Spending and expense policies in the offices of the B.C. legislature’s Speaker, clerk and sergeant-at-arms were not always followed and lacked clear documentation, the province’s auditor general said in a report released Sept. 19.
Expenses happened without approval and others in a vacuum of policy to prevent them, Carol Bellringer said. The report covered 4,700 transactions totalling $2.2 million.
"We found that there was no specific travel policy for staff and officers of the legislative assembly," she said, noting nine recommendations have been made to remedy the situation, suggestions accepted by the legislature. "The practices we observed in this area would not have been allowed in ministries."
The report can be read here: https://www.bcauditor.com/pubs/2019/expense-policies-and-practices-offices-speaker-clerk-and-sergeant-arms
The report comes after a scandal that rocked the legislature late last year, resulting in a scathing report from Speaker Darryl Plecas detailing spending habits of former clerk of the legislative assembly Craig James and sergeant-at-arms Gary Lenz.
Plecas said while he had hoped for a forensic audit, he called the report an important step forward.
“The report illustrates that there was a failure of leadership and trust by senior non-elected leadership of the legislative assembly, “ he said in a statement. “Appropriate and effective polices were not established and policies that were in place were overridden or not applied.”
When Plecas brought the allegations forward, James and Lenz were escorted from the building in November.
Among spending details the audit found are $146,745 for travel by staff in the offices of the Speaker, clerk and sergeant-at-arms in 2018-19.
“From April 2016 to December 2018, the clerk incurred $108,656 in travel costs for 14 out-of-province trips. None of the clerk’s out-of-province travel had prior approval documented in the expense claims,” the report said. “Over the same period, the sergeant-at-arms incurred $59,269 in travel costs for 15 out-of-province trips. Two of these trips had prior approval documented in the expense claims.”
The audit also found the clerk, sergeant-at-arms and Speaker were chauffeured on an August 2018 U.K. trip at a cost of $1,915 for three trips on August 6, 9 and 13. From April 1, 2016 to December 31, 2018, the clerk’s office spent $11,678 in the U.K., Washington state and Canada for similar services.
Between August 2016 and August 2018, the Speaker, sergeant-at-arms and the clerk spent $17,000 on clothing, including $4,810 on four cufflink sets, one suit, one pair of shoes, one pair of trousers and two hats.
Various gifts were bought at a cost of $18,783, ranging from a ginger chocolate bar for $4.98 to three jade bear sculptures with a price tag of $1,428.
“In addition to these items, in November 2018, the legislative assembly was invoiced for $20,093 for artwork ordered by the clerk, which included one original painting, 150 prints of the original and 2,000 art cards from an artist based in Victoria, B.C.,” the report said.
However, Bellringer told a media teleconference, “I’m not coming straight out and saying there was no fraud because we can’t be confident in that statement.”
She said the legislature lacks mechanisms for reporting such cases, adding investigations into the situation continue by the RCMP and under B.C.’s Police Act.
The clerk acts as the CEO of the legislative precinct, whereas the sergeant-at-arms is responsible for its maintenance and security, as well as oversight of conduct by staff within the legislature, former chief justice of Canada Beverley McLachlin noted in an independent fact-finding report.
James also engaged in misconduct by charging travel expenses, such as two suits ($2,150), luggage ($2,135) and insurance premiums, to the legislature, McLachlin found.
James had contended in interviews with McLachlin that he was trying to update the legislature’s dress policy and establish a “luggage bank” for MLAs. McLachlin didn’t buy the arguments.
McLachlin did allow for James’ explanations to purchase over $5,000 in electronics between April 2017 and July 2018. She noted the line between personal and business use “may be difficult to track.”
Further misconduct was found when James removed alcohol belonging to the legislative assembly. No repayment slips had been produced by James, noted McLachlin.
“The issues we found could have been mitigated if the legislative assembly had clearly assigned responsibility for ensuring that policies are being consistently followed and that any significant or systemic breaches of policy are being reported to an appropriate authority,” Bellringer said.
The legislative assembly did have a policy in place for the use of purchasing cards. However, the office identified a number of instances where purchasing card practices did not follow the stated policy.
Finally, the office found that there was no effective mechanism for reporting policy violations directly to the Legislative Assembly Management Committee (LAMC). The issues found could have been mitigated if the legislative assembly had clearly assigned responsibility for ensuring that policies are being consistently followed and that any significant or systemic breaches of policy are being reported to an appropriate authority.
"LAMC needs to ensure the administration of the legislative assembly sets the bar for controlling, overseeing and ensuring the efficient and effective use of public resources in an organized fashion," Bellringer said.
The legislature response said work “will be undertaken to develop a policy that will establish whistleblower provisions for legislative assembly employees.”
Specifically, the report said the legislature’s executive financial officer should have direct capability to report significant instances of non-compliance with policy to the Speaker, the finance and audit committee and LAMC.
The auditor general's practice is to refer any unusual or potentially fraudulent transactions to management or the appropriate authority for further investigation. In the course of this audit, no such referrals were made, beyond what is included in the report, Bellringer said.
"The audit report makes nine recommendations to address policy weaknesses and gaps. The legislative assembly accepts all recommendations,” Plecas said.
He said LAMC has established a work plan on urgent reforms, and progress has already been made by that committee and the acting clerk on many recommendations.
“On my instructions, new policies on employee travel, uniforms and gifts and honoraria have been explicitly extended to my office. The full implementation of all audit report recommendations will be completed in the months ahead,” Plecas said.
"Sound financial management is a basic expectation of any public institution. As Speaker, I will do my utmost to support increased and much-needed accountability and transparency at the legislative assembly,” he said.
The report is the first performance audit report in a series on the legislative assembly. It was prompted by the Speaker's report, released in January 2019. Upcoming audits in the series will focus on fixed assets, compensation and benefits, governance and a further look at purchasing card administration and usage across the legislative assembly.