CITY VIEW – Voodoo accounting and the unanswered questions

Posted April 18, 2013

In a recent report in the local daily the headline stated hat: “Guelph recovers nearly $10M in unspent capital funding.”

I don’t know about you but I get nervous when the word “nearly” appears when referring to the city’s finances.

The report covered a meeting of the corporate administration, finance and enterprise committee in which senior corporate analyst Greg Clark revealed details of the 2009 Infrastructure Stimulus Fund program. This was a cooperative spending program that involved a third coming from the Federal government, a third from the Province and a third from the municipality.

At the time the city applied for permission to proceed with a $66 million infrastructure construction program of which its share would be $22 million.

Mr. Clark reported that the city received more than $40 million from the two senior governments. Again I get nervous when there is a lack of precise figures by the finance department,

Here’s the skinny: If the feds and province paid “more than” $40 million, how much did the city pony up? Mr. Clark did not reveal that figure. Probably with good reason as the reported final cost of this spending was $72 million.

First, assuming the city’s estimates of the work was accurate then it’s safe to assume the city had to pay an extra $4 million to hold up its end of the original $66 million.

Second when Coun. Karl Wettstein asks if the unspent funds could be applied to other new capital projects in the current year, you have to wonder if he knows how the system works. Mr. Clark pointed out that the bulk of the so-called recovered funds must be returned to their source. He cited restoring reserve funds or paying government agencies.

This whole story is a total misread of the facts. While the reporting is as accurate as the material presented at the meeting, the facts presented were vague and non- specific.

Coun. Cam Guthrie, chairman of the audit committee commented “it would be interesting to know … which capital projects were overspent.”

Right on! Let’s get some specifics before misleading the public that the administration came up with a $10 windfall of unspent funding.

The last word goes to Chief Financial Officer, Al Horsman. warned that the task of providing that information would be “labour intensive”.
How far do you want to drill down?” He asked.

It is disturbing that this report vastly overstated the true financial situation given the appearance of a public relations handout. It is also troubling when councillors question the staff that the request is treated as … gee, that’s going to take a lot of work.

Even more troubling is why didn’t the newspaper reporting this story, follow up and find out exactly where the money was coming from, where it was going and why was there an apparent over-spending by the city on the Infrastructure Stimulus program?

Again, this is more mushroom politics. Keep the taxpayers and their representatives in the dark.

The legacy of former CAO Hans Loewig whose four-year career as senior manager of the city, has left a culture among staff that obfuscates, allows cover ups and tightly controls the message.

Hey Hans, it’s still working!

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8 Comments

Filed under Between the Lines

8 responses to “CITY VIEW – Voodoo accounting and the unanswered questions

  1. geo

    How far do we want to drill down? Shouldn’t the CFO have that information available to him at the click of a mouse? But since you asking, we want to drill down until we “Break On Through To The Other Side”

  2. geo

    substitute your for you.

  3. Glen N. Tolhurst

    So the CFO feels it would be labour intensive and rhetorically queries how far do you want to drill down? Such arrogance! Are the city finances in such rotten state that capital budget items cannot be tracked for actual costs vs. planned expenditures? Are invoices and costing data kept in shoe boxes rather than tracked by computer based project management utilities? A post completion audit is routine for capital projects in the real world. Rather than drilling down, perhaps a proctologist should be utilized.

  4. geo

    Mr. Tolhurst has asked some questions that thousands of Guelph’s taxpayers would like answered. I would suggest the answers be provided at the next public council meeting. That is if Guelph still has public council meetings.

  5. Paul

    Yes the City is in a sad state of affairs.
    The CFO’s competence is in serious question when he answers a question that way. Unfortunately he probably has a multi-year contract with a guaranteed payout. (it would be nice to know what “golden parachutes are contained in the contracts of senior administrators. Time for a return visit by Mr. Cuff!!
    Some citizens have called for AMO to conduct a forensic Audit. A comment like the one made by the CFO just points out the urgent need for such an audit. A “vacation” paid for by the taxpayers of Ontario seems justified under this stonewalling.
    Another question – Just what has the City’s investment in Computers and extra staff provided for the City Administration. If we cannot get answers to these simple questions then heads must roll. What value does the External Auditor produce?

    • Paul: There is a need, as I see it, for an accounting of operations of the administration. Managing finances has left a trail of misleading statements, secrecy, and self-serving propaganda that would make Goebels blush. (WW 2 Nazi information chief). There will be a day of reckoning, to be sure,

  6. Scott Tracey

    Gerry,
    It was not clear from my story (http://www.guelphmercury.com/news/local/article/919529–guelph-recovers-nearly-10m-in-unspent-capital-project-funding) but the comments with respect to ISF money did not come from Mr. Clark. I added those to explain the discrepancy in capital spending from one year to the next.

    Scott

    • Scott Tracey: Thanks for that. Welcome to the world of commentary. Look, I know what you are up against. But please, don’t just go along to get along.

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