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Source: www.mcys.gov.sg |
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THE COMMISSIONER OF CHARITIES
RAISES STRONG CONCERNS ON POOR GOVERNANCE AND MANAGEMENT OF YOUTH
CHALLENGE |
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- LACK OF TRANSPARENCY
AND MISLEADING INFORMATION ON EXECUTIVE PRESIDENT'S REMUNERATION
HIGHLIGHTED |
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The Commissioner of Charities (COC) has
completed his inquiry on Youth Challenge (YC). |
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In August 2006, the COC commenced an inquiry
on YC after receiving a formal complaint from the National Council of
Social Service (NCSS) on possible mismanagement in the administration of
YC as a Charity. |
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YC is an associate member of NCSS. Deloitte
and Touche Enterprise Risk Services Private Limited was appointed by COC
to conduct a special review on YC and to assist in the inquiry. |
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The special review has been completed and
the report presented to the COC. |
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The COC found many irregularities and areas
of concern in the corporate governance, management and financial
controls of YC. |
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In particular, there is lack of transparency
and misleading information on the remuneration of its Executive
President, Mr Vincent Lam. The COC's key findings are: |
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a) Poor Corporate Governance and
Management |
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The YC's Constitution provides for the
election and duties and responsibilities of the Management Committee
(MC). The COC noted non-adherence to the Constitution in this area. The
examples included the following: |
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Some of the members elected to the
2006/08 MC in July 2006 were not YC members at the time of
election; they had in fact been approached by the Executive
President to stand for election. There was also insufficient
notice served to members for the Annual General Meeting (AGM). |
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Two 2004/06 MC members resigned within
four months of being elected, leaving only five members in the MC,
although its Constitution stipulated that the MC should have seven
members. |
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The 2004/06 MC only had six meetings
in its 2-year term, of which four meetings were attended by only
three members, while the Constitution required the MC to meet at
least once every quarter. |
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The MC has the responsibility of
ensuring good governance and proper management of the charity and
should discharge its duty diligently. |
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It should hold regular meetings with
the presence of sufficient members and to actively and vigorously
ask and discuss pertinent information and issues, and to ensure
YC's compliance with its Constitution and relevant regulatory
requirements. |
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Some of the lapses found within YC
were of grave concern. |
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An example was that the Executive
President was able to transact electronic payments (including his
salary) without a second level of approval, in violation of its
Constitution which requires all cheques to be signed by the
President or the first Vice-President in addition to the
Treasurer. |
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Another example was that no official
register of YC members was maintained. |
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b) Deficiencies in Internal
Control |
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The COC also noted numerous internal
deficiencies in YC. Some of the findings included |
blank cheques were pre-signed by the
signatories;
non-compliance with the expenditure approval limits set in the
Constitution;
payments that were inadequately or not supported by documents;
lack of effective control over merchandise stock eg 4,200 pens
valued at $42,000 were unsold from fund raising events and not
properly recorded and tracked;
failure to contribute CPF for interns;
under-declaration of Executive President's income to IRAS; and
membership fee waiver by the Executive President without approval
of the MC. |
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c) Lack of transparency and
misleading information on Executive President's remuneration |
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The basis of the Executive President's
salary scale
($4500x$450-$6,300/$7,200x$720-$9,360/$10,800x$900-$15,300) was
unknown. The Executive President was also paid various benefits
and allowances [1], which were well above the civil
service and charity sector norms. |
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There was no system of annual
performance evaluation and neither was there any review to
determine if the scale is equitable vis-a-vis the Executive
President's responsibilities over the years. |
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The COC found that the Executive
President's total annual remuneration for the financial year ended
31 January 2006 was $248,867. Of this amount, only $53,836 was
disclosed as the Executive President's salaries in the Income and
Expenditure Statement. |
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Another $164,475 was disclosed in Note
3 to the audited financial statements as salaries apportioned to
various projects/events. |
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The remaining $30,556 that comprised
CPF contributions and allowances was embedded in various income
and expenditure items and had not been disclosed as the Executive
President's remuneration. |
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The Executive President's total
remuneration of $248,867 amounted to 56% of the total donation and
other income of $442,287 raised for the same period. |
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The COC noted that while the audited
financial statements by auditor of YC for the years ended 31
January 2004 and 31 January 2005 stated the apportionment of the
Executive President's remuneration to the various projects/events,
the disclosure notes were however omitted from the YC's Annual
Reports for the respective financial years. |
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In fact, the amounts disclosed as the
Executive President's salaries in the Income & Expenditure (which
excluded the amount allocated out) for the two years were only
$39,060 and $41,681 respectively. |
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The figures were misleading. YC's
Annual Report for 2006, published at the time of the COC's
inquiry, had reflected the disclosure note in full. |
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The COC has informed the new
YC's Management Committee, which was elected in October
2006 after the mass resignation of the 2006/08
Management Committee in August 2006 when COC instituted
the inquiry, of the findings on the various
non-compliance and lapses. |
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The COC has given the
Management Committee six months to rectify the breaches
and weaknesses in the governance and management of YC.
During this period, the COC will monitor YC's progress
closely. |
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The COC has been informed by
the Management Committee that it has accepted Mr Vincent
Lam's resignation from the post of Executive President
of Youth Challenge with immediate effect from 22 January
2007. |
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The institution of a public
character (IPC) status for YC's environment project,
which is due to expire on 17 August 2007, will be
terminated with immediate effect from 23 January 2007. |
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[1] The benefits and
allowances cover transportation, car park, outpatient
medical, dental, annual medical checkup, holiday resort
and recreation, personal travel, birthday gift, housing
loan subsidy, club membership and insurance. |
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The Executive President was
also entitled to a gratuity once every 5 years, which
ranges from 7% to 10% of his total annual salary of last
5 years. |
ISSUED BY
MINISTRY OF COMMUNITY DEVELOPMENT, YOUTH AND SPORTS
23 January 2007 |
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Source: www.mcys.gov.sg
Media Release 24 Jan 2007 |
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FrontPage Edition: Tue 23 January 2007
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