Auditors not up to standards

robertteh SG

Apparently after so many lapses in reporting wrong doings from NKF to lack of accountability and transparency as revealed by the AG, it is clear that our current standards of auditing is too lax.

Read more at www.managefranchise.blogspot.com for solutions.

robertteh SG

Metaphorical wrote:
kan ni nia if no transparent, you think gov give you all read thing auditor find out har? Seow!

When ex-president Ong asked for accountability in reporting hidden assets and profits, the AG lamented lack of manpower to do it.

Then more problems, like NKF, Shin Corp etc causing more losses for not listening to good advice.

Government which changed only when forced to is not really good government.

The past taxing and recovering all possible costs allowing taxes to become idle and causing loss of economic competitiveness is still a major problem and not changed.

So do not just show off and practise hypocrisy. Do all the changes in a more sincere manner in response to reasonable to people's feedbacks on errors of past policies which no longer work.

Ministers' writing their own pay cheques, donation to charity by ministers or PM after the huge uproar over such lack of accountable self-writing of pay cheques, NKF prosecution, shin corp losses, elites' not producing results in economic restructuring for years etc and still talking like they have been world class since the last three recessions, and many more are not voluntary.

curryman SG

its not the auditors fault….some barriers r created to stop the auditors from auditing b4 this….

allentyb SG

robertteh oh robertteh

join the opposition party as their spokesman bah

panzergrenadier SG

Consider reading more about the role of the Auditor-General before shooting off to say that they are not doing their job.

I don't think even more than 3 people in this forum are able to articulate what the Auditor-General's Office does. This department has been around even before PAP came into power as it was set up during British colonial government days.

Check out their role here:

http://www.ago.gov.sg/

The EDB audit issues is because EBD has been audited for many years by commercial auditors. For those in the know about AGO, they audit BEYOND what the commercial auditors does which is "true and fair opinion on the financial statements." AGO looks at the above PLUS:
- compliance with government procurement procedures
- detailed scrutiny of internal control procedures, governance
- areas that could potentially be reportable (very wide).

Check out the Audit Act under statutes.agc.gov.sg and Constitution for their additional roles as well.

crazy monkey SG

so u think u can do a better job ?

Fingolfin_Noldor SG

You think they will even let him?

robertteh SG

Nope, I only need to show them problems and as people who are paid to do the jobs they should solve these problems without any excuse.

From the many malpractice and creative accounting discovered obviously the relevant ministers and departments have been too lax with their management, accounting and auditing.

Such lack of standards can be easily corrected by process management as illustrated. If they feel that this process management does not come from established audit practices known to them in their own university learning and are nonsense they are entitled to do so.

People who claim to be talented should not simply be excused by asking others for solutions. It will be a shame if they should let non-talents show them how to do their jobs. Some Japanese ministers would resign or commit suicide in such a situation.

crazy monkey SG

they will all go crazy with all his management theory blah blah all talk and no action Laughing

robertteh SG

Then a high-powered committee should be formed to investigate anyone who dares to instruct or expect auditor what to write and what to report to cover up their weaknesses or shortcomings.

Presidential Council surely has the right to investigate anyone or refer to parliamentary special select committee who dares to quietly influence any Judges or CPIB from investigating or not investigating any wrongful discounts in property deals.

curryman SG

haha....the highest council is u know who already lah.

EDB-GLC-Temasek-Astar same same..all controled by you know who.

President is just like Agong in malaysia...no power

ndmmxiaomayi SG

In short, it's NATO.

Seems like not only are the PAP leaders who are practical, most of us are too.

airgrinder SG

Perhaps you do not understand how auditing works.

Let me quote an example from engineering quality control. Say a process line produced 500 parts in a batch. The QC personnel will have to check the batch before sending to customers/other depts/etc/whatever. The QC people will not be able to check each and every part. They'll just check a fix quantity of parts based on probability of their pre-defined acceptable tolerance. It will be too costly (both time, manpower, money) to inspect each of the 500 pieces.

In auditing, it's the same. Auditors work on a pre-defined, legal acceptable framework. They'll check all that is required based on the requirements pre-set in the industry. Be it auditing NKF, mcdonalds, genting international, keppel corporation, the practises and framework is not unsimilar.

After the Gold Tap incident where the papers decide to back their reporters and take the case to court, a full auditing team was put in place with the intention to "dig out dirt" from NKF. Over 50 auditors were assigned to audit full time into NKF's accounts. That's how they got the stuff out. Consider a normal annual audit process where a team, say 5 people were put to the task for a 2 weeks? And this team of 5 is most likely also handling other companies' accounts at the same time. And, they dun check each and every txn, they randomly check certain txns, done by the internal auditors.

What I'm saying is, the ex-management of NKF is no fools. They know what are the standard practises in an annual audit check, hence thought of ways to get around it. Hence your statement of "obviously the relevant ministers and departments have been too lax with their management, accounting and auditing" do not hold.

Your first paragraph, about pointing out problems and those who are paid should think of solutions without any excuses, shows the "Bochap" mentality of Singaporeans nowadays.

I wun elaborate much, as I strongly believe it will lead to much redundant flaming and/or "strong discussions". I'll just say that during my lunch at golden shoe hawker centre, I'll help the table clearing auntie clear my messy table (by piling up the dirty plates, utensils so it's easier for her to clear when she reaches my table) even thought I'm not paid.

Cool

reyes SG

robertteh oh robertteh

join the opposition party as their spokesman bah

allentyb oh allentyb
join the FU*King PAP to be their parrot bah. Mr. Green

reyes SG

Consider a normal annual audit process where a team, say 5 people were put to the task for a 2 weeks? And this team of 5 is most likely also handling other companies' accounts at the same time. And, they dun check each and every txn, they randomly check certain txns, done by the internal auditors.

i get what you mean, but the external auditors handling more than 2 cases at a time doesnt justify they can be excuse of any irregularities that is not detected. what is the point of hiring them? to create more profit and revenue to the already fat paycheck at the big 4. that is what RT trying to say, something need to be done.

i hope governing singapore can be as simple as helping an auntie pile up her dishes. by the way, i always teach my daughter by showing example to clear up her table after every meal at all fast food outlets. even though i am not paid. Mr. Green

robertteh SG

About the constraints of manpower faced by the auditor, these are basic problems which should be taken care of by the laws relating to company auditing and presentation of annual accounts and by the auditing profession.

If the professional body representing the auditors and the general laws relating to company auditing say that it is impossible to check every entry and prevent any defalcation, do be it.

The professional auditor knows there are constraints and have always qualified his audited accounts and audit report so as to protect himself from any negligence to the end users or shareholders if there is any issue.

In the case of NKF, the malpractices which were finally revealed were however publicized over a period of time and the minister concerned simply could not have overlooked basic and fundamental problems of the kind finally revealed. He and his regulatory authority simply has failed to exercise due diligence in failing to unearth problems with a fuller audit particularly over the issue publicised whether NKF management has misled the public with regard to level of reserve and the patient subsidy.

The auditor in such a situation should have been alerted even without instruction to thoroughly address the many issues professionally and should have no excuse in not being able to detect fundamental flaws or the creative or wrongful accounting used to misinform or misled the public.

Similarly, ministers are human beings and are bound to make mistakes. If they make mistakes which are accidental and not deliberate with no denials of persistent problems, citizens can understand.

However the many problems we are discussing under this topic are not matter of accidental mistakes but deliberate and persistent failures or lack of accountability and transparency especially after many losses failures as pointed out in many incidences by high-level people like Ngiam Tong Dow and ex-president Ong Teng Cheong.

Furthermore ministers have publicly claimed themselves to be the world's best talents so as to be paid the highest salaries to retain their talents.

In such a situation, our ministers, the AG and all the professional auditors should not be easily excused for the basic and mundane problems mentioned by you. They will be expected by citizens to practise the highest professional standard of accountability and transparency commensurate to their talents and salaries as expected so as to prevent similar NKF malpractices or irregularities. The pre-signing of cheque or hidden profiteering by HDB etc may be just the tip of the iceberg.

robertteh SG

(Extracted from www/managefranchise/blogspot.com )

Most businesses are today still managed in an ad hoc manner resulting in complexities and uncertainties which lead to idling, delays, inefficiencies, losses, scandals or malpractices.

Despite the Asian Financial Crisis, many businesses continue to be managed in an ad hoc fire-fighting manner with senior management only concerned with making decisions leaving implementation to the subordinates.

When troubles happen, the senior management has many escape routes one of which is to conduct a post-mortem Management Audit to determine the cause or causes of problems to punish a scapegoat.

It may be asked : why a management audit and not hold the senior management of responsibility to take preemptive or corrective or advance actions instead of leaving issues and problems to chance occurrence before taking actions.

Process management like OSP Process Management is aimed at preventing problems and solving them in advance before their occurrence, viz:-

(1) Establish complex and conceptual goals and tasks in Follow-through lego-like component work processes.

(2) Objective supervision, Clear definitions of roles, duties and quality-time-cost control.

(3) Coordination and knowledge application.

(4) Effective Communication and feedbacks.

(5) Logical work processes, measurement of performance, corrections.

(6) Objectivity, accountability and transparency.

(7) Clearly defined Filing, retrieving of records.

( Cool Motivation of workers in knowledge application.

(9) Effective Departmentalisation and delegation.

As the saying goes, it is easy to find faults as anyone can make mistakes.

Processes set up in follow-through sequence and integrated into daily work routines will avoid the errors and mistakes of the kind as discovered belatedly by the Auditor General.

Being set up in attainable component work processes the whole organization will gel their works with coordination, teamwork and knowledge application at every level.

The traditional management or financial audit might be the most effective in finding faults but will such audit lead to preemptive solutions, efficiency and prevention of malpractices as found in NKF and many others.

Once tasks are established in cause-effect lego-like component work processes the management and lower rungs will be connected into a whole allowing regular and consistent actions to be taken to realize result-oriented performance with hands-on control, comparison, processing and corrections to attain organizational efficiency and productivity.

In the globalization age, it is critical to empower staff to achieve higher level of efficiency through coordination, teamwork and knowledge application by all staff.

Therefore, there is an overriding need to change the current mindset of management from one which is based on fault finding to one which will be more hands-on and proactive as that will be the only way to solve many of the problems reported by the Auditor General.

Process management will also be most effective in upgrading efficiency, accountable good corporate governance and results.

If the solutions are proposed after the events or facts are found out credit will not be given to such finding for the same finder was himself probably unaware or unable to prevent its occurrence in the first place in most situation.

If your organization is thinking of spending thousands on conducting a management or financial audit surely it will be more beneficial to devote some time to process management as the latter while being more cost effective will be the more creative way to upgrade efficiency instead of fault findings without contributing to final solutions of problems.

So there is an alternative solution to all those problems mentioned by the Auditor General. Problems are not that complex and overwhelming when tasks are laid out in objective component work processes and processed through forms and work forms via a call centre so that everyone will be able to work with coordination and teamwork and knowledge application to achieve results.

ceecookie SG

Auditors kenna "poisoned" by their work,thanks to LKY Laughing

robertteh SG

TOC Exclusive (Reproduced from online.citizen)

The original Auditor General Offices (AGO) audit of 12 Ministries and associated statutory boards has revealed irregularities to an extent not fully revealed by the recent Public Accounts Committee (PAC).

According to the AGO, losses of public monies added up to $6.2 million, a substantial amount of which is still unaccounted for.

The Auditor Generals preface to the report states that This audit approach is not intended to reveal all errors and irregularities.

In the report, the Ministry of Law lost a potential $77,666.64 safety deposit because its computer system could only register sums to the nearest dollar. It appears under the header No $77,666.64 security deposit because of 36 cents.

The report details how these millions were lost in a detailed account of mistakes and dubious practices.

The Ministry of Home Affairs, for example, charged rental far below the market rate, forgoing $2.38 million that should have gone into state coffers. The Ministry of Law, in addition to the 36 cent mistake, left our public funds $386,829 poorer by failing to implement rental increase. This was described as an oversight.

The list goes on.

The Ministry of Manpower delayed collecting a $501,998 debt for a grand total of 15 years. When it decided to finally recover the sum of money, the company disputed the debt owed but the Ministry did not have the necessary paperwork to substantiate the debt. National Development lost us $228,000 in foregone rental, and Trade and Industry overpaid $1.87m in grants to a statutory board (since recovered).

The largest outstanding sum identified was the Ministry of Health: $136.2 million for Phase III of the National University Hospital development project has still not been recovered despite having been completed in 1996.

More questions than answers

The report raises more questions than it answers. Procurement irregularities are unexplained: a National Development contract was awarded for an eighth ranking bid (in terms of price) out of 11 without any justification. Further, the officers signing the contracts were not authorized to do so. Under the column subsequent action, all that is said is that the Ministry streamlined procurement procedureswhich would prevent such lapses from recurring. Not even an ex post facto explanation about the dubious procurement.

The subsequent action detailed for other irregularities and mistakes do not offer much elaboration. In the case of the Ministry of Manpowers half a million dollar mistake that spanned 15 years, it gave assurances that levy debts will be resolved within a much shorter time frame in future and that future relevant documents would be retained.

TOC Opinion

Theonlinecitizen (TOC) recently reproduced in full the report by the Public Accounts Committee (here), convened by Parliament to scrutinize irregularities highlighted by the Auditor Generals report for financial year 05-06. It gave few concrete figures to highlight the irregularities it was pointing out.

TOC has obtained a copy of the original AGO report, which gives a far more comprehensive overview of the scope of the irregularities. This is reproduced in full (see below). We hope that members of the public will step forward to scrutinize the report and ask the necessary questions of our public servants.

In light of the limited scope of the Auditor-Generals report, we believe that the public deserves a more thorough audit of its public offices. Further, action needs to be taken to examine why these mistakes occurred in the first place: What are the fundamental causes of these lapses? Is it systemic or is it just incompetence on the part of the departments involved?

What were the consequences of these multi-million dollar mistakes?

This report can either be swept under the carpet to the further detriment of the credibility of the media and our government, or it can serve as a reference point for a new era in government transparency and accountability.

We hope the latter will prevail.

From the Auditor General Offices website:

Non-compliances with procedures in the use of public funds are signs of weak internal controls. As audits are done on a test check basis, the weaknesses found could be an indication of more widespread problems. Many frauds, big or small, occurred because the weak controls were exploited. Weak controls involving small amounts could also be exploited resulting in larger losses. In the Report of the Auditor-General for the Financial Year 2005/06, individual cases of loss of public moneys were mostly small but these collectively amounted to $6.2 million. (Link)

You can view a copy of the Auditor Generals report as follows (pdf file):

Part 1 - The cover and content list
Part 2 - Introduction
Part 3 - Main report
Part 4 - Main report (contd)

Please visit also the Auditor Generals Office website for some FAQs.

Please do send us your views/articles on this issue. Our email address is [email protected]

Choo Zheng Xi
Co-editor, theonlinecitizen

*Check out Mr Wangs entry on the EDB : EDB Under Scrutiny

Brief Summary Of Auditor Generals Report

Ministry of Community, Youth & Sports
Signing contracts without authority

Ministry of Defence
Three cases of procurement irregularities Under-collection of Goods and Services Tax

Ministry of Finance
Weak access controls in computer systems

Ministry of Foreign Affairs
Exposure to fraudulent payments

Ministry of Health
Delay in recovering $136.2 million
Five-year delay in finalizing transfer of $40 million of assets

Ministry of Home Affairs
Government revenue not paid into consolidated fund

Ministry of Information, Communications and the Arts
Unfair payment practice Wrong information in government accounting system
Irregularities in procurement of video production services costing $90,000

Ministry of Law
No $77,666.64 security deposit because of 36 cents Certification by permanent secretary not accurate
Long delay in debt recovery

Ministry of National Development
Waiving fee without authority
Officers signing contracts not authorized to do so

Ministry of Environment and Water Resources
$527,819 written off in audited statement without authority

Ministry of Trade and Industry
Inaccurate records of unutilized grants
Recovery of $2mil paid from grants not promptly refunded to govt
$540,300 interest not promptly recovered and accounted for as govt revenue

Multi Ministry Loss of public moneys

Defence
- Doubtful claims by staff
Finance
Overpayment of bills
Health
Overpayment for training programme
Health
Overpayment of rental subsidy
Home Affairs
Charging rental below market rate
MICA
Fees not paid into consolidated fund
MICA
Rental not charged
Law
Under-collection of rental
Manpower
Uncollectible foreign workers levy debt
National Devt
Rental not charged
Trade & Industry
Overpayment of grants to statutory board
ACRA
Failure to bill $346,603
IRAS
Weak access controls in computer systems
MAS
5 year delay in resolving inadequacies in investment accounting system
MAS
Payment to wrong bank account
HSA
Weak access controls in computer systems
HSA
Weakness in financial controls
IDA
Weak access controls in computer systems
CPF
Undue delay in paying insurance claims
NPB
Weakness in payroll control
NPB
Undue delay in recovering liquidated damages
EDB
Governance structure and practice
IE Singapore
Missing fixed assets
SDC
Deficiencies in procedures for land sales
SDC
Weak access controls in computer systems
SDC
Errors in accounting of govt grants