Performance Audit Report – Urban Development Corporation (UDC)
The Urban Development Corporation (UDC) was established by the UDC Act (1968), to plan orderly development of physical infrastructure in a holistic and sustainable manner, in designated areas across the island. As provided by the Act, the UDC may undertake transactions that are necessary to ensure the proper performance of its functions. In this regard, the Act empowers UDC, among other things, to acquire, manage and dispose of land; construct and maintain roads and buildings; provide and maintain car parks, piers, public parks and gardens.
In November 2012, the Auditor General’s Department conducted a performance audit aimed at determining whether UDC was managing its operations effectively and efficiently to achieve its core business objectives. The audit found significant weaknesses including several corporate governance failures; as well as financial challenges and internal control deficiencies that impaired the UDC’s ability to manage effectively and efficiently the resources under its control. Deficiencies were identified in UDC’s management of its investments in subsidiary and joint venture companies. UDC did not effectively execute its core objective to make development happen through the planning and implementation of comprehensive projects and programmes in designated areas. Based on these findings, the Auditor General recommended that UDC must ensure strict adherence to the applicable Acts and reporting requirements, adopt a robust investment management strategy to better guide future investment decisions and urgently take measures to ensure that it returns to a financially viable and solvent operation.
This performance audit sought to determine the adequacy, effectiveness, and timeliness of actions taken by UDC to correct the reported weaknesses, and to assess whether UDC was cost-effectively optimizing the return on assets under its charge