Winnipeg Free Press - PRINT EDITION

City council's audit fever clouds its audit amnesia

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At city hall, 2012 seemed like it was the Year of the Audit. If you had a problem, an audit seemed to be the solution. So what should we expect when some of the audits proposed in 2012 are actually published in 2013?

To recap: After the fire hall land-swap controversy last fall, council commissioned a broad external audit of recent realty transactions. Cost overruns at Fire Hall 11 will be audited separately. Individual councillors also asked for a garbage-contract audit and a Waverley West road audit. In early December, I wrote to city council to complain that city policies weren't followed on three construction consulting contracts. The city's response: They added those contracts to the mandate of the realty audit.

I have great respect for Winnipeg's audit department and its work. But even the auditors themselves will tell you audits have their limits. For example, audits are time-consuming. Delaying corrective action while an audit is underway can leave room for more of the problems that sparked the audit in the first place.

When it comes to careless spending, auditors are often called in long after the cash has been wasted. Audits also have a poor record when it comes to attacking outright corruption. Auditors only played a minor role in exposing recent scandals in cities such as Montreal and Bell, Calif.

Audits are most useful as a source of advice to help prevent future waste or abuse. And there's the irony in council's 2012 audit fetish. After all, the recent surge of audit work is mostly focused on construction and real estate. Yet both areas were already audited thoroughly during the career arc of several sitting members of council.

Winnipeg's realty practices were audited extensively in 2000. Auditors criticized city hall for sole-sourced deals, poor due diligence and unnecessarily generous discounts and subsidies. They scolded councillors for intervening in price negotiations and for failing to hold public servants accountable when existing policies were ignored.

Does any of this sound familiar?

It should, since history is repeating itself. Councillors haggled directly with a leading bidder when they sold the Winnipeg Square parkade in 2009. It's hard to believe due diligence was done on the multimillion-dollar Parker land swap earlier that year, since it was walked on without notice to a closed-door council committee for approval. The city's fire chief admitted on TV he'd ignored city rules with his own land swap in 2012 -- without consequence. And the botched Parcel 4 deal sole-sourced valuable land to a subsidized buyer. You shouldn't need a rocket scientist, a brain surgeon or another auditor to see the lessons of the 2000 audit have been forgotten.

Things aren't much better in construction. In 2007-08, at the mayor's request, city staff worked hard to attack construction cost overruns. City auditors published their own findings on construction procedures in 2009.

By Winnipeg standards, both efforts produced a wave of reform. Contracts were frozen, the entire capital plan was updated for annualized inflation, and city auditors proposed new measures to promote transparency and price competition. The public service hired a full-time construction manager with industry experience so departments could access cost-effective price advice for all major projects.

That era is a memory. When the construction manager left city hall, he wasn't replaced. It took an explicit council directive to get cost updates for ongoing projects late last year. Despite months of controversy, no individual has yet accepted responsibility for a $2-million scope increase on Fire Hall 11.

Meanwhile, a spot check of the 2009-2012 capital budgets suggests many project costs in Winnipeg's five-year capital plan aren't being updated for inflation, even though a recent city report pegged the city's annual construction-inflation rate at five per cent.

So why are councillors demanding new audits to revisit these same problems?

Perhaps councillors are voting for audits because that's the toughest response they can muster in the face of a totally intransigent administration. Information is imprisoned at city hall, and even elected officials are filing freedom-of-information requests to access basic financial data. Councillors have audit fever because they see neutral audits as a tool to get basic facts staff research or routine committee hearings could turn up in most other cities.

If that's the motive here, we should be sympathetic. But it's important to limit expectations accordingly. If city hall can disregard audits tabled in 2000 or 2009, it can do the same with the next round of audits in 2013.

If there's no political will to actually enforce city policies or expect best practices, every new audit will be just another study in a town that's already rich in that particular commodity.

Brian Kelcey is a Winnipeg freelance writer.

Republished from the Winnipeg Free Press print edition January 5, 2013 A15

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