Poor oversight, inconsistent disbursement of grants, among litany of issues flagged by Auditor-General’s report

• A report of the Auditor-General's findings on government ministries and agencies for the financial year 2019-2020 was released 
• Workforce Singapore saw the most lapses, with three instances of possible fraud found
• There were 26,000 suspected cases of unauthorised subletting of JTC properties, as well as cases of illegal diesel sale
• The NLB’s revamp of the National Archives building had overrun its approved project cost by S$1.72 million
• Government agencies are taking active steps to remedy these lapses

SINGAPORE — The Auditor-General has flagged multiple lapses in three out of 16 government ministries and eight out of 13 statutory boards it audited in its latest report. The report was made public on Monday (Sept 7) after it was tabled in Parliament last week.

The “significant observations” related to the lapses were highlighted by the Auditor-General’s Office (AGO) audit for the 2019 to 2020 financial year and they involved poor handling of business grants, contracts, tenders and operations, as well as weaknesses in IT controls.

The three ministries named in the report were the Ministry of Foreign Affairs, the Accountant-General Department of the Ministry of Finance (MOF) and the Public Service Division of the Prime Minister’s Office. 

Among the statutory boards, the AGO also highlighted the National Library Board (NLB), the Public Utilities Board, the Jurong Town Corporation (JTC), Government Technology Agency (GovTech), Workforce Singapore, Enterprise Singapore, as well as Ngee Ann Polytechnic and Republic Polytechnic.

The AGO had also conducted a thematic audit, which had placed selected business grant programmes managed by Workforce Singapore and Enterprise Singapore under close scrutiny.

It flagged several problems, including insufficient oversight over how grants were disbursed, possible fraud, inconsistent practice, and other inadequacies in how the agencies managed around S$333.4 million worth of disbursements belonging to six of their programmes in total.

A total of five police reports have been made as a result of the AGO’s observations.

Workforce Singapore, a statutory board under the Ministry of Manpower that oversees the transformation of Singapore’s citizen workforce, received 14 red flags — the most out of all the agencies named in the report.

Problems in IT controls were the most common issue. In particular, there were weaknesses in the management of user accounts that have full access to an entire operating system, the AGO said.

The report also highlighted lapses in operations management. For example, the AGO found that around 26,000 industrial premises under JTC were suspected to be sublet without authorisation. It also found instances of JTC tenants storing and selling diesel to the public illegally.

Auditor-General Goh Soon Poh wrote: “I am pleased to note that the public sector entities audited by AGO take the audit observations seriously and are committed to taking concrete steps to rectify the lapses and weaknesses. The AGO will follow up with the public sector entities to ascertain that remedial actions are taken.”

The report was delayed owing to the Covid-19 measures, including the circuit breaker from April to June that restricted activites and movement, Ms Goh said in the report to President Halimah Yacob on Aug 6. These measures affected the Government’s financial statements and thus also impacted the timeline for AGO’s audit, which is typically released in the middle of the year.

In response to the AGO’s report, MOF said that the heads of each agency have reviewed each case and are taking “active steps” to address the lapses.

“For serious cases, investigations have been conducted or are ongoing. Action such as penalties, enforcement actions and disciplinary actions will be taken. The Government takes a zero-tolerance approach to fraud and corruption,” MOF said.

Here are some selected examples of lapses flagged by the AGO during its audit.

WORKFORCE SINGAPORE

Inconsistent practices in administering grants

The Workforce Singapore typically appoints third-party programme partners to administer grants, such as those issued under the sectoral Professional Conversion Programmes (PCP), on its behalf.

However, the AGO found inconsistent practices by these programme partners, stating that this “may subject Workforce Singapore to allegations of unfairness in the award and management of grants”. 

Some programme partners imposed extra requirements, while others did not request adequate supporting documents from companies that applied for the agency's programmes. Some partners also did not comply with the agency’s instructions on grant quantums.

The AGO also found that several programme partners did not carry out any checks on whether the PCP really helped trainees convert their careers, with cases of trainees whose previous and current job scopes appear to be similar.

PCPs are for mid-career professionals who want to convert their skills and move into new job roles or sectors that have good prospects and opportunities for progression. Grants are provided by the Government to companies or employers to support the training. 

Possible fraudulent grant claims

AGO found three cases where grant requirements under PCP may have been circumvented. The report said: “More could have been done to ensure that Workforce Singapore’s funds were used to provide assistance to companies that genuinely meet eligibility criteria.”

In one case, a trainee might have circumvented a rule that shareholders of the company may not apply for the PCP grant, by disposing of shares in the company three days before the PCP grant application, and re-acquiring the shares later on. The trainee received a grant of S$12,000.

In another case, a trainee who applied and received a S$49,300 PCP grant under one company was found to have received Central Provident Fund contributions from another company, casting doubt on whether the trainee was from the applying company. The trainee’s salary had also increased by 167 per cent over a nine-month period to a level just short of Workforce Singapore’s grant support cap.

The cases have been reported to the police.

Delays in grant disbursement, lack of monitoring of outcomes

Workforce Singapore has a eight-week service standard for processing disbursements for its WorkPro programme. However, the AGO found that the programme partners had delayed disbursements ranging from one to 14 weeks, on top of the eight-week standard.

This could negatively impact companies’ cash flow, especially for small- and medium-sized enterprises (SMEs), the report stated.

AGO also found inadequate monitoring of PCP outcomes by some partners, who handle a total of S$3.09 million in disbursements. This means Workforce Singapore would not be able to properly assess whether to cease, extend, or renew each PCP grant.

The AGO also highlighted Workforce Singapore’s Career Support Programme (CSP), which provides salary support to approved employers and Singaporean professionals, managers, executives and technicians (PMETs). The CSP is a precursor to the new Jobs Growth Initiative announced recently.

However, the AGO found that the agency did not monitor approved CSP applications that ended up not making any claims or only making partial claims. Several business claimants ended up in dissolution. Proper monitoring of these outcomes would have informed the agency on how it may enhance or review the programme, the report said.

Workforce Singapore's response

In a statement, the Workforce Singapore said that it has conducted a thorough review of its programmes to ensure that the lapses were not systemic, and that the review is scheduled for completion by the fourth quarter this year. No systemic anomalies have been detected, it said.

It has also issued stern warnings to errant programme partners who failed to comply with requirements for grants assessment and processing, stating that it will not hesitate to take further action against recalcitrant programme partners. It is also developing a stringent framework to deter non-compliance by partners.

“Although we have put in place proper controls and guidelines to manage our grant programmes prudently and to prevent fraud, we acknowledge AGO’s observations that there are areas of improvement,” it said.

ENTERPRISE SINGAPORE

Lapses in grant management

The AGO found 28 cases, totalling S$3.9 million in grants, where approval was not obtained from Enterprise Singapore for companies that deviate from their grants’ terms and conditions. These should have been subject to scrutiny and approval by the authorities for good governance and accountability, the AGO said.

There were also inconsistencies in how grant applications were evaluated. There were some cases where evaluators did not follow up on obtaining proper financial records. The AGO also found many cases of inadequate assessment of projections and proposed costs, which relied on the companies’ own declarations.

Poor monitoring of disbursements to companies

Enterprise Singapore works with trade associations and chambers (TACs) in disbursing grants to companies in their relevant sectors. However, the AGO found several instances of late disbursements by the TACs, of between two months and a year, after Enterprise Singapore disbursed the grants to the TACs.

The grant amounts disbursed by the TACs to companies were also incorrect in several cases.

In addition, Enterprise Singapore did not follow up with companies on the status of their projects, totalling S$1.42 million, in order to recover unutilised grants in a timely manner.

AGO said that Enterprise Singapore should improve its oversight of TACs and enhance its guidelines for TACs to disburse grants to companies on a timely basis.

Enterprise Singapore​'s response

Enterprise Singapore said that it has enhanced its grant guidelines, stepped up its training sessions for staff members and tightened control of its IT activities.

“As the enterprise development agency, grant administration is an important part of Enterprise Singapore’s work. Effective grant management will ensure that enterprises, especially SMEs, have access to the necessary resources to develop capabilities, transform their businesses and expand into new markets,” it added.

JURONG TOWN CORPORATION

Unauthorised subletting

AGO checks found that about 26,000 business entities had indicated JTC premises as their registered addresses, even though they were not in JTC’s list of approved lessees, tenants or subtenants.

Following AGO’s observations, a quick investigation by JTC of 2,792 entities out of the 26,000 firms revealed that 2,010 — or 72 per cent of those investigated — turned out to be suspected cases of unauthorised subletting.

AGO said: “Unauthorised subletting could expose JTC to the risks of unauthorised or illegal activities occurring on its premises and financial loss due to under-collection of sublet fees.”

Illegal storage and sale of diesel at leased premises

In four leased premises, AGO noted the illegal storage and sale of diesel to the public, which posed environmental and safety risks.

They had done so without JTC’s approval. In addition, the tenants either had no licences from the relevant authorities to store or sell diesel to the public, and may not meet the relevant fire safety requirements.

JTC’s response

The JTC said that it has strengthened its inspection regime to address the subletting issue, and has also worked with the Singapore Civil Defence Force to take enforcement actions against tenants who illegally store and sell diesel on its premises.

The statutory board said: “JTC takes a serious view of unauthorised subletting and will take legal action to repossess the site from recalcitrant occupants found in breach of the authorities’ or agencies’ Acts and Regulations. 

“JTC remains committed to ensuring accountability and will continue to review and tighten our controls and processes, step up inspections, and take enforcement actions where necessary.”

NATIONAL LIBRARY BOARD

The National Archives development project

The revamp of the National Archives of Singapore building at Canning Rise, which was opened to the public in April last year, was found to have inadequate management on several fronts.

The AGO found a lack of scrutiny of contract variations, and that many of the in-principle approvals sought for these variations were approved even though no ballpark cost estimates were provided, involving sums as high as S$370,000 for each variation work.

In total, lapses involving 42 variations amounting to S$1.35 million were found, representing more than half of the variations that the AGO test-checked.

The AGO also found inadequate monitoring of project cost — the project eventually exceeded the approved cost by S$1.72 million, 8.4 per cent higher than the original approved cost of S$20.53 million.

“In addition, the NLB only sought approval from its approving authority for exceeding the approved project cost five months after it became aware of the cost overrun,” the AGO said. NLB is a statutory board under the Ministry of Communications and Information.

This undermined the role of the approving authority and indicated a weakness in financial controls, the AGO report stated.

NLB’s response

Explaining how the issues came about, the NLB said in a statement on Monday that the process for in-principle approvals was introduced in September 2018 “to enable urgent variation works to be carried out without undue delay”.

“These in-principle approvals were subsequently formalised... and the cost involved for each (approval) is independently reviewed by NLB-appointed consultants before any payment is made by NLB,” it said.

The NLB has conducted a review “to further enhance the contract variation process to ensure timely and well-documented approval, including for all urgent variation works”. It is implementing an online system to track contract variations and cost utilisation for projects in 2021.