S'pore's Public Accounts Committee records breaches in 20 govt ministries and 19 stat boards

By Philip Lee
May 25, 2007
AsiaOne

A Singapore overseas mission circumvented the dual control on cheque payments by having cheques pre-signed when their signatories were on home leave in Singapore.

This breach of procedure was among a list of other lapses in government ministries and statutory boards highlighted in the latest report of the Public Accounts Committee (PAC) for Financial Year 2005/06.

The report says that the Report of the Auditor-General (A-G) for the year contained 20 audit observations on government ministries and 19 on statutory boards.

These included:

* procurement irregularites
* inaccurate records of State land and buildings
* unfair payment practices and wrong information in the government accounting system
* circumvention of internal controls
* weak access controls in computer systems
* deficiencies in land sales procedures and accounting controls, and
* lapses in governance structure and financial operations.

The PAC report says: "In the course of its inquiry into audit observations, the Committee sought written explanations from the ministries and statutory boards concerned and enquired into remedial actions taken."

In the case of the pre-signed cheques, the committee says it was concerned whether the circumventing of controls was pervasive in Singapore's overseas missions. Being away from their headquarters, that is, the Ministry of Foreign Affairs, these missions would have increased risk of fraudulent payments.

The report says that the ministry's permanent secretary had reprimanded the head of mission for this. A circular was then issued to all heads of mission to emphasise that cheques must not be pre-signed.

"The ministry also issued guidelines to all overseas missions on the appointment of bank authorising officers and cheque signatories so that the controls need not be bypassed for expediency when one cheque signatory is away from the mission," it adds.

Another was the A-G's discovery of unfair payment practice in the Ministry of Information, Communications and the Arts (Mica). Officials in the ministry had requested that suppliers alter the dates or credit terms on invoices, apparently, to conceal late payments.

"In these instances, false information was recorded in the accounting system," says the PAC report.

"Although the cases reported might not be significant in monetary terms, the committee took a serious view of this issue because it casts doubt on the integrity of the public service and the reliability of the Government's financial information."

The PAC stresses that payments due to suppliers should be paid promptly after satisfactory delivery of goods and services, so as to portray the civil service as efficient and fair in its business dealings.

The report also notes that the seven cases reported by the A-G were isolated ones from a project managed by a new department in Mica and that there was no malicious intent to conceal late payment.

The officials involved have been warned and counselled. and a task force has since been formed to institutionalise proper payment procedures in the ministry.

The report also cites the case of procurement irregularities when the A-G found evidence of conflicts of interest in the award of three contracts for renovation works for overseas offices of Mindef.

A Mindef investigation into this found that the three companies awarded the renovation contracts were linked to the firm that had been engaged as consultant for the renovation project.

"Nevertheless, an independent surveyor engaged by Mindef's Investigation Board concluded that the price paid for the renovation works was within the mid-range of prices for the specific works," says the PAC report.

Mindef attributed the lapses to the "personal failure" of its finance officer for one of the contracts and "personal negligence" of its logistics officer for the other two.

The officers were charged and fined S$1,000 and @$5,000 respectively.

Mindef, says the report, has since taken measures to prevent such conflicts of interest in its future procurement processes.

Another case involves keeping inaccurate records of State land and buildings.

The report says the PAC was concerned that the A-G had found the certification of the land and buildings by the Permanent Secretary of the Ministry of Law to be inaccurate.

The PAC had questioned if the inaccuracy was an indication that the reliability of the records had been compromised.

The Ministry of Law explained in a memorandum that the omission of a land parcel from the certified listing was due to human error by two officers of the Singapore Land Authority (SLA).

Says the report: "The first officer had accepted the return of the land parcel by another ministry but failed to raise the forms required to update the land records.

"Subsequently, the ministry that returned the land informed the SLA that the record inaccurately showed that the land was still under its charge. This led to the second mistake when an officer of the SLA deleted the record from the returning ministry but failed to add it to the record of the receiving ministry."

A new computerised system has since been implemented to capture all lands and buildings spatially such that a parcel of land could not be removed from the charge of one ministry without designating it to another ministry. This would reduce the risk of a similar lapse in future.

Weak access controls in computer systems appeared to be a prevalent problem in some public service bodies, says the PAC report.

Seven agencies were reported to have this problem: Singapore Customs, Accounting and Corporate Regulatory Authority, Inland Revenue Authority, Health Sciences Authority, Infocomm Development Authority (IDA), National Parks Board and Sentosa Development Corporation.

Says the report: “As computer systems are an integral part of the basic structure supporting public sector operations, the importance of computer security cannot be over-emphasised.

"Access control is a critical first-line defence against unauthorised access to computer sysyems."

The PAC recommends that appropriate central agencies such as the Ministry of Finance or the IDA take action to further instill computer security consciousness in ministries and statutory boards, and that the internal audit unit of every ministry and statutory board carry out regular checks to ensure that access controls are complied with.

The report also mentions the deficiencies in land sales and accounting controls in Sentosa Development Corporation (SDC).

It says instances of deficiencies in the land sales procedures, a departure from the normal government procedures, would cause the public to view the land sales as not being transparent, fair and competitive.

SDC has since tightened measures to ensure that directors and ex-directors who participate in Sentosa Cove land sales do not have an unfair advantage. In particular, board members will no longer have access to privileged information pertaining to Sentosa Cove land sales.

But it points out that the inherent weakness of SDC's land sales by private treaty was not fully addressed. It says direct negotiation with a prospective buyer may not result in the best price compared with an auction, especially in a rising market.

It is also open to abuse as leaked information on the reserve price, for example, puts a prospective buyer with such information, at an advantage over others.

The additional control of not providing board directors with privileged information will not prevent public perception of conflict of interest as directors and ex-directors will have access to more background information than others, the report says.

The PAC recommends that the procedures and guidelines be further reviewed so that land sales by SDC not only comply with principles of fair competition, maximising total returns to government and transparency but are also seen as such by the public

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