Mike Duffy Acquitted but Canada’s Senate Not off the Hook Yet

May 12, 2016

Senator Mike Duffy has been acquitted of all 31 charges laid against him in the highly publicized trial that arose out of the Canadian Senate expense scandal. This only signals a brief hiatus for the scandal, though: there are still two other senators—Pamela Wallin and Patrick Brazeau—who could go to trial for questionable expense claims. An additional seven senators may also soon be hauled into court by the Senate itself if they don’t repay almost $530,000 in improper expenses. It’s unclear at this point if the Senate or its members will recover from the reputational damage incurred since the scandal first came to light.

Although Duffy has been found not guilty on all charges, he and many other senators had a number of irregularities in their travel and expense claims. If the senators aren’t at fault for these issues, then who or what is?

As discussed in our previous post on the Senate scandal, it seems safe to say that the Senate lacked documented internal controls and clear-cut rules that would limit the amount of questionable expense and housing claims. The judge ruling over Duffy’s trial agreed, noting that Senate administrative rules were “inadequate, poorly communicated, (and) criteria-lacking.” The judge also made it clear that Duffy’s expense irregularities were the result of ineffective, unclear or simply non-existent internal controls within the Senate.

Since the scandal broke in 2012, the Senate has taken steps to implement more effective and clear rules to prevent similar situations from happening in future. Both senators and MPs have agreed to publicly share more details of their expenses, and guidelines have been introduced for trips and claims of residency after the Auditor General and a former Supreme Court Justice questioned the clarity of these specific rules.

The judge presiding over the Duffy trial also suggested that further changes are needed, and that though the Senate has made “significant changes, moving from guidelines to policy to give direction to the senators regarding various financial matters”, there are ongoing issues that must still be addressed. Senators have, however, been reviewing Senate rules, policies and definitions with the goal of making them more clear and accessible. To start, they have been examining what constitutes a primary versus a secondary residence (a key issue in Duffy’s case) and who is authorized to hire and fire any staff working at a senator’s office. A Conservative senator has also noted that a new uniform expense disclosure system is set to be released soon, further reducing the opportunity for errors and irregularities.

Other changes to Senate spending include:

  1. The ‘honour system’ that considered senators to be acting on “their personal honour” and “presumed to have acted honourably in carrying out their administrative functions” was abolished in 2013.
  2. Receipts are now required for all taxi rides (previously senators could submit a written note requesting reimbursement for rides less than $30).
  3. On an annual basis, senators must provide a copy of their tax return, driver’s license and health card in order to file for a secondary residence.
  4. The ethics code has been expanded and harsher sanctions implemented, allowing the Senate to punish members believed to have acted in a manner unbecoming of a member of the Senate.

The Senate would be wise to exercise even more caution and oversight going forward. Implementing a continuous monitoring solution such as CaseWare Monitor would be a prudent measure—one that would have detected these travel and expense irregularities before they snowballed into a large-scale scandal. Find out how CaseWare Monitor has helped organizations like the Banco de Costa Rica drastically improve operations by reading their success story. To learn more about how a continuous monitoring solution could have helped the Senate and how it can help protect your organization, contact us.

 

About Bob Cuthbertson:

Bob Cuthbertson brings a wealth of accounting, auditing and technology experience to his role as Chief Operating Officer at CaseWare Analytics. Prior to starting the analytics division of CaseWare in 2000, initially as CaseWare IDEA Inc., Mr. Cuthbertson was Vice President, Professional Services, of The Canadian Institute of Chartered Accountants (CICA). Mr. Cuthbertson is also a CPA (Ontario) with a specialty in Information Technology (CITP), granted by AICPA, and holds a Bachelor of Commerce degree from Queen’s University School of Business.

Connect:  Bob Cuthbertson

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