SINGAPORE: An overpayment by the National Environment Agency (NEA) for the TuasOne project and errors in evaluating a tender by the Maritime and Port Authority (MPA) were among the lapses flagged by the Auditor-General’s Office (AGO) in its report on Tuesday (Sep 9).
The audit for the 2024/2025 financial year covered government financial statements incorporating the accounts of all 16 ministries and eight organs of state.
It also audited three government funds, 10 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 that public funds have been properly accounted for,” said the Ministry of Finance (MOF) in a separate statement.
“The annual audits by AGO are crucial for maintaining public trust, accountability, and transparency in the management of public monies,” it added.
“Where there are lapses, agencies will review each case thoroughly to identify the root causes and take corrective actions promptly.”
The report raised three areas that public agencies need to pay greater attention to, said MOF.
These are in contract management and procurement, the management of revenue and possible irregularities in records furnished for audit.
Twenty-five of the more significant audit observations were highlighted in the report. These are: thematic audit on research and development grants (9), lapses in contract management and procurement (7), lapses in management of operations (3), lapses in management of revenue (2), possible irregularities in records furnished for audit (2), lapse in management of grants (1), and weakness in IT controls (1).
Among the agencies and ministries flagged in the AGO report were MPA, NEA, Ministry of Education (MOE) and the Insolvency and Public Trustee’s Office (IPTO).
The AGO audited a public-private partnership project for a waste-to-energy plant under NEA.
In response to CNA's queries, NEA said this relates to the S$1.946 billion TuasOne project that was originally awarded to a consortium led by Hyflux in 2015.
NEA entered into an agreement with the consortium's project company, TuasOne, in October 2015 for the development, operation and maintenance of the plant.
Under the agreement, the company would provide waste incineration services to NEA for 25 years, and the agency would make monthly payments.
As part of its bid proposal for the project, TuasOne was required to submit a financial model that incorporated the cost, funding, operating and technical assumptions.
The AGO said NEA had not monitored TuasOne's compliance with requirements in the agreement about the project’s financial model.
The company did not update the financial model and it did not do so to reflect the actual costs incurred for two components.
NEA also did not check with the partner on the updating of the financial model until AGO’s query in August 2024.
“Based on NEA’s estimates, this resulted in an overpayment of S$0.53 million to the partner from the commencement of operations of the plant in December 2021 to January 2025,” said the AGO report.
With the updating of the financial model, NEA estimated that it would also pay S$1.73 million less for the remaining contract period with the updating of the financial model.
The TuasOne project underwent restructuring in 2022 when the then-minority owner agreed to acquire all the shares of Hyflux.
NEA agreed to the restructuring on the premise that there would be no increase in payment arising from the restructuring.
But the AGO estimated that NEA would be paying S$8.09 million more post-restructuring.
“AGO’s concern is that NEA could have over-relied on the financial models provided by the partner,” said the report.
"As changes to the financial models could affect payments to the partner, it is important that NEA puts in place proper procedures and checks to ensure that changes to the financial models are accurate and properly documented.”
In its statement to CNA, NEA said it "acknowledges that the financial model used to determine monthly payments for the project was not updated with the correct parameters".
"NEA should have exercised greater due diligence on the financial model submitted by TuasOne. TuasOne has since reviewed and updated its financial model, which has been separately verified by an independent auditor.
"NEA will recover an overpayment of around S$0.53 million from TuasOne. The overpayments were made to TuasOne since the plant began operations in December 2021.
"NEA will also adjust future payments according to the updated financial model."
The agency also said it has "enhanced its processes and team overseeing" such private-public partnership projects. It has also conducted checks across other such project agreements to ensure there are no similar lapses.
"The restructuring in 2022 was critical to ensuring the continued operations of the plant," said NEA.
"Prior to this, the project experienced significant challenges, including Hyflux’s insolvency in 2018, which led to a construction delay of 31 months and significant cost overruns. The project was eventually completed in end-2021."
NEA added that the restructuring negotiations took place under highly uncertain circumstances, with "limited interest" from industry players to take over the project, potentially leading to its cessation.
"The restructuring process delivered a satisfactory outcome for NEA despite the deviation. Our external financial consultant has since assessed that the post-restructuring payments are reasonable and justified," said the agency.
The TuasOne waste-to-energy plant. (Photo: NEA website)
The AGO found lapses in contract management and procurement at MPA. In the audit, it was noted that there were inadequate checks on goods delivered or services provided.
AGO test-checked five tenders called by MPA from Jan 1, 2022 to Mar 31, 2024, with a total approved procurement value of S$104.86 million (US$81.8 million).
It found two instances of errors in the evaluation scoring of a tender for vessel management services. The tender was awarded to two tenderers.
AGO noted that one of the errors could have affected the award of the tender – it could have been given to another tenderer with a bid price that was S$2.43 million lower than the awarded price.
MPA used the Price-Quality Method in the evaluation of the tender. Under the PQM, price and quality criteria were assigned weightages and translated into quantitative scores during evaluation.
The error pertained to points awarded for an evaluation criterion on compliance with requirement specifications for vessel management services for patrol craft.
For this evaluation criterion, the successful tenderer submitted the certificates awarded to its subsidiary, and not itself. MPA accepted this submission.
“If the points had not been awarded to the tenderer, another tenderer would have obtained the highest score,” said the AGO.
MPA said in a statement that it has updated its evaluation protocols to “allow capabilities of entities within the tenderers’ group to be considered, provided these are clearly declared in the tender documents”.
The AGO also highlighted six operational service contracts in which payments were made without adequate checks to verify that services had been delivered as required.
"MPA has since reviewed and confirmed service delivery for each of the six contracts through logs and supporting records. MPA has also put in place measures to ensure proper checks and verification of supporting documentation are done before future payments are approved," said MPA.
For the audit of the Post-Secondary Education Fund, the AGO covered receipts and payments in its data analysis and test checks.
The AGO looked at the Post-Secondary Education Account (PSEA) withdrawal records for course fees and charges by training providers from Apr 1, 2021 to Mar 31, 2024.
The total amount of PSEA withdrawals for course fees and charges by all training providers was just over S$30 million during the audit period.
The AGO found lapses in the administration of PSEA withdrawals. There were inadequate verification checks on withdrawals by one of the three training providers.
It found 299 instances of multiple withdrawals – ranging from two to four times – for the same course, or withdrawal amounts exceeding the prescribed course fees.
There were also eight instances where a member had made withdrawals for eight courses by the training provider but had not enrolled in any of the courses.
These 307 instances led to unutilised PSEA withdrawals totalling S$116,200.
Unutilised PSEA money should be refunded to the accounts of members, but the training provider had held the money for as long as 2.8 years as of December 2024, even though it would have been aware of them from its records.
“AGO noted that MOE relied on checks by training providers and the members themselves to ensure that PSEA monies were used for approved purposes and any unutilised monies were refunded to the PSEAs,” it said.
MOE told AGO that it had a system of controls in place for the governance of PSEA withdrawals and refunds.
The ministry also told the AGO that the training provider has since refunded the unused amounts to the accounts in full.
In a separate statement, the ministry said the training provider has been warned.
Prior to the audit by the AGO, it has been progressively tightening the PSEA withdrawal process since 2022.
"For example, in 2023, the process was strengthened to only accept withdrawal requests made with Singpass authentication by the PSEA member. This prevents any potential forged or fraudulent withdrawal requests," the ministry said.
MOE said that it also embarked on a pilot initiative in December 2023 to conduct an "in-depth audit of selected" training providers, focusing on providers' withdrawal and refund processes. It said it intends to scale up this audit to all training providers.
The ministry will also be reviewing past transactions of all training providers over the past six years.
For IPTO, AGO noted that money paid into the Companies Liquidation Account (CLA) by liquidators of companies undergoing compulsory winding up had been invested in fixed deposits.
However, not all liquidators had requested or given their consent for the money to be invested. Based on legal advice, such money cannot be invested if there was no request or consent given by the liquidator.
The Ministry of Law (MinLaw) told AGO that from April 2019 to November 2024, the total interest earned for these cases was estimated to be S$14.25 million.
The interest earned from investing the money had been credited to the Consolidated Fund.
MinLaw said in a statement that it takes the AGO’s observations seriously and has taken steps to address them.
It acknowledged that under existing rules, the money should have only been invested upon requests from liquidators.
“When no such requests were received, these monies should have remained in the CLA, which is maintained as a current account with a bank.
“However, MinLaw placed those monies in fixed deposits through the Accountant-General’s Department instead of leaving them in this current account earning lower interest.”
The ministry said there was no misuse of public funds and no losses arising from the fixed deposit investments, and no company undergoing compulsory liquidation was “financially disadvantaged arising from this”.
It added that it has “taken steps” to ensure that money will not be invested if the liquidators did not make such a request.
A new investment framework has been implemented to ensure the money will only be placed in fixed deposits only upon liquidators’ requests.
Continue reading...
The audit for the 2024/2025 financial year covered government financial statements incorporating the accounts of all 16 ministries and eight organs of state.
It also audited three government funds, 10 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 that public funds have been properly accounted for,” said the Ministry of Finance (MOF) in a separate statement.
“The annual audits by AGO are crucial for maintaining public trust, accountability, and transparency in the management of public monies,” it added.
“Where there are lapses, agencies will review each case thoroughly to identify the root causes and take corrective actions promptly.”
The report raised three areas that public agencies need to pay greater attention to, said MOF.
These are in contract management and procurement, the management of revenue and possible irregularities in records furnished for audit.
Twenty-five of the more significant audit observations were highlighted in the report. These are: thematic audit on research and development grants (9), lapses in contract management and procurement (7), lapses in management of operations (3), lapses in management of revenue (2), possible irregularities in records furnished for audit (2), lapse in management of grants (1), and weakness in IT controls (1).
Among the agencies and ministries flagged in the AGO report were MPA, NEA, Ministry of Education (MOE) and the Insolvency and Public Trustee’s Office (IPTO).
Related:
NATIONAL ENVIRONMENT AGENCY
The AGO audited a public-private partnership project for a waste-to-energy plant under NEA.
In response to CNA's queries, NEA said this relates to the S$1.946 billion TuasOne project that was originally awarded to a consortium led by Hyflux in 2015.
NEA entered into an agreement with the consortium's project company, TuasOne, in October 2015 for the development, operation and maintenance of the plant.
Under the agreement, the company would provide waste incineration services to NEA for 25 years, and the agency would make monthly payments.
As part of its bid proposal for the project, TuasOne was required to submit a financial model that incorporated the cost, funding, operating and technical assumptions.
The AGO said NEA had not monitored TuasOne's compliance with requirements in the agreement about the project’s financial model.
The company did not update the financial model and it did not do so to reflect the actual costs incurred for two components.
NEA also did not check with the partner on the updating of the financial model until AGO’s query in August 2024.
“Based on NEA’s estimates, this resulted in an overpayment of S$0.53 million to the partner from the commencement of operations of the plant in December 2021 to January 2025,” said the AGO report.
With the updating of the financial model, NEA estimated that it would also pay S$1.73 million less for the remaining contract period with the updating of the financial model.
The TuasOne project underwent restructuring in 2022 when the then-minority owner agreed to acquire all the shares of Hyflux.
NEA agreed to the restructuring on the premise that there would be no increase in payment arising from the restructuring.
But the AGO estimated that NEA would be paying S$8.09 million more post-restructuring.
“AGO’s concern is that NEA could have over-relied on the financial models provided by the partner,” said the report.
"As changes to the financial models could affect payments to the partner, it is important that NEA puts in place proper procedures and checks to ensure that changes to the financial models are accurate and properly documented.”
In its statement to CNA, NEA said it "acknowledges that the financial model used to determine monthly payments for the project was not updated with the correct parameters".
"NEA should have exercised greater due diligence on the financial model submitted by TuasOne. TuasOne has since reviewed and updated its financial model, which has been separately verified by an independent auditor.
"NEA will recover an overpayment of around S$0.53 million from TuasOne. The overpayments were made to TuasOne since the plant began operations in December 2021.
"NEA will also adjust future payments according to the updated financial model."
The agency also said it has "enhanced its processes and team overseeing" such private-public partnership projects. It has also conducted checks across other such project agreements to ensure there are no similar lapses.
"The restructuring in 2022 was critical to ensuring the continued operations of the plant," said NEA.
"Prior to this, the project experienced significant challenges, including Hyflux’s insolvency in 2018, which led to a construction delay of 31 months and significant cost overruns. The project was eventually completed in end-2021."
NEA added that the restructuring negotiations took place under highly uncertain circumstances, with "limited interest" from industry players to take over the project, potentially leading to its cessation.
"The restructuring process delivered a satisfactory outcome for NEA despite the deviation. Our external financial consultant has since assessed that the post-restructuring payments are reasonable and justified," said the agency.
The TuasOne waste-to-energy plant. (Photo: NEA website)
MARITIME AND PORT AUTHORITY
The AGO found lapses in contract management and procurement at MPA. In the audit, it was noted that there were inadequate checks on goods delivered or services provided.
AGO test-checked five tenders called by MPA from Jan 1, 2022 to Mar 31, 2024, with a total approved procurement value of S$104.86 million (US$81.8 million).
It found two instances of errors in the evaluation scoring of a tender for vessel management services. The tender was awarded to two tenderers.
AGO noted that one of the errors could have affected the award of the tender – it could have been given to another tenderer with a bid price that was S$2.43 million lower than the awarded price.
MPA used the Price-Quality Method in the evaluation of the tender. Under the PQM, price and quality criteria were assigned weightages and translated into quantitative scores during evaluation.
The error pertained to points awarded for an evaluation criterion on compliance with requirement specifications for vessel management services for patrol craft.
For this evaluation criterion, the successful tenderer submitted the certificates awarded to its subsidiary, and not itself. MPA accepted this submission.
“If the points had not been awarded to the tenderer, another tenderer would have obtained the highest score,” said the AGO.
MPA said in a statement that it has updated its evaluation protocols to “allow capabilities of entities within the tenderers’ group to be considered, provided these are clearly declared in the tender documents”.
The AGO also highlighted six operational service contracts in which payments were made without adequate checks to verify that services had been delivered as required.
"MPA has since reviewed and confirmed service delivery for each of the six contracts through logs and supporting records. MPA has also put in place measures to ensure proper checks and verification of supporting documentation are done before future payments are approved," said MPA.
MINISTRY OF EDUCATION
For the audit of the Post-Secondary Education Fund, the AGO covered receipts and payments in its data analysis and test checks.
The AGO looked at the Post-Secondary Education Account (PSEA) withdrawal records for course fees and charges by training providers from Apr 1, 2021 to Mar 31, 2024.
The total amount of PSEA withdrawals for course fees and charges by all training providers was just over S$30 million during the audit period.
The AGO found lapses in the administration of PSEA withdrawals. There were inadequate verification checks on withdrawals by one of the three training providers.
It found 299 instances of multiple withdrawals – ranging from two to four times – for the same course, or withdrawal amounts exceeding the prescribed course fees.
There were also eight instances where a member had made withdrawals for eight courses by the training provider but had not enrolled in any of the courses.
These 307 instances led to unutilised PSEA withdrawals totalling S$116,200.
Unutilised PSEA money should be refunded to the accounts of members, but the training provider had held the money for as long as 2.8 years as of December 2024, even though it would have been aware of them from its records.
“AGO noted that MOE relied on checks by training providers and the members themselves to ensure that PSEA monies were used for approved purposes and any unutilised monies were refunded to the PSEAs,” it said.
MOE told AGO that it had a system of controls in place for the governance of PSEA withdrawals and refunds.
The ministry also told the AGO that the training provider has since refunded the unused amounts to the accounts in full.
In a separate statement, the ministry said the training provider has been warned.
Prior to the audit by the AGO, it has been progressively tightening the PSEA withdrawal process since 2022.
"For example, in 2023, the process was strengthened to only accept withdrawal requests made with Singpass authentication by the PSEA member. This prevents any potential forged or fraudulent withdrawal requests," the ministry said.
MOE said that it also embarked on a pilot initiative in December 2023 to conduct an "in-depth audit of selected" training providers, focusing on providers' withdrawal and refund processes. It said it intends to scale up this audit to all training providers.
The ministry will also be reviewing past transactions of all training providers over the past six years.
INSOLVENCY AND PUBLIC TRUSTEE’S OFFICE
For IPTO, AGO noted that money paid into the Companies Liquidation Account (CLA) by liquidators of companies undergoing compulsory winding up had been invested in fixed deposits.
However, not all liquidators had requested or given their consent for the money to be invested. Based on legal advice, such money cannot be invested if there was no request or consent given by the liquidator.
The Ministry of Law (MinLaw) told AGO that from April 2019 to November 2024, the total interest earned for these cases was estimated to be S$14.25 million.
The interest earned from investing the money had been credited to the Consolidated Fund.
MinLaw said in a statement that it takes the AGO’s observations seriously and has taken steps to address them.
It acknowledged that under existing rules, the money should have only been invested upon requests from liquidators.
“When no such requests were received, these monies should have remained in the CLA, which is maintained as a current account with a bank.
“However, MinLaw placed those monies in fixed deposits through the Accountant-General’s Department instead of leaving them in this current account earning lower interest.”
The ministry said there was no misuse of public funds and no losses arising from the fixed deposit investments, and no company undergoing compulsory liquidation was “financially disadvantaged arising from this”.
It added that it has “taken steps” to ensure that money will not be invested if the liquidators did not make such a request.
A new investment framework has been implemented to ensure the money will only be placed in fixed deposits only upon liquidators’ requests.
Continue reading...