comments on related-party transactions. AHPETC’s auditors had found that there was no segregation of duty between the person certifying invoices from FM Solutions and Services for Managing Agent services and the person approving related payment vouchers.

“This is an old issue on which AHPETC has made progress. In any event, any concerns will be completely removed after July 15, when the current Managing Agent contract expires and AHPETC is directly managed,” said the town council.

Regarding its deteriorating financial position between FY11 and FY13, which was flagged by the MND — it went from an annual operating surplus of S$1.1 million in FY11/12 to a deficit of S$1.53 million in FY12/13 and a deficit of S$2.01 million in FY13/14 — AHPETC said the figures for FY12/13 were “restated in response to the findings of the AGO audit”. The increased operating deficit stemmed from higher operating expenses because of the inclusion of Punggol East Single Member Constituency in May 2013.

AHPETC said: “We believe the trend in changes in AHPETC’s financial position and the results of operations will become clearer following the FY14/15 audit.”