Forensic audit calls out Richmond County CAO, some councillors

A forensic audit of the credit card and expense claims of Richmond County councillors and senior staff has found few detailed receipts, money spent on alcohol, and singles out the CAO for charging the municipality $582 at two adult entertainment clubs in Texas.

The report was released Tuesday. It confirms concerns raised in an review by Nova Scotia's ombudsman and provides even more detail.

The accounting firm Grant Thornton was asked to delve into five years of financial records, from April 1, 2011, to March 31, 2016. Auditors were tasked with determining if expenses complied with the municipality's policies and procedures.

No receipts

During the time period in question, more than $800,000 in claims were filed — about $470,000 of them on credit cards and about $335,000 in expenses.

Time and time again, the report says auditors were unable to determine whether claims violated the existing policies "because there was no supporting documentation."

The auditors questioned a total charge of $582 for back-to-back nights at adult entertainment clubs in Houston. An expense claim filed by Warren Olsen, the municipality's chief administrative officer, listed one evening as a reception/meal.

The report says that based on its interviews, "the explanation attached was prepared by the CAO in advance of and in anticipation of the forensic audit."

However, the audit report says the current travel expense policy and employee policy are "unclear regarding acceptable meals and entertainment practices."

Claiming twice

As in the ombudsman's report, which was made public earlier this month, the forensic audit describes "double dipping."

It says two councillors and the CAO claimed a per diem or meal allowance while filing expense claims for the same meals charged to municipal credit cards. In total, the audit identified $3,871 in credit card meal claims on the same day when three meal allowances were also claimed.

The audit says 73 per cent, or 440 of 603 transactions, were not supported by detailed receipts.

It says the employee policy requires that meal expenses only be reimbursed when the name of the attendee appears on the expense claim and the business purpose of the meal is justified.

Liquor charges

Alcohol purchases were also singled out in the forensic audit, which noted 26 alcohol purchases from liquor and beer stores during the five-year period, totaling $7,959. In addition, more than $75,000 in meals and entertainment claims included drinks charges.

The report says while alcohol charges are prohibited as a reimbursable expense in the employee policy, the travel expense policy is unclear.

Auditors interviewed five councillors and three employees who described alcohol as a "natural part" of entertainment.

The forensic audit also describes seven claims totaling $300 in which councillors claimed reimbursement for expenses "perceived to be political donations or fees for attending a political party event."

The auditors found the travel and employee policies are both unclear regarding that practice.

Going forward

The audit's summary of recommendations made four suggestions:

- Meal expenses should be limited to either a daily meal allowance or the actual expense incurred. If a meal expense is claimed, it should include a detailed receipt including who attended and the business purpose.

- The employee policy should include a limit on meal expenses.

- A log of actual mileage incurred by councillors should be maintained, including the originating address and the address of the destination, and the kilometres travelled.

- Any expenses incurred on behalf of family members should be paid personally.

As for councillors and the CAO, the report recommends they receive training regarding a revised expense process and policy.