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.
