Forensic audit reveals ‘inappropriate spending culture’ at TNRD under former CAO Suklh Gill – 100 Mile House Free Press


Findings from a forensic spending audit in the Thompson-Nicola Regional District confirm what was reported in Kamloops This Week’s investigation into the same issue earlier this year.

In its summary, BDO Canada said, “There was an inappropriate spending culture within TNRD which had the effect of attracting and involving many employees.

He found that there was a lack of controls in the finance department and a lack of oversight and governance by the regional district council.

In February, KTW published a series of articles detailing hundreds of thousands of dollars in seemingly excessive spending under former CAO Sukh Gill, who suddenly left the regional district on February 14, 2020.

Gill received severance pay in excess of $ 500,000 as part of a legal agreement that his departure should be described as “retirement.”

The real reason for Gill’s departure has yet to be explained, but TNRD board chairman Ken Gillis told KTW he was not linked to spending issues.

When posting the series of stories, Gillis said the board was unsure to what extent the spending had taken place and called the amounts “surprising” and “somewhat distressing.”

Following KTW’s stories, the TNRD board ordered a forensic audit and changed many policies. In addition, the RCMP has opened a criminal investigation, which is ongoing.

The forensic audit has been completed and a summary of it was presented at the TNRD Board of Directors meeting on Thursday, December 16 by the Director General of Administration, Scott Hildebrand and BDO Canada representatives. , Simon Padgett and Jervis Rodrigues.

Auditors cited a number of activities that have perpetuated the “inappropriate spending culture,” activities cited by current and past regional district employees.

These activities include many of those cited in the KTW survey, including:

• Gill’s remuneration and expenses were considerably higher than those of general managers in other regional districts;

• Frequent and excessive spending on meals and entertainment;

• Incorrect allocation of expenses or ordering subordinates to pay and claim reimbursement of expenses;

• Purchase and distribution of gift cards and personal time without specifying who received them.

The auditors also noted expenses reimbursed without approval, a lack of control in the approval of expenses and meal expenses above the meal thresholds contained in the TNRD statutes and policies.

“The former CEO appears to have created, or encouraged, a culture of bypassing internal financial controls over expense reports,” said BDO Canada.

In addition, the audit found that there was a practice of listing the names of people on receipts when such people were not present at dinners, lunches or other events.

Earlier this year, a former TNRD employee told KTW his name was on a receipt, but they said they did not attend that dinner with Gill. Another person from the regional district told KTW that her name was associated with an out-of-town event, despite not being at that event. Padgett said other people in audit interviews also said their names were attached to receipts at events they did not attend.

In the summary of the audit observations regarding Gill’s expenses, the auditors declared a “false list of employees” and noted that Gill had charged meal expenses on her company credit card in addition to her charges. daily allowances.

Additionally, auditors found that Gill, during a 2019 government trip to Uji, Japan, claimed per diems and billed meal expenses during his personal days.

The audit also examined $ 755,258 in expense reimbursements and found that $ 197,008 (26%) did not have supporting itemized receipts and $ 13,102 (two percent) did not have any approval. The audit noted that Gill approved $ 503,913 (67%) of the sampled expenses and that CFO Doug Rae, who remains with TNRD, approved $ 669,195 (89%) of the sampled expenses.

The audit used as an example an expense highlighted in the KTW survey, that of the TNRD spending $ 8,602.41 to rent a champagne room at the Barefoot Bistro in Whistler on September 13, 2018, during the convention of the Union of Municipalities of British Columbia that year.

The auditors noted that the cost was split into two transactions: “Employee A was instructed by Employee B to pay part of the $ 8,602.41 separately. “

The auditors noted that no itemized receipts were provided for the expenses and that those who attended the champagne room event were not listed in the receipts.

In its summary of observations on the supplier review, the auditors expressed concerns about the procurement and tendering policy and Gill’s relationship with companies.

As in the case of the KTW survey, the audit cited “frequent and excessive spending on meals and entertainment” and listed the top 10 food and beverage vendors where TNRD money was spent between 2015 and 2019.

In order, the top 10 audit list includes Nandi’s Flavors of India ($ 26,836), Terra Restaurant ($ 20,644), Dorian Greek House ($ 14,579), Hotel 540 ($ 10,573), The Keg ($ 7,157), Bearfoot Bistro ($ 6,899), Cactus Club ($ 6,684), Moxie’s ($ 5,729), Al Porto Ristorante ($ 5,664) and Mitz Kitchen ($ 4,924).

(A full list of where the money was spent during this time period can be found on KTW’s survey spreadsheet by clicking here.)

BDO Canada made a number of recommendations to improve corporate governance and oversight, policies and regulations, human resources, internal audit and finance department operations. These recommendations are below.

BDO Canada’s forensic audit included over 20 interviews and a review of over a dozen policies / regulations and a review of over 45,000 electronic documents and over 12,000 other documents.

He reviewed 876 management expense claims and 264 board expense records and reviewed all of Gill’s expense records. The audit also examined 75 percent of the expense reports of seven senior management personnel and 25 percent of the expense reports of the board of directors.

The audit also looked at TNRD’s procurement and supplier process, analyzed Gill’s per diem claims from 2014 to 2019, and examined telecom expenses over the same period.

Final report not yet published

Last week, Hildebrand told KTW that the full report will be released this week, after the presentation to the board.

However, he said during the board meeting that the full report could not yet be released, pending legal review as the report is very sensitive and contains confidential documents.

A copy of the summary presented to the TNRD Board of Directors may be distributed.

Hildebrand and Rodrigues both said they were disappointed the full report could not yet be released to the public, but both said it would happen in due course.

“I am confident that it will finally be published once all lawyers have considered all the content and form of the report,” Rodrigues said, noting that the summary presented includes all the important information.

A time-consuming audit

Rodrigues said the forensic audit encompassed more than 1,500 hours of work.

He said this was due, in part, to longer-than-expected talks, noting that people were “very willing to stay longer and speak in depth with us.”

Go forward

“Our staff deserve better and our staff deserve to be heard,” said Hildebrand, referring to the audit which noted that staff concerns in the past have been ignored.

He added that residents and taxpayers also deserve better.

He said the regional district fully accepts the conclusion of the audit and the errors that were made. He said TNRD should accept and own all of BDO Canada’s recommendations.

About these recommendations

“There are gaps at the board level,” said Padgett, noting the recommendations are meant to be constructive.

Recommendations include:

• the board takes government training in ethics and financial literacy at least annually;

• the board should delegate more to the audit committee;

• internal audit examines the rotation of all departments

• zero tolerance from top to bottom for any breach of the rules;

• a complete review of the organization on its vulnerabilities and have a risk management plan. An annual fraud risk review is implemented.

• improve and create a formal whistleblower policy, external and confidential (whistleblower noted Padgett is the # 1 method for uncovering wrongdoing);

• review the TNRD code of conduct (eg family members are not included in conflict of interest rules); • the comparative analysis of compensation is implemented;

• improve the exit interview process as such dialogue may have revealed problems earlier.

• training in ethical governance and fraud for the human resources department so that it can deploy them in all other departments;

• implement internal audits because such an audit would have detected this problem and saved TNRD money in the long term;

• review the duties and responsibilities of the CFO position and strengthen the role of internal audit.


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