The presentation explains some of the controls and compliance issues related to public sector procurement in Singapore

1. Public Sector Procurement Asia 2010
17-18 August 2010
g
Yoong Ee Chuan, CIA, CPA, CISA, CISM
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2.  Evolution of public sector procurement
 Procurement risks
 Managing procurement risks
 Control and compliance issues
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3.  Paper to Digital
 Centralisation to de-centralisation
 IM3B to IM on procurement
 Snapshot of procurement ecosystem
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4. 4

5. 5

6.  Principles remain similar i e open and fair
i.e.
competition, transparency and value-for-money
(or previously “lowest cost meeting
specifications”)
ifi i ”)
 Procurement processes were very manual
 IM3B – Government Instruction Manual on
Procurement prescriptive rules for manual
handling of procurement exercises
g p
 Rules for quotations vs tenders
 Estimated procurement value (EPV)
◦ >=$3,000 < $30,000 – quotations
◦ > $70,000- tenders
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7. 7

8.  Quotations
◦ Less onerous compliance wise to tenders
◦ Confidentiality of quotations
◦ Fax quotations vs mailed quotations
l d
◦ Dedicated fax, officer opening etc.
◦ Posting of quotations on notice board
g q
◦ Finance Circular No 3/2010 [11 August 2010] Changes
to the Quotation Process
 Minimum Conditions of Contract for Quotation
 Publication of Quotation Schedule and Corrigendum Changes
 P bli i
Publication of Reasons f Quotations that are “Cancelled” or
fR for Q i h “C ll d”
“No Award”
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9.  Tenders
◦ Offer by vendors – more legal documentation as it
is binding
◦ Confidentiality and integrity important
 Tender boxes system with dual key
 Tender opening committee
 Tender witnessing officers
 Evaluation b committee
E l i by i
 Award by approving authorities based on value
◦ Posting of bids on notice boards
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10.  Centralisation to de-centralisation
◦ THEN
 Central procurement office (CPO)
 Stationeries e.g. pens obtained via CPO
 Savings from bulk purchases but spoilage from stock
obsolescence, matching demand/supply
◦ NOW
 Decentralised
 E.g. e-Catalogue buy, bulk tender, GeBIZ
 You buy what you need, block budget aproach
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11.  IM3B to IM on procurement
◦ THEN
 Instruction manuals came in paper files
 Updating was a pain, manually cross out super-ceded
paras, paste over new paras etc.
 People were more controls & rules conscious
◦ NOW
 Web based
Web-based
 Ease of reference and ease of forgetting (in some
cases)
)
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12.  Inherent Risks
◦ Procurement is susceptible to corruption (in
general)
◦ E.g. vendors gifts, ang-pows, free samples
◦ Non-compliances can threaten openness, fairness
and transparency occur
◦ Laxity in contract management can result in loss of
value-for-money
al e for mone
◦ Report of the Auditor-General highlights cases of
non-compliance
non compliance
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13.  In the past:
◦ AG’s Report 1994/1995
 Audit of Purchases under United States Foreign Military
Sales Programme
 Review of Financial Systems of Singapore Armed Forces
Sports Association
S A i i
 Compliance with Government Procurement Procedures
by Statutory Boards
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14. 14

15. 15

16. 16

17.  Recently – Report of the Auditor-General
FY2008/09, Auditor-General’s Overview
 Areas of concern
◦ Laxity in procurement and contract management
◦ Lack of financial prudence in procurement and poor
management of contracts and agreements
◦ Resulting in higher expenditure for goods and
g g g
services
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18.  Areas of concern (cont’d)
(cont d)
◦ Under-performance not detected
◦ Penalties for non-performance not imposed
non performance
◦ Revenues due not collected
◦ Little or no assurance of value-for-money in
y
projects carried out
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23.  People
◦ Clear from AGO report that lapses are due to the
way people interpret and enforce the rules as well
as implementing the procedures
◦ IM3B now more principles-based, i.e. more room
for people to interpret hence critical to educate
staff handling procedure about how to apply the
principles
◦ IM3B now provides case studies to help us
◦ But still need to inculcate controls consciousness
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24.  People
◦ Segregation of responsibilities
 Not one person do everything
 GeBIZ – different roles, e.g. goods received and goods
inspection must be different officers, purchasing
officer also cannot be approving etc.
ffi l b i
 Previously can circumvent if manual, now with GeBIZ
roles, more difficult
 Evaluation team for tenders shouldn’t all be from the
same dept/team
◦ Education and awareness of IM 3B (and 3G)
◦ Trade-off between controls and efficiency
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25.  System of procurement
◦ Implement systems and processes that adhere to
IM3
◦ But public agencies do vary in implementation
 E.g. of SBs that had dubious quotations
◦ Get internal audit to review
◦ Perhaps external audit may review
 However, does not focus too much on internal controls
over procurement, i.e. more concerned about validity
and authorisation, completeness of recording of
purchasing and payment transactions then
procurement principles: openness, fairness and
transparency
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26.  GeBIZ: A game changer
◦ Controls are built into the procurement process
◦ More difficult (but not impossible!) to circumvent
relative to manual processes
◦ Examples
 Openness of web invitations to quotes and invitations
to tenders and request for proposals (global)
 Routing for approvals
 Publication of awards
f
◦ Make full use of GeBIZ
 Because you HAVE to (SBs MUST follow IM3)
 Because it’s good for your agency
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27.  Some issues for procurement managers to
consider:
◦ To what extent does your agency adhere to IM3B/G?
◦ To what extent is your standard operating
p
procedures for p
procurement in line with IM3B/G?
◦ How familiar are your people with IM3B/G principles
and procedures (i.e. GeBIZ use)
◦ Have you set-up assurance and audit of
d d f
procurement
 Get your internal audit to look into it
 Ask your external auditor to look into it
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28.  Understand your own control and compliance
issues first
 Auditor-General s
Auditor General’s Office will carry out audits
on a rotational basis
◦ Your turn for procurement or contracts audit by
AGO will (eventually!) come 
◦ At least minimise or reduce number of findings by
g y
AGO (or your agency will be featured in Report of
the Auditor-General FY 20XX/XX
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29.  Questions?
 Contact
◦ Yoong Ee Chuan, Director/Internal Audit Office
Chuan
◦ 535 Clementi Road, Singapore 599489
◦ Ngee Ann Polytechnic (www.np.edu.sg)
(www np edu sg)
 yec2@np.edu.sg
 DID: 6460-6275
 Twitter: @eechuan
 LinkedIn: http://sg.linkedin.com/in/eechuan
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