Too easy to fiddle expenses

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The auditor general's report on the financial fraud that went on in the Office of the Fire Commissioner for years is an indictment of the former employees pinned to those abuses, which amounted to at least $300,000 over four years. But the chapter on that affair in the auditor's annual report also speaks volumes about lax control within government, its boards, Crown corporations and special operating agencies. All should be called to task.

In part, the financial fraud continued unchecked for years because the fire commissioner's office doesn't require receipts from employees for per diems, private accommodations while on the road and other such expenses. This was how, the auditor reported, the former commissioner, who was axed in 2011, could recoup cash advances he took and cover other financial abuses -- paying it back through fraudulent expenses of employees whose expense claims he approved.

It wasn't a terribly sophisticated scheme, but it worked. The Labour department deputy minister was supposed to vet the commissioner's expenses but there simply were none, or not many, filed. Further, oversight by the office's own comptroller was subverted when the responsibility for vetting expenses was given to another employee. The comptroller complained to the department's human resources director, but that employee took no action, despite the fact he was told of suspected financial mismanagement.

The director, auditor Carol Bellringer noted, said he didn't understand the significance of the disclosure. That is difficult to accept, but so is the fact, Bellringer added, that neither the director of human resources nor the comptroller blew the whistle under the protection of provincial legislation that provides for confidential disclosure to the Ombudsman's office.

Where to start? The controls over expenses can be tightened system-wide. Most departments and government affiliated bodies, for example, don't require employees to submit receipts for per diems for meal expenses -- the amounts of which can vary dramatically across the board.

There is ample room for abuse in the absence of proof of expense claims. It may be difficult to protect against all financial mismanagement, but the rules shouldn't make abuse easy. The per diem policy should change to demand receipts.

Further, special operating agencies exist in a sort of hybrid world -- neither public, nor private, nor a Crown corporation -- and are allowed to keep surpluses year over year. The fire commissioner's office, as with other special operating agencies, has no board of directors for oversight, only a board of advisers. The government needs to impose a better financial and governance control.

Finally, the auditor's recommendation for a review of the Whistleblower Protection Act was dismissed out of hand by Labour Minister Jennifer Howard, which is more than odd. Ms. Bellringer often finds civil servants who suspect wrongdoing are unaware the act exists. That is an indictment of a government that five years ago passed legislation to backstop probity and good management. In the absence of Ms. Howard's interest, Ombudsman Mel Holley should himself launch a vigorous awareness campaign to ensure public employees know there is recourse for those who want to stop the rot around them.

Republished from the Winnipeg Free Press print edition January 18, 2013 A10