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OUR VIEW: Bad account on accounting software

By: EDITORIAL

Wednesday, Jul. 18, 2012 at 8:52 AM | Comments: 0

The poor political spin job that came out of city hall on Monday will do little to quell the growing feeling that Brandonites are not getting the full story when it comes to the city’s late audited year-end statements.

The provincial government is withholding about $1.3 million in gas tax revenue from the City of Brandon as it waits for the 2010 audited financials to be submitted. This amount will increase to a total of $2.65 million if the city doesn’t file either its 2010 or 2011 statements by the end of this month.

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While there will be no financial penalty for the city for being tardy on the required reports, there should be a political penalty for the way the situation has been handled.

Mayor Shari Decter Hirst told the Sun on Monday that a number of factors delayed the submission of the reports to the province. But the main problem that caused a chain reaction of events, she said, was when the accounting software and system used by the city crashed and could not be recovered.

At the same time, every municipality in the province had to follow a new accrual-based accounting standard, as mandated by the Public Sector Accounting Board in 2009. Ironically, the City of Brandon was one of the first municipalities to get its 2009 statements in under PSAB rules. It was also among the first to receive its audited 2009 financial statements under the new requirements.

But without a city treasurer or assistant treasurer in place at the time of the software change, Decter Hirst said the city had to rely on Brandon’s director of finance, Val Rochelle, through the required transition to public sector accounting.

"We didn’t have a complete team to get us through that changeover. Couple that with the entire Bellamy financial reporting system failed," Decter Hirst said. "It wasn’t that there was no backup file. The system was gone. It would have had the same effect if you took the whole thing and threw it into the Assiniboine River."

And yet, apparently, it didn’t really.

The Calgary-based technology firm that produces the Bellamy accounting software that Decter Hirst said had "failed" took issue with the mayor’s comments, saying that the licensing and support agreement with the city ended on Dec. 31, 2010.

"Since that licensing agreement ended, the system would not be accessible after that date and the software would not be accessible to be used after that date," Sylogist Ltd. CEO Jim Wilson said.

Wilson says not only did the system not crash, all the vital civic information that the city required for a more efficient and orderly transition to the new software that it had purchased was still available in the Bellamy system.

While the province’s new accounting methods required city staff to go through boxes of old files for aging financial records, they also spent hundreds of unnecessary working hours trying to input information that could have been accessed by cutting a cheque and working with the company.

To be fair, we can buy the argument that the looming disaster-funding deadline from the one-in-300-year flood and the need for cash flow from the property tax and utility bills caused city accounting priorities to shift and required the diversion of staff and resources from the software’s installation.

It’s also perfectly believable that city staff have been having difficulty trying to meet new provincial accounting requirements in the midst of the software and staffing snafu. The fact that 44 other municipalities have yet to receive gas tax revenues just shows that Brandon is not alone in this case.

As provincial government spokesperson Jodee Mason told the Sun, there are a variety of reasons why these municipalities have not filed, including "capacity issues within the municipality and the audit community, as well as the challenges of the new accounting standards."

And it’s not as if the city’s Audit and Finance committee has been lying about the late audited financials for 2010 and 2011. The committee reports show us that they kept councillors informed about that fact.

As a side note, earlier reports suggested at least a few councillors claimed they were unaware that the government of Manitoba was withholding gas tax revenue from the city. We suggest ignorance is not a defence.

If they want to make the big financial decisions for this city, we recommend they get more familiar with federal and provincial financial requirements. It’s all laid out in black and white.

But clearly, the mayor has talked herself into a corner over the software issue. We don’t buy the communication officer’s line that Decter Hirst was speaking "colloquially." Either the mayor was given bad information, or she was fudging the truth.

Either way, the information coming out of city hall has become questionable.

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