Internal auditor ‘would be costly’
Auditors discover theft
Changes to the Finance Audit and Risk Committee have sparked debate over whether or not an internal auditor should be hired to detect fraud.
Councillor Terry Magill was one of two councillors who opposed the decision to drop the word ‘‘finance’’ from the finance and audit risk committee and add an external member.
The new audit and risk committee will be a committee of the full council plus an external appointee.
Chairperson Magill said he agreed with getting the involvement of someone with specialised knowledge but argued he/ she would have more of an impact if they were contracted in to complete an internal audit and report back to the committee.
‘‘I believe that if that person is just sitting on the committee going along to the meetings with us, that there’s no guarantee there either that any sneaky person couldn’t get around them. What I was suggesting was that we should rather have a suitably required contractor – part of the governance expenditure, an internal auditor paid for through democracy. That way there’s no employer employee situation.’’
It is the job of senior manage- ment to ensure that all middle management are operating under strict protocols, but as it stands there is room for error, he said.
‘‘If a person had the mind to be fraudulent then there is the opportunity to do that and it may not be picked up.’’
The senior commercial lawyer by trade said he had seen it in his line of work.
‘‘I’ve got the fullest confidence in our senior staff but it is a relatively large organisation and there is the potential for [fraud] to occur.
‘‘ These things happen unfortunately and if you are going to have a viable risk committee that just relies totally on what we’ve been told then why call it an audit committee, if you’re not auditing anything?’’
Chief executive Craig Hobbs said he did not want an external person ‘‘ coming in and being God over our officers’’.
Meanwhile deputy CE Ben Smit During the presentation of Deloitte’s annual financial statement audit, it was noted by their auditors that the council had discovered an incident of theft earlier this year.
The council confirmed it had occurred at a South Waikato District Council run facility.
‘‘ Appropriate action was said there was merit in Magill’s suggestions but it would costly.
He said the purpose of the committee was to identify organisational risk.
‘‘You would have to question whether fraud was one of the top risks the organisation faces.’’
He said in his time as CE internal fraud cases had been ‘‘extremely rare’’. taken and the individuals involved no longer work for the council. The incident was reported to the council’s auditors at the time,’’ communications manager Kerry Fabrie said. A thorough investigation was held and subsequent control measures have been put in place.
Magill said the external auditors, who are paid ‘‘some sixfigure sum’’ made it quite clear that they do not audit the operating accounts.
‘‘Perhaps if you just employed someone part time to hone in on particular things .
‘‘If I’m going to be charged as chairman I want it to be the best committee it can be.’’