FIRST REPORT of the PUBLIC ACCOUNTS COMMITTEE Parl
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THIRTEENTH PARLIAMENT OF SINGAPORE _____________ First Session _____________ FIRST REPORT OF THE PUBLIC ACCOUNTS COMMITTEE Parl. 3 of 2017 _________ Presented to Parliament on 17 January 2017 _________ PUBLIC ACCOUNTS COMMITTEE Members Ms Jessica Tan Soon Neo (Chairman) Mr Ang Hin Kee Mr Ang Wei Neng Mr Liang Eng Hwa Dr Lim Wee Kiak Mr Leon Perera Ms Tin Pei Ling Mr Zainal Sapari CONTENTS Page FIRST REPORT OF THE PUBLIC ACCOUNTS COMMITTEE Overview 1-2 Committee’s Enquiries and Ministries’ Responses in relation to Observations in the Report of the Auditor- General for the Financial Year 2015/16 Inadequate Financial Controls 3-5 Proper Governance Framework Not in Place 5-7 Lack of Oversight of Administration of Schemes and 7-9 Programmes Lapses in Management of Contracts 9-13 Other Lapses 13-15 Committee’s Enquiries and Ministries’ Responses in relation to Observations in the Report of the Auditor- General for the Financial Year 2014/15 Administration of Grants 16-17 Management of Contract Variations 17-19 Related Party Transactions 19-20 Other Lapses 20-21 APPENDIX I Minutes of Proceedings 22 FIRST REPORT OF THE PUBLIC ACCOUNTS COMMITTEE Overview 1 The Public Accounts Committee considered the Reports of the Auditor-General for the financial years 2014/15 and 2015/16. 2 The Committee noted that there were a number of instances where processes were in place but not adhered to due to weak governance. For example, there were several observations regarding variation works being carried out before the required approvals were given. There was also a lack of assessment on the reasonableness of the cost of the works and services procured. There were also instances of inadequate financial controls over Government operations including those outsourced to external operators. 3 The Committee also noted that the lapses pertaining to procurement (e.g. management of contract variations) and governance as highlighted in the Reports of the Auditor-General over the two financial years were recurring across different agencies, indicating that these are common areas of concern that need to be addressed. 4 The Committee noted that agencies had acknowledged the lapses and were taking the necessary rectification actions to address the gaps in controls and lapses identified. The Committee would like to emphasise the importance of putting in place effective measures to prevent recurrence of the lapses. In this regard, the Committee has the following points to share. 5 First, in considering the measures to be implemented to address the lapses, agencies should address the underlying causes. Agencies should review the relevant systems and processes to come up with holistic solutions that are effective and efficient. These may include redesigning the system and making better use of technology. Agencies should not introduce piecemeal measures that would result in more rules and procedures, which might increase bureaucracy and costs unnecessarily without addressing the fundamental causes of the lapses. 6 Second, heads of agencies should set the tone at the top to ensure adherence to processes and controls as part of good governance. This is important as public sector agencies use significant amounts of public funds for a wide range of schemes, programmes, operations and projects. Agencies should ensure that their officers understand the importance of and principles behind the financial controls and governance practices, and comply with them. 7 Third, public officers handling public funds need to be equipped with the relevant knowledge to carry out their duties effectively. 8 Lastly, to address common lapses found across agencies, there should be sharing of lessons learnt and best practices so that other agencies can review their processes to ensure that similar gaps in controls and processes are promptly addressed. In this regard, the Committee noted that the Ministry of Finance (MOF) has a key role to play in the sharing of learning points and best practices across public sector agencies, as well as providing guidance in the area of procurement and governance. MOF has done so through 1 various forums and should continue to engage agencies to enhance their processes to prevent the recurrence of lapses. 9 The Committee’s enquiries into specific observations and the agencies’ responses are discussed in the following sections. 2 Committee’s Enquiries and Ministries’ Responses in relation to Observations in the Report of the Auditor-General for the Financial Year 2015/16 10 The Committee considered the Report of the Auditor-General for the Financial Year 2015/16 (Paper Cmd. 4 of 2016). The Committee’s enquiries into specific observations are discussed in paragraphs 11 to 70. Inadequate Financial Controls 11 The Committee noted observations of inadequate financial controls over revenue collection and payment in the Report of the Auditor-General. In this regard, the Committee sought written explanations from the following Ministries: (i) Ministry of Defence (MINDEF); (ii) Ministry of National Development (MND); (iii) Ministry of Transport (MOT); and (iv) Prime Minister’s Office (PMO). MINDEF – Failure to Provide for Central Provident Fund (CPF) Contributions for Bonus Paid 12 The Committee noted that MINDEF had estimated that the amount of CPF, which it did not contribute for 215 members for the Full Savings Vesting (FSV) Bonus paid in the financial year 2014/15, was $324,000. The Committee asked MINDEF whether interest payable was included in the estimated amount and whether MINDEF would be making the CPF contributions (including interest payable where applicable) for FSV Bonus paid from 2007 (when the bonus was introduced) to the financial year 2013/14. 13 In response, MINDEF informed the Committee that the interest payable to the employees was not included in the estimated amount of $324,000 as it would be calculated by the CPF Board after MINDEF had completed back payment of the CPF contributions. MINDEF would make payments for the interest that would have been earned if the CPF contributions had been made at the time of the FSV Bonus payment. MINDEF also informed the Committee that the CPF contributions for FSV Bonus paid in the financial year 2014/15 had been credited into the employees’ CPF accounts in August 2016. MINDEF would also make back payment of CPF contributions (including interest payable) for FSV bonus paid since its inception in 2007 and it aimed to do so by December 2016. MND – Inadequate Monitoring of Car Park Operations and Enforcement 14 The Committee noted that the Housing and Development Board (HDB) did not have adequate oversight of the operations of its car parks at industrial estates and 3 residential estates which were outsourced to commercial operators. HDB had made police reports against the motorists who had deliberately manipulated the car park system to evade parking fees in industrial estates and would be amending the Parking Places Rules (Cap. 214, R2) (the Rules) to enable HDB to take action against motorists who evade parking fees. The Committee asked MND whether HDB could have taken its own enforcement actions without having to refer the cases to the police. The Committee would also like to know the timeline for the amendment of the Rules. 15 MND explained that the car parks in industrial estates were not gazetted under the Parking Places Act (Cap. 214, 2014 Revised Edition). Hence, HDB had to refer the cases to the police for enforcement action to be taken. MND informed the Committee that with the proposed transfer of industrial estates to the Jurong Town Corporation, HDB is working with various government agencies to review the need to gazette these industrial car parks. The review would be completed in February 2017. 16 In the meantime, the Rules, which currently covered car parks in residential estates, were amended on 11 July 2016 to allow HDB to take enforcement action against motorists who deliberately evade payment of parking charges. According to MND, as at 31 August 2016, HDB had issued 199 parking offence notices to motorists who were caught deliberately evading payment of parking charges at Electronic Parking System car park since the Rules were amended. 17 MND informed the Committee that HDB was exploring the use of analytic tools to flag out cases of evasion of payment by the first quarter of 2017. Convicted cases would also be publicised as a deterrence to other motorists. Other measures included stepping up the education of its tenants at industrial estates, introducing additional signboards and pilot testing on additional humps and more efficient sensors at car parks to prevent tailgating of vehicles. 18 The Committee noted HDB’s measures to address the lapses. The Committee would like HDB to review its car park system and processes to identify if the overall effectiveness and efficiency of its car park operations and enforcement could be further enhanced. These could include better use of technology and redesign of car parks where appropriate. MOT – Weaknesses in Controls over Revenue Collection at Checkpoints 19 The Committee noted that the controls over collection of toll at the Woodlands and Tuas Checkpoints were weak and there could be potential loss of revenue. The Committee would like to know the cause of the weaknesses in controls and whether the under-collection was pervasive at both Checkpoints and for certain vehicle types. 20 In response, MOT explained that the Land Transport Authority of Singapore (LTA)’s collection system at the Checkpoints was not linked to the system of the Immigration and Checkpoints Authority (ICA). Motorists could therefore clear immigration without paying the correct toll and fees. LTA estimated that the probable loss in toll could be 10 per cent of total toll based on a three-month period from March to May 2016, which would translate to a probable loss of toll of about $7 million per year on average.