In-Sights

Trust in AG is broken

A message from an informed reader includes this:

Over the past week the Liberals have waged a pressure campaign to overturn the Legislative Assembly Management Committee [LAMC] decision to bring in an out-of-province auditor, and to have the BC Auditor General Carol Bellringer investigate instead.

What really astonished me was when Carol Bellringer also launched a media campaign that she should be the one to lead the audit. Her media comments included criticisms of Premier Horgan, and objection to an out of province auditor (Vancouver Sun, Jan 24).

She repeated these objections and criticisms in CBC Radio interviews last week, and astonishingly even went so far as to proclaim Dep. Clerk Kate Ryan-Lloyd to be above reproach in all things, even though the interviewer had not raised this subject.

It is wholly inappropriate for Ms. Bellringer to make such biased comments, and these should definitely disqualify her from leading the audit. Even if Bellringer had not made any remarks, the LAMC was right and wise to “unanimously” vote to look at bringing in an out of province auditor. Bellringer cannot deny that she and her office had a role to play in oversight, however slight it may (or may not) have been. For that reason alone, the BC Auditor General should NOT lead the audit. 

Why are the Liberals and Bellringer objecting to an external auditor so much? Mary Pollack claimed on CBC Radio that Bellringer would have access to more info than an external auditor. That is a sham excuse; it is a customary practice to bring in an external auditor. In fact, irony of ironies, Ontario’s government hired Gordon Campbell to lead an inquiry in the spending and accounting practices of their previous government.

It smells like the Liberals and Bellringer are eager to keep this “in-house”. Why?

To overlook the dozens of meetings Craig James had with former Liberal AG Geoff Plant in 2018, or the meetings with Christy Clark, just prior to and just after her resignation?? Just a thought.

This is urgent. CBC Radio news aired multiple clips of an interview with Mary Pollack on Saturday proclaiming that the NDP had agreed to this. That was false; it appears the LMAC will now vote on whether to go the BC Auditor General, or out of province.

Mainstream media is not questioning Bellringer’s unprofessional and inappropriate conduct last week. So, I have written to several of the NDP and Green members to beg them not to fall for this trick.

I agree with these statements. In December, the BC Auditor General proved to me the agency cannot be trusted.

Denying widely accepted definitions, they claimed benefits worth billions of dollars allowing natural gas producers to avoid paying royalties were not “tax expenditures” and therefore did not need to be reported.

The Auditor General argued that royalties, which once contributed billions of tax dollars to BC’s treasury, were not tax revenues, so corporate subsidy programs that reduced royalties were NOT tax expenditures.

However, when families buy children’s clothing and footwear and reduce payments of provincial sales tax by signing a certificate of exemption (FIN 425), that IS a tax expenditure.

Besides the AG’s willingness to shape work to suit political expediency, there are other issues.

In my early career, I worked as a financial auditor. I know it is fact that professional accountants hesitate to reveal long-standing irregularities after audits in numerous prior years failed to note existence of those same problems. It is preferred to minimize importance and continue skating over previous audit defects.

For evidence of my assertion, check out the years-long failures of Arthur Andersen & Co at Enron, Waste Management and WorldCom. Or, those of Price Waterhouse Coopers at Tyco, AIG and Freddie Mac. Or, those of Ernst and Young at Lehman Brothers and KPMG in the UK, where the Financial Reporting Council found the company’s work was inadequate in 50% of audits reviewed.

In 2012, BC Auditor General John Doyle raised serious concerns about financial mismanagement at the Legislature. For this and other difficult issues raised, Liberals fired him and attempted to deny benefits due him by contract.

Carol Bellringer knew the sensitivities of her office when she accepted the appointment. Since then, she seems to have been willing to make waves… but only small ones.

Despite, John Doyle’s clear warnings about financial impropriety at the Legislature, Ms. Bellringer has signed independent auditor reports each year with statements like this one a year ago:

In my view, the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Legislative Assembly of British Columbia as at March 31, 2017…

Bellringer’s audit of finances at the Legislative Assembly during the year ended March 2018 was complete. But, in November, she was quoted by The Star Vancouver:

We have not issued an opinion on the current-year financial statements — and I’m not prepared to do so until I know what’s going on.

We completed … the work we normally do to be finished, then all this happened.

Having raised no pubic concerns, eight months after year end, the Auditor General was bewildered.

Yet, this same auditor who failed to discover corrupt practices in the Legislature now wants exclusive right to re-audit those transactions. According to Liberal spokesman Vaughn Palmer, Bellringer “rejected the insinuation she would somehow be auditing her own findings and/or things she missed earlier.”

Insinuation? No, that would be fact.

Experts in fraud investigations know that specialized training is needed to expose malfeasance, particularly when numerous parties are colluding to obscure truth. What the BC Legislature needs is a full examination by forensic investigators like those at Rosen & Associates of Toronto.

If the Horgan Government and the LAMC allows Auditor General Bellringer to direct a re-examination of the Legislative Assembly’s financial records, that is a clear sign, they’ve made a choice to sweep yet more scandalous behaviour under the carpet.


The Auditor General Act requires that the existing Auditor General remain in place at the Legislative Assembly. My suggestion is that a company like Rosen & Associates do a forensic examination. That work would be supplementary to standard financial audit work by the BC AG.

Given that potential fraud has been exposed, Ms. Bellringer ought to welcome expert assistance.

She does not. That is unfortunate.