Overpayments by MOE, NParks among lapses flagged in Auditor-General report

SINGAPORE: Overpayments to contractors by the Ministry of Education (MOE) and the National Parks Board (NParks) were among the lapses flagged by the Auditor-General’s Office (AGO) in its report on Wednesday (Jul 17).

The audit for the financial year 2023/24 covered government financial statements incorporating the accounts of all 16 ministries and eight organs of state. AGO also audited three government funds, eight statutory boards, four government-owned companies and two other accounts.

“This is an independent verification that the government’s accounts are prepared, in all material aspects, in accordance with the law and public funds have been properly accounted for,” said the Ministry of Finance (MOF) in a separate statement. 

Other entities where lapses were found include the Ministry of Home Affairs (MHA) and Nanyang Polytechnic (NYP). 

AGO also conducted a thematic audit on parenthood support measures administered by the Ministry of Social and Family Development (MSF) and the Early Childhood Development Agency (ECDA). 

MOF said the government takes the AGO’s observations seriously, and that the audits are crucial for maintaining public trust, accountability and transparency in the management of public money. 

"Where lapses have been identified, agency heads will review each case thoroughly to get to the root cause, and implement measures to address the issues promptly," said the Finance Ministry.

"We also continuously undertake efforts to strengthen governance capabilities, processes, and systems across agencies. Good practices highlighted will be shared across public agencies to raise governance standards." 

EDUCATION MINISTRY'S OVERPAYMENTS

Overpayments by MOE and NParks were highlighted under lapses in procurement and contract management. 

For MOE, test checks by AGO on three school construction contracts managed by consultants found lapses in contract management in all three. 

The lapses included approvals obtained after variation works started, lapses in valuations of contract variations, and payments for works not carried out or not done in accordance with contractual requirements. 

The net possible overpayment to the contractors was estimated to be S$317,100 (US$236,000). 

AGO also noted long delays in the finalisation of accounts for 20 construction contracts, ranging from two months to more than three years.

In a separate statement on Wednesday, MOE said it “takes a serious view” of the lapses observed in the AGO report. 

“We have taken immediate steps to rectify them as flagged by AGO, and will step up efforts to strengthen our processes to avoid recurrence.”

MOE added that it has recovered S$68,000 out of the estimated total net overpayment of S$317,000 to contractors, and targets to complete the recovery of the remaining funds by the end of the year.

“Besides the projects audited by AGO, MOE will also check through all other ongoing school development projects for possible overpayments and other contract management lapses,” it said.

Regarding the 20 construction contracts with delays in the finalisation of accounts, MOE said that it had paid its contractors for all work certified as complete by its appointed consultants prior to the audit. 

This amounted to 98.3 per cent of the total contract sum. Of the outstanding balance of S$6.41 million – equivalent to 1.7 per cent of the total contract sum – MOE has since paid a further S$1.8 million to the contractors. 

“Our appointed consultants were unable to recommend MOE to pay the remaining sum as discussions with the contractors on the valuation of work done were still ongoing. We will engage the respective consultants and contractors directly, and pay the remaining balance by end-2024,” said the Education Ministry. 

It added that it has issued "stern warnings" to the consultants of audited projects for not adhering to MOE's procedures.

NPARKS' OVERPAYMENTS

For NParks, test checks found lapses in the valuations of and payments for 22 of 60 works orders issued under two-term contracts. 

The lapses included payments made in full for works not done according to work orders, lapses in the valuation of work done and duplicate payments for works. 

The possible overpayment to the contractors due to the lapses was estimated to be S$1.93 million, the report said. 

Commenting on AGO’s observations, NParks said in a media release on Wednesday that it has since taken immediate steps to address and rectify the lapses. 

“AGO found possible irregularities in some of the documents that were submitted to NParks by its consultant and contractor for an NParks construction contract for a park connector. 

“NParks takes a serious view of these concerns regarding the authenticity of the quotations provided by the consultant and contractor and has lodged a report with the police for further investigation,” it said. 

Further steps have been taken to improve the management of star rate items – items for which rates are not listed in the contract – on top of current practices. 

The latest measures include further enhancing consultancy tenders by incorporating requirements that include sourcing for independent quotes by consultants, where necessary. 

Training sessions are also being conducted to enhance staff competency and NParks said it is exploring the use of technology to better detect irregularities and conduct checks.

NParks also noted that AGO’s report pointed to possible overpayment to contractors for term contracts for development and upgrading works at parks and open spaces.

“While NParks’ internal investigations have concluded that there were no indications of fraud or ill intention by staff, disciplinary actions have been taken against staff involved for the oversight,” it said. 

The agency added that it has taken action to recover S$0.29 million as of May and is working with the contractors to recover the remaining amount in the next few months.

INVENTORY ISSUES AT MHA

In the audit of MHA's management of a contract for the provision of logistics services, including warehouse management services, AGO noted weaknesses in inventory and records management.

The total contract value was S$783.83 million over 10 years, including a four-year optional extension period.

As part of the audit, AGO conducted “surprise stocktakes” at three locations – two for Singapore Civil Defence Force (SCDF) equipment and one for Singapore Police Force (SPF) equipment. 

The checks found discrepancies between the inventory balance records and the physical inventory at all locations.

The SCDF equipment included medical supplies and disaster recovery equipment, while the SPF equipment included helmets, vests and gas masks. 

AGO said MHA has acknowledged its observations and taken immediate steps to improve its inventory management. 

SCDF has enhanced its daily, weekly and monthly checks over the physical inventory and records managed by the vendor. 

In response to CNA's queries, MHA said this will "improve governance and ensure accuracy in record-keeping".

SCDF has also requested access to the vendor’s inventory balance records to conduct surprise checks. Checks performed would be endorsed by SCDF personnel and documented accordingly.

As for SPF, its investigations concluded that the discrepancies were due to recording errors. 

SPF informed AGO that there was no loss of inventory items and acknowledged that the organisation of stocks at its store could be improved. 

It will work with the vendor to improve storekeeping management and reorganise its store by July. It would also work with its line units and complete a data cleansing of its inventory records in the logistics management system by July.

NANYANG POLYTECHNIC

AGO found lapses in the management of revenue and collections at Nanyang Polytechnic (NYP). 

Data analysis found delays in its issuance of bills for course fees. Bills totalling S$8.98 million were issued only after course commencement dates, with some issued as late as a year after course commencement. 

It was also found that NYP did not take prompt follow-up actions on outstanding course fees that were due. Course fees totalling S$0.24 million for 304 bills had been outstanding for six months to as long as three-and-a-half years as of Nov 15, 2023. 

“It is important that NYP exercise greater diligence and strengthen its procedures for prompt billing and collection of course fees. Otherwise, the longer the fees remain unpaid, the lower the likelihood of recovery,” said AGO. 

NYP has since followed up on the outstanding bills. 

As of April, course fees totalling S$0.11 million – or 46 per cent of the total outstanding bills – had been recovered, with another S$30,000 from 62 bills written off. NYP is currently recovering the remaining fees.

AGO said that NYP has acknowledged that there were delays in billing and inadequate debt recovery actions. 

“NYP informed AGO that with the implementation of a training portal in July 2023, enhancements had been made to the processes for billing and collection of course fees,” it said.

For instance, bills would be automatically issued at different points depending on the type of course and trainee. The polytechnic will also work on engaging a service provider for debt recovery services.

PARENTHOOD SUPPORT MEASURES

AGO’s thematic audit on parenthood support measures covered MSF’s government-paid leave schemes (GPLS) and Baby Bonus Scheme – Child Development Account (CDA) benefits.

It also looked at ECDA’s infant care and childcare subsidies, kindergarten fee assistance scheme (KiFAS), as well as anchor operator scheme and partner operator scheme.

The government disbursed a total of S$4.55 billion under these schemes during the audit period from Apr 1, 2021 to Jun 30, 2023.

The audit also covered withdrawals made by parents or trustees from the CDAs. The total amount of withdrawals was S$1.49 billion during the audit period.

AGO said it found that in general, MSF and ECDA had put in place processes and controls across the various grant stages to ensure proper management of the schemes. 

Areas where improvements could be made were also identified.

"Both agencies could improve the controls and monitoring of claims to detect ineligible claims and potential irregularities," said the report. 

"AGO found lapses in grant evaluation which occurred due to system errors, inadequate system checks or system checks not working as intended.

"The agencies could consider additional system rules or validation checks to enhance the processing of grant applications/claims and ensure that system checks were working as intended."

Improvements could also be made to the monitoring mechanisms for the Baby Bonus Scheme to ensure that CDA withdrawals were made only at registered approved institutions and for authorised beneficiaries and eligible items.