MND releases new governance code for town councils, effective April 2020

Singapore—A new code of governance whose goal is to increase management standards and promote higher levels of transparency among town councils was released by the Ministry of National Development (MND) on June 19, Wednesday.

This new code will take effect by April of next year, FY2020 (April 1, 2020, giving town councils ample time with which to establish the implementation of the new code.

Town Councils are required to submit the first declaration for FY 2020 by September 2021.

According to the MND, “The code provisions set out best practices which TCs (town councils) are encouraged to adopt, through a comply-or-explain regime.”

Every year, town councils are required to declare their compliance and hand in the Governance Disclosure Checklist for the Code to the MND.

In order to ensure compliance with the checklist, MND says “Where TCs opt not to comply or are in the process of working towards compliance with certain provisions, TCs will be required to provide meaningful explanations on how the governance standards in the Code are achieved.”

Here are the four main areas where the new guidelines have focused on: council effectiveness, internal controls and processes, financial management, and vendor management.

The statement from the MND reads,

“The Code is based on five guiding principles, namely integrity, objectivity, accountability, fairness, and transparency. These guiding principles underpin the provisions in the Code, which span four domains: (a) Council Effectiveness, (b) Internal Controls & Processes, (c) Financial Management and (d) Vendor ManagementThe Code provisions set out best practices which TCs are encouraged to adopt, through a comply-or-explain regime.

In drafting the Code, MND has taken reference from the Code of Charities and Institutions of Public Character, and the Code of Corporate Governance where appropriate, and adapted the provisions to suit the unique operating context of TCs. MND has also sought to introduce more robust governance standards whilst being mindful of the cost of compliance and the differences in operating circumstances across TCs.”

Since one of the goals of the new code is transparency, MND emphasized that town councils are in charge of significant amounts of money.

According to the ministry’s press statement, “Today, town councils collectively manage about S$2 billion worth of public and residents’ monies.

As public institutions entrusted with significant amounts of public funds, town councils should have good governance and management controls in place to remain transparent and accountable to their residents.”

The Straits Times quotes a spokesman for the MND as saying that the new code “goes beyond the legislative requirements, and covers best practices that will guide Town Councils to achieve a higher level of governance over time”.

The ruling party, the People’s Action Party (PAP) apparently had their own Code for Town Councils, according to Dr Teo Ho Pin, since PAP’s Town Councils are under his purview. Based on the Party’s code as well as existing law, Dr Teo said the PAP is “complying substantially to the new code of governance,” although he added that a reorganization of committees is needed for most Town Councils, which will also need to create a new audit committee made up of councilors who are experienced.

Pritam Singh, head of the Worker’s Party, said that the only town council held by the opposition, Aljunied-Hougang, had also been consulted on the code, and had provided feedback on it./ TISG

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