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Liberal books unaudited, Harper charges

Update: A producer from CBC has contacted me regarding this and there may be a potential story on it...Ill keep you posted.

Today in Parliament the Tories exposed Liberals regarding their "audits." Perhaps some of the parliament IP's that I have had visit my site read these two articles that I wrote over the weekend :

Were the Liberal Party's finances "audited"? (part 1)
Were the Liberal Party's finances "audited"? (part 2)


From the Globe and Mail: (excerpts)

Ottawa — Conservative Leader Stephen Harper suggested Tuesday in the House of Commons that full audits were never done on the Liberal Party's books with regard to the sponsorship inquiry.

"It [the government] claimed full audits were done on the Liberal Party's books to find dirty sponsorship money. This is not true. Pricewaterhouse Coopers even states emphatically that what they did does not constitute an audit. Will the Prime Minister admit that an audit was never done, only reviews?"

[...]

"So let me ask the moral authority [an ironic reference to the Prime Minister], Pricewaterhouse Coopers says that what they're doing here do not constitute an audit. Deloitte says our services were engaged to perform a forensic accounting review. No audits. Will the Prime Minister admit that, contrary to what the government has told Canadians, they never performed an audit?, Mr. Harper asked.

[...]

"Yet the Prime Minister, a former finance minister, had the nerve to pretend this was a real audit. Now we learn of money laundering, extortion, kickbacks, bribes, envelopes of money. No wonder the Prime Minister was frantically waving around his whitewash audit," Ms. Ablonczy said.

From CTV:

Conservatives attack Liberals over 'audits'


CTV.ca News Staff
"The government seems to now be admitting they didn't do audits, but the question is, did they do thorough reviews," Conservative Leader Stephen Harper asked in Parliament on Tuesday.
"Not only were these not full audits, but the Liberal Party refused to supply the accountants with all the necessary documentation," Harper said.
[...]

"According to Deloitte and Touche, they were forced to rely on the Liberal Party for the accuracy of the information," the Conservative leader said to laughs from his caucus.
[...]

On the weekend, Public Works Minister Scott Brison told CTV's Question Period that an "audit" had been performed on the Liberal Party's books and that no irregularities were found.
[...]

In response to Harper on Tuesday, Brison quoted from the Deloitte and Touche report: "We made sure to obtain detailed supported documents for every amount deposited in the Liberal Party accounts in the period covered by this mandate."
[...]

Harper continued his attack, saying the Liberals set the rules for what transactions were examined.
[...]

"That didn't include any money to riding associations, which is where the sponsorship money was funneled," he said.
[...]

When Calgary Conservative MP Diane Ablonczy tried to continue the line of questioning, she was shut down by Speaker Peter Milliken.
[...]

Earlier, Harper had said the accounting firms themselves admitted they never performed an audit.
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4/12/2005 04:02:00 PM

Hat tip to you dude. The Liberals just got smacked by a clue by four. Liberal worst enemy right now is the truth.    



4/12/2005 06:31:00 PM

Congrats,

Your research may have made Scott Brison turn red and stammer in the House today.    



4/12/2005 10:09:00 PM

The Specified Procedures Reports mean nothing. Even an Audit of the Liberal Party and affiliated organizations means nothing. Back in my public practice days audits of not-for-profit organizations used to carry a disclaimer. The disclaimer basically said that since the organization relied on donations and contributions for its revenue, instead of sales or provisions of services in exchange for fee income, there was no way to ensure completeness of recorded revenue. Put another way, if I donate $100 to the NDP (fat chance, but work with me here) and don't ask for a receipt, the only way the auditor will ever know about it is if it goes into a bank account that he knows about and applies auditing procedures to.

In the normal course of an audit, the audotor finds out about all the bank accounts for a company, because the company wants him to (companies generally have an incentive to disclose all their revenue), so they cooperate in providing details. In addition, the auditor sends bank confirmations, requesting (among other things) that the bank identify any related accounts. In the case of business audit clients, what the auditor is really looking for is undisclosed debt or outstanding guarantees - but every now and again a long-forgotten bank account would surface.

From the PWC Procedures on the Federal Liberal Agency of Canada it doesn't appear that they did a bank confirmation - although it is certainly required as a part of Generally Accepted Auditing Standards, "Specified Procedures" means just that: whatever the client has specified. It is possible that donations to FLAC paid by cheque were not recognized, although I doubt it.

More insidious, though, is that some transactions discussed by Brault were in cash. In this case, there is no need to pass the "contribution" through a bank, and hence no paper trail for even the best auditor to follow, even in a full audit. Since no inventory goes out the door (nont-for-profit; no sales) there is nothing to indicate to any third party that they should even be looking for a contribution. The result is that the receiving party has financial assets they can use without fear of discovery - and without reflecting them in their campaign-spending limit. Even better are the "in kind" contributions. These are difficult enough to follow even if there is no overt skullduggery involved - if it is just a friendly supporter providing office space and some clerical assistance. Again, there is little to idicate to an outsider that there should have been an expense, so there is nothing to cause them to investigate how the expense was met.

As I said above, none of these reports mean bupkis.

Cheers,

Dean    



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