Summary of findings published by AGO
The Auditor-General’s Office (“AGO”) performs annual audit and reports the findings to give assurance on the proper accounting, management and use of public resources. The intention is to strengthen financial government of public service and enhance accountability of public entities.
In the FY2024/25, AGO made 132 audit observations in AGO Management Letter. Of which, 25 of the More Significant Audit Observations are highlighted in the Report of the Auditor-General. Below is a summary of the More Significant Audit Observations highlighted.
While annual audits are conducted and key findings shared, certain categories of exceptions and control gaps remain recurring within the government sector. The following areas, already highlighted in past AGO reports, are still noteworthy.
Procurement
Procurement remains a key risk area where gaps and weaknesses frequently arise. While the Government Instruction Manual sets out clear policies and guidelines across the eight stages of procurement, the AGO audit for FY2024/25 identified instances of weaknesses in Stage 5, the evaluation process. Specifically, two agencies were noted to have demonstrated “a lack of robustness in tender evaluation”.
In one agency, AGO found that the bid price used for evaluation and subsequently submitted for award did not match the bid price stated in the tenderer’s proposal. The bid price stated in the proposal differed from the required remuneration data submitted by the tenderer after the tender had closed. AGO was however unable to sight to any clarification sought on the discrepancy. Instead of evaluating the tender based on the bid price stated in the proposal, the agency derived a different bid price using its own analysis and adjustment on the required remuneration data. This derived bid price was then submitted for approval and used to award the tender.
In another agency, AGO noted that the successful tenderer submitted certificates belonging to its subsidiary as documentation of its Quality Management System (ISO standards) for evaluation instead of its own. The agency accepted these certificates and awarded points to the tenderer, which contributed to their eventual tender award. AGO noted that, had the certificates not been accepted, another tenderer would have been awarded the contract at a lower price.
Upholding procurement principles
These cases highlight the importance of upholding the procurement principles of fairness and transparency. Supporting documents provided by tenderers must be verified for adequacy and accuracy. Where discrepancies or ambiguities are identified, such as the above-mentioned cases of bid price differences and the use of subsidiary certificate, agencies should always seek clarification with the tenderer before proceeding.
Agencies should also put in controls to ensure that the clarifications with vendors, particularly those involving information that may affect decision-making, are properly disclosed to the Tender Approving Authority (TAA) for consideration in the tender approval process.
Construction contract management - Star rate assessment
Star rate items refer to items for which rates are not listed in the contract. Since these rates were not predetermined, agencies should place greater emphasis on evaluating star rate items to ensure they are reasonable and aligned with prevailing market rates.
Across the past three AGO Audit reports (FY2021/22 - FY2023/24), concerns were repeatedly raised about the authenticity of quotations provided for star rate items, raising questions over whether adequate value for money had been achieved. In addition, AGO also noted instances where star rate quotations were obtained from the contractor’s sub-contractors rather than from independent sources. This creates gaps in assurance over the reasonableness of prices for the star rate items.
Exercising professional scepticism and use of data analytics
Although guidelines have been issued to assist agencies over the management of star rate items, the management of star rate assessment continues to present significant risk. The assessment of star rate quotations remains a key concern for agencies to address.
Agencies should exercise professional scepticism when reviewing star rate items, even when consultants are engaged. Furthermore, agencies should also avoid being overly reliant on the checks performed by consultants. Where appropriate, the use of data analytics or artificial intelligence can be incorporated into the review process to help identify potential exceptions in star rate items.
Grant management
Recurring concerns were also noted in the area of grant management. In the FY2024/25 audit, AGO observed inadequate assurance over grant eligibility as agencies had not retained supporting documents to demonstrate that eligibility checks were performed. Furthermore, there was also a lack of requirement for the grant application and claims of reimbursement to be supported with submission of documents.
Audit also highlighted the absence of conflict-of-interest declarations from applicants during the process of claims submission. This gap in controls may increase the risk of inflated or improper claims being made under the grants.
Use of system workflows and risk-based verification
To strengthen controls, agencies can leverage on the use of system workflows. By embedding mandatory requirement for uploading of supporting documents and conflict of interest declaration into workflow, agencies can improve compliance and transparency. A risk-based approach can also be adopted, where higher risk transactions can be routed for a second layer of verification, providing additional assurance over the management of grant.
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