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Springwater mayor addresses compliance audit committee

In Council Watch
Feb 28th, 2018

The following is the text of a deputation by Springwater Mayor Bill French to the township’s compliance audit committee (Colin McLarty and George Wodoslawsky in attendance)  on February 27 2018

Thank you for allowing me to address the Committee today before you make a decision. I appreciate that there is no real training ground for the job you are tasked with, as there are few Compliance Audits relative to the number of candidates in Municipal Elections.

What is the purpose of a Compliance Audit? I believe it is intended to ensure that no one had an unfair advantage in an election with regard to spending or fund raising. The Courts support the notion that the intention of the Act is not to upset the will of the electorate. Mr. McLean had concerns about my submitted Financial Audited Statement prepared by Smith Lassaline and filed an application to request a Compliance Audit. You as a committee met in July of 2015, accepted presentations from Mr. Siegel on behalf of Mr. McLean and I presented on my own behalf.

I was surprised that few questions were asked by the committee to clarify the concerns expressed by Mr. McLean. The only detailed comments noted in the minutes were provided by Chair Barlow outlining reasons why an audit would not be justified. The other two members seemed to conclude that there might be something there, so what harm will it do. Compliance Audits are not fishing expeditions, they are in response to real or apparent serious and intentional contraventions of the Act. Since I had no real concerns about my original filing and report, I decided to allow the audit and that is why I did not appeal that decision.

Now to the October 2015 meeting where the Committee received the Grant Thornton Audit report. Mr. Siegel argued the audit was not conducted by an individual auditor and expressed a concern about my acknowledgement on the engagement letter. I think those points were addressed in the recent Jan 2018 Judicial Review written decision. Justice Molloy suggests the concerns were more of an irregular or optics nature rather than a matter of substance.

However, you as a committee were swayed to request another audit. Since both my lawyer and later the Township lawyer believed the committee overstepped its jurisdiction in the Act, I launched an application for a Judicial Review in December 2015 which was heard in Dec 2017 and dismissed in January of 2018 on the grounds of prematurity.

On the way from my December 2015 application, until now, we have seen a variety of activities that have delayed the process. In July 2016, Mr. Siegel on behalf of McLean filed an application for a JR of the Compliance Audit Committee’s original engagement of Grant Thornton. This delayed proceedings somewhat, as it was determined by Associate Chief Justice Marrocco that hearing both Judicial Reviews together may be more efficient and less costly. Grant Thornton then requested that the McLean application be dismissed adding a new wrinkle and time.

The McLean/Grant Thornton application was heard and dismissed in January 2017. Justice Kiteley in her decision in 2017 suggested a conference with Justice Marroco to see if there was a settlement that could be reached as she noted the considerable expense to the parties and the ratepayers. All representatives conferenced with Justice Marrocco in the summer of 2017 and a solution was proposed which Mr. McLean, the Township and I were in agreement, but the committee rejected the offer.

Is this an example of what Justice Molly stated in her recent January decision, “It (referring to the Committee) misconceived its role before the court” and goes on to say, “A tribunal ought not to compromise its neutrality and impartiality by taking an active position in opposition to one or more of the parties that appeared before it.”

Is that not what the committee has done? So when it comes to Justice, could this matter have been resolved in the summer of 2017 at a much lower cost for all parties if the Committee had allowed Mr. McLean and I to settle?

The purpose of the audit was to ensure there was fairness in the 2014 election and that I reported properly. I think my financial statement and the Grant Thornton audit of that statement illustrates that I did, and except for some minor errors and omissions, the incomes and expenditures are well within the limits.

What is reasonable to me may be quite different to you. Is it reasonable to spend over $200,000 of Township money defending your decision? Justice Kiteley expressed concern about escalating costs over a year ago in January 2017. Is it reasonable that you as a committee have an unlimited budget, roughly 10 times that of Mr. McLean or I, and we have limited and finite resources? How is the Committee being reasonable or fair to Mr. Mclean, me or the Taxpayers of the Township of Springwater?

We all have biases, but in your position those biases must be checked to the best of your ability, so you can properly adjudicate the matter at hand and make decisions on the evidence before you. I challenged Clerk Daly at the beginning of this process in July 2015 on Mr. McLarty being on the Committee. I was in receipt of an email showing that Mr McLarty distributed Mr. McLean’s election video to at least one local resident during the 2014 campaign which, if nothing else, could be perceived as having some bias for the applicant.

To complicate the matter more, one of the members of this committee has missed crucial meetings in 2017. I do question whether the Committee’s decisions at those closed session meetings were fair and without bias?

I would also like to clear up some misconception of the audit process. An audit in business follows Generally Accepted Accounting Principles and practices which means you record all expenses and incomes in their appropriate categories. A Compliance Audit follows that principle with the additional responsibility of reporting activities or entries that did not meet the requirements of the Act. An Audit Report does not report on matters that are compliant, as their function is to identify irregularities. So, the Auditor reports on matters that are not compliant and makes suggestions for improvements.

The fact that the Grant Thornton Audit Report in 2015 did not comment on each issue raised by Mr. McLean in his application suggests they felt the information provided during the audit was compliant. But illustrating their thoroughness, the Grant Thornton Report did report issues raised by Mr. McLean’s application that were identified as non compliant, even though minor in nature. I think there needs to be clarification of who is involved with an audit. In this case the Audit is in the control of the Compliance Audit Committee under the auspices of the Township. Like any audit, neither Mr. McLean nor I have any say except for my required acknowledgment and agreement to provide all records and answer all questions relating to my income and expenses in the 2014 election campaign.

So today, I believe you have three choices:

1. You can order another audit which I believe will produce the same results as the Grant Thornton Audit Report and cost thousands more.

2. You can accept the Grant Thornton Report which was ordered by the committee and make a decision based on it.

3. Or you could take a bold move because of the time and expense of all parties and make a decision to end this matter today.

I do thank you for your time and only ask that you do take, Justice, Fairness, Reasonableness and reflect on the possibility of some Bias and make the right decision for all stakeholders affected by this matter.

I am asking that you vote in the negative for your resolution to appoint a new auditor. If that be your will, I would then ask you table a motion to cease further action on the compliance audit matter.

I would be pleased to respond to any questions.

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