Media Statement on Audit Observations on PA in the Report of the Auditor General for FY 22|23

MEDIA STATEMENT ON AUDIT OBSERVATIONS ON THE PEOPLE’S ASSOCIATION IN THE REPORT OF THE AUDITOR-GENERAL FOR THE FINANCIAL YEAR 2022/2023

1        The Auditor-General’s Office (AGO)’s audit of the People’s Association (PA) covered activities by PA and Grassroots Organisations (GROs) and focused on areas relating to procurement, payment, revenue, welfare assistance and IT access controls in specific PA systems for the period from 1 April 2019 to 31 May 2022.

2        In its report, AGO’s observations had pointed to lapses in complying with processes and that there was no indication of any fraud or ill intention. PA acknowledges and thanks AGO for its observations. PA takes the findings of the AGO very seriously and is committed to resolving and improving its governance, procurement and oversight processes.

Ongoing Efforts

3        In recent years, PA has embarked on major structural changes and projects to strengthen our key processes. These were to address risks that were observed through past AGO audit findings, as well as our regular internal audits and reviews. For example:

(a)          Setting up of 17 Field Governance Offices at the Group Constituency level to strengthen compliance for ground operations with the forward deployment of procurement and finance expertise, arising from the AGO audit findings in 2018;

(b)          Developing the Grassroots E-Mart System (GEMS) II and Grassroots Financial Accounting System (G-FAST) to digitalise procurement and payment procedures by GROs and tighten compliance with existing rules;

(c)           Rolling out a digital payment function using PayNow (NRIC) for welfare assistance disbursements to reduce cash handling;

(d)          Completed the implementation of all but two recommendations provided by the external consultant who conducted a comprehensive independent review to strengthen overall governance and oversight systems, arising from the AGO audit findings in 2020. The remaining 2 recommendations, which both involve the development of IT systems, will be implemented by December 2023 and June 2024 respectively; and

(e)          Strengthening its regime of regular internal checks and audits, by widening the range of controls and measures being audited and collaborating with external auditors to finetune processes and systems for greater adherence to financial rules and regulations.

4        As many of these measures require significant system implementation and change management efforts, it will take time to roll them out to all of PA and its close to 2,000 GROs. Some of these efforts were still being piloted or scaled up during the period of concern in AGO’s recent audit. We believe that when our roadmap is implemented in full, the measures will substantially address the outstanding risks. Notwithstanding, AGO’s observations are an important validation and check of our plans, and we acknowledge that there is still room for improvement.

Follow Up to AGO’s Observations for PA in FY2022/2023

5        In AGO's findings, AGO observed weaknesses in (a) the evaluation and award of tenders, (b) the management of monies for welfare assistance schemes, (c) checks on the debarment status of contractors, (d) ensuring formal agreements are established with external partners, and (e) the management of accounts in IT systems. PA has put in place measures to address each of these, including accelerating the full implementation of measures we had embarked on in recent years. We have elaborated on the AGO findings and the remedies we have undertaken, in Annex A.

6        PA has also set up a Review Committee to review the latest AGO findings together with the management’s existing and planned remedies and recommend to the Board any further interventions that will address systemic risks. The Review Committee will also oversee the implementation of these measures, and regularly report the progress of the implementation to the Board as well as the Ministry of Culture, Community and Youth. PA will also give a public update of its progress.

PA’s Commitment to Good Governance

7        Every day, PA oversees more than 700 community facilities and manages an extensive group of contractors and vendors, whose services complement the work of PA staff in ensuring our buildings, programmes and initiatives are run efficiently and effectively for the community and its residents.

8        Ensuring the prudent use of public funds and good governance and outcomes for our programmes has always been a key priority for PA. PA acknowledges that there is scope for improvement and will actively take steps to resolve the AGO audit findings and continue to put in place measures to strengthen our processes as well as overall governance and oversight systems.

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ISSUED BY THE PEOPLE’S ASSOCIATION

19 JULY 2023

ANNEX A

Improving Evaluation and Award of Tenders

AGO observed lapses in two maintenance services tenders and one cleaning services tender that indicated weakness in adhering to procurement procedures by the tender evaluation committees. These include a lack of documentation to substantiate the scores given during evaluations and tender bids not assessed and scored according to the evaluation sub-criteria and scoring matrix. However, AGO did not detect any irregularities in the audited records that warranted any investigations.

2        PA has reviewed its tender evaluation and procurement process following the AGO report. Briefings on key responsibilities will be conducted to members of the Tender Evaluation Committee, specifically on the need to evaluate based on the published criteria and the importance of documentation, before they carry out any tender evaluation.

3        In addition, PA will improve existing procurement checklists and templates to ensure greater clarity and compliance as well as step up training to raise staff awareness on procurement procedures and improve overall governance. For example, in the upcoming months, there will be inhouse seminar briefings as well as sessions by external professional trainers on topics such as tender evaluation and contract management. As an added safeguard, PA has also put in place a structured e-filing system since August 2022, to cater to the mandatory provision for staff to e-file their procurement documents and to ensure proper documentation for future reference and audits.

Improving the Management of Monies for Welfare Assistance Schemes

4        AGO observed arrangements by two GROs to transfer GROs’ monies to staff’s personal bank accounts, so that they can disburse monies to recipients of welfare assistance schemes and reimburse hawkers and merchants for their claims under a voucher assistance scheme, more promptly. AGO did not find any evidence of monies being lost or misappropriated. PA has since stopped this practice by the two GROs, and to ensure that other GROs do not have this practice.

5        To prevent future occurrences, PA is working on the implementation of digital payments for welfare assistance disbursement where practicable and viable for recipients, so that cash handling by staff is minimised. Some GROs will also be piloting the Government’s electronic voucher system before PA expands it to more GROs. In addition, PA will improve the knowledge and capabilities of GROs and staff in managing welfare assistance schemes to boost proper governance and accountability, by ramping up briefings and training, and developing e-learning for staff. Going forward, PA will step up internal checks on management of monies to ensure good governance in the management of monies for welfare assistance schemes.

Tightening Checks on Debarment Status of Contractors

6        AGO’s audit found that three GROs had awarded or renewed contracts with two debarred contractors during their debarment period. These were for the provision of lift maintenance services and security services. One lapse was a result of the wrong understanding that the lift had to be serviced by the original supplier (who was debarred), while another had proceeded with the contract renewal so as not to delay the maintenance of the lift. The remaining two cases were due to staff oversight in confirming the non-debarment status of the contractors.

7        Subsequent to AGO’s audit, PA conducted checks to ascertain that the projects undertaken by the debarred contractors complied with prevailing safety standards and were completed as per contract requirements.

8        PA is updating the procurement checklist and instructions to impress upon GROs to check for debarment status of contractors during bid evaluation and contract renewal. GROs will also be regularly apprised on updated procurement policies and processes to enable them to better perform their roles in contract award and renewal.

Ensuring Formal Agreements are entered into with External Service Partners

9        AGO observed that two GROs did not enter into formal agreements with external partners when implementing two projects to provide community services to residents.

10      Formal agreements are important to help safeguard the interests of PA and GROs. PA has since reviewed both cases and taken corrective actions.  One of the projects has ceased on 30 April 2023. PA is putting in place a formal agreement for the other project.

11      In addition, PA is carrying out checks on other existing collaborations with external service partners to establish formal agreements where they are required.

Strengthening the Management of Accounts in IT systems

12      AGO had observed that there were weaknesses in the management of user accounts in three of PA’s IT systems. This pertains to lapses in compliance with system requirements such as updating/disabling accounts and revoking the access rights of users who had left or stepped down, within a stipulated period of time.

13      Following the AGO observation, PA conducted an exercise to bring the accounts and user access rights up-to-date; it has since been completed. As part of PA’s earlier measures to strengthen its processes, all three systems will be onboarded to the WOG-Central Account Management (CAM) system in September 2023. CAM enables any changes to PA staff movement to be automatically updated into the three systems, thus ensuring that user accounts of staff are deactivated and their rights revoked in a timely manner. The systems will also be enhanced to de-activate inactive accounts automatically. In addition, PA will also review its current processes to improve the timeliness of updates on GRO committees in the systems.