From: Coun. Cameron Guthrie replying to guelphspeaks blog
Editor’s note. Mr. Guthrie’s responses are unedited. His comments are countered with comment from the editor of guelphspeaks. We apologize for the length of this posting but believe the material is of importance to all taxpayers in the city.
Will the real Cam Guthrie please stand up?
Posted March 11, 2013
Recently Coun. Cam Guthrie wrote an email to the local weekly that stated: “As chair of the audit committee, I can honestly say this city is being run very, very well.”
Guthrie: I am the chair of audit. Within that role I don’t have the luxury of saying I don’t want to audit something that I might not have agreed with in the first place. It’s my role to see if the right risk management, controls, staff/management responses to our external auditor concerns, proper oversight etc. are being done. Through this lens as chair, I can say that these oversights are being done very well. However, we can always do better.
Guelphspeaks: You and the external auditor may be doing a fine job, but that horse is out of the barn. The two of you have been on the job for less than a year. The spending and manipulation of taxpayer funding for the previous six years was not audited internally. The oversight you describe in your brief job description makes monitoring a $400 million corporation a fulltime not part-time job. Following your election as chairman of the audit committee last September, it could be considered presumptuous that a city has suddenly changed. An ideological majority on counciI has mismanaged the city in six years. Adding a new employee to monitor operations internally, does not change the spots on the leopard.
He later denied that he was interviewed by the reporter and demanded a retraction.
Guthrie: I asked for a retraction/correction of my voting record, which was reported incorrectly, as me voting in favour of last years budget increase when in fact I did not.
Guelphspeaks: You’re missing the point. You claimed as chairman of the audit committee that the “city was being run very, very well.” How would you know? Remembering that the Mayor sits on the committee, you and your committee’s job and Ms. Alonzo is to monitor the spending as it applies to the current budget. The committee ‘s basic function is to make sure the numbers match the budget as approved by council majority. In the past six years, there is evidence it has not been the case.
Now it appears he has joined the Guelph Civic League, stout supporters of all things Farbridge, as the new poster boy on the League’s blog site. His photo and comments lifted from the pages of the local weekly are prominently displayed.
Guthrie: I have not joined anything. You need to be a member of the Guelph Civic League, which I am not and never have been. I have attended a few of their meetings because they put on interesting seminars. I like to hear all points of views because I believe that makes me a better leader.
Guelphspeaks: Well you certainly managed to give that impression considering you deny association with this group. By admitting you have attended a few of their meetings only reinforces the public view that you have joined. It would be wise to tell the League to remove your statements and photo from their blog. They could be breaching the Tribune’s copyright using the material without the paper’s permission. Yeah, like that’s going to happen.
And all it took was being appointed chairman of the audit committee.
Guthrie: I ran for that position, needing to be elected by council as chair of audit. Yes, no one else stepped forward to challenge the post, but it was not an appointment.
Guelphspeaks: Did it ever dawn on you why you were chosen and unapposed? After battling with the Farbridge team for two years, did it not occur to you that your fellow opposition councillors and supporters may wonder which side you bat on?
In the same article, the Mayor praised the formation of the “new” audit committee that now has added the work of the internal auditor. Formerly the audit committee oversaw the mandatory external city audit. It was the shortest meeting of any city committee as they rubberstamped the work of Deloitte Touche, the external auditors.
GuthrieOur new internal auditor is amazing. She really is. Since becoming chair, council has now increased the work, scope and times that we meet throughout the year as I too felt that we needed to be meeting more. Rubber stamping and short meetings are not occurring I can assure you of that.
Guelphspeaks: How many external audits have you reviewed as chairman of the audit committee? I welcome an internal auditor as long as that individual has the scope and power to control spending and operations. Writing about this council for seven years, I’m from Missouri.
Just asking: Does internal auditor Loretta Alonzo report her investigations to the external auditor or to the Chief Financial Officer?
Guthrie: Her mandate, reporting role and terms of reference, (all public documents) state she reports to audit. Her independence is paramount. And as chair, I can tell you that she does exactly that. But please take a look at this link:
Guelphspeaks: This is a basic flaw in city communications. Not every taxpayer accesses the city website. Even when canned information is regurgitated from the city website, it is so slanted that most people don’t bother to enter the “newsroom”. It wasn’t too long ago that the city demanded that all journalists become members of a professional journalist organization before being recognized by city staff. It was done to muzzle fair comment by an individual who was critical of operations. Ms. Alonzo is a city employee and she must report to council who at present is dominated by the Farbridge faction. Independent? Check out what happened to former Chief Financial Officer, Margaret Neubaur.
As an employee of the city, which master does she serve?
Guthrie: She serves at the direction and/or will of the audit committee and then council as a whole.
Guelphspeaks: Cam, you gotta be kidding. You know the Mayor, her majority of cohorts and carefully selected executive directors tightly control the council and staff. The audit committee is a front for this bunch. The Farbridge administration has conducted most of its business behind closed doors and there is a lack of transparency, accountability and clarity. Boy! Have you got your work cut out for you.
It should be noted that the external auditors do not audit spending less than $600,000 as part of their job description. That leaves a lot of spending that is never audited.
Guthrie:The suggestion that “Deloitte does not audit anything under $600,000 for the city” is incorrect. Deloitte (as do most external auditors) use a % random sampling technique based on materiality to focus their audit work. Once the entities are derived through this lens, Deloitte will drill down as far into the accounts and transactions as they feel necessary to satisfy their assessment that the appropriate level of risk and internal controls are in place. There is no threshold for how far Deloitte will go down to complete this assessment to their satisfaction. Any uncorrected adjustments from staff or management could be brought to audit committee. But with the C.A.S (Canadian Auditing Standards) it is practice to only show anything to the audit committee of $300,000 or more. Again, this doesn’t mean they ignore things under $300,000. For example, if they found a $500 bill not correctly noted in the right column, they would take that matter to management to have corrected. Having Deloitte come to the committee and report on all of these (minor) issues would not be a good use of our time. I had a conversation once with our external auditor and in his words “We’ll start at the first dollar and work up from there. Or drill down to the last dollar to make sure it’s correct”.
Guelphspeaks: Well, my information comes from reliable sources. Your response indicates you have sought advice about the methodology of the external audit. Your comment that your one conversation with the external auditor quoting him as, “we’ll start at the first dollar and work up from there. Or drill down to the last dollar to make sure it’s correct.” Those are reassuring words. What did you expect him to say? “Nah, we’re only interested in the big stuff over $300,000.” The standard used to be $300,000 but was increased to $600,000. Regardless, the cost of an externally-generated audit is high and is mandatory to be forwarded to the Ministry of Municipal Affairs. Having said that, why have final audit figures at year-end not carried forward when the next budget is being debated? As chairman of the audit committee, you might want to investigate why the official audit figures of the previous year are altered and usually show increased spending at budget time.
Guelphspeaks, along with other contributors and citizens, has protested some of the most egregious spending by council that falls beneath the $600,000 threshold.
Guthrie: I’m too on record to look out for pennies, because they are the taxpayer’s pennies, not the governments. Being chair of audit I can assure you I’m not dismissing any opportunity to route out and expose any waste, find efficiencies or processes that can impact us positively to make our city run better.
Guelphspeaks: The trouble is that city staff is dysfunctional and fearful. It is generated by senior management who are basically inept at handling staff and treating them with dignity. There is too much waste in operations and too much spending on creating programs that most people don’t want. Hiring consultants and lawyers when not necessary not only negatively impacts the bottom line but also demoralizes and disincentivizes the staff. The city staff is bloated for a city of our size. The long term liability for taxpayers is staff perks and pensions that are way out of line when compared to peer municipalities.
There are reserves that have been raided and are under funded.
Guthrie: Yes, some reserves were raided (which many I voted against) and some are/were under funded. But over the past two years our reserves have steadily been moving upward. I’m hopeful, as I’m sure you are, that this trend continues.
Guelphspeaks: Cam, get real. If you start dredging up previous spending and operational issues, how long do think it will take to be slapped down by council? How many reserve accounts are there and how much is in each. If the city is “run very, very well”, why are reserve accounts being raided or underfunded in the first place?
Money is moved around from account to account to accommodate the administration’s proliferate spending.
Guthrie:I have not seen this, if there is proof of such I would be more than happy to investigate.
Guelphspeaks: You make it appear that you, your committee and the internal auditor are on top of everything. That’s impossible because if previous financial statements are opened up (that will never happen), there will be ample evidence that money was moved around between reserves. Usually it is to accommodate such spontaneous items as the Terry Bradshaw video. Another is how much, over four years, the city invested general account funds in the Loretto convent conversion. Was it to mask the unanticipated costs of converting a crumbling building into a civic museum? The basic problem is the lack of leadership continuity in the city’s financial department. In the past six years there have been five employees acting as Chief Financial Officer. One, the experienced David Kennedy, was terminated, Margaret Neubaur was fired after three years on the job, another lasted a week, Susan Arum left to work at the county after a year and finally last summer Al Horsman was named CFO. Does this look like a city is being very, very well run?
Six years after her election, Mayor, Karen Farbridge decided it’s time to hire an internal auditor. This is a political move designed to make her administration appear it’s looking after business.
Guthrie:An internal auditor should have been hired a long time ago. But we have one now.
Guelphspeaks: Again, it took six years to appoint an internal auditor. Is it too little too late? It appears you and your committee are totally reliant on Ms. Alonzo to monitor and report on irregularities in financial management. Why doesn’t her reporting line go through the Chief Financial Officer, Is he not in charge of over-seeing and managing the city’s finances?
The next question is when does the public hear about the work of Ms. Alonzo?
Guthrie: Ms. Alonzo and I have weekly conversations and/or meetings. She comes forward a minimum of 5 times a year to report to the audit committee. These are public meetings and anyone can come and be a delegate, send in their thoughts to the city clerk or contact me to discuss anything. She has many audits to do this year. This is all outlined in the last audit meeting report that’s available here:
Guelphspeaks: Until you made your “city run well” statement, there weren’t a hundred people in the city who knew they could attend an audit committee meeting. I presume citizens cannot speak, as the new council rules of communication will not even allow visiting councillors to speak at committees of which they are not members.
Guthrie: You and your readers will be pleased to know that at our last meeting, our committee passed a motion (not originally from staff), to have our internal auditor report back to us in April of potential further “value for money” audits. This passed unanimously.
Guelphspeaks: That’s commendable. Perhaps notice of the meeting should be advertised in the Tribune’s city “news” pages so that people may hear the results first hand.
That concludes Coun. Guthrie responses to the guelphspeaks post of March 11, 2013. The counter comments of the councillor’s responses reflect the views of the editor of guelphspeaks.
The best thing Coun. Guthrie can do now is hunker down and hire a public relations expert to guide him through the minefield of press and public relations.
Through all this, we have yet to hear Guthrie apologize for his statements. If he still believes what he said was true, then he hasn’t been on the job long enough to understand what has happened in the past six years to our city. Stating he made a mistake in his characterization of the city being “very, very well run”, will be judged by the electorate in 2014.