Thoughts and Opinions On Today's Important Issues

Thursday, February 07, 2008

Do Oil And Water Mix




Oh dear, here we go again. And make sure you watch the video at the end for my take of what ultimately will happen.

First WUC and now Public Works if the audit is correct. I wonder what is next? Perhaps, for fun, one of the Councillors should demand an audit of the border file. It would include obviously going behind the fees and expenses charged to the City by third parties. That would be a hoot trying to figure out how much was paid to whom for legal fees, consulting fees, travel costs and expenses.

Do we have another WUC-type fiasco in our midst, this time involving vehicles and gasoline rather than watermains and sewers? I started laughing so hard when I saw how the blame for this was being put on a former CAO who's been out of the City now for years. Just like with WUC, blame it on the past, especially where the person is not around to say anything.

When we make a salad, we shake up oil and water together, to get a dressing. Well taxpayers need to shake things up too or we will get a recipe for financial disaster with our oil and water problems. I can hardly wait for citizens to speak at the budget meeting at the end of February if this matter isn't resolved quickly.

Will a number of City employees, especially given the anti-union attitude that they should be feeling right now, have had enough and finally break their silence and act as whistleblowers so that more and more scandals will appear. I would hope so.

This time I hope that Council has the nerve to actually bring in a forensic accountant to examine what is going on in this City before the citizens storm City Hall. If an 86% water increase was not bad enough and if what is being said in the audit report is true, there is no doubt that a full investigation will be necessary, perhaps even including the police.

I trust that the Mayor and Councillors have been reading the Windsor Star Forum. They won't admit it I am sure, just as they won't admit that they read the BLOGs. I'm sure that the attitude will be to tough it out and soon the the citizens will be quiet. It will cause a bit of a kerfuffle and and then that will be the end of it. Just like the Windsor Utilities Commission matter.

Or so they think!

In passing, a little birdie has told me that WeACT has not gone away with the WUC matter and will be taking further action with respect to WUC shortly. The approach taken will be rather startling as well if the information I have is accurate.

I thought you might be interested in reading some of the things that the auditors said about the Fleet Operations Review. To be blunt about it, if what the auditors said is true, heads should roll. But no worries, that won't happen:
  • We identified significant control conditions that in our opinion expose the Corporation to the risk of fraud, waste, abuse, incomplete and inaccurate records, inefficiencies and ineffective operations.

  • From 2005 to 2006 inclusive, the accumulated operating results of the Fleet Division show an excess of expenditures over revenues totalling $5,836,673. In addition, management estimates the operating expenditures will continue to exceed revenues by about $1.5 million per year.

  • The "Tone at the Top" of P. W. Fleet operations is not strong. Operational objectives have not been clearly communicated and there is little structure or control in place.

  • The Fleet Division would be placed in the category of an "Unreliable-Unpredictable" environment where controls are not designed, communicated or monitored.

  • We were unable to find evidence of an ongoing process of identifying, analyzing and mitigating departmental or organizational risk.

  • Management stated that they are unable to identify the reasons that operational expenditures continue to exceed revenues.

  • Management was unable to identify that there have been steps taken or that a plan of action has been created to address the issue of ongoing expenditures over revenues.

  • Monitoring is what managers use "to mind the shop." In all operational areas of Fleet, we observed at that monitoring controls were significantly lacking.

  • The basic controls of an asset management system were not found to be in place.

  • The lack of control results in excessive maintenance and labour costs, and inaccurate system data.

  • To controls over the city's fuel assets are significantly lacking... creates significant opportunity for fraud.

  • For many months, fuel inventory receipts and usage were not recorded or captured in the system.

  • There is little control over the fuel assets in manual sites. Fuelling at these locations occurs on an honour system.

  • Management efforts are concentrated on keeping things going as is, with minimal focus on control, risk and operational improvement.

  • By "treading water," management has has been performing only day to day tasks, which can give the appearance that things are going well when in reality there are inefficiencies, ineffective operations and a lack of adequate and appropriate controls.

I could go on but you get the picture.

Just to be fair Public Works in October, 2007 sent a two-page letter to the City Auditor, as was disclosed in the Audit Report, in which it stated that

  • "many of the findings are vague and the recommendations are equally vague. Many statements in the report are incorrect, incomplete and require revision."

There is a major difference of opinion in this letter whereby the Department claims that instead of a deficit of almost $6 million, they in fact have a surplus of $91,298 over the three-year period. That is such a dramatic difference that this in itself should result in the hiring of a forensic accountant to find that what is going on. It may well be that we need a new audit department rather than changes in Public Works. Could they be that incompetent?

There is a very interesting comment made that I believe points directly to the lack of action and direction by the Mayor and the Councils under his leadership in the Department letter:

  • "With respect to the statement that "the tone at the top" is not strong, I certainly concur, in that since the corporate restructuring in 2003, there have been 3 Chief Administrative Officers, 5 General Managers of Public Works, 2 Executive Directors, 3 Fleet Managers, and vacancies at the supervisory level. It is only since August 2007, that the Division has finally had a full management complement."

What's going to happen next... we see it in the Windsor Star just as what happened with the WUC matter. The counter-offensive has begun to discredit. Except the persons being discredited are the City's own audit group. That causes me a great deal of concern because if our own auditors are incompetent than they ought not to be doing the job in the first place.

The counter-offensive is interesting however:

  • "Mike Palanacki, executive director of operations, maintained Wednesday there remains no evidence of fraud involving the city's fuel pumps.

    He said the department had more documentation that was never considered regarding the city's fuel than was indicated in the audit report.

    "I do have issues in the way the audit was done and the report," Palanacki said."

DUH, Mike, if you had all of this information, and you had the opportunity to give it to the audit group, why didn't you do so. An incorrect report would not have been issued and we would have had no headlines. Did Mike think so little of the audit group of the City that he felt that he could ignore them? Sure he had issues about the audit, so much so that he did a whole two-page letter as I referred to above.

City Treasurer Onorio Colucci

  • "called the actual amount of funds "wasted" on vehicle repair costs, fuel and mismanagement "miniscule" compared to the overall $5.8-million cost recovery shortfall cited in the audit, which looked at a period from 2003 to 2006."

Well, dear Treasurer, that is hardly an answer. If one multiplies the miniscule amounts in every division and Department of the City, those little acorns can add up very quickly to a giant oak tree. What an absolutely irresponsible comment to be made by someone who controls the City's finances.

I am so glad and thrilled that Councillor Hatfield

  • "he has "full confidence" in the people today overseeing the department and their abilities to get any problems under control."

Personally, I'm not so confident that if what the auditors say is true that these people can manage their department properly. For years and years and years these issues have been outstanding and nothing has been done to deal with the matters. The Councillor ought to read the report to see what they say about Management.

I thought that Price Waterhouse had spent a lot of time and taxpayer money dealing with controls after MFP. If so, then how can Councillor Gignac say

  • "We have a very large corporation with a large number of employees, but you can put things in place to ensure the corporation is run right."

How many more times do our systems have to fail before things are done properly in this City?

It is pretty clear that the City Audit department is treated as a joke, especially since it took two years for them to complete their investigation on one department covering a three-year period:

  • "Fleet management initially restricted the information it supplied to the auditor," the report said. "In all stages we were required to request information multiple times before obtaining adequate documentation from fleet management."

And even then, if what is said by Mr. Palanacki is true, they did not get complete information.

I'm sure that by now you would have expected that I would of taken a shot at the Mayor and his lack of management skills. Why should I, it's obvious. He is such an easy target.

As the only full-time Member of Council and the chief executive officer of the municipality, it is his responsibility and duty to ensure that the organization is managed properly. It is not acceptable for him to say that he is the one that asked for an audit to be done in 2004 that brings out all of this information. It is his responsibility to ensure that there are managers in place who manage properly so that when an audit is done there are few negative comments.

Again, if the audit is correct, the Mayor has failed in his function.

So what is going on? Is the audit correct or are Mr. Palanacki and the Treasurer correct? Whom are we to believe? Given what seems to be contempt for the Audit Department by an Operating Department, Council ought to be very concerned.

I'm afraid that the only solution is to bring in an outside independent auditor again, hopefully this time a forensic auditor, to clear up this matter.

Do you really think though that the Mayor and Council want to go through what they went through with WUC? Don't be silly. Just check out the video and remember the words of Councillor Lewenza at the end in a few weeks from now.





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