Recently I received an email from a student with this type of address ie. @ago.gov.sg.

Curious, I ask him as to which branch of government is she working for now.

“Auditor-General Office,” she said. [I thought it was the Attorney General Office. :)]

She is helping AGO to fufill its role to audit all ministries, statutory boards, embassies, and Temasek owned complanies for President. [Wow!]

That conversation brought my attention to the recent article in BT dated Jul 20, 2007 entitled, “Govt audit reveals financial lapses”.

Examples of financial lapses revealed by Auditor-General are:-

• The Infocomm Development Authority of Singapore (IDA) could have better managed over $200 million in cash reserves for higher returns. [..from zero return?]
• National Volunteer & Philanthropy Centre (NVPC) had accumulated unused grants of $4.9 million in March 2006. [So again money is sitting idly around.]
• Ministry of Health (MOH) was found to have continued its payments for some 106 deceased persons through a scheme was administered by an agent. It has recovered some $55,850 of the $178,150 that was paid. [Phew! Amount not big.]

My Words

• Thank goodness we have a Government who is willing to be transparent about their own boo-boos.
• Thank goodness we have a good problem of dealing with money sitting around to the tune of millions of dollars. It shows that we have some hidden reserves ie. like housewives putting away money.
• Thank goodness we did NOT find massive frauds.
• It is good that we have taken stock of the problems. We will remedy them and move on.

the void will be filled

There are two Wong brothers, Wong Jian Jong and Wong Jian Reng, who are partners of Cristofori Music School.

The first Wong was convicted on two charges of wilful tax evasion – for making false entries in his income tax returns, claiming he earned less than he did.

Jail term – two weeks and he will have to pay penalties cum taxes totalling $671,170.80 for offences committed from 1998 to 2003. He was in charge of finance, accounts and the filing of the partnership’s income tax returns.

For similar offences committed in the same period, the second Wong , who was in charge of recruitment and administration, will pay $624,353.56.

In conclusion, under reporting your income is a bad bad thing to do and you will be punished. Both Wongs have to pay a total of $1.3 mio and one of them got to go to jail.

Sad days for the Wongs.

What happened?
ACRA, the independent regulator of auditors in Singapore, conducted a “test” on 110 of the total 780 public accountants from April 2005 to March 2007.

On Jul 25, 2007, ACRA has for the first time released the “report card” on the state of auditing profession in Singapore. The results are as follow:-

• One third of the 110 received a ‘good’ rating.
• Another third were rated ‘satisfactory’
• The remaining third, or 36 accountants, were asked to undergo remedial action.
• The special 5 got their licence suspended or cancelled.
  

What are the areas of weakness?

ACRA deputy chief Mr Ow Fook Chuen listed the common boo-boos as follow:-

• Inadequate documentation of audit opinions.
• Lack of follow-up on subsequent events up to the date of the audit report. [Why the need to follow up? These events may materially affect the financial statements and the validity of the audit opinion.]
• Audit procedures were conveniently updated as ‘noted’ or ‘done’ without actual audit work or assessments being carried out. [While corners were being cut, clients still got charged. Or the other way round where clients want to lower audit fees and thus the corners cut.]
• Insufficient inventory count procedures eg. no physical count procedures.
• Some also blindly and recklessly relied on the audited financial statements by the auditors of overseas subsidiaries without considering their competence.

Edgar’s words of wisdom (ha!)

A second round with wider coverage is expected to be completed in 2011. Hmm… isn’t it a wee bit too long for the next report card in the current dynamic world?

To hasten the process of quality renaissance, should we do with public accountants what we did to hawkers in Singapore ie. force them to display their “A” or “B” or “C” licence? As hawkers’ hygiene in food preparation has public implication, likewise the quality of work of auditors too has significant public implications.

So ACRA what say you?

On July 25, 2007, ACRA has proposed some bold moves to ease the talent strain in the audit profession as follows:-

• It is seeking feedback on how to make it easier for mid-career professionals such as bankers and financial analysts to switch to accounting.
• To consider the possibility of letting international auditors with specialised expertise to practise here.

Karma Tsultrim Wangchuk highlighted in his/her letter to ST Forum today that we are being charged GST on Water Conservation Tax. Are we being tax on a tax? If it is, when? When have we been paying the Water Conservation Tax (WCT)?

• “WCT forms part of the total price of water” and;
• “GST is charged on the final value of any goods or services consumed in Singapore”.

• WCT does not form the total price of water as the proceeds from WCT go to MOF’s pocket and not PUB’s pocket.
• PUB must be already charging an economic viable and sustainable pricing for water it is supplying to its customers.

• mandatory paid announcements will no longer be required [notification in the newspapers will be eventually phased out – less advertising revenue for newspaper companies but lower cost of compliance for listed companies / good for the environment]
• companies must eventually maintained their own website