Province should ensure auditor general appointments are independent, former auditor says
Current and former auditors general have had to report on spending they once oversaw
A former auditor who worked for the provincial auditor general said there needs to be changes to the selection process for the job to give the public more confidence that the next appointee is independent.
Brent White said it creates a potential problem when officials who once oversaw spending in the Finance Department are appointed to the job--as has been the case in the last two appointments.
"The appearance side is where we have the big issue, because having worked that long inside government, you just cannot disassociate yourself from that problem with appearance," said White, who worked for auditors general for two decades.
"You're going to be reviewing some of your own work. So you have a self-review problem. You're going to be thoroughly familiar with the decision-makers inside government, so it can be very hard for you to extract yourself from the familiarity threat."
Self-review and familiarity are two of five "threats" to independence that accountants guard against under their professional standards.
Mike Ferguson, who was auditor general from 2005 to 2010, and Kim Adair-MacPherson, who has been in the job since 2010, both held the position of comptroller before their appointments.
The comptroller is in effect the chief financial officer of the province responsible for financial accounting systems and internal audits, while the auditor general is independent and reports to the public through the legislature.
"Such a transition raises questions about how the province responds to the way the profession has articulated auditor independence," White writes in his recent doctoral dissertation at the University of New Brunswick.
The public could question how an auditor general can credibly audit programs and spending that they themselves reviewed as comptroller, said White, who left his position of audit director in 2011 and now teaches at Mount Allison University.
Former Finance Minister Norm Betts agrees with White's conclusions and said the legislature should choose who gets the job with no input from the executive branch of government.
"This is an archaic piece of legislation that should be fixed," said Betts, a professor of business administration at UNB.
Betts recalls when Ferguson was chosen for the job from 2005, "I thought, 'boy, that's kind of weird,' the audited becoming the auditor."
Ferguson's predecessor Daryl Wilson had been treasurer for the city of Saint John before taking the job. But White notes that four of the seven people to have held the auditor general position since it was created in 1967 had been in the comptroller role beforehand.
"I'm not saying there's anything wrong with the quality of the work," White said of Adair-MacPherson's decade in the role and of Ferguson's work before that.
During her term, Adair-MacPherson has issued critical audits on ambulance services, road maintenance contracts, school curriculum changes, youth group homes and the Atcon loan fiasco, among others.
White's comments are timely because a new auditor general has to be chosen sometime before the end of 2021. Adair-MacPherson's 10-year term is up, but last year it was extended until December.
Adair-MacPherson said in an email that a new appointment process put in place since she was chosen "should help address the concern raised when I was appointed."
A four-member selection committee that includes a judge and someone from "the university community" now draws up a list of names that goes to the premier, who is required to consult other parties in the legislature on the final choice.
"A selection process will be established in the coming months in accordance with legislation," said provincial spokesperson John McNeill.
White said because the clerk of the executive council is also part of any selection committee, the group could still be persuaded to appoint the comptroller or someone from within the Finance Department.
"I think it certainly makes it less likely, but there's nothing to forbid it," he said. "What we have now is a better process… but it's still flawed. For one thing, the clerk of the executive council should not be there.
He recommends giving the legislature sole authority to fill the position.
Concerns not new
When Adair-MacPherson was appointed in 2010 by Premier David Alward, CBC News reported on the same concerns raised by Queen's University business professor Steven Salterio. White reveals there were also concerns within the auditor general's office.
But opposition politicians, other media organizations and provincial associations representing professional accountants "consistently ignored" the issue, White writes.
No one from the Chartered Professional Accountants of New Brunswick was available for an interview Friday.
White notes in his dissertation that Adair-MacPherson disclosed in her first report that she had held the position of comptroller and had asked her deputy auditor general to sign off on the province's financial statements that year.
White interviewed three former New Brunswick premiers, Bernard Lord, Shawn Graham and David Alward for his dissertation.
He said Lord and Alward, who appointed Ferguson and Adair-MacPherson respectively, acknowledged they didn't have expertise in professional accounting standards at the time and weren't informed of the issue.
They each said they relied on the quality of their appointees in making their decisions.
"In effect, these politicians were claiming that the state of mind aspect of independence trumped the appearance side of the equation, although the professional guidelines do not allow for this distinction," White writes.
Betts, who sat on White's dissertation review committee, has forwarded copies of White's dissertation to the four party leaders in the legislature.