Forensic audit of development agency coming: N.S. gov't
Published Tuesday, August 7, 2012 1:08PM ADT
Last Updated Tuesday, August 7, 2012 5:41PM ADT
HALIFAX -- The Nova Scotia government has decided to launch a forensic audit of the Cumberland Regional Development Authority after the province's ombudsman detected questionable accounting practices and a lack of oversight.
Dwight Bishop released a report Tuesday that concluded the economic development authority's record-keeping was insufficient and should be examined by the province's auditor general.
"CRDA's financial practices revealed in this investigation are not acceptable," Bishop says in his 13-page report. "There is insufficient financial detail on projects to allow for effective financial oversight and governance of CRDA."
Bishop launched his investigation after two former employees from the development authority contacted him in October 2011 alleging wrongdoing.
He found that some invoices could not be verified, adding there was enough evidence to suggest the provincial government could have a tighter rein over its 13 regional development authorities.
"In some cases invoices were submitted, purchases were made or the money was expended," he told a news conference. "In other cases it might have been expended several years later and in some cases we couldn't find where it had been expended."
The report looked at four projects and found reporting irregularities where invoices were created and voided cheques were used to obtain funds from the provincial Economic and Rural Development Department without direct expenditures.
In one instance, two invoices for a street beautification project totalling $35,000 could not be verified.
"In my judgment it raises significant propriety issues which extend beyond maladministration," Bishop said.
He said he also found there was a lack of guidelines in discretionary spending, citing examples where gifts such as crystal, watches, flowers, wine and Christmas bonuses were given to people.
Economic Development Minister Percy Paris said a forensic audit was in order.
"I have instructed staff to start the process of a forensic examination," Paris said in an interview, adding that he wants to see permanent audit and finance committees established for all of the development authorities.
Paris said he realizes there is a need to strengthen the department's financial oversight of the development authorities.
"Any expense now that's been invoiced we want to see proof of payment," Paris said. "I want all expenses that are $50 or more to be made in the form of a cheque or a money order."
Rhonda Kelly, the executive director of the Cumberland Regional Development Authority, did not return messages seeking comment.
Last week, Paris said the government had asked the RCMP to examine a forensic audit of the now-defunct South West Shore Development Authority to determine if that agency broke any laws before it went under owing dozens of businesses more than $2 million.
Paris said a four-member panel would review the province's regional development model.
Auditor general Jacques Lapointe said he would meet with Bishop near the end of the month to hear the ombudsman's case for a forensic audit, although he cautioned his office would have to be selective given its limited budget and work with ongoing audits.
"If we feel that we agree with him ... then we'll have to see exactly how we fit that in," said Lapointe.
The Cumberland Regional Development Authority is mandated to stimulate economic growth in that area of the province. It receives funding from all three levels of government.