Manitoba municipalities and financial controls

Opinion

Late last month, Manitoba Auditor General Tyson Shtykalo released a report aimed at ensuring the provincial government exercises greater oversight over spending by municipal governments across the province.

Following a yearlong investigation of allegations of financial mismanagement by several local governments, the AG discovered that the province does not currently have a comprehensive process to follow up on complaints regarding municipal governments, review financial submissions made by them, or even monitor the spending of provincial grants they receive.

Shtykalo emphasized that the province provides millions of dollars in funding to municipalities annually and that, “With this funding comes a responsibility — both for municipalities and the Department of Municipal and Northern Relations — to ensure effective stewardship of public resources.”

To many Manitobans, that is likely regarded as nothing more than stating the obvious. All recipients of public funds must handle those monies with care and be both transparent and accountable for how the dollars are spent. And yet, the auditor general found that adequate controls are not currently in place to ensure that is happening.

We may have assumed that proper processes and accountability measures existed, but Shtykalo has found they aren’t there, and that steps must be taken by the province to fix the deficiency.

In support of his argument, his office found that almost $500,000 was stolen from the Municipality of Westlake-Gladstone in a cybersecurity incident in 2019-20 but, incredibly, the municipality did not investigate how the funds were taken or by whom. Even worse, he found that the province has provided no guidance to municipalities regarding cybersecurity controls.

Beyond that, the AG’s investigators also found that the Municipality of Swan Valley West violated purchasing policies by buying fire trucks in 2022 without a tendering process, while councillors for the RM of Springfield were found to have expensed approximately $3,000 more on travel in 2022 than they were allowed to spend.

Even worse, a review of spending in the municipality of Ethelbert found that “The former head of council improperly authorized procurements and generally operated unilaterally without involving council in the decisions.” That included reimbursing questionable travel expenses without council’s knowledge or approval, as well as conflicts of interest when tendering contracts.

Shtykalo’s report says that “When the Department of Municipal and Northern Relations (the department) is made aware of weak municipal stewardship over assets, it should have a process in place to review and take steps to rectify the situation.” That should be the practice, but the AG found that the department lacks appropriate followup, lacks oversight of the use of government grants by municipalities, and performs only “minimal review of required municipal financial submissions.”

In other words, the province is dispensing millions of dollars to local governments annually, based on some sort of loosey-goosey honour system that assumes all that money is being spent as intended, according to rules we now know either don’t exist or, if they do exist, aren’t always being followed.

That has to change, and fast.

In his report, Shtykalo makes five reasonable recommendations that should be immediately implemented. The first two call for all municipalities to, at a minimum, implement the Canadian Centre for Cyber Security’s baseline cybersecurity controls, and that the Department of Municipal and Northern Relations implement oversight measures to monitor compliance with those controls.

Given the growing frequency of cyberthefts, it is mind-boggling that such protocols are not already in place.

Perhaps even more importantly, the AG recommends that the department implement a “risk-based approach” for oversight of grants to municipalities. That would include a comprehensive process to ensure completeness of financial documents received, define the level of analysis that should be performed, and what “red flags” should be examined. Again, it is shocking that such processes are not currently in effect.

Beyond that, Shtykalo calls for a “defined process for when non-compliance is noted,” potentially including consequences such as withholding funds, financial penalties or requiring additional conditions being placed on funding.

Last March, Shtykalo complained that 29 per cent of recommendations contained in previous reports completed by his office had been implemented by the provincial government. The recommendations contained in this latest report cannot suffer that fate. They address serious accountability deficiencies at the local level, and must not be ignored.

Deveryn Ross is a political commentator living in Brandon. deverynrossletters@gmail.com X: @deverynross