AHTC ordered to appoint one of the Big Four firms as accountants

SINGAPORE — Aljunied-Hougang Town Council’s (AHTC) last-ditch bid to have accountants of its choice fix its lapses was thrown out today (Jan 22) as the Court of Appeal heard evidence that members of its first two nominees had failed — on two occasions each — evaluations by the Accounting and Corporate Regulatory Authority (ACRA).

The town council, run by the Workers’ Party, will now have to choose from among the Big Four accounting firms within two weeks, ordered Chief Justice (CJ) Sundaresh Menon, so that this “matter of public interest and involving public funds” is not delayed further.

The court’s intervention came after a gridlock between AHTC and the Housing and Development Board (HDB) that has stretched to eight weeks since accountants were ordered to be brought in to find remedies to compliance and governance issues found within the town council.

“The concern now should be to appoint a team of accountants that manifestly have the ability, the experience and the resources to complete this task expeditiously,” said CJ Menon, adding that the task to be undertaken should not be underestimated.

AHTC has nominated three accounting firms — the third on Wednesday night. The first two, Business Assurance LLP and MRI Moores Rowland LLP, had backed out, after more information on their credentials was sought through a court order.

Business Assurance’s founder Alex Chai highlighted the intense media scrutiny as a reason. The court was also told he backed out of the job because he wanted to keep his grading in an annual evaluation of public accountants (called Practice Monitoring Programme, or PMP) carried out by ACRA private. MRI Moores Rowland quit without offering any reason.

But today, the chief director of the ACRA department overseeing the PMP tendered to the court gradings given to members of the two firms that AHTC had initially pitched to do the job.

Ms Quek Siew Eng’s evidence showed that an unnamed member of Business Assurance LLP had failed the PMP in 2010 and 2014, and was restricted from practice from July 2015 until this month.

“This period is relevant because during the period that Business Assurance was put up for nomination, they were placed under a restriction on practice,” said Deputy Chief Counsel (Litigation) Aurill Kam, who is representing the HDB.

MRI Moores Rowland also has a team member who failed two evaluations between 2009 and 2013. The firm similarly withdrew from the job.

“The revelation of failures in both teams nominated calls into question their selection and due diligence process, their judgment in the selection of accountants, and there is no assurance that proper checks have been carried out by them in relation to their latest nomination,” said Ms Kam.

It also emerged today that after the last hearing on Wednesday, AHTC proposed a third firm that very night — Ardent Business Advisory, led by Mr Kelvin Thio and Mr Terence Ng.

In an affidavit filed with the court, AHTC vice-chairman Sylvia Lim said both candidates have “significant experience” in regulatory and forensic services, and have accepted appointments as judicial managers and liquidators.

According to AHTC, both Mr Thio and Mr Ng also have experience in voluntary liquidation work and trustees’ bankruptcy appointment.

“What’s not clear to us is whether these assignments were just plain vanilla kinds of winding up, or whether they required forensic or investigative work?” said Ms Kam, adding that both parties appeared to be not “suitably qualified”.

Given the evidence tendered on the first two firms’ members, CJ Menon agreed that the HDB could “reasonably” object to their appointment, had they not withdrawn. 

On AHTC’s third nominee, the judge noted that the HDB had said it required more time to assess the firm.

The court had ordered AHTC to appoint accountants to pinpoint areas in which it had flouted the Town Councils Act and offer solutions. 

An Auditor-General’s Office (AGO) report had flagged lapses in governance and compliance, including on the town council’s timeliness in making transfers to its sinking fund, among other things.

The first monthly progress report on AHTC’s outstanding non-compliances and the steps taken to remedy these will have to be submitted to the HDB by April 15.