The Court of Appeal (CA) has turned down Aljunied-Hougang Town Council (AHTC)’s application for directions on how it should go about choosing its accountants, adding that this is a “matter of common sense” and that it would be “neither appropriate nor helpful to draw the Court into a consideration of these questions”.

Concerns over AHTC’s Due Diligence Process

1    HDB is concerned over AHTC’s persistent failure to provide basic information on the expertise, capacity and resources of the accountants proposed by the Town Council (TC) for HDB’s concurrence. Such information should be readily available if the TC had conducted due diligence before selecting and proposing their nominations.

2    AHTC has not been forthcoming with information requested by HDB regarding its nominated accountants viz Business Assurance (BA) and subsequently MRI Moores Rowland. To recap:

• HDB wrote to AHTC on 5 Jan 2016 for specific information on BA to enable it to make an evaluation of the suitability of their nomination.
• The TC did not provide the information. On 7 Jan 2016, the CA directed the TC to provide the requested information by 11 Jan 2016.
• The TC did not do so. Instead, in their response on 11 Jan 2016, i.e. the day of the deadline, they proposed a completely new team of accountants from another firm, MRI Moores Rowland.
• As was the case when the TC first proposed Business Assurance, the information furnished on MRI Moores Rowland was vague and incomplete. For instance, basic information such as the team’s proposed approach for carrying out its work was not submitted.
• Consequently, HDB wrote again to AHTC on 13 Jan 2016 to seek clarifications and additional information on their newly-nominated accountants to properly assess their suitability. AHTC chose again not to answer any of HDB’s questions on MRI Moores Rowland.
• On 19 Jan 2016, the night before the CA hearing, AHTC informed the CA that MRI Moores Rowland was no longer their nominee as the firm had also withdrawn on 17 Jan 2016. No reason was given for MRI Moores Rowland’s sudden withdrawal. This latest development was also not mentioned in the affidavits filed by AHTC on 18 Jan 2016.
   

See Annex A for the full chronology of exchanges between AHTC and HDB.

4    AHTC’s nomination approach in both instances suggests a lack of rigour and basic due diligence – evident in the successive nominations and withdrawals of both their proposed accountants over a short period of time.

5    Hence, HDB shares the CA’s concern on whether AHTC “has done due diligence in making nominations”, and that “all facts may not have been provided in a candid manner”.

Appoint the Most Suitable & Qualified Accountant

6    HDB is unable to understand why the TC is averse to considering any of the major accountancy firms, which clearly have the expertise, capacity and resources to carry out the assignment.

7    This continuing position is perplexing as the AHTC’s concern about costs of a Big Four accounting firm has been addressed by HDB’s offer to bear the additional costs, given the public interest involved in this matter.

8    HDB hopes that AHTC will do all that is necessary to appoint the most suitable and qualified accountants to carry out the work ordered by the Court.

9    As noted by the CA, the appointment of AHTC’s accountants has been long outstanding. It is in the interest of all parties involved that this matter be resolved expeditiously.

10    If AHTC is prepared to reconsider HDB’s earlier suggestion to appoint a reputable firm such as one from the Big Four, HDB’s offer to bear the additional costs of the appointment still stands.

Annex B – Background of the Court Case