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Council advised by auditor to watch the cash

Am Naqvi, left, and Tom McMillan advised City council on new audit standards — Timothy Schafer photo.

By Timothy Schafer, The Nelson Daily

Big brother is watching you, or at least, City council is.

New risk-based audit standards are coming into effect — arising out of the uncertainty created by the Enron scandal in 2001, the biggest audit failure in history — that are turning people in the seat of power into watchdogs.

The City’s own auditors — Berg, Naqvi, Lehman Chartered Accountants — has advised City council they have to be vigilant and on guard for potential abuses in the handling of taxpayer money.

“You have to exercise a healthy skepticism under these audit standards,” said the firm’s John McMillan on Monday night at City council’s committee of the whole meeting. “If you do have concerns about the way money is handled, it might help you do a good job.”

“There is an emphasis on prevention ... you can prevent wrong things from happening,” added Am Naqvi.

City financial statements will be ready for auditing by March 18.

But the suggestion confused council and they worried about the ramifications of having to “micro manage” City staff.

“In every decision we make there are a number of lenses,” said Coun. Marg Stacey. “Are you suggesting we need more lenses, like a risk lens?”

Council’s trust has to go with the staff they have, said Mayor John Dooley, and they place a lot of value in that. The suggestion of more regular checks, mini audits at intervals throughout the year to limit the chance of fraud, concerned him.

“At the end of the day we have to recognize there is a challenge. What would a more regular check do for us?” he asked.

Naqvi said council has to ask themselves if they have done everything possible to mitigate risk, to reduce risk, since they are the ones who have to take responsibility if anything goes wrong.

“Being informed is making good decisions,” Naqvi said.

Coun. Donna Macdonald was concerned about the degree of knowledge a councilor would have to have in all areas of City operations, to go deeper into the systems of the City and know what is happening.

“This feels really weighty,” she said.

“You do have to rely on your management,” McMillan replied. “But again, if there is something that maybe doesn’t seem quite true, you ask questions. It’s really all about asking questions.

“It isn’t necessary to get into the details. You don’t need to go that far.”

The new audit standards will be in effect for the 2010 financial audit, which may include an in-camera session in which council can speak about potential abuses in the City finances.