Wednesday, May 26, 2010

Pressure building for House to open its books

The three-party caucus unity we are witnessing in Ottawa may not be unprecedented, but it is rare indeed. It’s a pity, though, that our Conservative, Liberal and New Democrat members chose to unite against the will of Canadians, who have shown remarkable unity on their part in indicating they favour an audit of the House of Commons by the auditor general.

Members of the all-party Board of Internal Economy have made much of their excuse that accounting firm KPMG already audits the House of Commons’ financial statements. But Canadians have not found that excuse acceptable for they are aware that most, perhaps all, public companies have internal audit departments which routinely perform audits of the sort proposed by Sheila Fraser, even though all public companies are subject to external audits of their financial statements—similar to the one done for the House by KPMG.

CTV's Ottawa Bureau Chief Robert Fife reported that MPs don’t want Sheila Fraser to conduct her audit, in part, because she might find examples of cheating like the following:

  • Sources say that when one MP was caught misspending, the MP was simply told to repay the money. Police were never called.
  • In another case, a staffer racked up more than $17,000 in fraudulent charges on an MP’s expense account, including $4,000 from the private Parliamentary liquor store. The MP repaid the money, although he was advised to forget about it.

As a former chief financial officer of a large public company, I am appalled to hear that $533 million is spent by the House and Senate each year without review by the auditor general’s department. Shareholders would never stand for it; why should taxpayers?

The issue has tended to narrow down, not surprisingly, to MPs expenses. In an interview yesterday with CTV’s Tom Clark on Power Play, however, Sheila Fraser explained her proposal:

“The audit could potentially include things like human resource management, management of information technology, security on the Hill, and of course there would be an element which would be financial management given the size of the budget.

“And potentially in there we would look to see what were the controls, what were the processes around reimbursing MPs expenses, and do a sampling of some to see if those rules were actually being followed.”

This approach is text-book and is the practice of thousands of Canadian corporations across the land. Controls are reviewed, systems are tested and sample transactions are selected at random and audited in detail. (Michael Ignatieff need not be concerned that every meal receipt might be reviewed.)

But let’s be clear, in any review by the auditor general, MPs $133-million in expenses should be included. MPs, after all, have been known to cheat. They did so in Britain and Nova Scotia and Newfoundland. And (see inset) there are reports that cheating does occur in Ottawa—surprise, surprise.

Apparently, Board of Internal Economy members have recently indicated they would like to meet with Ms. Fraser and discuss the sort of things she might do in an audit. Such a discussion is, of course, quite proper, however, any attempt to negotiate the terms of the audit are not.

Another excuse to deny the audit can be summed up by the comment from New Democrat MP Joe Comartin (Windsor-Tecumseh, Ont.) who said last week:

“We’re MPs, we’re elected, and what she wanted to do was a performance audit. She was very clear in that. That performance audit is not her responsibility. It’s not within her mandate for the MPs. That performance audit is done every time we have an election, it’s the electorate that makes that decision, not her.”

Sheila Fraser answered this rather adolescent misinterpretation of a “performance” audit, when she said on Power Play:

“And I’d really like to clarify too that this is not an audit of performance of MPs. The electorate will judge that, not an auditor. So I’m concerned that there’s been this misunderstanding and MPs in particular I think have interpreted this to be something quite different than what we proposed.”

I’m astonished that a member of the House (i.e., Joe Comartin) does not understand the distinction and has to have it explained. How insulated and unworldly are our MPs?

Polls1 show 88 per cent of Canadians think detailed expense accounts of politicians should be open for deeper scrutiny. We taxpayers-voters demand Parliament’s accounts be independently confirmed and verified by an audit by the auditor general. It’s been 20 years since such an audit was done—by a previous auditor general. An audit is far overdue.


1A Leger Marketing survey released Thursday revealed 88 per cent of Canadians think detailed expense accounts of MPs and senators should be made public. The survey of 1,504 Canadians took place May 10-13 and is considered accurate within a margin of plus or minus 2.5 percentage points.


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© 2010 Russell G. Campbell
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