«

»

Jun 14

Print this Post

Canada Audits Dubious Senator Expenses At Great Cost

The recently released report by the Canadian Auditor General details numerous incidents of inappropriate spending by members of the Canadian Senate. The report investigated 116 current and former senators and 80,000 expense items totaling CAD $45,000,000 over a period from April 1, 2011 to March 31, 2013. 30 of the senators under investigation were found to have filed dishonest expenses, and 9 are likely to face criminal charges.

In total the audit uncovered just under CAD $1 million in fraudulently expensed items. However, the costs of the audit totaled over CAD $23,600,000, as described in the June 5, 2015 Report from the Office of the Auditor General and captured in the chart below :

Chart 1: Breakdown of Audit Expenses from the Canadian Senate Audit

Expense Type

(Cost in CAD $)

2013–14 2014–15 2015–16 2015–16 Total
YTD Forecast
 

Staff costs

 

$1,700,000

 

$6,300,000

 

$900,000

 

$300,000

 

$9,200,000

Contract costs (professional contractors)           300,000           1,100,000           100,000        100,000               1,600,000
Other direct costs (expenses, including travel)           100,000              200,000                     –                  –                  300,000
Allocated indirect audit costs (training, leave, etc.)           800,000           3,200,000           400,000        100,000               4,500,000
Total audit costs        2,900,000         10,800,000        1,400,000        500,000             15,600,000
Plus: Support costs (IT, finance, HR, legal, etc.)        1,600,000           5,300,000           800,000        300,000               8,000,000
 

Grand total:

 

$4,500,000

 

$16,100,000

 

$2,200,000

 

$800,000

 

$23,600,000

 

The CAD $23,600,000 in expenses incurred was derived from a total of 121,800 man hours spent on the investigation, including over CAD $1,300,000 in forensic accounting fees charged by the Big Four Accounting Firms and Grant Thornton, as captured in the chart below:

Chart 2: Breakdown of Fees Charged by External Auditors

 

Accounting Firm

(Costs in CAD $)

Amount Spent to Date Expected Expenditures Total Forecast
 

DELOITTE & TOUCHE LLP

 $6,875  –  $6,875
 

ERNST & YOUNG LLP

                  58,894                        – 58,894
 

KPMG LLP

                222,015                        – 222,015
 

PRICEWATERHOUSECOOPERS LLP

                764,236  

24,462

 

788,698

 

GRANT THORNTON

                254,052  

 

254,052

Total Costs $1,306,072  $24,462  $1,330,534 [2]

 

Obviously the findings are not impressive from a purely dollar for dollar standpoint and suggest that a more efficient audit methodology could have been pursued. Yet the Auditor General believes the audit to be a success in that it improved transparency for the legislative system and increased accountability for individual legislators. The extent to which the government was willing to pursue its investigation should serve as a powerful deterrent going forward, as fraudsters are often emboldened when they perceive a low likelihood of detection.

About the author

Devin Yaeger

Devin Yaeger is a consultant at Fulcrum Inquiry, an accounting, finance and economic consulting firm specializing in complex litigation, forensic investigations and appraisal issues across a broad spectrum of industries.

Permanent link to this article: http://betweenthenumbers.net/2015/06/canada-audits-dubious-senator-expenses-at-great-cost/

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*