City of Powell River recommends solutions for questions about corporation finances

Resident still calling for audit of corporations’ books

City of Powell River will be attempting to provide more financial information for resident Pat Martin, who has taken city council to task over accounting related to its corporations.

At the committee of the whole meeting on Tuesday, August 13, two letters from Martin were discussed, regarding the PRSC limited partnership and Powell River Waterfront Development Corporation, and the lack of audits of those two entities.

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At the meeting, councillor George Doubt, who chairs the city’s finance committee, said the first letter was a request to city council asking that PRSC be audited retroactively to make sure the organization’s financial statements are correct, that the audit be extended to Powell River Waterfront Development Corporation (PRWDC) and the city to ensure accuracy of the figures.

Doubt said attached to that letter is a report to council, July 4, 2017, to explain the reasons why council voted to accept a review of the financial statements of PRWDC, as opposed to an audit. He said the report was reviewed at an open meeting of council. Reasons for that were explained as there were very few activities going on in the corporation during that year and the cost of an audit would be about double the cost of reviewing the financial statements, he added.

Doubt said a similar decision was made in 2017 for all of the years from 2008 to 2014 and that was made in a public meeting where everyone had the opportunity to come and see what council was talking about, look at the statements and review council’s discussion.

There has been an election since then and an opportunity for people to voice their opinions about council and whether they approved of those actions, said Doubt.

“What I’m trying to get at is that council made the decision in the eyes of the public, where everybody had the opportunity to ask questions and talk about what was going on,” said Doubt. “I think that should be suitable and cover the issues.”

He said he attended a meeting on July 30 with city chief administrative officer Russell Brewer, chief financial officer Adam Langenmaier, councillor Cindy Elliott and Martin. He said they talked about answering questions Martin had posed in a letter she had sent to council on April 4.

“I think the questions have been gone over and examined and publicly looked at enough times already,” said Doubt.

Mayor Dave Formosa said he did not attend the meeting Doubt alluded to but the participants were there, to the best of his knowledge, to discuss the financial questions. The answers were provided and from what he understands, Martin had no questions. Subsequent to that the mayor was informed that Martin provided another letter with a series of other questions, talking about side-by-side audits of the city, PRSC and PRWDC.

“My first thought was that we could bring in our auditor so that Ms. Martin could spend a day with her and they could go through the questions,” said Formosa. “She could speak to the person that does our audit and maybe find some comfort there.”

Formosa said it was then suggested by the corporate officer that the provincial government has a department that could be applicable. If the letter and its questions fall under the department’s mandate, maybe it could be asked to attend so the city does not have to spend money setting up an appointment with the city’s auditor.

Formosa suggested staff undertake research on the provincial audit option and see if this falls within its mandate, and if not, to forward the information to the city’s auditors to go through the issues with Martin.

Brewer said PRSC was not a city entity, so a side-by-side audit as requested by Martin would be difficult.

Formosa said the city could ask for permission from Tla’amin Nation, the other partner in PRSC, if it has no objections to the books being reviewed.

Council voted to receive the letter.

Council then discussed the second letter from Martin, written following her meeting with staff and two councillors.

Doubt said he was surprised by how short the meeting was and he believed the city provided full answers to everything the city had access to in terms of numbers.

Council moved receipt of the letter and gave direction to staff to return to the committee of the whole or council with options regarding a side-by-side audit of PRWDC’s financials, and, if agreeable by the other shareholders, PRSC. Staff was also directed to reach out to the attorney general for local government to see what assistance could be provided, and the city auditors, should it be necessary.

Following the meeting, Martin said she believes a "forensic" audit of PRSC is needed because there was no third-party financial oversight for years.

“In fact, PRSC's financial statements warn that they do not include all the disclosures required under accounting standards for private enterprise,” said Martin. “Had there been adequate financial oversight by PRWDC and the city, this could have been avoided.”

Martin said a discussion with the city's auditor regarding PRWDC, as suggested by Mayor Formosa, would serve no purpose. She added that an audit of PRWDC without first auditing PRSC would be pointless, as her main concern is with PRSC.

“If there are limited funds available for an audit, they should be used for a forensic audit of PRSC,” said Martin. “The City of Powell River has an obligation to its citizens to safeguard the assets of the community. In this case, they didn't fulfill their duty. Now, they have a moral obligation to ensure a forensic audit of PRSC is performed.”

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