Politicians shirk their duty... again #nlpoli

If the Auditor General starts the investigation of wetlands capping as requested by the Public Accounts Committee, then she will be acting illegally.

The Auditor General has no authority to conduct a review requested by the Public Accounts Committee of the House of Assembly under any provincial statute,  regulation, or constitutional practise.

Section 16 of the Auditor General is explicit about the subjects that the Auditor General may review, if requested by either the Lieutenant Governor in Council,  the House of Assembly,  or the Public Accounts Committee.  They are:

•         [matters] relating to the financial affairs of the province or to public property, or
•      inquire into and report on a person or organisation  that has received financial aid from the government of the province, or   in respect of which financial aid from the government of the province is sought.

In August 2019, Crosbie asked the Public Accounts Committee of the legislature to look into why the environment department had not issued a permit for wetland capping.  Specifically, Crosbie asked for an investigation of a “breakdown in communication that resulted in the flooding of the Muskrat Falls reservoir in violation of an agreement between the Government of Newfoundland and Labrador and the Innu Nation, the Nunatsiavut Government, and the NunatuKavut Community Council to abide by the recommendations of the Independent Expert Advisory Committee, which directed that wetland capping must precede any such flooding. ”

There is no way that the plain English meaning of section 16 can be stretched to cover a “breakdown in communication” of any kind. Crosbie tried to make the issue a financial one by noting in his letter to the Public Accounts Committee that the government allocated $30 million for wetland capping and some it had been spent.

AG reports on suspected frauds in FY 2014 #nlpoli

In his most recent report, Auditor General Terry Paddon disclosed alleged frauds identified during his review of the provincial government's accounts:

• The finance department's Professional Services and Internal Audit Division discovered a potential fraud of $42,000, less about 10% that had been repaid, that occurred in the the division's examination of the Provincial Courts bank reconciliation processes. The Department of Justice and Public Safety referred this matter to the police for investigation. 
• The same division reported a suspected fraud in the Department of Transportation and Works' depot involving thefts of automotive fuel and supplies as well as inappropriate use of employee resources. "It was concluded by the Division that due to the poor state of records and lack of effective internal controls at the depot, it was not possible to prove that any fraud had occurred. No further action was taken."
• During a routine review of travel claims, the Department of Justice and Public Safety identified irregularities that totalled approximately $1,300. The Department forwarded the matter to the police for investigation. 
• The Department of Child, Youth and Family Services reported that A foster parent may have committed fraud by submitting claims for funding for overnight babysitting when no babysitting services were provided. CYFS turned the matter over to the police and the individual is no longer a foster parent. 
• The Department of Advanced Education and Skills identified an alleged forgery of documentation submitted for reimbursement of approximately $30,000 for medical transportation costs and possible false documentation to support $27,000 in client rental payments.  Both cases are with the police.
• The Forestry and Agrifoods Agency identified an alleged misappropriation of funds by an employee of the agency that involved deliberately delaying the submission of cash remittances and personally using the funds during the intervening period.   The agency recovered the $21,000 involved,  terminated the employee but did not report the matter to the police.  
• Nalcor Energy identified a theft of petty cash of $360.  Nalcor revised its procedures for handling petty cash.
• The Provincial Information and Library Resources Board informed the AG of a fraud against the board involving a cheque that had apparently be altered.  The board subsequently recovered the $7,100 from its bank but did not report the matter to the police. 
• The Newfoundland and Labrador Housing Corporation identified an instance of improper retention of public money in which two employees were using their assigned corporate procurement cards to make purchases for personal use. Overall, the improper transactions amounted to $5,156 ($4,698 related to one employee and $458 to another). The $5,156 has been recovered from both employees and one employee has resigned. The other remains an employee of the Corporation. The Corporation has not referred the matter to the police. 

 -srbp-

Small things and big differences #nlpoli

The Auditor General delivered his annual report on some of the provincial government’s programs and services on Wednesday.

We learned, among other things that provincial government consulting contracts have gone horrendously beyond the amount originally budgeted.  The worst case was a contract – presumably related to the Corner Brook hospital  - that wound up  being 780% beyond the original budget. 

One of the big culprits in the escalating costs were change orders.  Those are, as the name suggests, changes to the original contract required because of changes made by the government. That was the case both in capital works contracts that involved changes to construction but in service contracts as well.

Terry Paddon’s Report #nlpoli

If you want to understand what the provincial government’s audited financial statements really mean, you will have to skip Tom Marshall’s comments last week and look instead at the lengthy set of observations from the Auditor General released on Friday.

Paddon’s comments are especially important for two reasons.

First of all, Paddon is the former deputy minister of finance.  He knows both the current situation and how the government got there.  if he is speaking this plainly now about the government;s financial position, you can imagine what he was saying as the current administration got itself into a mess in the first place.

Second, Paddon explains a great many things in plain enough English so that anyone can understand his points. As you will see, they are not what the government has chosen to talk about.

One Newsroom. Two Stories. @nlpoli

For the English crowed in Newfoundland and Labrador, @cbcnl gave its audience one story from the Auditor General’s report.

They focused on horrendous salary increases in one government agency.

From the Radio Canada desk in the same newsroom comes a completely different story that fits exactly with the Big Story that has been dominating headlines since the Premier warned of layoffs and spending cuts late last year.  The Radio Canada headline translates roughly to “Alarming increase in public spending in NL”.

NL AG: Dunderdale unprecedented doc block “not a good thing“ #nlpoli #cdnpoli

From Canadian Press:

The veteran auditor, in an interview Thursday, said the government's sweeping denial of documents on the basis of cabinet confidentiality has left him no way to trace how and why spending decisions were made.

"I can certainly say it's not a good thing," he said.

"The auditor general's office is a very important link in the chain of accountability in government. And when governments spend money and make decisions, we go in and look at how they spend the money and how they make these decisions."

Loveys, who plans to retire in May after a 33-year auditing career, said he has never seen such an information block.

"I've seen some refusals, but the very broad interpretation is something I've never seen before. It's inconsistent with reviews we've done in the past."

- srbp -

Tories hide spending documents from Auditor General #nlpoli

The culture of secrecy that is Danny Williams’ legacy in provincial politics is firmly institutionalised. The provincial Conservative’s war against oversight and adequate oversight of their management of the province’s finances now extends to withholding information from the province’s Auditor General.

When the province’s Auditor General went looking for the Conservative’s oft-mentioned infrastructure strategy, he found out they didn’t have one.  You’ll find that gem in the first few pages of the latest report from the Auditor General on how the provincial government spends public money.

A committee of officials was supposed to develop the strategy.  While they didn’t do that, according to the AG, the group did produce a draft “report”.  But the draft report was never finalized.

When the auditor general’s officials started contacting departments to get information on capital works spending, they ran smack into a legal roadblock. The departments refused to release the information to the Auditor General and cited the provincial Access to Information Act as justification. The documents would reveal cabinet deliberations  according to justice department lawyers, and as such they couldn’t turn them over to the Auditor general.

The access to information laws were never intended to cover officials like the Auditor General.  You can tell that because of the way the law is worded.  The purpose of the Act is to make public bodies more accountable to the public by providing the rules under which the public may obtain information held by government and its agencies.

Members of the public – known as applicants in the Act – apply as set out in Section 8. Under section 18, heads of department must refuse to disclose cabinet documents to applicants. 

But the Auditor General?  Not a person as defined by the Act or an ordinary member of the public.

As such there wouldn’t be a conflict between the access law and the Auditor General Act.

The AG’s got his own legal opinions and they pretty much wind up in the same place:  there’s no legal reason for the provincial government to hide information from the AG. Unfortunately, he and his lawyers have taken the weak premise of accepting that the access law actually governs the AG in the first place.

And all the AG has done is filed a report with the Tory-dominated House of Assembly.  That might make the upcoming session interesting and tense but it doesn’t settle the legal issues.  The AG needs to take it downtown and drag the attorney general in front of a judge.

Now this is not the first time the provincial government has misused the access laws to keep information from the public or other officials.  In fact, the current administration is notorious for its efforts to hide information from the public. Around these parts, SRBP likes to call it freedom from information.

In fact, in the seven years SRBP has been around, this sort of stuff is part for the course.

No strategy.

No documents.

No audit.

No surprise.

- srbp -

AG finishes term with more fumbles

Outgoing auditor general John Noseworthy held to his pattern of making less-than-accurate claims or claims without evidence, this time with respect to the offshore regulatory board.

Noseworthy’s claims and the accurate information from the board are in a story available at the Telegram website.

In his latest accusation, Noseworthy said he did not have full access to the offshore board records.  Fact is, he did.  What Noseworthy couldn’t get was proprietary information belonging to the oil companies.

“We invited him in. He had sent four people in, they were here for four months conducting an audit. He had full access to the board,” [offshore board CEO Max] Ruelokke said.

But Ruelokke said Noseworthy’s staff did not have access to information provided to the board by oil companies — which the companies deem to be proprietory [sic]— and that’s because of section 119 of the Atlantic Accord Act.

The act states companies have to approve the release of the information to any third party.

“When we asked (the companies) to do so, on behalf of the auditor general, they refused to do that. So we couldn’t release it to him,” Ruelokke said.

The distinction is significant.

Your humble e-scribbler has raised questions about Noseworthy’s attack on the board – and that’s what it has been – from the beginning.

The most recent post on the topic raised the question  of why Noseworthy had failed to produce a report or bothered to update the public on it since he launched his public attack on the board in 2008.  Maybe Noseworthy’s most recent unfounded accusation was an effort to deflect attention away from his own shortcomings.

While Noseworthy enjoys local “media cred’ – that is, they will never, ever question any of his pronouncements – the retiring auditor’s record is far from pristine.

Noseworthy missed millions in House of Assembly overspending that continued well into 2006. The accurate figure turned up in some fairly simple analysis done by the Green commission. 

Despite having access to financial records kept by the comptroller general, Noseworthy did not once report on the obvious overspending in some House of Assembly accounts until after his auditors stumbled across irregularities in 2006.

From the rings to spending by individual members of the legislature to the actual rules in place during the period, Noseworthy or his crew simply didn’t do the homework in many cases to know what they were looking at. That didn’t stop him from making claims that were baseless or that lacked evidence.

And to cap it all, Noseworthy still hasn’t completed the tasks set out for him in a 2006 cabinet order.  Instead he substituted his own commentary on individual member’s spending in an incomplete report he issued to wide media coverage.

And on that one Noseworthy also missed one fairly obvious problem in the House scandal: diversion of public money for partisan purposes. It’s obvious wrong and there was way more to it than just the $11,000 he did report.  Three times that turned up during subsequent criminal trials of former members of the House.  And while Noseworthy couldn’t have reported that while the investigations and trials were under way, it was the most fundamentally corrupt practice he should have seen raised in his original audits.

But he didn’t.

Instead, Noseworthy focused on trinkets.  In one news conference, Noseworthy said that he and his staff “did not find” any rings.  That led many to believe initially that the rings did not exist. They quickly turned up, however if one looked. Obviously, Noseworthy and his staff didn’t look.   

In perhaps the most bizarre case, Noseworthy replaced his actual recommendations for a report on government operations and substituted one he never made.  He then reported compliance with his invented recommendation in a review he produce of government compliance with his reports.

The matter gets to be all the more serious when you realise the subject of the original report was an apparent lack of adequate management of public money handed out to private sector companies.

Noseworthy has never explained the discrepancy in what he reported originally and what he claimed happened later on. Nor did Noseworthy report in his self-assessment that one of the companies covered in the original report had gone bankrupt in the intervening two years.

- srbp -

Noseworthiness, redux

Sometimes you do have to wonder if anybody – let alone Auditor General John Noseworthy himself - actually reads what his office spits out.

Take, for example, the most recent report on operations in government departments.  Page after page of the report contain sentences containing random spacing that one piece of software or another has added to text as someone cut and pasted it back and forth.

Your humble e-scribbler knows the problem all too well. There’s a huge difference, though,  between someone writing in his spare time and the province’s official accounting watchdog.

But perhaps the worst part of Noseworthy’s report is the shameless massaging of numbers to make his office look way more effective than it actually is.

No, we are not talking about a problem identified in previous reports: the AG actually made up recommendations he never originally made and then claimed departments had complied with the fake ones.

This is a case of basic math problems.

Previous reports contained a total of 193 recommendations according to Noseworthy’s most recent report.  In following up on them, he reported that 89.1% “had been acted upon”.

Nearly 90%?

Wow.

That’s amazing.

Until you look at the detail.

Departments and agencies only fully accepted  79 of the 193 recommendations.

That’s 41%.

Departments only partially implemented another 79.

And they didn’t implement another 21 at all.

The remainder are less than partially implemented, whatever that means.

But think about it:  Noseworthy’s success rate is not 90% as his statement implies;  it’s really only 41%. 

Government departments either gave up implementing 60% of his recommendations fully or simply refused to implement them altogether.

So if the guy massages the numbers about his own office in order to make things look better than they actually are, what might he be doing with the other numbers?

- srbp -

Related: 

• “Noseworthiness”
• “Auditor General’s examination of offshore board mysteriously vanishes”

Kremlinology 31: The Auditor General’s examination of the offshore board mysteriously vanishes

The year:  2008.

The case:  Auditor General John Noseworthy suddenly took it in his head that the offshore regulatory board fell within his jurisdiction.

Boom.

Right out of the blue without any warning.

And it was odd too, because despite mounds of evidence that the board wasn’t subject to the provincial auditor general and that Noseworthy’s office didn’t think it had the legal right to audit the board (it has only recently been added to the list of entities subject to audit), Noseworthy threw a major-league tantrum. 

In the end, Noseworthy quietly started to review the board in 2009.

In early 2011 – three full years after the racket started – Noseworthy still hasn’t issued a report on the board nor has he indicated when - if ever -  it might appear.

How very odd.

2008?

2008.

Something about that year stands out.

What could it be?

Oh yes. 

That was the year of Danny Williams’ jihad against Stephen Harper if memory serves.

Hmmm.

Maybe it was just a coincidence.

Wonder where John’s report is?

- srbp -

Delusion or Disconnect? Overtime

“The Williams Government has been unwavering in its commitment to managing provincial programs, services and financial resources in a responsible and prudent manner.”

and

“Sound governance and responsible management have been the cornerstones of how our government runs the affairs of the province and administers programs and services to meet the needs of our residents."

Sure.

That’s easy enough to write in a release, but it sure doesn’t hold up to scrutiny. 

Take, for example, the issue of overtime which led off pretty well every conventional news story on the Auditor General’s report released last week.

The coverage and commentary thus far took cues from the Auditor general and focused on some fairly simple and obvious points. Overtime both in its paid and time-off varieties has mushroomed  - up 55% - since 2001.

That’s despite the work of a committee struck in 2001 to come up with ways of controlling overtime. The climb has been steepest since 2004 when the current crowd of sound fiscal managers took over and started spending public cash in what Paul Oram and other cabinet ministers have described since as an unsustainable manner. 

The official response: these people are making way more money than before, there may be problems recruiting in some cases and the work demands for public safety all may make it necessary to run up the over-time bill.

That first one would matter if the amount was the concern. 

It really isn’t, though, if you look beyond the simplistic stuff the AG fixated on and look at the rates of change for specific departments.  It’s easy to focus on  Works and Transportation but the change in overtime paid out has actually been relatively modest.  It’s gone from $9.3 million to about $11.9 million in a little less than a decade.

But what about Executive Council and Finance?

The numbers there show stunning increases:  from $74,000 to $602,000 in Finance and comparable jumps – on the order of nine or 10 percent  - in Executive Council. The explanations offered for the transportation or Justice departments’ overtime expenses just don’t apply here.

They also don’t fit with the pattern for most of the departments listed on page 12 of that section of the AG report.  The changes, over time, just don’t match that rate of increase.  Even in Justice, the overtime paid out in 2008 is only slightly less than three times higher than that paid in 2000. That’s bigger than it should be but the amount is potentially justified – pardon the pun – if there are issues of staffing or public safety involved in some years.

The sort of comparison done here – as relatively unsophisticated as it is – just can’t be found in the AG report.  There is much talk of amounts and the shares of the total held by one department or another.  But at no point does the AG zero in on the departments which seem to have some fairly obvious problems and ones that have – on the face of it – much more significant implications for management or the manageability of the problem.

If a department has a fairly consistent amount of overtime, then that’s one thing.  But if the amount starts small and then grows exponentially?  Well, that suggests there are people problems or an organizational problem that needs to be addressed with something more substantial than the “keep an eye on things” advice coming from the AG report.

You might forgive the Auditor General for the simplistic approach to this issue taken in the report if the amount of overtime accumulated through the “time-off in lieu of” system  - called TOIL - wasn’t equally as dramatic as the paid overtime in a couple of cases as well.

That chart isn’t distorted.  Finance went from a TOIL of $68,000 in Fiscal Year 2000 to almost $1.1 million in FY 2008. Justice numbers are about the same.  TOIL is time off in lieu of overtime.

What makes these numbers stand out all the more is the comparison with departments where you might expect the overtime bill to be huge. 

Take Health, for example.  Big department.  Plenty of demands.  However, both the TOIL and paid overtime costs in the study period remained about what they were before.  Now the paid overtime numbers for Health fluctuated wildly over time, but they did not experience the sort of dramatic sweep upward seen with the departments noted here.  And in the case of TOIL, the Health tally was about $27,000 for 2008 compared to $25,000 about a decade ago.

It would take way more information that the AG makes available to figure out why these three departments are experiencing the rather dramatic changes in overtime over time.  As a result, it would be hard to say what is causing the problems and therefore make some useful suggestions on how to fix things. 

One thing that is for certain, the AG report makes some pretty lame recommendations that don’t really amount to much.  Tracking the overtime and making sure it is warranted both count as penetrating insights into the managerially obvious and they are about as useless an exercise as faking your own recommendations.

-srbp-

Spending Scandal: when “facts” aren’t true

The agreed statements entered in some of the trials resulting from the House of Assembly spending scandal are remarkable, if for no other reason than by the incorrect information contained in them.

Take this one from the statement entered on Tuesday in the Bill Murray trial:

In simplest terms, that statement is not true.

The finance department’s Comptroller General continued invariably over the whole scandal period to maintain accurate records of the total amounts paid under the allowances budget item each year.  

The Comptroller General’s figures were reported in the provincial government’s financial statements which were – it should be noted – audited each year in the scandal period by first Elizabeth Marshall and then her successor John Noseworthy.

Even a cursory examination of the Public Accounts shows overspending well in excess of what was subsequently reported by John Noseworthy once the scandal story broke.

In fact, as documented at Bond Papers and in Chief Justice Derek Green’s inquiry report, the overspending was obvious.  The BP post from December 2006 indicated that the total overspending amounted to more than twice as much as anything Noseworthy ever indicated.

In the chart from that post (above), red indicates the overspending as reported in the public accounts.  Yellow is the figure reported by Noseworthy for a given fiscal year. It only includes money identified by Noseworthy as being made to four members of the House of Assembly.

No one – least of all Noseworthy – has explained the massive discrepancy between the available evidence and what Noseworthy reported or the consistent failure of any audit officials to make public reference to the evident overspending.

-srbp-

Related:

• “AG reports leave serious unanswered questions” (July 2006) – discusses problems with Auditor General’s reports on four politicians, including inconsistencies in the way travel expenses were allocated by the AG’s office for the four MHAs.
• “Legislature financial scandal bigger than previously revealed” (August 2006)
• “The little things” (September 2007) – Among other things, the Ag did not offer any comment on the diversion of constituency funds for partisan purposes, something which was improper at the least and potentially illegal at most.
• “NL AG hoist by petard of own misleading statements” (February 2008)
• “AG report makes up old recommendation…” (November 2009) – Notes that an auditor general’s update on previous reports included a fake recommendation which he claimed had been acted on instead of the five on which no information was proved.

Dead companies still on government asset books

The provincial government is still carrying shares in two dead companies on its books as assets even though the companies are now out of business and the chances of recovering any cash from them is virtually non-existent.

A total of $1.0 million in shares in Consilient and SAC Manufacturing are still listed as investments in Volume II of the Public Accounts, the audited financial statements for the provincial government.

SAC Manufacturing went out of business less than six months after the provincial government injected a half million dollars into that company.

Consilient, a high technology company, went bankrupt last year. it was featured in a report by the province’s auditor general on investments that, among other things, lacked adequate documentation and security.

Unlike past years, the Public Accounts section that includes these companies doesn’t contain any notes on existing holdings and any new ones acquired during the year. There is only reference to $3.3 million being available to write-off bad investments. 

There is no indication any of the investments have been written off. 

That’s despite a note in the 2008 audited financial statements which said the half million dollars for SAC Manufacturing would be written off over a year ago:

During 2006-07, the Province acquired 500 Class “B”Common shares at a cost of $500,000. Commencing in June 2007,
these shares are conditionally redeemable based on after tax earnings. All shares must be redeemed no later than 19 December 2016.

During 2007-08, the company ceased operations and, as there is now no reasonable prospect for redemption of these shares, the full amount of the investment has been included in the provision for investment write-downs.

That’s not the only peculiarity in the recent work by the auditor general about one of these companies. 

An omnibus report on previous audits, released in November 2009, made up the recommendation related to original audit.  The report replaced the original list of five suggested changes and actions with one that wasn’t made originally.  The AG then reported that the innovation department was making progress on the phony recommendation.

-srbp-

AG report makes up old recommendation, gives no real update on small business program

The section of the recently released auditor general update report that deals with small business fund in the provincial innovation department relies on a recommendation that wasn’t contained in the initial report.

All the same, the report claims that the department has begun complying with the AG recommendations for a 2007 review.

The invented recommendation and supposed compliance are also included – apparently – among the 80% of the recommendations the 2009 AG report claims have been acted on within two years.

According to the 2009 update, the lone recommendation on the small business fund was this:

The Department should ensure all required documentation is on file to
support applications, payments for funding and monitoring.

But the original report – released in early 2008 - contained a total of five recommendations, none of which was the one cited by auditor general John Noseworthy in 2009:

The third real recommendation – related to security for disbursed funds - is particularly important since one of the companies apparently reviewed by the initial audit has since gone belly up.

There is no reference to the bankruptcy in the 2009 update report nor does the auditor general discuss at all whether or not the public money in the company was secured.

There was also no reference to the first recommendation from 2007. That one suggested there may be no legal basis for the department to operate the fund in the way it had been operated in the first place.

In fact, there’s no reference at all in the 2009 review to how the fund actually operates three years after the period covered by the first review.

Compare that, however, to the significant problems found in the 2007 report:

• there was “no explicit authority under the Financial Administration Act for the Department to make direct investments in companies” and yet in a single year the department made three investments totalling “$1,050,000 to three companies”;
• There were “no documented procedures for approving, disbursing and monitoring such unique investments and, as a result, these investments were not subject to the same due diligence required for investments under the SME Fund. “
• “[N]one of the three companies were required to repay the investment
  contingent on either income earned or a maximum seven year period;”
• “one company was not required to submit documentation to support
  specific expenditures;”
• “shareholders for one company (Knowledge-based IT Company A) who received $500,000 were not required to make new equity investments as part of their contribution to the project; instead, previous investments were accepted;”
• “shareholders for one company (Knowledge-based IT Company B) who received $500,000 were not required to provide personal net worth statements;” and
• “Department officials were not entitled to attend any company meetings for one company (Knowledge-based IT Company B) even though the company was provided with funding totalling $500,000.”

-srbp-

MIA AG report pops up

The auditor general update report that appeared and then disappeared a couple of weeks ago is back.

This time all the links work.

No explanation of the mysterious appearance and disappearance in the last week of October, though.

-srbp-

Oh where, oh where did his big report go?

The province’s auditor general release a report last week to update issues covered by some of his previous reports.

or did he?

Your humble e-scribbler dutifully noted the release when it appeared and flagged it for later examination.  returning to the site today, your humble e-scribbler found that the release had mysteriously disappeared.

There are traces of it, though, just in case you were thinking the old boy had finally lost it entirely. 

On the government website you can find the archive of AG news releases.

The month of October is there but underneath it is nary a thing.  Odd that, given that in other months where nothing was said, not even the name of the silent month is noted.

On the AG website, the name of the report is there  - right at the top of the pile -  but the report itself is not.

Interesting, wot?

-srbp-

More help for Jerome

Finance minister Jerome Kennedy’s not alone.

He’s not alone on a lot of things, but in this case, we refer to his lack of willingness to read the documents relevant to an issue and to understand the plain English meaning of them.

Jerome’s already been poked a bit both here and at the Telegram over his apparent ignorance of the role of the Clerk of the House of Assembly.

But there’s more ignorance, and that has to do with one of the issues the House of Assembly Management Commission discussed at its May 13 meeting.

They were talking about recreating the financial statements of the legislature for Fiscal Years 1999 and 2000.  The issue is whether or not to pay an outside audit firm to rebuild the House accounts for those two years and then audit them.

Auditor General John Noseworthy believes this work would be for naught since many of the records are missing and there is no guarantee the accounts would be accurate.  He noted in correspondence dating back to 2007 that his reviews would be sufficient to meet the legislative requirement the management commission is looking at in trying to have this work done. There’s an estimate under discussion of hiring an outside audit firm at a cost of over $600,000 to do the work.

Jerome thinks the work ought to be done.

Without going into all the details, he’s right.

The work ought to have been done and it should have been done by the Auditor General under the task assigned to him by cabinet in 2006. The only problem is that it isn’t clear the work was done.

In the summer of 2006, cabinet directed the Auditor General to do two things as a result of the House of Assembly scandal. 

First, he was directed to go back to 1989 to find any other examples of overspending up to 2004.  He did that and apparently found nothing beyond what he’d already reported.  Note that he didn’t look in detail at the two years up to 2006 when the allowances account was overspent by about $1.0 million and the budget estimates presented in the House were known to be wrong.

Second, the Auditor General was directed to conduct “annual audits of the accounts of the House of Assembly from fiscal years 1999/2000 to 2003/2004.”

So where are those audits?

Good question, since they’ve never been made public. In fact, there’s no public sign that component of the order was ever done even though the Auditor General got extra money and staff in order to do the work.

What we got instead was a report that discussed some inappropriate spending from 1989 to 2005. We can say “some” inappropriate spending  since Noseworthy never went into enough detail to determine where all the cash actually went or if people misdirected money even if they didn’t exceed their allowance totals.

For example, Noseworthy never reported at all – apparently never even noticed – how much money was directed to partisan purposes even for a member now known to have funded party work out of his allowances.  There was a glaringly obvious breach of the Elections Act in there but it went unreported until the Ed Byrne trial.

If Noseworthy didn’t do that for one glaring example, then we have to wonder just exactly how much of a look his team of auditors actually gave any of their reports.  But that’s a digression.

The key point to bear in mind is that the Auditor General himself was tasked with producing detailed audits for 1999 up to 2004.  That’s irrespective of whether or not there was an audit by a private firm.

On top of that, there’s no sign Noseworthy and his team ever did the work they were tasked with by cabinet in 2006.

So what exactly is the House of Assembly Management Commission doing arguing about spending public money to recreate what the Auditor General already got paid to do?

-srbp-

AG quietly starts offshore board audit

Officials of the province’s auditor general have started their audit of the Canada-Newfoundland and Labrador Offshore Petroleum Board, the spokesperson for the board confirmed for Bond Papers.

The audit began earlier this month.

The board is the joint federal provincial body that regulates the province’s offshore oil and gas industry.  Last year, the board issued invitations to both the federal and provincial auditors general to conduct audits;  only the provincial auditor accepted.

In the letter, chairman and chief executive officer Max Ruelokke notes that the board is concerned about "recent comments in the media concerning its finances which may be construed to imply some impropriety in the Board's finances."

That would be comments by Noseworthy, who is no stranger to making unsubstantiated accusations.

Auditor general John Noseworthy decided last year to audit the board, despite the fact that his office had never listed the board as an entity subject to audit.  Noseworthy claimed to have legal advice supporting his new position.  The legal opinion has never been made public.

The board refused the request indicating that  - as a joint federal-provincial body – the board should be audit by both federal and provincial auditors.

This did not satisfy Noseworthy who issued a special report accusing the board of breaking the province’s Auditor General Act.

Noseworthy made reference to the special report in his annual report for the year ending March 31, 2008.  However, Noseworthy neglected to note in the report that the dispute had been resolved and his office was now conducting the audit.

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Related:

“No access restriction: offshore board”

“NL AG hoist by own petard of misleading statements”

Signs of the times

1.  Consilient Technology, a success story in the local information technology sector closed its doors today. The office is closed and the furniture is gone, according to CBC news.

In his report for 2006, issued early in 2008, Auditor General John Noseworthy raised concerns about the conditions attached to an infusion of provincial public money.

2.  Wabush Mines is slashing production in response to the global economic downturn.  Production forecast for 2009 is about half of what it was in 2007/2008.  Layoffs are expected.

Other factors are influencing the Wabush Mines decision in addition to the demand drop:

"We are now going through the most difficult time in the history of Wabush Mines, with, from what I perceive to be, an unfavourable work climate at the plants, the worst cost structure in North America and a plant that is aged," he said.

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Bring in the Auditor General

While the crowd at Tammany on Gower are fighting over the recent firing of an internal auditor, they are missing a fairly obvious solution to the problem of ensuring that the City's books are well-watched:  let John Noseworthy have a look at them.

The City of St. John's has been run for far too long as a closed shop without much in the way of public oversight or scrutiny.  The current council - every single one of them - has yet to demonstrate the slightest concern for transparency and accountability particularly when it comes to the way city council spends public money. 

Sure there has been plenty of talk, especially from Ron Ellsworth.  But Ellsworth's already shown himself to be good at talk, but not much when it comes to the action of disclosure.  Heck, when confronted with a simple question about a political poll he'd commissioned, Ellsworth couldn't figure out whether to fib or fess up.  So he did both, first fibbing and then confessing he was behind it.

Talk is cheap. 

If Ellsworth and his cronies at ToG want to earn public confidence, they'd start by letting John Noseworthy audit the city books. 

At the same time, since they've made such a public spectacle of the internal auditor, it is incumbent on city officials to disclose the details of what went on. They will howl at the prospect and try and find every legal means to keep the whole mess under wraps, but the whole episode stinks to high heavens.

A little sunlight will help disinfect the place.

Something says, though, the council and senior officials will be doing everything possible to put up blinds, all the while talking a good game about the benefits of solar energy.

It's what city council does.

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