NKF issues revisited

[reachme2003]

yes, i do have some reservations about some religious orgns 'flaunting' their wealth.

It takes 2 hands to clap - on the one hand, the chap at the helm got himself too much power and so started to abuse it. On the other, all the authorities, auditors and so forth simply missed out or overlooked it. So there you are, the result.

We should not look at only Charitable Organisations, but there are many other NGOs collecting lots of funds. One example is some Churches that collects like 10% of the congregation's salaries, which could result in huge amounts. Another one is the Clan associations. Something could be done before we see another scandal.

 

[dkw]

thank you for the paras and paras of legalistic case presented. sorry, i have not much interest nor desire to read them.

the sentiments among us, lay people, is that they cannot reconcile what was presented to MOH after PwC and KPMG's audits(not the most recent one) and what has surfaced in the recent 'massive' audit. in the words of khaw, 'if we cannot rely on the professional (auditors), then who does one rely on?'.

It is a technical but critical point. The problem of relying on lay sentiments is that....well.... they are uninformed and just that....sentiments. Sentiments do not make truths, they do not make law, and often they do not make sense.

 

[reachme2003]

it does not matter. in the larger scheme of things, uninformed sentiments can be potent and destructive, if left alone.

which is also why today, the feedback unit has attempted to influence general sentiments that citizens' feedback are not taken into account in the formulation of policies by publishing 'success' stories.

It is a technical but critical point. The problem of relying on lay sentiments is that....well.... they are uninformed and just that....sentiments. Sentiments do not make truths, they do not make law, and often they do not make sense.

 

[jhansolo]

Let's take heat off auditors as they were doing their job to present the accounts for Tax relationed issues. The issues here are more about moral issues. Happy holidays

 

[smallaperture]

If these so called Big 4 or Big 5 auditors could miss an elephant, what about those smaller OMO ones - much could be missed.

 

[Watcher]

The problem goes back to the Board of Directors (BoD). As posted previously, a normal, annual audit is to ensure what client is doing is following the GAAP and legality in the transaction.

Two major points here:
1) What if the client is actively hiding the transactions from the auditors? Having separate files, and complex transactions? And furthermore, these have been approved by the BoD, even though they are not strictly GAAP, they may not be illegal. An annual audit is not a forensic audit. They cannot dig into computers to retrieve files, they canot go and dig out anything at all. They can only examine what the client give them. Only when there is an obvious inconsistency will an alarm be raised. And even then, they need the authority to conduct an investigation and/or forensic audit. Who to give them the power? If there is no proof, no one will take actions, given the powerful patronage and support.

This is made more difficult by the fact that all levels of management failed in their fidunciary responsibility and to the public. There have been several people who brought up the issue (I can't remember the name of the guy who was formerly working there) on the issue of controls. They brushed him off. No one wants to be a whistleblower, even though those working there I'm sure know of it ("what is this invoice for a gold tap?!?").

Don't forget that even the Minister of Health was deceived by them. With support from so many people, who dare to challenge them? Without all these hoo-har by everyone after all the details came out, who would dare to challenge them?

2) A conflict of interest when the BoD is rubber stamping what the CEO does. Lets put it this way: who pays the auditors? who does the auditors report to? The auditors can be told by the BoD that a transaction or practice is acceptable. As long as it is not overtly illegal (money directly into pocket), who would dig that deep? Eg: How many can link Matilda Chua to Forte and the former CEO to Forte and ProtonWeb prior to the trial, given that this relationship is actively concealed? Don't forget that auditors are not police and do not have rights to secure documents or even demand document outside the scope of work.

 

[reachme2003]

1. we need laws to protect whistle-blowers.

2. in a public listed cos scenarios, the auditors are appointed by the shareholders, including minority shareholders collectively at agms. their task, fundamentally, is to audit on mgt. btw, they can only be removed by shareholders, not mgt. the co pay their fees.

The problem goes back to the Board of Directors (BoD). As posted previously, a normal, annual audit is to ensure what client is doing is following the GAAP and legality in the transaction.

Two major points here:
1) What if the client is actively hiding the transactions from the auditors? Having separate files, and complex transactions? And furthermore, these have been approved by the BoD, even though they are not strictly GAAP, they may not be illegal. An annual audit is not a forensic audit. They cannot dig into computers to retrieve files, they canot go and dig out anything at all. They can only examine what the client give them. Only when there is an obvious inconsistency will an alarm be raised. And even then, they need the authority to conduct an investigation and/or forensic audit. Who to give them the power? If there is no proof, no one will take actions, given the powerful patronage and support.

This is made more difficult by the fact that all levels of management failed in their fidunciary responsibility and to the public. There have been several people who brought up the issue (I can't remember the name of the guy who was formerly working there) on the issue of controls. They brushed him off. No one wants to be a whistleblower, even though those working there I'm sure know of it ("what is this invoice for a gold tap?!?").

Don't forget that even the Minister of Health was deceived by them. With support from so many people, who dare to challenge them? Without all these hoo-har by everyone after all the details came out, who would dare to challenge them?

2) A conflict of interest when the BoD is rubber stamping what the CEO does. Lets put it this way: who pays the auditors? who does the auditors report to? The auditors can be told by the BoD that a transaction or practice is acceptable. As long as it is not overtly illegal (money directly into pocket), who would dig that deep? Eg: How many can link Matilda Chua to Forte and the former CEO to Forte and ProtonWeb prior to the trial, given that this relationship is actively concealed? Don't forget that auditors are not police and do not have rights to secure documents or even demand document outside the scope of work.

 

[radedward]

One of my friends remarked that this whole thing has a feel of a (beer?) commercial that spoofed the whole enron incident where people were busy shredding documents and making it look like snow when thrown out the window.

"Let it snow. Let it snow. Let it snow." :bsmilie:

Anyway, expect to see some very harsh action on any and everyone involved in this whole mess. I believe no criminal charge will be overlooked, judging from today's ST report. MOM is looking into charging people for hiring foreign workers illegally.

What is the problem really?
The fact that the public got duped by the former management of the NKF?
Not really, the general public can be easily duped sometimes, so that's not really surprising.

The problem is related to how people in authority and people who were supposed to regulate NKF were, what's the word... misinformed? :sweat: . If TT Durai and NKF never made a big fuss about the original report about gold taps and flying 1st class in ST, none of this would have been uncovered. He pulled the trigger on himself.

It's hard to say how deep investigations would have been about these allegations or if any real punitive actions would have been taken. The ST already mentions that NKF has been looked into in the past but it was still business as usual for NKF (at least from the layman's point of view).

It seems that the Board of Directors and Durai still had a degree of trust with the authorities even after the previous investigations. Why?

Personally, I don't know. I can only speculate.

But I do know one thing, the government should come down very decisively and very hard on the people involved in this scandal. To do any less would risk a PR disaster with the elections coming soon.

 

[reachme2003]

pls no speculations. if you do not know, just do not post. speculations lead us nowhere, but possible closure of the thread.

One of my friends remarked that this whole thing has a feel of a (beer?) commercial that spoofed the whole enron incident where people were busy shredding documents and making it look like snow when thrown out the window.

"Let it snow. Let it snow. Let it snow." :bsmilie:

Anyway, expect to see some very harsh action on any and everyone involved in this whole mess. I believe no criminal charge will be overlooked, judging from today's ST report. MOM is looking into charging people for hiring foreign workers illegally.

What is the problem really?
The fact that the public got duped by the former management of the NKF?
Not really, the general public can be easily duped sometimes, so that's not really surprising.

The problem is related to how people in authority and people who were supposed to regulate NKF were, what's the word... misinformed? :sweat: . If TT Durai and NKF never made a big fuss about the original report about gold taps and flying 1st class in ST, none of this would have been uncovered. He pulled the trigger on himself.

It's hard to say how deep investigations would have been about these allegations or if any real punitive actions would have been taken. The ST already mentions that NKF has been looked into in the past but it was still business as usual for NKF (at least from the layman's point of view).

It seems that the Board of Directors and Durai still had a degree of trust with the authorities even after the previous investigations. Why?

Personally, I don't know. I can only speculate.

But I do know one thing, the government should come down very decisively and very hard on the people involved in this scandal. To do any less would risk a PR disaster with the elections coming soon.

 

[Spectrum]

Just like what my previous bosses done. Family business man! But in a different scenerio. Cheat investors $$ by telling whatever lies they can. One of them owned a panthouse double storey, change new car about once a year. Buy new, latest & very expensive computer gadgets/systems for thyself to work at home (I doubt so) & tonnes of IT books in his office. Wife working at home (don't know true or not cause no witness) & yet still get paid every month. Did not increase most employees pay for 3 years. Lots of empty promises. Making people leaving one by one & finally in the end, closed down.
One thing need to mention here is that, before any auditor(s) could come & check our office (or personal) :think: expenditures & spendings, most or even all of the related unknown ($$ spending aimlessly) documents are scrapped into bits & pieces. Only the accountant in the office knew all that.
So tell me, how the hell can you audit it?:dunno:

 

[zerofour]

This case is bust coz that st*pid Durai offended S*H then now in deepshit. After this case gets even bigger everyone(public) is watch so nobody to push to, then everyone in the group keep stabbing the one injury and let it die with the case.... everywhere is the same like in my camp last time, schools and every other company also have.... But i think this st*pid Durai should do 20yrs of social work with a normal wage not higher then manager, then all fine from the court must put back to the NKF fund so they will stop saying their fund only can last 5-6yrs more... better then asking him to go jail do nothing right... just my 2 cent la :x

 

[AEC]

thank you for the paras and paras of legalistic case presented. sorry, i have not much interest nor desire to read them.

the sentiments among us, lay people, is that they cannot reconcile what was presented to MOH after PwC and KPMG's audits(not the most recent one) and what has surfaced in the recent 'massive' audit. in the words of khaw, 'if we cannot rely on the professional (auditors), then who does one rely on?'.

fundamentally, they are competitors

kpmg is doing "their share of national service" with regards to the scale and resources deployed in the latest audit. in the words of Ee, the massive audit would have cost $2 mill but kpmg is charging them $100K only. why?

I have no qualm or scruple with differing views. If our opinions differ, we agree to disagree as I am non the wiser if I do.

In my previous thread, I am just opining on the common misconception regarding the auditor’s duties and responsibilities in an annual statutory audit (assuming there is no professional negligence) and I have made no reference to any extant entity or person / group of entities or persons.

Barring the auditing cost of $2 millions, it had been reported that it took 40 professionals and a startling 10,000 man hours and five months to piece together the story of what was going on at NKF after the CEO and BODs had resigned. What kind of audit is required to perform such investigation? Think about it, as I do not wish to repeat what others have told you.

Larger charities have now come under scrutiny by ICPAS in its revised guidelines. It has come up with stricter guidelines for charities in how they are to report the use of donors' funds.

Dr Ernest Kan, vice-president of the ICPAS, said the guidelines cannot fully prevent another NKF-like scandal from happening, but have been designed to make charities more accountable to their donors.

He noted "In the past, in the absence of adequate disclosure guidelines, it was really up to the organization to disclose - or not disclose - certain information they felt was very sensitive,". Now, these charities cannot say their accounts are "following best practices", if they have not complied with the recommendations.

do you remember arthur andersen's role as auditors in Enron's? total disappointment in them.

Thanks for reminding us, I do and I believe you knew the answer as well. Below is a verbatim quote from your previous NKF thread.

yes, all public listed cos has audit committees and other committees. citiraya, informatics, enron, etc has such committees too. why then did misconduct of varying scale goes undetected until it was too late? having committees in place guarantee nothing. so, do not accept them with full faith. i hope the above 'live' examples are sufficient to convince you

with actual cases eg. enron, isn't it timely reminder to review their role? it would seem that the current role of auditors is inadequate.

In the U.S.A., the Sarbanes-Oxley Act of 2002, or SOX, has been passed in response to corporate financial scandals, e.g. Enron and WorldCom. It requires U.S. businesses to report on their internal financial controls and to have those controls audited by external auditors. Many businesses have complained the law requires them to spend large sums of money to ensure their accounting systems are in compliance. Fortune 1000 companies' auditing costs have increased by $1.4 billion collectively so far, and much of this increase is in response to the corporate governance act known as Sarbanes-Oxley, according to University of Nebraska at Omaha researchers.

In the U.K., Oversight Board exists. The Oversight Board is one which carried out a watchdog role, reviewing the activities of the accountancy bodies in monitoring the work of accountants and auditors, in handling complaints and in the conduct of investigation and disciplinary cases. It would review the procedures, checks and balances within the regulatory system to ensure that these were capable of producing the right decisions.

In Singapore, will there be a seismic shift in audit approach and coverage, thereby incurring higher auditing cost? It is under the ICPAS’s purview.

it does not matter. in the larger scheme of things, uninformed sentiments can be potent and destructive, if left alone.

which is also why today, the feedback unit has attempted to influence general sentiments that citizens' feedback are not taken into account in the formulation of policies by publishing 'success' stories.

At last we did found a common ground, which is why I tried to demystify the auditor’s duties and responsibilities in an annual statutory audit for those with popular uninformed sentiment. Anyway, you have mentioned that you have not much interest nor desire to read it.

Finally, Health Minister Khaw Boon Wan mentioned that as their investigations are still in progress, we should not comment further at this stage”.

 

[reachme2003]

in yr last statement, i believe that khaw was talking about him, as a govt official, not you and me.

 

[AEC]

in yr last statement, i believe that khaw was talking about him, as a govt official, not you and me.

He did not say "I shall not comment further at this stage", but "We should not comment further at this stage".

 

[AEC]

in yr last statement

By the way, it is not my statement, I am just quoting what Health Minister Khaw Boon Wan mentioned during the MOH Press Release on KPMG's Report On The National Kidney Foundation (NKF).

 

[radedward]

pls no speculations. if you do not know, just do not post. speculations lead us nowhere, but possible closure of the thread.

which is why I didn't post my speculations
the rest of my post is mostly fact with some opinion as with most of the posts

 

[reachme2003]

at the press conference, khaw was with another senior health official, balajif(sorry for wrong spelling).

He did not say "I shall not comment further at this stage", but "We should not comment further at this stage".

 

[Watcher]

1. we need laws to protect whistle-blowers.

2. in a public listed cos scenarios, the auditors are appointed by the shareholders, including minority shareholders collectively at agms. their task, fundamentally, is to audit on mgt. btw, they can only be removed by shareholders, not mgt. the co pay their fees.

For 1), how far will the law go? Who will ensure that they are properly protected? Government? What if the whistle on some governmental mis-management? :think:

For 2), you are partially right. Auditors are appointed by BoD who represents the shareholders, and reports back to the BoD who, in a money earning company, would try to ensure that the company is better run so they have better returns on their investments. However, this is dependant on the BoD doing the "right" thing for the company or other non-personal reason, the BoD is independent and authority of the BoD.

However, in NKF situation, all three motivations are not there. Therefore, it is failure on all level of management and in the case of NKF, it goes into collusion which makes a normal annual audit almost impossible to detect these situations.

 

[reachme2003]

corrections. 1. auditors are not appointed by BoD. as in my earlier post, the Bod recommends the auditor to the shareholders and the authority to approve/or reject this recommendation lies with the shareholders.

2. auditors do not report to the BoD. auditors report to shareholders. that is why, as shareholders, you receive the annual report annually. the annual report incorporates the audited accounts too.

For 2), you are partially right. Auditors are appointed by BoD who represents the shareholders, and reports back to the BoD who, in a money earning company, would try to ensure that the company is better run so they have better returns on their investments. However, this is dependant on the BoD doing the "right" thing for the company or other non-personal reason, the BoD is independent and authority of the BoD.

 

[reachme2003]

on 21 Dec ST, chua mui hoong wrote 'no more passing the buck please'. a good piece of hard hitting journalism.