Biggest Scandal in Canadian History: Hrdc Audit Starts Probity War

2774 Words Jul 10th, 2011 12 Pages
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“Biggest Scandal in Canadian History”: HRDC Audit Starts Probity War

Abstract.
This article describes the nearly year-long political and media uproar that followed on the
Release in January, 2000 of a qualitative or soft “audit” of management control in the federal government department, Human Resources Development Canada, and analyses the contributing factors. The article argues that the auditors’ examination of project files for programs delivered by grants and contributions was so abstract and poorly executed that nothing whatever can be concluded from the work.

Introduction
The article takes up an audit event that dominated Canadian national politics for the first three quarters of the year 2000. The proximate cause
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The Minister’s January 27 statement, however, took the defensible position that the audit applied to administration only, but it did not directly address and deflate the audit’s credibility. It spelled out the measures the department had taken to ensure that the situation was being corrected. Nevertheless, by January 29, two days later, pressure had mounted such that HRDC felt it necessary to stop payments on new awards in all eight grants and contributions programs.
Elements of the study
The first element in the story was that documentation of “management control” such as a physical form in a file saying when financial monitoring had been done was in the course of a decade never “appropriate” in the programs implemented through grants and contributions. The second element was that appropriate Documentation is in principle of such fundamental importance that the Department was moving heaven and earth to complete files of control activity on old projects, even freezing current work. The third element was a logic patch that tried and failed to make modern audit practice plausible in ordinary language. Yes, it is important to be sure that management control is “appropriate” and is documented perfectly. However, missing paperwork does not predict that results of financial audit will be bad. These are different kinds of

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