HDB’s Media Statement Following the Court of Appeal Hearing on 22 January 2016
HDB welcomes the decisions of the Court of Appeal (CA) today, where “the concern now should be to appoint accountants that manifestly have the ability, expertise and capacity to undertake the task”, and looks forward to receiving the Aljunied-Hougang Town Council’s (AHTC) nomination of one of the Big Four accounting firms within the next two weeks.
2 To recap, AHTC had initially proposed Business Assurance (BA) and subsequently, MRI Moores Rowland (MRI Moores), as their accountants.In both cases, the information on the TC’s nominees’ experience and expertise were incomplete and insufficient for HDB to make a proper assessment. Hence, HDB asked the TC for additional information, including its nominees’ latest Practice Monitoring Programme (PMP) results, as part of due diligence.
3 However, the TC did not respond to the queries. Instead, both nominees abruptly withdrew. The TC initially said that BA withdrew because of “intense media scrutiny”. However, it later emerged at the CA hearing on 20 January 2016 that BA withdrew because it did not want to reveal its PMP inspection findings. No reasons were given for MRI Moores’ withdrawal.
4 This led the CA to raise its concern on 20 January 2016 on “whether the court has been apprised of all the facts in a candid and forthright manner” and “whether the Town Council has in place a system to ensure due diligence in selecting candidates to do this work”. Furthermore, the TC repeatedly said that the PMP results requested by HDB were not material since both nominees had withdrawn, but the CA disagreed.
5 This morning, the CA heard evidence that for both nominated firms, each had a member who failed the PMP inspection. For BA, there was also a restriction of practice for six months from July 2015 to January 2016, which was within the period BA was nominated by AHTC. The Court also heard that the accountant was informed and was aware of the restrictions. Consequently, the CA commented that it was “satisfied that HDB could reasonably have objected to those nominees had they not been withdrawn.”
6 In light of these disclosures, the Court agreed with HDB that AHTC’s nomination approach in both instances suggests a lack of rigour and basic due diligence. On the TC’s continued aversion to consider any of the Big Four accounting firms, even after HDB has offered to pay the additional cost, the TC gave no further reason for their refusal, other than that they were entitled to appoint their own accountants, and did not want to appoint any of the Big Four.
7 This issue of appointing accountants could have been resolved much sooner had the TC carried out proper due diligence, or considered any of the Big Four accountants, as suggested by HDB in the first instance.
8 Nonetheless, we hope that the TC will give its fullest cooperation to its accountants to complete the work ordered by the CA. We look forward to receiving the TC’s nominated accountant from any of the Big Four within two weeks, and the accountants’ first progress report by 15 April 2016, as directed by the CA.
 Since June 2015, the AGO has required all Statutory Boards and Town Councils to, as part of the appointment process, submit a declaration from their nominated accountant on his/her independence, track record and latest PMP inspection results. The accountant’s PMP results enable one to make an informed assessment of the accountant’s level of professional competence and ability to handle the audit of public institutions such as Town Councils, where public funds and public interest are at stake.