Canadian city set to probe construction procurement fraud

The Canadian City of Calgary has hired an accounting firm to look into allegations of fraud in construction procurement. Deloitte & Touche LLP will review the city’s procurement practices and address serious concerns about fraud. In June, city auditor Tracy McTaggart was fired for heading a department that failed to meet international accounting standards. The decision was made after a review into the auditor’s office by

PriceWaterhouseCoopers found a wide range of inefficiencies.
McTaggart released an audit on May 20 which also revealed systemic problems in the way contracts for construction projects are awarded. One of the main conclusions of this audit is that there is an increased risk of fraud through the use of change orders and non-competitive procurement. According to McTaggart, change orders were issued on purchase orders over $25,000 that totaled $747 million in a three year period ending April 2009.

However, many change orders were missing from contract files and, as a result, she said it was not possible to assess the underlying cause for the change order. There was also a disproportionate use of sole/single sourcing to procure goods and services, without evidence to support the rationale for the lack of a competitive process and to ensure compliance with the Agreement on Internal Trade.

In response to McTaggart’s findings, city manager Owen Tobert produced his own report.
His report stated that the administration conducted its own analysis and found that there have been no circumstances of procurement fraud. Given the contradictory conclusions of the two reports, Tobert felt it was necessary to hire an independent auditor to address any lingering doubt in the minds of the city council or the public.

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