Sunday, January 1, 2017

Employee Business Expenses Audit November 14, 2016-----In 2015, employee business expenses were approximately $8.8 million--------------Iveson said he met with the city manager and the city auditor, the only city employees who report directly to council. He said he pitched a new way to keep them accountable for their expenses.-------Cochrane said she plans to take things a step farther, and extend the disclosure policy to all senior members of the administration. "The corporate leadership team and I have been discussing that, just in the spirit of this, so that it doesn't have to be investigated," Cochrane said. Senior management is expected to disclose their expenses and travel in the near future.------------City council sets the city manager's budget and reviews performance, but currently it doesn't review the city manager's self-approved expense reports.----https://www.edmonton.ca/city_government/documents/16412_Employee_Business_Expenses_Audit.pdf-






If you are curious how your tax dollars are being spent you will spend some time looking at the auditor reports at every level of government. Today I will look at one auditor report for the city of Edmonton. As time permits I will read over the rest of the reports.
Following the money is important because it seems to me that we get a lot of waste in government for no darn reason that I can determine other than folks in government are using OPM (other people's money).
I start off with a small audit because it is late and I am just getting back into investigation work again after the holidays.  This audit reviews how the city of Edmonton employees spend our money on their expenses.
It has always been curious to me that government employees get paid for expenses when private business owners don't. It's not necessary in my opinion and should stop but since we are citizens without any ability to change laws we simply have to protest and be ignored. Here is how the city folks expense their food, travel and other costs on our dime.  I mean I understand about the costs of going to places (travel) but I don't quite understand why we should pay for food costs on these trips.

In addition, I don't also understand why we would be paying for the education of employees. Isn't it best for the employees to do what private business owners do which is pay for their own continuing education?


https://www.edmonton.ca/city_government/documents/16412_Employee_Business_Expenses_Audit.pdf
Employee Business Expenses Audit November 14, 2016
***
Total costs for expenses incurred by city of Edmonton employees --in 2015 was high:
https://www.edmonton.ca/city_government/documents/16412_Employee_Business_Expenses_Audit.pdf
In 2015, employee business expenses were approximately $8.8 million
****
How is it even possible for the city of Edmonton to spend this much money on expenses for its employees?  Apparently this total includes money for travel, food, taxi service, events etc.

When the city auditor looked at different categories of expenses the one that was increasing were for internal food services (whatever this is) and external hosting services (which I guess means paying for other folks).

https://www.edmonton.ca/city_government/documents/16412_Employee_Business_Expenses_Audit.pdf

3.2 Overview of Expenses We reviewed the employee business expenses that were incurred between 2013 and 2015. As shown in Figure 1 and Table 1, employee business expenses have been relatively consistent except for internal food services and external hosting expenses which increased over these three years.


****
When I look at the costs of each category (in the thousands) they seem rather high to me. The business travel area seems outrageous considering that these are city employees and not provincial government folks who we would expect some out of Canada travel. It's odd and I decide to look back in time.


Table 1 – Employee Business Expenses 2013-2015 (in thousands) 2013 2014 2015 

Business Travel Business Travel – In Canada $ 626 $ 731 $ 547

Business Travel - Out of country $ 432 $ 610 $ 388

Training & Conferences Local Training $ 3,335 $ 2,708 $ 2,866

Training Requiring Travel – In Canada $ 930 $ 1,029 $ 960

Training - Out of country $ 400 $ 547 $ 535

Conference Fees $ 152 $ 92 $ 93

Mandatory or Legislated Training $ 51 $ 23 $ 23

Food Services & Hosting Food Services - Internal $ 1,008 $ 1,036 $ 1,249

Hosting - External $ 810 $ 1,020 $ 1,150

Employee/Partner Recognition $ 972 $ 1,099 $ 989

Total $ 8,716 $ 8,895 $ 8,800
..............................................................

So let me consider these costs.

1) For folks to travel inside of Canada, it cost us more than half a million dollars each and every year for 2013, 2016 and 2015.  Now that is a ton of travel. Where were folks going and why? 

2) For folks travelling inside Canada we have $432,000 spent in 2013; $610,00 in 2014 and $388,000 spent in 2015.  This amount of money also seems high to me.

If I remember correctly we had some media reports on the amount of travel done by city officials here that are not mentioned by the city auditor.






CBC INVESTIGATES



Edmonton's former city manager spent 200+ days travelling on taxpayers' time and money

Mayor and new city manager vow to change policy and make expenses public

By Laura Osman, CBC News Posted: Apr 17, 2016 6:00 PM MT Last Updated: Apr 18, 2016 11:07 AM MT
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How far did Farbrother go? 1:06
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Laura Osman
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Laura Osman is CBC News Edmonton’s city hall reporter. She has worked as a producer and reporter on radio, television and online news across Canada. You can contact her on Twitter at @LauraOsmanCBC or by email at Laura.Osman@cbc.ca

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Former Edmonton city manager Simon Farbrother made 52 trips on taxpayer dollars in his last three and a half years in the job, all under a system that allowed him to approve his own expenses with little to no oversight.
A CBC Investigation shows Farbrother spent 212 days during that period working outside the city, at a total cost of $139,643.34. Some of those expenses were reimbursed by the province and other organizations.
In all, he spent 24 per cent of his final year on the job out of the city.- CBC Edmonton investigation
Last year alone, Farbrother went to Russia, the United States and Australia before he was fired in September 2015 and given an $800,000 severance package. In all, he spent 24 per cent of his final year on the job out of the city — often out of the country — even as major projects began to fall off the rails.
CBC obtained more than 2,000 pages of travel documents from the city manager's office through freedom of information.
Click on the coloured bars below for more details about where Farbrother went
In response to CBC's inquiries, the city has changed its policy; the new city manager will now be expected to publicly post all expenses online.
Simon Farbrother

Metro LRT delays

The first time the now infamously delayed Metro LRT line was set back, Farbrother was in Phoenix, Ariz. The third time it was delayed, he was in Fort Lauderdale, Fla., attending a conference.
In October 2014, the city stopped setting new opening dates for the beleaguered line, settling instead for "early 2015." As Mayor Don Iveson stood at a podium to break the news to the public, Farbrother was in Australia as part of a 41-day worldwide junket for the city's Commonwealth Games bid.
In the last month of his employment, Farbrother was grilled by council over the auditor's findings of mismanagement of the Metro LRT line, which was 16 months behind schedule at the time.
Farbrother responded by accepting "full accountability" for the delay. The next day, he boarded a plane for Sydney, Australia, for a week on city business.

Manager travelled for sports, international conferences

Farbrother was hired in 2010, with a salary of $400,000 a year, including benefits.
Coun. Mike Nickel said he started to notice Farbrother's frequent absences shortly after he was elected in 2013.
"When I just got on board I was trying to find out how the organization had been restructured, and those sorts of things," Nickel said.
Nickel said he had trouble reaching the city manager, who was often away at conferences or representing the city in bids to bring major sports events to Edmonton.
"Here I was struggling to find the city manager on deck."
Mike Nickel
The city manager's office budgeted $25,000 for travel in 2015. He had already spent that much by the time he was fired in September.
His itinerary last year also included a $700 trip to Vancouver for the FIFA Women's World Cup Final.
According to the city's documents, Farbrother travelled mainly to attract major sporting events to Edmonton, such as the FIFA women's world cup and the ITU World Triathlon Grand Final.
Farbrother continued to travel on Commonwealth Games business after Edmonton dropped its bid.- CBC Edmonton investigation
In 2014, as part of the city's bid to bring the Commonwealth Games to the city, Farbrother led a delegation of city officials to Glasgow, China, New Zealand, Australia and Barbados.
The costs of those trips were largely reimbursed by the province after the city dropped its Commonwealth Games bid on Feb 10, 2015. By the time the city dropped out, it had already spent about $2 million in preparation for making the bid.
Though the bid was dropped, Farbrother continued to travel on Commonwealth Games business, including the 12-day trip to Sydney that ended just days before council voted to fire him.

'Reputational advantages'

The second most common reason for Farbrother to travel involved the International City Managers' Association (ICMA), which he served as president from 2013 to 2014.
Council approved of his taking the role at ICMA, and helped chip in for related travel across the globe, including appearances in Tokyo, Denmark and several cities in the United States.
It's not clear how much of the travel expenses Farbrother racked up on ICMA businesses were reimbursed by the organization.
"There were reputational advantages," Iveson said of Farbrother's travels for ICMA.
"Delegations came here, as well as presentations that he was able to make all around the world about our leading practices from waste management to the environment to biodiversity to workforce inclusion. You name it."
Aside from Farbrother's expense claims, the travel money was generally used to send staff members to meetings with other governments, to Alberta Urban Municipalities Association meetings, and to professional development courses.
Don Iveson Farbrother
Farbrother never broke city policies, possibly because no policy existed for the city manager. Councillors were always notified when he was away, and a deputy was always installed.
The city's business expense policy states that "no employee may approve his/her own authority to travel or business expense claims." But Farbrother approved his own travel.

No approval necessary

As the highest ranking employee in the corporation, no one had authority to sign off on his frequent travels.
Nickel said his concerns over Farbrother's trips grew over the years, as things started to go wrong, including the Metro LRT Line, two major bridge projects, and a number of troubling audit reports.
As the highest ranking employee in the corporation, no one had authority to sign off on his frequent travels.- CBC Edmonton investigation
"I basically had to push and ask the question, 'Who should be held responsible?' " he said.
Nickel, like the rest of city council, isn't legally allowed to say what specifically was behind the decision to fire Farbrother. But he said some of the responsibility lies with councillors and the mayor.
City council sets the city manager's budget and reviews performance, but currently it doesn't review the city manager's self-approved expense reports.
Linda cochrane
New city manager Linda Cochrane said there is already lots of oversight of her work through reports, performance reviews, and her contact with councillors at committee and council meetings.
She said she doesn't believe trip approvals are warranted.
She said her job is to oversee the work of 13,000 city employees, and it's the responsibility of the city manager to balance that with the need for travel.
"I don't believe that approvals for different aspects of the city manager's job are particularly required," she said.
In Calgary, the mayor reviews city manager expenses. Iveson said trying to approve individual trips for the city manager in Edmonton would create a "cumbersome new approval bureaucracy."
"I think the challenge is that the employee reports to council, not to the mayor," Iveson said. "If you're going to set up a proper reporting and approval system, it's going to have 13 signatures on it, which is pretty cumbersome."

Policy changes coming

Iveson said he met with the city manager and the city auditor, the only city employees who report directly to council. He said he pitched a new way to keep them accountable for their expenses.
Iveson suggested both officials post their expenses online, just as council does. He said those reports will also be included in the annual performance reviews of both employees.
Cochrane said she plans to take things a step farther, and extend the disclosure policy to all senior members of the administration.
"The corporate leadership team and I have been discussing that, just in the spirit of this, so that it doesn't have to be investigated," Cochrane said.
Senior management is expected to disclose their expenses and travel in the near future.
Iveson said there were a number of reasons why the city let Farbrother go. He said the new city manager will be more focused on her work at home.
"What I can tell you is that our expectation of the new city manager is quite clear in terms of priority around ensuring we have effective delivery of our major projects," he said.
Simon Farbrother could not be reached for comment for this story, despite repeated attempts.










  • **
    Under the former mayor and city council it appears that there were no checks and balances in place to ensure that city managers at least had adequate oversight with reference to expenditures. Certainly it felt to some of us that the city of Edmonton culture was one of entitlement and waste as exemplified by the extraordinary amount of travel that was seen as necessary by the city council and mayor who did nothing to check these expenses. Why not? It's that culture thing again. The higher you are in the pecking order at any level of government you get to do what you want and it takes a CBC investigation to do the auditor's work for the city. No mention of this debacle in this particular audit I note.

    One wonders why this sort of entitlement complex reigned supreme in the city of Edmonton and I feel it was the general entitlement complex that we felt was associated with the PCs. If the provincial government folks weren't accountable to us why would the city of Edmonton folks be accountable? Remember the Sky Palace debacle that got slammed into our consciousness at the time that the PCs were considering shutting down the home of the most disabled citizens in Alberta-the Michener Centre? The PCs really were beyond any sort of control at this point other than being let go and how the few remaining folks retained their jobs is beyond me.

    The mind boggling thing in all of this junk is that the city council STILL doesn't think it needs to control the city manager's expenses. Not only does the city council not control the manager's expenses but it doesn't even review them.

    http://www.cbc.ca/news/canada/edmonton/edmonton-s-former-city-manager-spent-200-days-travelling-on-taxpayers-time-and-money-1.3538665

    City council sets the city manager's budget and reviews performance, but currently it doesn't review the city manager's self-approved expense reports.



    And the new city manager likes this set up just fine. So odd. Why would city council not set limits to the expenses of the top of the pyramid and in fact of all the top executives at the city of Edmonton? What are we? The bank for the executive staff?

    http://www.cbc.ca/news/canada/edmonton/edmonton-s-former-city-manager-spent-200-days-travelling-on-taxpayers-time-and-money-1.3538665

    New city manager Linda Cochrane said there is already lots of oversight of her work through reports, performance reviews, and her contact with councillors at committee and council meetings.
    She said she doesn't believe trip approvals are warranted.
    She said her job is to oversee the work of 13,000 city employees, and it's the responsibility of the city manager to balance that with the need for travel.
    "I don't believe that approvals for different aspects of the city manager's job are particularly required," she said.
    Mayor Iveson is wrong to continue the lax oversight system of the Mandel guy. He should do what the city of Calgary is doing at the very least. I don't understand why the city auditor did not recommend this in his audit and instead yaps about water bottles and such like as noted here:



    No gift cards, bottled water for city employees as Edmonton reins in costs

    Published on: November 24, 2016 | Last Updated: November 24, 2016 5:07 PM MST
    While Edmonton’s auditor commended city staff for tightening the rules around employee spending and ratcheting down overall amounts, there is still work to be done.
    An audit passed by the audit committee Thursday found Edmonton employees spent $8.8 million on travel and expenses in 2015. That’s down from $13.5 million in 2008, and auditor David Wiun said the number of inappropriate expenses is down significantly.
    “We didn’t find anything that we would classify as inappropriate,” said Wiun, after his staff analyzed a sample of 86 claims. “That’s significantly different than we found in 2009.”
    That audit of 2008 expenses found issues with a third of the expense claims, including on a $127,000 training bill with no receipt and several staff going over clear limits on per diem and meal expenses.
    City officials clarified and better enforced their expense policies since then.
    Thursday’s audit still found “uneconomical” decisions, such as a hosted lunch that went over the $15 per person budget, a seat selection fee over the $15 limit and a taxi tip above the 15-per-cent guideline. But his staff stopped their search after 86 randomly selected entries because it was clear guidelines were better followed.
    This year, expenses are on track to be down 25 per cent again, said Wiun, after city manager Linda Cochrane sent out a detailed memo in February warning all branch managers and directors to constrain “non-essential spending.”
    Gift cards for employee recognition and bottled water for employees in city work spaces have been banned, while working lunches are to be minimized. All travel out of province has to be approved by a general manager, and employees who attend conferences are expected to present what they learned to colleagues at home to reduce the number of employees sent.
    Barbecues and other large-scale employee recognition events for each department have been replaced with one corporate-wide “Great City Event,” according to the memo Postmedia obtained separately through a Freedom of Information request.
    “The current economic uncertainty requires all businesses to constrain non-essential spending; the City of Edmonton is not immune to this reality and all leaders need to respond appropriately,” Cochrane wrote.
    Wiun said the city can still improve by making sure spending limits on per diem and other expenses are reasonable, ensuring travel co-ordinators are well trained and used for all travel arrangements, and that tracking expenses is better co-ordinated.
    It’s a high risk area, he said. “It’s a reputational risk when you’re dealing with taxpayer money.”
    Todd Burge, chief financial officer for the city, said the city is trying hard to minimize costs, including using Skype for conferences where appropriate. They’re also moving to electronic expense claims to make the process easier and embed the rules into the forms to make them obvious.
    “We’re trying really hard to manage and control those costs. We try to use local training wherever we can,” said Burge. “For travel, we try to use it appropriately. … Learning is really fundamental to what we do.”
    On Thursday, Wiun also presented his 2017 work plan. That includes audits on Edmonton’s pesticide use, the waste management process and disposal program, the city’s corporate culture and the effectiveness of Edmonton’s program for selecting sites and installing pedestrian crossings.
    estolte@postmedia.com

    RELATED



    *********************************************************
    This sort of article on the city audit makes me wonder if there is any connection between the real life findings of the CBC investigation and the work done by the city auditor. Why does no one bring up the CBC investigation of the excessive expenditures of the city manager? Why does no one put in realistic controls to ensure abuse does not occur?

    http://www.cbc.ca/news/canada/edmonton/edmonton-s-former-city-manager-spent-200-days-travelling-on-taxpayers-time-and-money-1.3538665

    In Calgary, the mayor reviews city manager expenses. Iveson said trying to approve individual trips for the city manager in Edmonton would create a "cumbersome new approval bureaucracy."
    "I think the challenge is that the employee reports to council, not to the mayor," Iveson said. "If you're going to set up a proper reporting and approval system, it's going to have 13 signatures on it, which is pretty cumbersome."
    In my opinion there should be a council committee to review all these expenses by the city manager and no chatter about it being cumbersome or too much work. What do we pay the city council to do? Isn't it to use our public dollars efficiently? And if a city manager has no oversight of the sort of the previous one how will this sort of abuse end without council oversight, approval and penalties?
    Mr. Iveson needs to get with the project and do the oversight through both the mayor and council and we should get the reports of these expenses approved by the council. This way we will hold city Councillors and the mayor accountable for outrageous expenses that should not be countenanced by citizens.


    I note that the auditor does not recommend this in his rather tepid audit. Instead there are pointless statements made as per this article.


    http://www.cbc.ca/news/canada/edmonton/edmonton-s-former-city-manager-spent-200-days-travelling-on-taxpayers-time-and-money-1.3538665

    Todd Burge, chief financial officer for the city, said the city is trying hard to minimize costs, including using Skype for conferences where appropriate. They’re also moving to electronic expense claims to make the process easier and embed the rules into the forms to make them obvious.
    “We’re trying really hard to manage and control those costs. We try to use local training wherever we can,” said Burge. “For travel, we try to use it appropriately. … Learning is really fundamental to what we do.”
    ****
    No doubt the CBC investigation left egg on the face of the city of Edmonton folks. And really what we want from the city is control over these expenses especially by the city manager and other department heads. If there is no control then really what you have is a self approval system that will result in problems that can only be determined by yet another CBC investigation. This isn't the job of the CBC. It's the job of the city auditor to make recommendations about the lack of control over the city manager's expenses. Why didn't the auditor make such recommendations in this audit?


    Let me go and ask him this question.

     I note that the new city manager has made changes that require approval for out of country travel for all underlings by the department Deputy City Manager but there is nothing in the audit that recommends that there should be approval of the city manager's travel. I also note that travel inside the country doesn't need to have approval by the Deputy City Manager. Why not? As the city auditor points out the internal to Canada travel costs can exceed the costs of travel outside of Canada. It seems that the internal to Canada travel costs just needs the approval of someone in a higher position above yours. This seems rather poor control of the process.

    https://www.edmonton.ca/city_government/documents/16412_Employee_Business_Expenses_Audit.pdf
    The Directive and Procedures require that expenses must be approved by an individual at least one level higher in the organizational hierarchy than the employee incurring the expense. This helps to ensure that there is appropriate oversight of expenses. In one instance, an employee temporarily acting in a higher position approved business expenses of peer employees. This is not a technical violation of the Directive and Procedures. However, as the approving individual may not have long-term accountability for their decision to approve the expense, this situation does not provide appropriate assurance

    The memo issued by the City Manager in 2016 indicated that all travel out of province required the approval of the department Deputy City Manager. The Directive and Procedures only required out of country travel to be approved by the department Deputy City Manager. Since this is a change from what is required by the Directive and Procedures, the Directive and Procedures should be updated to avoid ambiguity and support employee compliance. Since this change was made in 2016, it did not affect our sample testing.

    Thresholds In the current process, travel that is outside of Canada requires the most extensive approval and review process. However costs for travel within Canada can exceed those of international travel. Administration may want to consider reviewing and revising the existing approval process so that travel and expenses that are higher risk are provided with more scrutiny than travel and expenses that are lower risk. By linking financial thresholds or other risks to different levels of approval, Administration may be able to improve the effectiveness and efficiency of this process while still maintaining an appropriate level of control.

    ***************************

    So it seems to be clear to me at least that there needs to be improvements in the approval of expenses for internal and external to Canada travel. I looked at only this area since it was of the most interest to me.

    I disagree with the auditor in terms of his conclusion. I find that the expenses for travel are excessive. I believe there needs to be a process to control costs incurred by the city manager who is still her own approval process. Its not cumbersome to have such an approval process in place. It is good quality control and proper use of city council energies. It should be implemented immediately.

    How the city auditor can say that the employee business expenses process is "reasonably well controlled" when we paid out major bucks to the former city manager for pointless travel is beyond me. Currently there are no controls in place to ensure that fiasco doesn't repeat when all we have changed is that out of province travel must be approved by the department Deputy  City Manager when previously only out of PROVINCE travel had this requirement. This change has not been made in the directive A14151 and there still is no sort of requirement for review of the city manager or the auditor's travel expenses I note.

    http://www.edmonton.ca:8084/city_government/documents/PoliciesDirectives/A1415I_Employee_Business_Expense_Pro.pdf

    EMPLOYEE BUSINESS EXPENSES – LOCAL AND OUT OF TOWN
    A1415I
    Approving Authority The Program Manager will approve the Authority to Travel and Business Expense Claim for his/her own employees. At a minimum, One-up Approval is required. No employee may approve his/her own Authority to Travel or Business Expense Claim. The City Manager will approve the Authority to Travel and Business Expense Claim for General Managers. General Managers must approve Authority to Travel and Business Expense Claim for all travel outside of Canada. The City Auditor will approve Authority to Travel and Business Expense Claim for Office of the City Auditor staff including travel requests outside Canada. When an expense is incurred on behalf of several employees, the expense is most often authorized and paid for by the most senior approving authority. There may be circumstances that occur where this practice is not followed.

    It appears as if the two gray areas are that of the city manager and the city auditor. Why has the city auditor not asked for oversight of these two areas?  Let me go ask him this very question.

    https://www.edmonton.ca/city_government/documents/16412_Employee_Business_Expenses_Audit.pdf

    5 Conclusions Based on our review, we conclude that the employee business expenses process is reasonably well-controlled. The Directive and Procedures should be updated, but currently addresses key risks. By increasing compliance with the Directive and Procedures, making forms more userfriendly, and providing training to Travel Coordinators, the organization can improve their compliance with the existing process. We also conclude that there are a number of opportunities to change and improve the existing travel process. Process improvements such as centralizing travel coordination, considering risk thresholds, assessing automation solutions, and developing corporate record keeping protocols may result in improvements to efficiency and effectiveness. The Office of the City Auditor would like to thank the Financial and Corporate Services department for their cooperation with this audit. We would also like to thank all of the departments who willingly shared their knowledge and experiences throughout the audit process. It was very much appreciated.


    I reviewed the travel expenses of employees of the city of Edmonton as presented in this audit. I will review the other expenses later once the City Auditor responds to my questions about the travel expenses.
    It is surprising to me that the city auditor did not bring up the major expenses of the former city manager and requested that city council put in effective checks and balances in the form of council review and approval for such travel expenses. I also don't know who approves of the city auditor's expenses or if he also self approves these expenses. I am curious why no one seems to feel it is necessary to have oversight.
    Why is self approval allowed for the city manager and the city auditor but not for the rest of the employees? Why are these two employees exempt from the requirement for approval of travel expenses from a higher authority? The Iveson guy tells us that it would be too cumbersome. Really? Why? Isn't it his job to ensure our money is not wasted? I think he should simply look at what the city of Calgary is doing which is at least one form of control. If the city manager in Calgary wastes money, citizens can blame the mayor who has the approval of these expenses. Why won't Mr. Iveson do the same thing here? Its poor oversight and should be corrected immediately. Or is the entitlement culture of the PCs still rampant?
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