Lapses and Breaches in the Auditor-General Report FY15/16

Parliamentary Questions by Liang Eng Hwa & Lim Biow Chuan:

To ask the Minister for Finance whether the lapses and inadequate financial controls reported by the Auditor-General in its Report for FY15/16 uncover any systemic flaws and how will the public sector entities strengthen their management of public resources to prevent future occurrence.

To ask the Minister for Finance whether the Report of the Auditor-General for FY15/16 has highlighted any repeated breach of financial regulations by any Ministry and, if so, whether any action will be taken against officers who fail to take remedial action to rectify the breaches.

Reply by Senior Minister of State for Finance and Law Indranee Rajah:

I thank Mr Liang Eng Hwa and Mr Lim Biow Chuan for their questions. Let me first highlight that there are two types of audits that the Auditor-General’s Office (AGO) conducts on government agencies. Each is important in a different way.

• The first concerns whether the accounts of government agencies are reliable and prepared in accordance with the law.

• The second involves checks on individual public agencies’ compliance with rules and procedures - for example the rules that guard against wastage of public funds and excess spending.

Unmodified Audit Opinion - Public Funds are Properly Accounted For

2 The first issue is whether the accounts of public agencies are proper and reliable. AGO has given an unmodified audit opinion for the Government Financial Statements this year, just as in previous years. The same is true for the Statutory Boards, all of which received an unmodified audit opinion from their respective auditors for the Financial Year 2015/16.

3. In other words, the accounts of Ministries, Departments, Organs of State and Statutory Boards have all been found by independent auditors to be reliable and prepared in accordance with the law.  Public funds are properly accounted for and we know what they are being used for.

Audits on Rules and Procedures

4. The second type of AGO audit as I mentioned concerns the rules and procedures in individual public agencies, for example those that aim at avoiding wastage. Are the rules adequate, and were the rules complied with?

5. As we review AGO’s findings in this regard, there are three key questions we ask within Government, and which everyone should be concerned about:

• First, what is the scale of the shortcomings and do they reflect a systemic weakness in Government?

• Second, is there financial malfeasance, for example fraud or corruption?

• Third, how are government agencies dealing with the lapses that are found so as to avoid the problems being repeated?

Scale of Lapses - No Suggestion of Systemic Weakness

6. AGO’s report highlighted several lapses amongst our agencies. However, I can say with confidence from this year’s AGO report and past years’, that there is no evidence of a systemic weakness within government agencies with regard to compliance.

7. Most of the lapses were due to non-compliance by individual officers. In some cases, individual agencies had not followed full and thorough procedures in approving contracts or payments, as required in our internal rules. The respective Ministries and agencies have in all instances taken steps to rectify the weaknesses identified.

8. It will be unrealistic to expect that there are no lapses found within the system each time a serious audit is done. With over 140,000 officers in the Public Service handling hundreds of thousands of transactions each year, human laxity or errors of judgement will happen. We take each and every lapse seriously, but if nothing was found by AGO, we would be very concerned about the independence and rigour of AGO’s audits.

No Findings of Fraud, Corruption or Personal Gain

9. Secondly, there was no suggestion of financial malfeasance, such as fraud or corruption, in the findings of the AGO. If there are any suspicions of wrongdoing, AGO does not hesitate to report them to the relevant authorities and highlight them in its report.

10. From time to time, we do come across such instances. We have zero tolerance for fraud or corruption. Everyone knows this: the Government acts promptly and thoroughly to investigate such cases. Indeed, this zero tolerance has itself kept fraud and corruption in check.

11. That is why we have a situation in Singapore that many countries seek to emulate. Singapore has consistently been ranked by institutions such as the World Bank and Transparency International^[1] as amongst the least corrupt nations in the world, with the likes of Finland, Switzerland, Sweden and Denmark.

Steps taken to rectify lapses

12. The third question is just as important. How do government agencies respond to the AGO’s observations? The Auditor-General has himself noted from our public agencies’ responses that they take the AGO audit observations seriously, including putting in place measures to prevent future occurrence.

13. The Permanent Secretaries of each Ministry and the Chief Executives of the Statutory Boards are responsible for ensuring that the lapses are rectified and steps are taken to minimise recurrence.

14. Mr Lim Biow Chuan asked about actions taken on officers responsible for lapses. Where there is evidence of individual responsibility for the lapses, the officers responsible have been subjected to the appropriate disciplinary actions. 28 officers have been counselled or warned arising from this year’s audit findings. One officer was put on a performance review process for repeated poor performance and subsequently left the organisation.

15. Let me highlight two areas where we have taken actions to avoid problems that tend to occur amongst our agencies. The first is contract management, particularly amongst agencies that do not manage construction projects regularly and hence may not have sufficient expertise and experience to robustly assess costs. The new  Building & Infrastructure Centre of Excellence that we have set up under JTC this year will advise government agencies which lack in-house expertise, and help us strengthen public sector’s capabilities in managing infrastructure projects. 

16. Second example is procurement. As Members may recall, this was an area that needed improvement as highlighted by AGO a few years ago. We took major steps to strengthen public sector procurement. Since 2014, Permanent Secretaries and Chief Executives of agencies have been required to report to MOF regularly with an assessment of the findings in procurement audits and their follow-up actions. We published the Essentials of Procurement Handbook to ensure top management are apprised on procurement issues. The procurement specialist track was launched in 2014 and we updated the accompanying training programmes to professionalise the procurement function. We also instituted the Procurement Leaders Programme to groom procurement leaders to better guide and supervise their officers.

17. We will continue to tackle all lapses identified each year with the same resolve.

We have a Transparent, Accountable and Responsive Public Sector

18. Let me summarise. We have a system that is transparent and accountable, and with Government responding to every weakness that is found. The fact that we have reports of lapses from the AGO each year reflects this transparency and accountability. It is a part of the workings of a robust system - which includes a diligent and impartial AGO, and government agencies that willingly submit to AGO’s audit, have their lapses displayed openly and seek to rectify them promptly. It is not perfect, but it is a system that has given Singapore international recognition for clean and efficient Government.

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^[1] Transparency International Corruption Perception Index is based on expert opinions of public sector corruption. Countries are measured on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean). Singapore scored 85 out of 100 and was ranked 8th out of 168 countries in 2015.