Auditor general finds significant flaws in provincial oversight, enforcement of municipalities

Manitoba’s auditor general has urged the province to overhaul its oversight and enforcement of municipal spending after a year-long review into allegations of financial mismanagement.

Tyson Shtykalo released the findings of the investigation into several Manitoba municipalities and the municipal and northern relations department in a 34-page report Thursday.

Auditor General’s report

Shtykalo — who leads the independent office tasked with reviewing government operations — concluded the province lacks a comprehensive process to follow up on complaints about municipal governments, monitor the spending of provincial grants and review financial submissions.

“Each year, the Province of Manitoba provides significant funding to municipalities to support local governance, infrastructure, and services,” Shtykalo wrote.

“With this funding comes a responsibility… to ensure effective stewardship of public resources.”

The auditor general launched the probe after more than $472,000 was stolen from the Municipality of Westlake—Gladstone in a cybersecurity incident around five years ago.

The investigation found the municipality did not investigate how the funds were taken or by whom. Further, the province has not provided any guidance about cybersecurity controls to municipalities.

Shtykalo’s office went on to review allegations related to six other municipalities during the January 2023-February 2024 investigation. The allegations spanned a five-year period.

The report says the Municipality of Swan Valley West violated purchasing policies by buying a pair of fire trucks without a tendering process in 2022.

Meanwhile, councillors from the Rural Municipality of Springfield were found to have expensed about $3,000 more on travel than allowed between January and October 2022, it said.

In the Municipality of Ethelbert, the investigation determined a former head of council improperly authorized procurements and “generally operated unilaterally without involving council in the decisions.”

Allegations related to the rural municipalities of St. Andrews, West St. Paul and Lorne were found to be unsubstantiated.

Manitoba Municipal Administrators president Nicole Chychota has been pushing the government to change legislation and enshrine her organization as a formal regulatory body for municipal administrators.

The group represents about 370 civil servants across the province, and has developed an education and accreditation framework. Currently, people who work as municipal administrators are not required to have formal qualifications.

“We continue to push for professionalism, so we feel this report gives us another opportunity as a province to look at how we do things and how we can improve,” Chychota said Tuesday.

“We are happy to see this come out.”

The report concluded the province performs minimal review of financial submissions from municipalities. It also lacks an appropriate process to investigate public complaints and provide inadequate oversight on the use of government grants.

The province disbursed $67 million in grants to municipalities (not including the City of Winnipeg) in the 2022-23 fiscal year. Despite this, no requirements are needed to receive the funding or to account for how it is spent, the report said.

The auditor general recommended the province further monitor municipal compliance and implement a risk-based approach to the oversight of grants.

Manitoba should add a defined enforcement process, with consequences that include withholding funds, imposing financial penalties or placing conditions on funding.

Shtykalo urged all municipalities to implement baseline cybersecurity controls, and said the province must monitor compliance.

Finally, Manitoba should develop a process to ensure annual financial statements submitted by municipalities are complete, outline what analysis should be performed and which red flags should be examined.

Shtykalo noted the most frequent complaints involve rural municipalities in relation to allegations of financial mismanagement and lack of accountability.

Recently, key administrators in some municipalities have been charged criminally.

North Cypress-Langford CAO Trisha Dawn Fraser was fired last year and pleaded guilty to misappropriating municipal funds to replace $30,000 she’d stolen from the Carberry Curling Club.

Amber Fisher, the former CAO in the Municipality of Gilbert Plains, pleaded guilty in April to one count of theft over $5,000, after $532,000 in municipal funds disappeared.

Gilbert Plains Reeve Jim Manchur said he had not yet read the auditor general report, but, at first blush, he supports the recommendations.

“I’d like to see… the CAOs of all the municipalities be closely monitored, checked and with credentials that are consistent across the province.”

Municipal and Northern Relations Minister Glen Simard said the government is “definitely interested” in the proposal to regulate the profession.

“We take these matters very seriously,” Simard said. “We want to make sure that we promote good governance in all of our partnerships and make sure that these types of incidents don’t happen in the future.”

He said the government is in talks with Manitoba Municipal Administrators and the Association of Manitoba Municipalities. It is critical to maintain a balance between oversight and independence of municipalities, which largely have their own governance structures, he said.

tyler.searle@freepress.mb.ca