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.

In the last week the Audit Committee has received quite a lot of attention due to a particular report currently being performed by the City Auditor’s Office. The feedback I’ve been hearing from residents on this has led me to believe there is not a clear understanding about the report or the Audit function and I would like to shed some light on this issue.

There has been a lot of politicizing of this audit by some of the media and some members of Council, and following Thursday’s Audit Committee meeting, the confusion has escalated.

This audit is of the City’s procurement process, it is not an audit of any single contract, namely the Peace Bridge. This audit encompasses roughly 100 contracts covering a 4 year period.

In other words, this is a big audit! It is an important audit! It needs to be completed so that we can move forward with improving our processes, for all our procurements, not just a particular one.

So, with that background, why did I vote against the motion to bring the audit forward in April?

We clearly heard from the City Auditor that her draft report would not be complete until the end of March/beginning of April. Following the procedures of internal auditing, an integral part of the audit process includes reporting on the management response to the findings of the audit. This is a key component of not only complete audits, but of successful audits. The City Auditor advised that to complete the audit in compliance with this industry standard would deliver the Procurement Audit to committee in May.

What I heard at Audit Committee on Thursday was that forcing the Auditor to report in April would have meant an incomplete report coming before committee. Clearly the proposal would politically short-circuit the City Auditor from doing their work. Politicizing the Audit function of a public institution, such as a city government, is not an approach that is supportable. We cannot, on the one hand, have an independent audit function that we support, and then, on the other hand, force that same audit function to bring forward incomplete reports because some find it politically advantageous.

We cannot let political hyperbole drive the agenda of the Auditor’s Office. They are independent for a reason.