Audit finds city protective of taxpayers when it comes to capital projects

An audit of the City of Campbell River found the city has been “relatively strong” in managing its assets and protecting the interests of taxpayers during a “challenging time.”

The City of Campbell River was one of 16 local governments audited under the provincial government’s controversial office of the auditor general for local government.

The audit took place throughout 2013 and 2014 and covers the period between 2010 and 2012 as the city was struggling with the fallout from losing the mill.

The audit was overseen by Gordon Ruth who replaced auditor general for local government Basia Ruta after she was fired in March, 2014 for only completing three audits in the three years since her position was established by the premier. She was expected to complete 18 audits in one year.

Campbell River’s audit focused on whether the city exercised proper management of its capital assets and analyzed the city’s process for awarding contracts for capital projects.

Auditors selected the city’s Aeration Blower Replacement Project and the Sybil Andrews Park Development Project, undertaken between 2010 and 2012, and examined a number of city payments to contractors in relation to work performed in the execution of the city’s capital projects.

Ruth said auditors found the city’s process of awarding contracts to be spot on.

“Procurement processes were open, transparent and fair,” Ruth wrote. “Both of the capital projects we reviewed were aligned with Campbell River’s corporate priorities and had council support.”

As for the city’s management of its capital assets, auditors found the city was doing an adequate job.

“The city has sound processes and controls in place to protect taxpayer interests in planning and procurement of capital projects, although there were some policy gaps that the city should address,” Ruth wrote. “We were advised that the city intends to address these issues through updates to its purchasing policy.”

Mayor Andy Adams said the audit findings show that city staff are doing an excellent job.

“I would say on behalf of council and the senior management team that we’re very pleased with the report,” Adams said. “It was a lot of work put in by staff.”

The report recognizes that facilities, finance and operations staff at City Hall all work well together in delivering capital projects. Adams said it’s positive reinforcement of what city staff and council are doing.

Dave Morris, the general manager of facilities and supply management, said it’s nice to finally see the results.

“It’s been a long-time coming,” said Morris of the audit which began nearly three years ago. “It certainly validates what we’re doing, we’re thrilled to bits.”

The audit was conducted following the Catalyst mill closure.

“This was a challenging time for the city in that it faced significant financial pressures during the review period due to a mill closure and a resultant loss of both tax revenue and jobs in the community,” Ruth wrote. He noted that business tax from the mill was $5.3 million in 2008 and only $209,000 in 2012. The city’s annual revenues decreased during the audit period from $62 million in 2010 to $51 million in 2012. In spite of that, auditors found the city was on the right track, though they did have recommendations for improvement.

Auditors determined the city needs an asset management policy and a more consistent approach to its asset management practices.

“The city should continue to increase its asset management capacity and maturity level by ensuring: greater uniformity and consistency in practice; key staff responsible for asset management continues to receive training and guidance on sound asset management practices and, core competencies are identified and incorporated into job descriptions,” Ruth wrote.

Ruth noted that since the three-year review period, the city has taken “recent significant steps to advance its asset management practices” by approving a 10-year financial plan (the first ever in the province) which looks at city assets and capital projects long term, as well as forming an asset infrastructure management committee.

“With the ongoing support of council and senior staff, these steps should move the city towards its goal of achieving long-term financial sustainability through strengthened asset management,” Ruth wrote.

Which should also help address the one other knock on the city – that there was no single point of leadership.

“Each city department expressed confidence in their annual planning, funding priorities and decisions,” Ruth wrote. “Operations and engineering were well-integrated throughout capital project implementation and they worked closely with finance at appropriate times. However, the city lacked a single point of leadership or accountability for asset management. While each department had detailed knowledge of its assets and was managing its assets relatively effectively, activities and practices tended to be disjointed.

“Asset register information accuracy and completeness tended to be different, condition assessments had differing degrees of rigour and risk analyses were carried out differently,” Ruth added.

City Manager Deborah Sargent said that since the audit, city staff have been looking at asset management in a concentrated way and will be bringing forward a report to council on how the city manages its assets.

Adams added that the city has had “some gaps in senior management in the last eight years” but for the past year and a bit there has been a full complement of staff at City Hall and items staff have been working on are starting to “come to fruition.”

That was recognized by the auditors.

“The City of Campbell River…was taking a number of important steps in developing a greater level of capacity and maturity,” Ruth wrote.

Adams said that was welcome news.

“There’s really some positive recognition of the work being done here. And especially when looking at some of the other audits done around the province, we’re really really pleased.”