Gobsmacking

That’s the only way to describe the audit of the Newfoundland and Labrador English School District (NLESD) released Wednesday. It would be easy to focus on the legion of financial woes the audit turned up, things like the two-week rental of a wheelbarrow for $735 or the acceptance of gifts, food and hockey tickets. Money paid to fix school parking lot potholes, even though the potholes weren’t touched.

You could look just at emergency purchase orders, for example, where the province’s auditor general found, “In almost all 5,559 cases, the purchase was not an emergency or we could not determine whether the purchase was an emergency because there were insufficient or no details of the purchase recorded on the QPO. For example, purchases included routine office supplies, clothing and accessories, phone cases and upgrades and food.”

Instead of that focus, though, we’re simply handing over the rest of this editorial to the auditor general, who has pointed out that the problems at the NLESD went right to the top.

“The Board of Trustees and senior management had not established standards for, or promoted a culture of, ethical organizational behavior:

• NLESD did not have a written code of ethics and conduct and neither the Board of Trustees nor the senior management had communicated expectations for ethical organizational behaviour to staff.

• There was no internal reporting mechanism by which employees could report suspected unethical behaviour.

• There was no evidence that allegations of unethical behaviour reported in 2013 and 2015 to senior management were investigated and resolved.

• There was a pervasive pattern of unethical organizational behaviours demonstrated by a number of employees in the Facilities Branch.

…

• There was no evidence the Board of Trustees requested reports, or that senior management provided reports to the Board, on the development, implementation and effectiveness of internal controls.

• The Board of Trustees and senior management failed to address repeated recommendations from the external auditor to improve internal controls for safeguarding assets, citing other priorities.

• There was no evidence that the Internal Auditor met with the Board of Trustees as required by its by-laws. Further, Internal Audit reported to senior management, reducing the independence and effectiveness of the Internal Audit function.

• Senior management failed to address repeated concerns reported not only by the external auditor but also by both Internal Audit and the Finance Division regarding non-compliance by Facilities staff with policies, internal control procedures and the Public Tender Act. Further, there was no evidence that senior management reported these findings to the Board of Trustees.

This lack of oversight and lack of action over the years to address these known internal control weaknesses, disregard of internal controls and pervasive pattern of unethical organizational behaviour significantly increased the risk of unauthorized actions, unethical behaviour and/or fraud.”

And that’s only one small fraction. There’s some major explaining to be done here.