Ward 11 Alderman Brian Pincott | City of Calgary Office of the Aldermen

The "f-word"...no, not that one, the other one; fraud. It may not be an expletive but it has no less powerful or emotional an effect than our foul friend.

On May 20, 2010 Phase two of the Procurement Audit was reported to Audit Committee, but I fear that in all of the emotion and anxiety created in the wake of the f-word, the actual findings of the audit and actions resulting from those findings are being lost or minimized.

This cannot happen. This is a very important audit; Phase One examined governance policies and procedures around procurement practices at the City, Phase Two examined a sampling of contracts from the last 5 years.
The results, to be frank, aren't pretty. The audits highlighted many gaps in process and policy that need to be fixed; many improvements need to be made to the procedure of procurement at the City of Calgary.

What the audit did not report was fraud. Nor did the City Auditor, during her presentation to Audit Committee, say that she suspected fraud. What she did say was that with so many gaps in procurement procedures the City was at risk for fraud. This conversation led to a member of committee asking if the City Auditor could guarantee there was no fraud at the City and she answered that she could not because in a corporation of the complexity and size of the City of Calgary it was statistically probable that fraud had or was occurring; which reinforced her professional opinion that the City's procurement procedures need to improve considerably to reduce the risk of fraud. Please view this link to see the Auditor's comments in this regard: www.calgarycitynews.com (Scroll through the blog entries to find the procurement audit interview video).

The City of Calgary issues about 46,000 purchase orders a year. The audit found that more sole-sourcing (contract without a tendering process) occurred than is advised. In some cases, change orders were made to existing contracts (considered a form of sole-sourcing) but the rationale for the change order was missing from the contract paperwork; though to be clear, what was purchased and from whom is documented. All in all, the audit boiled down to pretty slack processes.

The Auditor made 13 recommendations for change, which Administration agreed with completely. 8 recommendations which are already in place, a further 5 recommendations which will be implemented by the end of this year.

Administration has a lot of work to do in Supply Management to ensure that the right policies are in place and that they are followed. It is going to take a lot of work to correct this. And, it is going to take a lot of work by Council and myself as Chair of the Audit Committee to ensure what needs to be done is done.

I believe in strongly in the value of auditing. I am unwavering on having the absolute best audit function for the City of Calgary, for the citizens of Calgary.