FY 2021/22 Auditor-General's Report- Findings on SkillsFuture Singapore (SSG)

Name and Constituency of Member of Parliament

Mr Yip Hon Weng, Yio Chu Kang SMC

Question

To ask the Deputy Prime Minister and Minister for Finance regarding the FY 2021/22 Auditor-General's Report finding that SkillsFuture Singapore (SSG) was lax in collecting Skills Development Levy (SDL) funds (a) what are the reasons and root causes as to why the discrepancy is not detected over five years; (b) how long will it take for SSG to collect back the required funds; and (c) what does the agency intend to do to prevent such similar grant management issues from occurring in the future.

Name and Constituency of Member of Parliament

Ms Sylvia Lim, Aljunied GRC

Question

To ask the Minister for Education with regard to the findings of the Auditor-General's Report for FY 2021/22 (a) what remedial actions are being taken by SkillsFuture Singapore in light of frauds and lapses in the disbursement of grants; (b) how much has been defrauded or overpaid since the inception of SkillsFuture; (c) how much have been recovered; and (d) whether any individuals overseeing the grant schemes have been or will be held accountable for the loss of public funds.

Response

1. The Auditor-General's Office (AGO) had identified lapses in two areas: over-payment in grant disbursement and under-collection of Skills Development Levy. SSG takes these findings seriously.

2. First, AGO found lapses in SSG's disbursement of grants, which led to estimated over-payments of about $4.22 million between 1 April 2018 and 30 June 2021. The main causes of these lapses were due to inaccurate or erroneous declarations by grant applicants and training providers that were not picked up by SSG's internal checks. The bulk of such errors occurred prior to November 2020, when SSG's previous IT system for grant administration had used a declaration-based approach. Other errors also occurred during manual processing of grants, including human errors made by the service provider contracted by SSG to perform grant administration functions.

3. SSG has contacted all affected training providers, companies and individuals for the necessary recovery. Parties will be given time to check their own records and return any confirmed over-payment.

4. To reduce reliance on declarations and manual processing, SSG implemented a new IT system for administering Training Grants since November 2020. The system uses administrative data in government databases to determine and verify eligibility of the grant applicants. SSG is also streamlining its business rules to rely less on declared information and manual verification. Where these cannot be avoided, SSG will tighten its audits on payments disbursed and on the work of its service provider.

5. Separately, AGO found that SSG did not follow up adequately, on a variance of $43 million, between SSG's estimate of the Skills Development Levy (SDL) that employers should pay, and what was collected for the period 2015 to 2020.

6. Allow me to explain the SDL and how it is collected today. The SDL is a levy which companies pay every month for both their local and foreign employees in Singapore. The SDL payable for each employee is 0.25% of the monthly total wages. SSG derives estimates of SDL payable by companies based on existing Government data such as CPF. SSG's estimates may differ from actual SDL amounts paid by the employers due to factors such as fluctuations in total wages payed foreign workers' actual wages every month. In some cases, the variance may be due to employers using more updated employee data, instead of being an actual underpayment of SDL.

7. SSG has adopted a risk-based approach to follow up on estimated variances. The overall variance between the estimated SDL payable and the actual payments has fallen from 18 per cent of overall SDL collected in 2008, to the current 3-4 per cent, with the majority of companies compliant in paying their SDL today. This was achieved through IT system improvements and SSG's reminder letters and calls. Nevertheless, SSG acknowledges that more needs to be done to actively reconcile the remaining gap and help all employers pay the correct amount of SDL.

8. SSG will give affected employers time to validate the amount owed. It has started engaging the affected employers and will contact all by the end of the financial year.

9. SSG will send timely payment reminders and develop more efficient processes to resolve differences in the company's and SSG's estimates of SDL payable. For the few recalcitrant employers who do not pay the outstanding levies despite reminders, SSG will take decisive punitive action.

10. Finally, if there is any negligence found, individuals will be taken to task. Learning from the AGO audit, SSG will do even more to review and enhance its policies, processes and systems to minimise such lapses.