02 Feb The mess in Richmond County — those foolhardy demands for a ‘forensic’ audit

There’s a simple way to resolve the manufactured controversy about travel and entertainment expenses in Richmond County: Put every expense claim by every councillor and senior staff member for the last five years online for every citizen to see—together with receipts, Visa statements, and explanatory notes.

That’s what the four reform councillors, Alvin Martell, Steve Sampson, Rod Samson, and Steve MacNeil, supported by Acting Warden Malcolm Beaton, have been trying to do for the last two weeks, only to be blocked by procedural maneuvers from their opponents on council. The delay insures the destructive debate about financial accountability will continue at least until the next council meeting February 22.

That seems to suit Councillors Brian Marchand and Gilbert Boucher, who would rather pander to the rabble than take concrete action toward transparency. From the safety of the council chamber, where they cannot be sued for defamation, they lob slanderous attacks on staff and fellow councillors.

That’s the striking thing about the mess in Richmond County: The councillors who have been most shrill in their accusations of financial mismanagement are the very ones blocking greater accountability. In this they are supported by anonymous online trolls using fake names and newly created Facebook accounts to lay down volley after volley of personal attacks and false allegations. Bullies are so often cowards at heart.

Marchand and Boucher, together with the disappointed office-seekers who make up their online Greek chorus, demand a “forensic audit.” It’s a word they’ve heard—scary-sounding and dramatic, with hints of criminal overtones. Trouble is, they don’t seem to know what a forensic audit is, or what circumstances might justify one.

There has been exactly one recent forensic audit of a Nova Scotia municipality. It happened in Bridgetown when the local ScotiaBank branch alerted the mayor to discrepancies in the town’s bank deposits. Cheques deposited at the bank did not match amounts entered on deposit slips.

The town called in its independent financial consultant, who quickly discovered the problem. Accounts receivable clerk Melissa Jane Young had been diverting taxpayers’ cheques to her own use and falsifying entries to cover the theft. Altogether she stole $113,195.96, although $33,676.60 was later recovered. Young pled guilty to a charge of fraud over $5,000 and served 18 months’ house arrest plus 18 months’ probation.

The discovery of missing funds took place before the forensic audit. No forensic audit was needed to uncover them. That took only a quick check by the town’s outside financial consultant. The forensic audit was only needed afterwards—to establish the chain of evidence required for a criminal conviction.

The main purpose of a forensic audit is not to find a problem, but to establish the chain of evidence required by a court once a routine audit has uncovered criminal activity.

Richmond County has already been audited, as it is every year, by the respected chartered accounting firm Grant Thornton.* As often happens in such audits, the accountants recommended procedural changes to ensure the county’s formal written policies for travel and entertainment expenses are reflected in practice. Such recommendations are a routine feature of public audits.

For example: County policy doesn’t allow payment for upgrades from economy to business class on airplane flights. The audit flagged two charges of $17.88 each for roomier seats within economy class.

Did this violate county policy? Possibly. The policy isn’t clear. Is it evidence of fraud or wrongdoing? Don’t be so foolish.

In fact, the Richmond audit found no evidence of wrongdoing, let alone criminal activity. There is no fraud. No money is missing. In accountant-speak, “Grant Thornton found no material misrepresentation.”

Grant Thornton confirmed this at a meeting with Warden Victor David and other county officials. The Department of Municipal Affairs reconfirmed it at a subsequent meeting with the same officials, including David. The province confirmed it again last week in a letter to CAO Warren Olsen.

When he began pressing for a forensic audit, David was facing all but certain defeat in his year-long campaign to retain 10 council seats in a county with just 9,000 residents. He may have expected criticism for squandering more than $50,000 in county funds on that hopeless crusade. Perhaps he thought demanding a forensic audit would divert attention from his own wasteful spending on seat preservation.

But an unnecessary, uncalled for forensic audit would be the Mother of All Wasteful Spending. Forensic audits require senior chartered accountants with specialized legal training, who charge upwards of $400 an hour. They are extremely expensive. The audit in tiny Bridgetown, with one-tenth Richmond’s population and a fraction of its budget, cost $350,000. A forensic audit in Richmond, especially a wild-goose-chase audit with no actual wrongdoing in sight, could cost $500,000 or more.**

The easy course for the reform councillors would have been to accept demands for a forensic audit, and waste a half million tax dollars proving nothing was amiss. Instead, supported by Acting Warden Beaton, they took the courageous path and opposed further squandering of public money in pursuit of political mischief. Predictably, this led to charges of a coverup, when in fact they were acting to protect the taxpayer.

Over the last 18 months, I followed events in Richmond County closely. I read the independent Stantec Report recommending a smaller council. I read every submission to the UARB, pro and con, and listened to a recording of the board’s lengthy hearing. I read the UARB decision. I read all the submissions to the Court of Appeal, and I watched that court dismiss the county’s feeble petition in a heartbeat. I read Grant Thornton’s “management letter” to the county, and CAO Warren Olsen’s response. To my distaste, I have even read the loathsome anonymous personal attacks on Facebook.

Here is what I have seen:

• One group of councillors has conscientiously pursued a smaller, more effective government for Richmond County—a council less concerned with culverts and potholes and more focused on the big-picture threats bearing down on rural Nova Scotia.
• A second group spent tax dollars waging all-out war to preserve 10 council seats with half the territory and barely half the population of an average rural Nova Scotia council district.

When it became clear they would lose that battle, a few  members of the second group resorted to reckless vilification of the reform councillors, whipping up public fury over false allegations and imaginary misappropriations. Careless journalists lent them a bullhorn.

At last night’s council meeting, a crowd of residents cheered on the vilifiers and showered abuse on those councillors who have pursued better, more accountable government for Richmond County.

Such are the perverse outcomes of a  public square deliberately made toxic.

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*  Ironically, GT is the same firm that carried out the forensic audit of Bridgetown’s books.

** One of Richmond County’s anonymous online trolls claims the Bridgetown audit didn’t really cost $350,000, because the town recovered $200,000 in insurance under a policy carried by all Nova Scotia municipalities, including Richmond. That’s true. But Bridgetown was able to collect only because it was the victim of a criminal fraud. In Richmond, an audit has already found there was no fraud, and confirmed there was “no material misrepresentation.”