COUNCILLOR EXPENSES
Audit finds ‘systemic’ problems
Calgary city council’s expense process has “systemic issues” that should be fixed, according to a new report from the city auditor.
City council unanimously approved an audit of council members’ expenses in February, when they also asked for a deeper investigation into Coun. Joe Magliocca’s expenses after a Postmedia report earlier this year raised questions about receipts the Ward 2 councillor had submitted for reimbursement.
Receipts obtained through a freedom of information request showed Magliocca expensed at least twice as much as other council members at the Federation of Canadian Municipalities conference in Quebec City in 2019, including at least $1,800 in “hosting costs” where he reported meals and drinks with company representatives or other elected officials.
But 10 of the people Magliocca listed on the receipts said or confirmed through representatives that they did not sit down with him.
Magliocca has since apologized, both in council chambers and in a subsequent public statement. He initially paid back $2,100 from his conference expenses and, later, “upon further reflection,” paid back all “alcohol-related” costs since the last election. In total, Magliocca has now repaid nearly $4,000 from the past two years of his expenses. He also publicly posted itemized receipts from his expenses in 2017 and 2018.
The city auditor’s new report doesn’t include Magliocca’s expenses since his costs are subject to an investigation by an external firm. That audit is “nearing completion,” according to a city spokesperson.
The audit released Friday shows councillors’ expenses have generally been in line with council policy. But the system also has issues “that require prompt resolution in order to maintain effective accountability and transparency” for council members’ budgets.
Coun. Jyoti Gondek brought the notice of motion to council in February asking for an investigation into Magliocca’s expenses, and councillors Jeromy Farkas and Sean Chu asked for additional work looking at all council members’ expenses.
Gondek said Friday that this is an opportunity for needed changes to council’s accountability process.
“The thing that this report indicates to Calgarians is we’re behaving in a responsible manner as a group,” she said.
“It’s not a mass issue of lack of transparency or unethical behaviour, but this gave us the opportunity to ensure that we were doing things the right way.”
Spending from councillors’ ward office budgets is publicly disclosed, but council travel and hosting costs expensed to the city’s corporate accounts are not posted publicly.
Mayor Naheed Nenshi has said that’s an issue the city needs to address to make sure Calgarians can see how elected officials are spending public money.
The city auditor’s office examined a sample of expenses from the mayor and councillors, excluding Magliocca, between October 2017 and February 2020. They looked at costs billed to taxpayers from each of the four years in council’s current term.
During that time, $443,505.05 was reimbursed to council members, and the audit examined about a third of the costs, totalling $143,375.26.
Just two of the expenses they looked at didn’t adhere to council policy, but after speaking to councillors, they found they were “valid and incurred while performing elected official duties.”
One of the biggest issues is the process that governs reporting and approving expenses. Councillors’ costs are currently approved through a council committee, which sees the chair — another councillor — assess and sign off on other councillors’ receipts. The report says that “may be perceived as a conflict of interest” and recommends changes, since councillors have agreed they want a process “free of political influence.”
In one case, the audit found an expense report had been approved by the committee chair, Coun. Ray Jones, even though it included a hosting event in which he participated. The audit said that expense was explained as an “oversight.”
“None of the elected officials interviewed felt that the current approval process was an appropriate governance structure, and most expressed the opinion that the approver role should not be held by a Councillor,” the report says.
Gondek said she has big problems with the system, and questions about it have been raised for a long time.
“First and foremost, it puts the reviewer in a terrible position of conflict, and it’s not the norm,” she said. “We need better practices.”
The report also suggests making clearer guidelines for certain expenses like alcohol, setting expectations for filing expenses within a set time frame and making sure council members get mandatory training on expense policies.
It specifically flags problems with expenses related to hosting, alcohol, travel, gifts and office expenses.
Hosting costs, like the ones Magliocca incurred during the 2019 Quebec City conference, are a permissible expense, but the names of the people hosted are required, and there’s a $100 per day limit. The audit said the hosting expenses they examined followed policy, but improvements could be made, including looking at whether more information should be required to support a hosting expense.
Council members are also allowed to expense alcohol as long as the meeting involves third parties — for example, if only Calgary councillors were present, they couldn’t be reimbursed for any liquor, but it’s permitted if “noncity” people are involved.
But alcohol expense guidelines are in three separate policies, and all of them have wording that could be left up to interpretation, according to the report. One policy says council members can expense alcohol as long as third parties are involved and alcohol consumption is “reasonable,” but there’s no specific explanation for what that means. There’s also a lack of clarity about who counts as a “noncity” party.
“While we did not identify instances of non-compliance in our sample with current policies as written, the wording is not sufficiently clear to provide direction regarding what is and what is not a permissible alcohol expense,” the report says.
Councillors have a range of views on the issue, according to the audit, but “it may be time to reassess permissible alcohol expenses.”
A working group that includes city council’s ethics adviser, city solicitor, city manager’s office and city auditor will make recommendations about fixing the issues raised in the report by the end of the year.
This gave us the opportunity to ensure that we were doing things the right way.