City staff intercepted and significantly delayed a letter critical of staff that was sent to councillors by the city's outside auditing firm. The letter was dated September 27 but didn't get to the council strategic planning and budgets committee until nearly two months later.

The delay drew a sharp reprimand from Ward 5 councillor Chad Collins. "I'm trying my best to recall a situation where correspondence to the municipality was addressed to certain individuals and it didn't find its way into our offices".

City manager Glen Peace explained that the letter was delayed to allow staff to prepare a response to the auditor's criticisms. However, it was revealed later in the meeting that the auditors had sent a draft of the letter to staff in early September but received no reply. As a result the auditors tried to send the letter directly to councillors, and it was this latter letter that was intercepted.

"If we're not getting responses, we basically have an obligation to get the letter in front of Council, and that's basically what we did for this letter this year," Fay Booker of Grant Thornton Chartered Accountants told Collins and the committee. "We basically felt that if we don't get it in front of Council the information is useless because it will not be timely, as is the case that we're seeing with your internal audit group."

Booker noted that "It's unusual that we have to force the process, that we're forcing the information to the client rather than the client pulling it from us".

The auditors report repeated criticisms of city practices that had been pointed out by for the last three years. "Some items are carried over from previous years as we're not satisfied that they've been appropriately addressed and, in fact, resolved." Booker told the committee.

For example, the report pointed out that "there are insufficient controls in place to ensure the completeness and accuracy of budget figures presented in the City's consolidated financial statements," and that "significant misstatements in the financial statements were noted during each of the three most recent external audits."

Booker also noted the much delayed process in Hamilton . "We have clients that can close [their books], and we're in front of the audit committee, by January 29. We have clients that are billion dollar corporations where we're in front of the audit committee in March. It's not often we go past the first quarter".

Sam Merulla offered his summary of the auditors' criticism of city bookkeeping: "What I've gathered so far is that there's been extra costs associated with our delay in response, we have a lack of critical analysis in respect to our books, we've not pursued the professional review that's been strongly suggested, there's a question with respect to the accuracy of the numbers being presented, the organization's finance department lacks discipline, there is some question with respect to the integrity of the process, there's a lack of check and balance, [and] we're the only client that your company serves that's been to the extent that we've been delayed".

The full CATCH report on the discussion at the November 17 committee meeting is available at
http://www.hamiltoncatch.org/strategic/strat_041117.htm.
The report from the auditors can be found at
http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/2003%20City%20Audit
%20Mgmt%20Letter%20Final%20Oct%2004.pdf
and the staff response is at
http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/FCS04130%202003%20Audit
%20Management%20Letter.pdf.