AG says advice not fully implemented yet, as NLESD points to progress on financial fixes

Years after a spending scandal at the Newfoundland and Labrador English School District, the auditor general says recommendations to fix financial oversight issues haven't been fully implemented.

But NLESD officials say an incredible amount of work has already been done, and they are surprised and disappointed at her comments.

An audit completed 3years ago found "pervasive" problems at the school district, with a history of repeated fiscal rule breaking.

"Anybody that looked at our 2018 audit would know there were many examples in that audit of small dollar items that were very shocking that they could even happen," Auditor General Denise Hanrahan told CBC News this week.

"And so that's why we're disappointed that it's not fully implemented given the significance of that audit."

But top NLESD brass say they are disappointed in the way their efforts have been presented in the report issued this week.

"I understand that the role of the auditor general is to highlight some of what could be areas that we can improve on," CEO Tony Stack said.

"We just felt that there could have been more attention paid to the significant achievements that have been made."

Stack added that most of the work is near completion.

The 2018 auditor general's report generated widespread public attention at the time, because of unusual purchases made with tax dollars.

• CBC INVESTIGATES | After years of oversight warnings, a financial scandal at the school district. What now?

That included $735 paid to rent a wheelbarrow for two weeks, and another $740 to rent some extension cords.

A purchase order for lawn maintenance was issued on a stormy day that saw more than 15 centimetres of snow fall, just before Christmas 2013. The company that got that purchase order wasn't actually in the lawn mowing business.

The audit zeroed in on the facilities branch of the school district's eastern region over a five-year period, from 2011 to 2016.

Details of AG's 2018 recommendations

The 2018 report from the auditor general made recommendations in two key areas.

The first was to set clear expectations for ethical behaviour in the organization. That included a written code of conduct and ethics communicated to employees.

Stack said the ethics code has been developedbut COVID-19 has affected how staff will be trained.

The final tweaks are happening now, he noted, and that should be done soon.

"While we're in the midst of a pandemic, we've taken to use a football analogy we've taken things from our own 20-yard line and brought it way to the other end of the field," Stack said.

"And I guess in the opinion of the auditor general, there's still a few plays to get it right across the finish line."

• 'A bit alarming': House watchdog committee questions school board over fraud scandal

The second recommendation dealt with better oversight and internal controls, including a fraud risk management program.

"You need a fraud risk management program to basically seal up the holes that could happen in an organization so you can prevent fraud, detect it, and then prevent future fraud," Hanrahan said this week.

NLESD chief financial officer Terry Hall says things have progressed on that front as well.

Hall says he believes the problems of the past could not be repeated today.

"I would say the problems have been solved. The system that we have in now has a tremendous amount of internal controls in it," Hall said.

"It would be extremely difficult for us to encounter something that we encountered in the past in this current system, with the way we have it set up."

RNC fraud probe continues, no charges laid

The Royal Newfoundland Constabulary was initially called in to examine problems at the NLESD in 2016, but paused their work pending the results of the auditor general's review.

The RNC relaunched their probe after the release of the AG's reportin late 2018.

Three years ago, fraud investigators got court approval to seize computers from the auditor general.

Those computers contained work product and supporting documents from the AG's review of financial issues at the school board.

• CBC INVESTIGATES | What the RNC told a judge to get a search warrant in the NLESD fraud probe

Police said this week the fraud investigation remains activebut no charges have been laid.

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