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SINGAPORE: Three office holders have been implicated as “severe mismanagement" and lack of financial governance and controls were uncovered at Sri Veeramakaliamman in Little India, and a Commercial Affairs Department probe is underway for suspected criminal offences.
The people involved are former chairman of the temple’s management committee R Selvaraju, current chairman of the management committee and trustee Sivakadacham (Siva) and Ratha Krishnan Selvakumar (Kumar), another trustee and a secretary on the management committee.
Here’s a detailed look at what an inquiry by the Commissioner of Charities found:
Duplicated payments for invoices issued by vendors
Between Jan 1, 2011 and Jul 31, 2014, the key office bearers of the temple (namely Selvaraju, Siva and Kumar) were the cheque signatories and approvers for payment vouchers, and had to sign jointly for the temple to effect any payment.
The inquiry revealed that they had erroneously effected multiple duplicated payments resulting in the temple overpaying its vendors.
Prevalent use of uncrossed cheques
The key office bearers had prevalently issued uncrossed cheques resulting in heightened risk of fraud and misappropriation of cash because these cheques could be encashed by any bearers who may not be the intended recipients. The temple also allowed the bearers of these uncrossed cheques to “encash” the cheques at the temple’s premises in exchange for cash received from donations.
Between Jan 1, 2011 and Jul 31, 2014, the temple issued at least 823 uncrossed cheques totaling more than S$1.5 million. Of which, the inquiry identified 45 transactions in excess of S$227,000 where the uncrossed cheques were not issued to the names of the intended recipients of the proceeds and no supporting documents were maintained to substantiate that the intended payees eventually received the cash.
Loans and disbursements of proceeds unaccounted for
The inquiry revealed that Kumar had, on behalf of the temple, obtained loans totalling S$350,000 without the approval from the management committee, and without written loan agreements with the lenders.
According to the temple, the cash borrowed from the loans was for the purpose of paying tokens of appreciation to an estimated 250 individuals (“the beneficiaries”) who had helped at the consecration ceremony, which took place on Jun 22, 2014. However, there was limited supporting evidence to substantiate that cash proceeds from these loans were disbursed to all of the intended recipients.
Further, although the management committee’s minutes of meetings initially stated that Kumar was requested to repay the loans, the loans were subsequently repaid using the temple’s funds with the payments approved by the key office bearers. Additionally, the temple’s accounting records were inaccurate because these cash loans and disbursements of the proceeds were not properly accounted for as liabilities and expenses in the relevant audited financial statements.
Cash advances unaccounted for
The inquiry noted instances where Kumar received cash advances amounting to S$18,000 via uncrossed cheques issued by the temple, and there were no supporting receipts to substantiate that the temple’s funds were legitimately used. The temple did not have any internal controls in place to safeguard the cash advances it disbursed.
Conflicts of interest
The inquiry revealed that the temple entered into substantial transactions with two vendors, owned by Kumar’s relative, for which the estimated transaction value was collectively in excess of S$750,000.
There was also a lack of competitive quotes obtained by the temple for the transactions with the two vendors owned by Kumar’s relative. The temple also reimbursed Kumar for purchases of SIM cards from his business amounting to S$2,824. There was no documentary record evidencing that Kumar had acted in the best interests of the temple by declaring these instances of actual or potential conflicts of interest or abstaining himself from approving these transactions, including the payment to himself.
Unauthorised offsetting of staff loans
There were no financial controls in place to monitor staff loans and more importantly, prevent manipulation of the accounting records through unauthorised journal entries. The inquiry identified an instance where unauthorised journal entries were entered into the temple’s accounting system to remove staff loans totaling S$10,000. As a result, the temple’s assets were reduced by S$10,000 with a corresponding increase in salary expenses. The temple’s management committee had also approved an additional loan of S$5,000 to one employee without a repayment plan for his outstanding staff loan.
Questionable transactions with intermediaries
There were many instances where the temple had engaged the services of individuals as intermediaries to purchase supplies and precious metals from overseas suppliers on its behalf (“intermediaries”). The inquiry noted that the temple disbursed a total amount of S$314,250 to the intermediaries.
The temple neither has a service contract with these Intermediaries nor pays for their services. More importantly, these Intermediaries were not required to obtain competitive quotes before purchasing the supplies and precious metals on behalf of the temple. There were no contractual safeguards to protect the temple from the intermediaries acting improperly on behalf of the temple.
Lack of financial governance and controls
The temple did not have any documented policies and procedures within its finance function to provide guidance to the management committee members and employees on how their duties were to be discharged. While all policies and procedures were purportedly verbally agreed and communicated, internal controls were near non-existent in practice.
Arising from the absence of policies and procedures, neither the management committee members nor employees were able to oversee and operate the temple’s financial controls reliably and consistently. There was also nothing to mitigate the risk of management committee members or employees improvising the policies and procedures over time in an ad-hoc manner. For instance, the inquiry noted instances in which donations collected for the building fund were not used for either building works or renovation, but used for operating expenses. There were differing practices on how cash and non-cash donations such as gold should be accounted.
Inconsistencies were also noted in the ex-gratia payments and benefits for employees and board members. An instance of such relates to private chauffeur services amounting to approximately S$48,000 which were provided to Selvaraju and Siva subsequent to the consecration ceremony although the management committee had only approved the use of private chauffeur services during the consecration ceremony. There were also many instances where payments disbursed by the temple were not adequately substantiated with adequate supporting documents.
These payments total in excess of S$500,000.
Inadequate finance functions
The inquiry revealed that only the outsourced accountant engaged by the temple was professionally trained in accounting, but she was working on a part-time basis and was not involved in the day to day operations of the temple.
The inquiry noted several discrepancies and inaccuracies in the financial records of the temple. Particularly, the Land and Building account in the audited financial statements for the year ended Jun 30, 2014 was understated by more than S$6 million due to an erroneous accounting adjustment. The discrepancies and inaccuracies in the temple’s accounting records and payments would have been mitigated if the accounting support in the temple’s finance function had the appropriate competencies and adequate supervision.
Evidence from the inquiry thus suggests that the key office bearers did not fulfil the duties expected of them as outlined in the charity constitution.
Said the Commissioner of Charities: “These disquieting findings may very well have been prevented if the management committee, particularly the key office bearers, exercised adequate care and prudence in their governance and financial management of the charity.”
Read more at https://www.channelnewsasia.com/new...man-temple-questionable-transactions-10188566
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