Public accounts watchdog calls for ‘greater diligence’ in use of public funds

Channel NewsAsia 5 Feb 15;

SINGAPORE: The Public Accounts Committee has responded to a report by the Auditor-General flagging irregularities in the use of public funds for the financial year 2013/14.

In a report submitted to Parliament on Wednesday (Feb 4), the committee – comprising eight Members of Parliament, and chaired by Mr Cedric Foo – urged government agencies to “exercise greater diligence in managing public resources and to review their usage regularly so as to optimise their use and minimise wastage”.

Released in July 2014, the Auditor-General’s report highlighted lapses in the administration of grants, schemes and programmes, as well as instances of weak management of resources which resulted in wastage.

LAPSES IN LICENSING OF LAND

Among the ministries and statutory boards cited in the report was the Ministry of Defence (MINDEF), which entered into an agreement with its contractor in 1995 to sublet land at a nominal rate of S$45 a year to provide services solely to MINDEF. However, the ministry did not raise the rent even after the contractor was privatised in 2000 and used the land for commercial activities.

MINDEF clarified that the contractor was a wholly Government-owned company prior to 2000, and there was no clause in the 1995 agreement to state that the land leased was not to be used for commercial activities. MINDEF told the committee that it has since entered into a new agreement with the contractor and would be charging it annual rental for the land used for commercial activities.

UNDER-UTILISATION OF ASSETS

The Agri-Food and Veterinary Authority of Singapore (AVA) was cited for the under-utilisation of land, buildings and facilities at two of its sites, as well as assets being under-utilised or left unused.

In response, the Ministry of National Development (MND), which oversees the AVA, said that the AVA will conduct a comprehensive review on the usage of all its land, buildings and facilities by early 2015. It has since completed a review of its Sembawang site and submitted a land return proposal to the Singapore Land Authority, MND said.

The AVA has also identified under-utilised equipment and machinery, and reminded departments to dispose of those no longer required. In addition, its finance department plans to carry out annual independent checks on the assets, MND said.

ERRONEOUS MEDISAVE CLAIMS

The Central Provident Fund Board (CPFB) was rapped for erroneous Medisave claims by medical institutions, and has since taken several remedy actions: Formalising and documenting procedures on the follow-up of erroneous claims, improving the tracking system, and sending reminders to all restructured hospitals to improve their medical classification of claim cases and to make the appropriate refunds to the claimants’ Medisave accounts.

As of January 2015, 90 per cent of erroneous claims have been settled, the Ministry of Manpower (MOM) said.

CPFB has also been working with the Ministry of Health (MOH) since 2011 to explore various deterrent measures against medical institutions that made erroneous claims, such as the possibility of imposing administrative or penalty fees.

According to MOM, the majority of the erroneous claims arose from misinterpretation of the surgical procedures and guidelines. MOH has since stepped up efforts to educate clinical practitioners and providers, and will update the list of surgical procedures claimable under Medisave or MediShield more regularly, MOM said.

ADMINISTRATION OF SCHEMES

The Health Sciences Authority (HSA) was cited for “lax controls” over the approval of applications for the import of medicinal products. Of 1,479 import applications checked, 386 contained errors.

The committee was told that HSA has since conducted checks on the 386 applications and verified that the products had been licensed or approved for importation. MOH added that HSA would be enhancing the current trade declaration system to ensure that information in the application forms are verified electronically.

PROCUREMENT

The HSA was also rapped for awarding contracts to five incumbent contractors even though their tender proposals did not fully meet tender requirements. The agency has since tightened its procurement process and amended its procurement guidelines, MOH said.

The Public Accounts Committee said it was concerned that the instruction manual on procurement did not specify if agencies should invite a fresh tender if variation works exceeded a certain percentage of the approved original procurement value.

In response, the Ministry of Finance (MOF) said there are “complex and multi-dimensional considerations” in determining whether a contract variation is justifiable. Setting a threshold may drive agencies towards calling contract variations as long as it is within the threshold and not considering calling fresh tenders, even when it may be more appropriate to do so, it said.

However, MOF said it has recently enhanced its guidelines on contract variations. Where additional works are necessary, and especially if the additional works are substantial, calling fresh tenders remains the default option, it said.

BACKDATED AUDIT DOCUMENTS

During the audit of the National Parks Board's (NParks) development of the Gardens by the Bay, certain documents were found to have been created and backdated to give the impression that they existed when the transactions took place.

An internal inquiry by the Ministry of National Development (MND) confirmed that an NParks officer had created and backdated 16 letters, purportedly issued by NParks to its suppliers, to satisfy audit queries. The same officer also arranged for the suppliers to issue a further 11 backdated letters – five of which were created by the officer on their behalf.

According to MND, Gardens by the Bay has taken disciplinary actions against the officer for misconduct. It will also tighten its internal procurement, project management and contract management processes to prevent future recurrence, MND told the committee.

- CNA/cy

MPs flag ministries' underuse of land resources
Charissa Yong The Straits Times AsiaOne 6 Feb 15;

The weak management of land resources by two ministries has been pinpointed by Parliament's watchdog of public-sector accounts.

The panel of MPs was particularly concerned with the underuse of land, buildings and equipment, such as at the Agri-Food and Veterinary Authority (AVA).

The AVA, a statutory board under the Ministry of National Development (MND), had vacant buildings and underused laboratories in Sembawang as well as research equipment bought in the 1970s that had not been used recently.

But the matter is being resolved, the AVA has informed the Public Accounts Committee (PAC).

The issue of resource management is one of four areas the PAC noted in its latest annual report submitted to Parliament on Wednesday and released yesterday.

The other lapses are in the administration of schemes and programmes, procurement, and the backdating of documents.

In another case, the Ministry of Defence (Mindef) had wrongly rented out a plot of land to a contractor at a nominal rate, the panel noted. This has since been rectified, as Mindef has drawn up a new agreement with the contractor and will charge it rental according to its revenue.

The PAC, made up of eight MPs who scrutinise how public funds are spent, tracks what government agencies have done to correct irregularities in the use of public funds.

It studied the latest Auditor-General's report, which found lapses in five ministries and 13 statutory boards for the financial year 2013/2014.

It then asked the ministries to account for how they had addressed the gaps.

The AVA said it would dispose of old equipment to free up storage space. It is also exploring the possibility of returning its unused land to the Singapore Land Authority.

The Auditor-General had found that several of the AVA's buildings and laboratories in Sembawang were vacant or underused. One even had termites, while others contained condemned furniture.

The Auditor-General had also highlighted some underused equipment, such as a tractor and a water filter, and research tools bought in the 1970s and 1980s that had gone unused in recent years.

The AVA told the panel that it has since completed a review of how all its land, buildings and facilities are used.It has also looked at whether it can relocate some of its offices and laboratory testing facilities from its Sembawang site to its Lim Chu Kang premises.

Mr Cedric Foo, the MP for Pioneer and chair of the PAC, said: "Singapore is land-scarce. Government agencies, as stewards of the land, ought to use land in the most efficient way. Otherwise, they are wasting resources."

Turning to other areas, the PAC found that where schemes and programmes had been improperly administered, the ministries and statutory boards had acted to redress their lapses.

For example, the Central Provident Fund (CPF) Board has settled 90 per cent of the Medisave claims that had been wrongly given out, and the Ministry of Health is working with it to recover the rest, said the report.

To prevent future wrong claims, the CPF Board has improved how it tracks and follows up on Medisave claims.

Also of concern was how an MND officer had created and backdated documents during the audit of the Gardens by the Bay development project.

The officer, who is still employed, has been disciplined, the MND told the panel.

It added that internal procurement, project management and contract management processes will be tightened to stop such misconduct from happening again.

Unlike in past years, the panel's report this year does not focus heavily on procurement lapses.

The reason is that the Auditor-General has shifted attention from procurement to other lapses "to give other agencies time to fix their procurement processes", said Mr Foo.

But the PAC will revisit the issue in future reviews, he said. "We will give the agencies time to fix it. But we will surely want to come back to procurement."