Auditors could not locate certain tender documents for arena project
A letter from the auditor to city staff released to council last week indicates that certain key documents are missing in the arena project paper trail, but city management insist that all documentation is retained for five years. Consequently, it is unclear whether these aspects of the project were tendered, as required by city policy, or not.
“Our review did reveal an instance where we believe improvements could be made in your organization’s controls, and accounting procedures,” wrote auditor Andrea Kramer of BNL Chartered Accountants to city staff in a letter dated Apr. 25.
Kramer wrote, “In attempting to follow through on a concern expressed regarding compliance to the purchasing policy over a capital project, we were unable to determine whether the required bids were solicited and obtained before the contract was awarded.”
The city’s purchasing policy requires a tender process—bids—for expenditures that exceed a certain threshold. Purchases between $10,000 and $25,000 require “verbal or written quotations,” and purchases greater than $25,000 require “formal written quotations,” in both cases “from a minimum of three suppliers.”
The only exceptions to the call for tender occurs “in the event of natural disaster, labour dispute and other public emergencies,” or if there is “only one qualified supplier,” in which case “a report shall be made for audit purposes.”
The auditors concluded that “the city currently doesn’t have a process for document retention on contract bids and related documentation supporting compliance with its purchasing policy,” and recommended that “a process be implemented to ensure that the documentation supporting compliance with this policy is kept on file for a reasonable length of time to evidence [sic.] that management has complied with the policy.”
The management response, however, was that the city already “has a process in place to retain documentation used in the tender process for a period of five years from the completion of the project. This documentation is filed and retained by the Clerk’s office.”
Coun. Jill Spearn raised the issue at council: “This was a response to Ms. [Deb] Timm, [former manager of finance], but it’s really a response to something that was brought up by Coun. [Kathy] Moore with regards to the tendering process.”
Moore said, “First of all, I think it’s great the city keeps all this documentation for a period of five years. That being said, then probably what I’ve asked for, which has never actually been given, could probably be given. If the documents have been kept for five years, then they’re there.”
Moore said she had not been provided documentation on certain bids for the arena upgrades, specifically “for the electrical, and the fire and safety, and the structural work on the curling rink.”
“We either keep [the tender records] for five years or we don’t,” she said. “So, if we keep it for five years, it should be able to be produced. If we can’t produce it, then I guess it means it didn’t happen, which is a different issue.”
Moore added that “this is not the end of what [the auditors] have to say,” pointing out that the letter initiates a “dialogue.” She said, “I think there will be some other letter that will provide a little more clarification.”
Specifically, Moore noted a conversation she had with auditor Amed Naqvi on May 8 in which she referenced a 2009 audit response to Rossland from BNL that had addressed a “previous councillor’s” concerns “point-by-point.”
“I was hoping that was the kind of response we would get,” Moore said, “and [the auditor] indicated to me that this was the sort of response he would give.”
After the meeting we asked Coun. Moore to expand on which points, exactly, she had asked to be addressed. Unfortunately, Moore explained that her issues had been put on an in camera agenda last month, so she is not free to comment on her concerns beyond what she stated publicly in council chambers.
Coun. Jody Blomme commented, “There must have been some inconsistencies that motivated [the auditors] that they came to the conclusion that the city does not have a process. But the fact that the management response says we do have a process in place obviously indicates there were some inconsistencies.”
Kramer’s letter to management was careful to direct its criticism at the “systems” and is “not intended to reflect on the competence of your personnel.” The auditor added that the “audit procedures are sufficient to enable us to report on the financial statements.”
Mayor Greg Granstrom added, “It’s also important to point out [the auditor] found ‘management and staff display a high level of commitment to financial reporting and we’d like to acknowledge your efforts in this regard.'”
Granstrom also highlighted a sentence from the management response: “Management will review the process with those responsible for issuing tenders to ensure they are in compliance with the process in the future.”
Blomme said, “I take that to mean there is positive, proactive movement going forward.”
Moore concurred, “[The auditors] work with us, and it’s an ongoing process for improvement. I think that’s very nice to hear.”
On May 29 we approached the city with an information request to help substantiate the issue here, but were told by Corporate Officer Tracey Butler that she was in union meetings last week and is away this week.
“Your questions, I’m afraid, will have to wait,” she said. “Sorry, we are down a man [and are] therefore stretched very thin.”
We requested the following documents:
- A summary of the project budget and actual expenses for all aspects of the arena upgrade—i.e. not just the roof, but especially work done on the bathrooms, changing rooms, showers, mechanical systems, electrical work, painting, etc.
- Copies of all the tender documents (that can be publicly disclosed) for all aspects of the arena project mentioned above.
- Copies of all the invoices for the work done on all aspects of the arena project mentioned above.
When we receive these documents, more details will be available.