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Source:
www.nkfs.org |
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KPMG¡¯s report on investigation into
the National Kidney Foundation (NKF) |
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1 INTRODUCTION |
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1.1. In July 2005, when the new NKF Board
took office, it commissioned KPMG to conduct an independent
investigation into NKF¡¯s past practices. KPMG has completed its
investigation and submitted its report to the NKF Board on Friday, 16
December 2005. |
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1.2. The full investigation into the past
practices of the former NKF board and management revealed poor
management practices and a lack of good governance of the NKF under its
previous Board and management, and even questionable ethical conduct. |
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1.3. Over the past 5 months, the new NKF
Board has taken active steps to improve governance and accountability,
enhance transparency, reduce operating costs and improve patient care.
On top of these, clear human resource and remuneration policies have
been established and financial management strengthened to prevent abuse. |
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The new Board recognizes that it is our moral
imperative to manage the NKF in accordance to the principles of good
governance, integrity and accountability to our donors, and will continue to
improve the NKF¡¯s governance framework and management practices to regain the
public¡¯s confidence. |
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2 KEY KPMG FINDINGS AND FOLLOW UP BY THE
NEW NKF |
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2.1 For the investigation, KPMG devoted a
team of forty professionals and more than 10,000 man-hours in its
investigation. It sought to address questions in nine key areas. |
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2.2. In its report, KPMG has highlighted
major weaknesses within NKF¡¯s the governance framework. |
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The new NKF Board is seeking legal advice on
whether there were corporate practices which might have crossed the
legal/regulatory line, and on the appropriate course of actions to be
taken against the former NKF Directors/EXCO Members and others where
applicable. NKF will have to be mindful of balancing the cost of any
actions and the interest of the organisation. |
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2.3. In this press release, we assume that
readers would have read the full KPMG report. Hence only salient
information in the report will be highlighted for presentation. |
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2.4. The key KPMG findings are summarised
below, together with the new NKF Board¡¯s follow-up actions: |
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3. GOVERNANCE OF THE NKF |
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Q1: Whether there existed any deficiencies
in control, oversight and independence relating to issues of governance
of the NKF? |
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3.1. Function of Former Board versus the
Executive Commitee |
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3.1.1. KPMG found that the former NKF Board
delegated all powers to the Executive Committee, which in turn delegated
most, if not all, powers to the former Chief Executive Officer, Mr TT
Durai. The Board was largely an ineffective one, which resulted in the
concentration of power and authority in Mr TT Durai. |
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3.1.2. The new NKF Board consists of a panel
of eminent professionals who are experts in their respective fields.
Their roles and responsibilities are clearly spelt out and well
delineated from the executive management and staff. |
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The Board has also formed 7 committees in
charge of specific areas: Audit Committee, Finance Committee,
Legal/Governance Committee, HR/Remuneration Committee, Investment
Committee, Nomination Committee and Medical Committee. |
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3.1.3. The new Board and management have
also revised the NKF¡¯s administration organization structure to achieve
a higher standard of governance and accountability. |
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3.2. Human Resources |
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3.2.1. Under the former NKF management, the
NKF did not have a formal remuneration policy nor a comprehensive HR
policy on staff benefits, which led to the apparent arbitrary
determination and awarding of promotions, salary increment, performance
bonus and other discretionary payments. |
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3.2.2. Now, the NKF has new HR policies that
contain clear guidelines covering all aspects of staff benefits and
entitlements as well as HR processes. Some of these polices are already
in force while others, like the new salary policy, will be introduced
from 1 Jan 2006. |
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When the salary policy is implemented, the
NKF will have a clear salary and grade structure and therefore a
progression path for its staff. It will define salary ranges, annual
increments, performance payments and there will be defined processes. |
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3.3. Financial Management & Control |
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3.3.1. The former NKF Board had a Finance
Committee, but was largely ineffective. KPMG found numerous breaches of
stated purchasing policy and noted inadequacies in finance and
accounting controls. |
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3.3.2. The new NKF Board has put in place a
clear finance policy with checks and balances on approval limits and
limits on cheque signatories. This will ensure proper and controlled
processes for budgeting, purchasing, tenders, contract approvals and
claims. |
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3.4. Disclosure & Transparency |
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3.4.1. The NKF Board¡¯s Audit Committee was
also found to be ineffective. |
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3.4.2. The new NKF Board will outsource its
Internal Audit work to an independent CPA firm to ensure maximum
impartiality. |
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4. TRANSPARENCY AND ACCURACY OF NKF
PUBLICATIONS AND STATISTICS |
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Q2: Whether the NKF made or caused to be
made misleading claims as to patient numbers, patient subsidies and
treatment costs? |
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4.1. KPMG found that figures relating to the
number of kidney patients, patient subsidies and treatment costs were
inflated or misleading in its press releases and fund raising
promotional materials. |
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4.1.1. In the amount of funds that was
raised and used for dialysis. KPMG found that based on the financial
statements for the year ended 31 December 2003, approximately 10 cents
out of every charity dollar went towards subsidizing patients¡¯ direct
treatment costs. |
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4.1.2. In the NKF¡¯s Investment Report 2004,
it was reported that ¡°out of every dollar NKF raised in 2003, $0.52 went
to our beneficiaries and programmes for the year,¡¡± |
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4.2. The new NKF Board had, in a press
conference and subsequent public disclosures, clarified a number of
issues, including: patient numbers of the NKF, treatment costs and
subsidy amounts per dialysis patient given by the NKF. |
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Key statistics are now available online at
its website
www.nkfs.org/statistics.php. The public and donors can now obtain
current information on the number of patients under the NKF dialysis
programme, number of LifeDrop donors, the amount of donations collected
and NKF expenses among other data. |
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4.2.2. Applying the same basis of
calculation by KPMG, the new Board aims to increase the amount spent on
dialysis in FY 2006 to be at least 41% of charity income. To achieve
this, the NKF will focus on its core business and have stricter control
over expenditure on support, ancillary and administrative activities. |
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More..... |
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Source:
www.nkfs.org Press Release 19
Dec 2005 |
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Related Articles: |
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-
STATEMENT BY HEALTH MINISTER KHAW BOON WAN ON KPMG'S REPORT ON THE
NATIONAL KIDNEY FOUNDATION |
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Responses to KPMG report on NKF |
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-
NKF - win back
donors' trust |
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FrontPage Edition: Tue 20 Dec 2005
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