Practice of Grassroots Organisations Transferring Sums of Money to Personal Bank Accounts for Official Operational Needs and Actions Taken

Mr Sharael Taha asked the Minister for Culture, Community and Youth with regard to the Auditor-General's report that found inappropriate money management practices for welfare assistance schemes and in particular, the use of personal bank accounts to disburse cash for welfare and voucher assistance (a) what are the lessons learnt by the entities involved; and (b) whether systems will be put in place by those entities to prevent such occurrences in the future.

Mr Yip Hon Weng asked the Minister for Culture, Community and Youth (a) what is the standard procedure to distribute monies to beneficiaries for programmes that are not yet covered by the Government's electronic voucher system; and (b) how will the People's Association ensure that this procedure will be adhered to.

Ms He Ting Ru asked the Minister for Culture, Community and Youth in light of the test checks in the latest Auditor-General's Office report finding that two grassroots organisations (GROs) had transferred significant sums of money to the personal bank accounts of staff (a) whether there are further checks and tests being carried out to identify if more such practices have occurred; and (b) what action is the People's Association taking across all its entities to ensure GRO monies are not co-mingled with staff's personal monies given the significant risk of loss or misappropriation.

Thank you, Sir. Sir, this reply will also address Parliamentary Questions filed for subsequent Sittings by Dr Tan Wu Meng, Mr Saktiandi Supaat1, Mr Leong Mun Wai and Ms Joan Pereira.

Sir, let me start by setting out some background to the nature of the transactions audited by the AGO.

Grassroots Organisations (GROs) have always played an important role in enabling the Government's efforts to support residents by raising awareness of and, in some cases, directly administering national schemes, such as the Community Development Council (CDC) Vouchers Scheme, on the ground.

Each year, GROs help to administer about three to four national schemes across all constituencies. Many GROs would be activated to support the administration of these schemes, which typically involves processing at least 260,000 such applications each year.

Over the years, GROs have also initiated their own local welfare assistance schemes to provide assistance to their residents having regard to the specific needs of their local demographic, which these GROs assess. These local schemes complement the national schemes, often helping those who fall through the cracks. In total, these local schemes benefit at least 400,000 residents annually across Singapore.

The assistance and support from the Government, GROs and community partners have had a real impact on the livelihood of our population. For instance, the cash distributions initiated by GROs and community partners help low-income households alleviate the increased expenses during festive seasons as they prepare for celebrations with their families.

Heartland hawkers and merchants were able to obtain relief from the pandemic and rising costs of living with the CDC Vouchers Scheme. They could not have done so without the prompt reimbursement of the voucher claims facilitated by the GROs.

Sir, there are about 2,000 GROs across Singapore assisting to operationalise both national and local schemes that I have outlined. They do so by raising awareness and identifying eligible households and assessing applications, including from those who might marginally miss the criteria of these schemes or require some form of additional assistance.

People's Association (PA) staff and volunteers are then mobilised to extend the last-mile support under these schemes by directly administering the distribution of welfare assistance or vouchers from the Government or community partners. In doing so, PA staff and volunteers have developed a good understanding of the ground needs and often had to be flexible as well to render timely assistance to the residents.

Mr Saktiandi Supaat asked about the proportion of GROs that were audited by the AGO. As I said, there are about 2,000 GROs across Singapore. Each year, the AGO decides on which organisation it wishes to audit – this includes the GROs – and how many it wishes to audit. The AGO also retains discretion to determine the areas to be covered in its audit and the approach to take.

For the FY2022/2023 audit of PA, the AGO chose to audit welfare assistance schemes for the period of 1 April 2019 to 31 May 2022, a large part of which coincided with the COVID-19 pandemic. In its audit, two GROs were identified to have adopted inappropriate practices in the management of monies. I will explain to Members now the facts of these two cases.

The first case concerned the management of monies for welfare distribution at festive events by one GRO.

Welfare distributions to low-income residents at festive events are a form of local welfare assistance scheme initiated by the GROs, often in collaboration with community partners. This, as I said, complements the national schemes in rendering support to the vulnerable. Such schemes are not uncommon and most GROs would have their local schemes to address the specific local needs of each constituency.

In auditing the disbursement procedure of this scheme, the AGO found that a crossed cheque was issued to a staff member. When the cheque was brought to the bank by the staff member, it would be processed and the amount would be deposited into the staff member's bank account. The staff member would then withdraw the deposited amount in cash over the bank counter, accompanied by one other staff member. Verification of the cash withdrawn would be performed by a third staff member not involved in the cash withdrawal.

Throughout this process, the deposit and withdrawal would be tagged to the individual responsible in PA's Financial Accounting System that is used by all GROs to account for receipts and payments. The monies withdrawn were then distributed to the scheme recipients, with proper record and accounting of the amounts given out.

Mr Yip Hon Weng asked what the standard procedure would otherwise have been. Sir, the standard procedure would have been to do all of the above, except one step, which is for the cheque to be an uncrossed one, made out to the staff member, with the words "or bearer" crossed out. When the uncrossed cheque is brought to the bank, the cash would be withdrawn immediately over the counter and retained by the staff concerned and then applied to the scheme for disbursement. That would have been the usual step.

There are a few notable points from this case. First, whilst this was not the correct procedure, the staff concerned explained that it was thought that the additional step in using the crossed cheque was taken to better account for the money. And that was why that step was taken. Second, the monies withdrawn were duly checked and verified through the process by multiple and different staff members. Third, all the amounts deposited, withdrawn and distributed were properly recorded and accounted for. The AGO has reviewed the records and found no evidence of loss or misappropriation of monies in this case. The practice ceased once the AGO noted this observation in the course of its audit.

The second case concerned the reimbursement of monies to the hawkers and merchants under the CDC Voucher scheme at one GRO. The CDC Voucher scheme was launched by the PA in 2020 to help lower-income households defray their cost of living and, at the same time, support hawkers and heartland merchants who were affected by the COVID-19 pandemic. At that time, GROs helped to administer the scheme by distributing the physical vouchers to the low-income households, as well as thereafter, facilitating the reimbursement of voucher claims from the hawkers and merchants. The period in question coincided with the time when cashflow of hawkers and merchants were seriously affected by the COVID-19 pandemic and various other measures, including safe management measures.

The GRO in question thus saw a need to set up a system which could facilitate a prompt claims process for the hawkers and merchants under the scheme. For this case, the AGO found that the process took place as follows: staff collected the used physical vouchers from the hawkers and merchants, and tabulated the amount to be reimbursed to each of them on a weekly basis. The transaction volume was high, with most of the claims of small amounts at around $20 to $30. Members would recall that this first iteration of the CDC Voucher schemes was entirely physical; physical vouchers were used.

To facilitate these reimbursements, a crossed cheque would be issued by the GRO to the relevant staff member's name, who would withdraw cash and then reimburse the hawkers and merchants using this cash withdrawn. When the hawkers and merchants received the monies from the staff, they would indicate their receipt of the cash by signing against the listings prepared by the staff member.

Similar to the first case, the process deviated from the standard procedure in that a crossed cheque was issued instead of an uncrossed cheque and the monies went through the staff member's personal bank account briefly. This was not the correct procedure. However, there were proper records and accounting of all the claims and the disbursement of monies. The AGO has reviewed the records and found no evidence of loss or misappropriation of funds, as in the first case. This arrangement ceased with the changes to the CDC Voucher scheme in December 2021 when electronic vouchers were introduced in place of physical ones.

Sir, to address Ms He Ting Ru, Mr Louis Chua and Ms Joan Pereira's questions, subsequent to the AGO's audit, PA has been undertaking checks similar in scope to the AGO audit and in respect of the same period. Thus far, we have identified three other cases in which similar inappropriate practice of money management for welfare assistance schemes was adopted. In all of these cases, there was also no loss of funds nor any mala fides in staff conduct. These practices have also since stopped.

Nonetheless, we do not take this for granted, and to Mr Saktiandi Supaat and Dr Tan Wu Meng's questions, PA has taken note of the areas and observations by the AGO and has counselled its staff and volunteers involved of the need to adhere strictly to governance processes. PA has also implemented and will continue to work on strengthening its internal governance and oversight of key processes.

I would add that given the scale and volume of such transactions, which I have outlined to Members earlier, PA recognises that staff and volunteers do face challenges when administering welfare assistance schemes and other Government programmes and, at the same time, managing administrative matters, such as contracts and claims processes.

PA will continue to identify ways to improve its structures, systems as well as processes to mitigate such reoccurrence, but at the same time allow the GROs and its volunteers to do what it does best on the ground by delivering last-mile services direct to residents, helping them in times of need and making sure – as Members saw in the case of the welfare schemes during COVID-19 – that cash flow, which was vital during COVID-19, was not affected.

Mr Sharael Taha, Ms He Ting Ru, Mr Saktiandi Supaat, Mr Yip Hon Weng and Mr Leong Mun Wai asked about PA's plans to strengthen compliance and prevent future occurrence.

In recent years, PA has embarked on major structural changes and implemented measures to strengthen its key governance processes. These were to address risks that were observed through past AGO audit findings as well as picked up through PA's regular internal audits and reviews.

Going forward, PA will implement all of AGO's recommendations in the FY2022 and FY2023 reports. It has put in place a systematic plan that includes accelerating the full implementation of measures we had embarked on in recent years. Digitalising manual processes to minimise the need for cash handling, refining financial procurement rules and bolstering capabilities of staff and GROs and their volunteers in these areas.

PA will also address the lapses identified and strengthen the monitoring and compliance to procedures and processes. In this respect, PA has also set up an independent review committee to review the latest AGO findings – independent from the existing staff and the internal audit team – to review the latest AGO findings and to ensure measures are put in to strengthen the system.

The review committee will regularly report the progress of the implementation to the PA board as well as to MCCY. PA will update the public on its progress from time to time.

PA takes the findings of the AGO very seriously and will continue on taking the steps outlined above to address the gaps in the processes.

Thank you, Mr Speaker. Just two supplementary questions for the Minister.

Firstly, beyond the finance staff who actually authorised the transactions and the withdrawal, to what extent was this practice authorised by the management team of the PA or even the grassroots organisations?

If we look at the second part of my original Parliamentary Question, it is really in terms of whether there was any form of disciplinary actions that are taken on the staff who were involved in the transfer and even the management team, and whether there was any censure of the board as well.

The relevant authorisations were all disclosed and properly recorded in the systems maintained by the GRO and that, as I mentioned earlier, was precisely the reason why AGO was able to check and verify, based on these records, that no money was missing at all.

In relation to the Member's question about follow-up steps for the staff and the volunteers, I have set them out in my response. We have underscored the importance of adhering to this and counselled the relevant parties concerned to ensure that this does not occur again.

Thank you, Speaker. May I ask the Minister, with the move towards digital payments for disbursements to reduce cash handling, what would be the impact on the elderly who may not own or have use of mobile devices? Second question: are there simpler ways to allow the use of PA or grassroots bank accounts for fund disbursement purposes and disallow the use of PA staff personal bank accounts for such purposes?

Thank you, Ms Pereira. The first question is a valid one. As we move towards ensuring that we undertake transactions digitally, there will be a constituency of persons, usually the elderly, who are not able to keep up and process the transactions in the same way. So, what we do at PA is we always go with the mantra that we say it is digital first, but not digital only. So, those of our seniors or other residents who come and need assistance because they are unable to process or handle the transactions digitally, we will assist them in person and, in some cases, if necessary, we will help them to print the hard copies so that they will be able to administer.

But, at the same time, in our drive to ensure that we move towards digital transactions, our staff is also trained to counsel such people to help them and try and get them on board the digital framework so that, for future transactions, they will be more equipped and more assured to be able to handle those transactions.

To the Member's second question, the proper process, as Members have heard me outline, is indeed to avoid co-mingling with the staff's bank account. In this case, what happened was that the cheque was crossed and, as a result, had to be deposited in the staff's account. The usual process is for the cheques to be uncrossed and for cash to be handled across the counter without entering the staff's bank account.

Thank you, Speaker. Two supplementary questions from me.

First, I understand from the Minister's reply that there is undertaking to be done to make certain checks that are similar in scope. Can the Minister share about the timeline for when this is expected to be completed and also a bit more details about the scope in which these additional checks are going to be carried out?

Secondly, on the details of the independent committee, would the Ministry commit to eventually publishing a full report about its findings? Can I also ask about the composition of this committee? Who sits on the committee? Are they external to the PA or are they appointed from external sources?

The committee has got one board member and other senior grassroots members who are not on the board and otherwise not connected to PA's senior management.

In relation to the Member's point about whether we will make the findings public and publish a report, I will have a word with the review committee. The scope of its work is essentially to look at its current processes, give a view and to really have a second pair of eyes. In most of these cases, it is not that the process is not set out. The process has been set out, there are standard operating procedures (SOPs), and in fact, that is why the AGO was able to audit it and make these findings of inconsistency relative to what the SOP ought to be. But I will convey the point and discuss it with the review committee.

The Member's first question is on the scope of the checks. The scope of the checks, as I said, would be similar to what the AGO has done in terms of timing as well as the scope – "scope" meaning the kind of transactions as well as having regard to the nature of the problems picked up. Obviously, as we do this, even as we focus on those transactions, the lessons learnt can be adopted on a broader scale, such as co-mingling is not just prohibited in the context of welfare assistance schemes, but also across the board. So, those are lessons that we will pick up from this review but applied across a broader variety of different transactions.