SOCIETIES (Accounting guidelines and audit checks)

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SOCIETIES:

(Accounting guidelines and audit checks): 12.

Dr Tan Sze Wee asked the Deputy Prime Minister and Minister for Home

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Affairs in the wake of the NKF debacle and concern about corporate governance matters, whether the Registry of Societies will consider implementing strict accounting guidelines and conducting audit checks on other societies, such as religious organisations and associations, in an effort to curtail any incidence of fraud and mismanagement of public funds.

The Senior Minister of State for Home Affairs (Assoc. Prof. Ho Peng Kee) (for the Deputy Prime Minister and Minister for Home Affairs): Mr Speaker, Sir, the primary responsibility of the Registrar of Societies is to ensure that societies comply with the Societies Act, and that the members and executive committee conduct their affairs in accordance with the society's constitution. By and large, societies should be self-regulating, with their affairs governed by their constitutions. The primary responsibility for regulating the affairs of a society therefore lies with the elected committee members and the general membership to ensure that the finances are prudently managed and properly accounted for.

Sir, out of some 6,200 societies registered with the Registry of Societies (ROS), only some 16% or about 990 societies have a charitable purpose as their main objective. In any case, for all societies, whether charitable or not, basic safeguards are in place to ensure proper maintenance of the society's financial accounts. Thus, all societies are required to submit their annual returns to the ROS within one month of holding the Annual General Meeting (AGM) or if no AGM is held, then within one month after the close of the financial year. The returns are to be accompanied by a copy of the society's audited statement of accounts to be certified by the society's auditor or if the gross income or expenditure exceeds $½ million by a qualified company auditor.

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Sir, such statements of accounts enable the Registry to check on societies should there be allegations of mismanagement of society funds or fraud. If there is evidence of fraud or an offence that is criminal in nature, the Registrar will refer the matter to the appropriate authorities for investigation.

Sir, on the issue of watching over societies which are charities and institutions of public character (IPCs) where funds are raised from the public, there are also other key organs, such as the Commissioner of Charities which play an important role. But in any case, as we strengthen corporate governance of these societies, we should avoid a heavy hand, as that may stifle the initiative and public spiritedness of volunteers, thereby hindering the growth of civil society.

In summary, Sir, in the case of registered societies, which are essentially the coming together of members by contract for a common purpose, the primary responsibility to ensure that the affairs of the society are properly conducted lies with its members. In addition, should the society raise funds from the public, the donating public can also play a part to ensure that the funds collected are used as intended.

Dr Tan Sze Wee: Sir, the answers are fairly clear. However, in view of what has happened recently, I think the concerns on the ground are primarily with regard to either charitable or non-charitable organisations which are collecting or in the process of collecting funds from the public in terms of accountability. For organisations that are governed under the Registrar of Societies, there is a clear guideline on the enforcement of corporate governance through the AGM and also through the accounts.

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Mr Speaker: What is your question, Dr Tan?

Dr Tan Sze Wee: My question is this. For religious organisations, does the ROS govern them strictly? If it does not, then it should look into this. Because religious organisations do collect a fair amount of money and there have been concerns about the lack of transparency in how the funds have been administered. Recently, there were also issues about fraud as well in one of these organisations.

Assoc. Prof. Ho Peng Kee: Sir, if a religious organisation is a society registered under the ROS, it will be governed by the ROS. And as I have said, essentially, it is for the members to watch over how the affairs of their society are conducted. These are funds collected from the members themselves. In so far as any society which wants to collect funds from the public, the society will have to apply for a permit from the police. And, indeed, one of the requirements of the permit is that within 60 days of the end of the collection, a statement of accounts, properly audited by an external auditor, will have to be submitted to the police. So that should control that part of the activities.