SINGAPORE — The spotlight has turned to Aljunied-Hougang Town Council’s (AHTC) choices of accounting firms to fix its deficient practices after fresh details emerged today (Jan 20) that two companies it had wanted to engage pulled out after more details of their credentials were sought.

AHTC’s first choice Business Assurance LLP backed out on Jan 8, a day after the Court of Appeal asked for more information on the firm’s size, the team of accountants’ experience in regulatory investigations, forensic services and audits of public institutions, and their inspection results.

“They indicated ... that they received phone calls from concerned clients, and because of the media scrutiny, they don’t want to be considered,” said AHTC’s lawyer Peter Low.

But it emerged in a hearing today that the firm’s founder Alex Chai had backed out as he wanted to keep his grading in an annual evaluation of public accountants carried out by the Accounting and Corporate Regulatory Board (ACRA) private. “Hence the assertion that the withdrawal was on account of media scrutiny only was perhaps half the story,” said Chief Justice (CJ) Sundaresh Menon.

After Business Assurance pulled out, AHTC approached MRI Moores Rowland LLP, which accepted the job but also did not respond to a request for details on its credentials. The firm also stepped away subsequently but the reason for this was not mentioned in court today.

In response to TODAY’s queries, Mr Low said MRI Moores Rowland did not give any reasons.The impasse started after the apex court ordered AHTC last November to appoint accountants — subject to the authorities’ approval — to identify areas in which it fell short of the Town Councils Act, and offer possible remedies. This came about after an Auditor-General’s Office (AGO) report highlighted lapses in governance and compliance in the town council.

But the Housing and Development Board blocked Business Assurance, citing concerns with whether the firm is up to the task. The ministry suggested instead that AHTC engage the services of one of the Big Four — PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG — adding that it is willing to cover any cost difference.

Today, Deputy Chief Counsel (Litigation) Aurill Kam, representing the Housing and Development Board (HDB), noted that the AGO had sent out a circular in June last year, informing public agencies to provide information on whether their proposed auditors have passed ACRA’s inspection. That, she said, made AHTC’s proposed accountants’ inspection results “highly relevant” to this matter.

The Attorney-General’s Chambers requested an ACRA representative take the stand to give evidence on both firms’ standing.

Taking issue with this, Mr Low said there was nothing “improper or suspicious” over the selection process of the firms. “This is all water under the bridge because these two sets of accountants no longer want to be considered,” he said.

While he acknowledged Mr Low’s point, CJ Menon said: “There remains concerns as to 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 candidate to do this work.”

The evidence from ACRA could put these matters to rest, the judge added.CJ Menon also took issue with the fact that the AHTC chairman Pritam Singh failed to mention MRI Moores Rowland’s withdrawal in his affidavit on Monday. “Ms Kam invites us to infer that in fact MRI withdrew not on Sunday but on (Tuesday) after the town council had been told that evening that ACRA had been subpoenaed,” he said.

CJ Menon also expressed his annoyance that this “long overdue” matter has dragged on until now and set tomorrow as the deadline for both sides to come to an agreement on an appointment. Failing which, the court will make a decision as to whether to hear from the ACRA representative and the appointment of a suitable firm of accountants.

Reminding AHTC of HDB’s offer to bear the additional cost of engaging a Big Four or other suitable accounting firm, CJ Menon said: “Business Assurance has since withdrawn from being considered for this engagement ... Common sense would seem to suggest the town council should now appoint the most suitable and qualified candidate for the engagement.”

Meanwhile, AHTC also said it has made one out of two outstanding transfers to its sinking fund, as ordered by the Court of Appeal in November last year.

CORRECTION: In an earlier version of this story, we reported that the ongoing court case is between the Aljunied-Hougang Town Council (AHTC) and the Ministry of National Development. This is incorrect. The case is between AHTC and the Housing and Development Board. We apologise for the error.