In her special audit of the O'Learygate land development, Manitoba auditor general Carol Bellringer said such a deception was perfectly okay according to generally accepted accounting principles.
Also perfectly okay is how an IOU that may never be cashed can be considered an asset, while debts that will have to be paid are not considered as liabilities.
As part of the land agreement the Seven Oaks School Division signed with the City of Winnipeg the school board is obligated to pay another $265,000 once a new school is constructed on the land the SOSD bought and developed in Swinford Park. In addition, they must pay $58,000 for drainage.
That's $323,000 in future expenses that are written into the development deal signed more than five years ago.
Yet Carol Bellringer doesn't consider them part of her audit.
That's probably because the school division plans on hiding these expenses in yet a third set of books--- the cost of a new school whenever and if ever its built, which will be paid for by money from the Public Schools Finance Board.
But there are other costs which are just as concrete and just as hidden. Only this time by Auditor General Carol Bellringer.
As part of its Swinford Park land development, the Seven Oaks School Division is contracted to put in a nature pond (cost $40,000) and trees (cost $28,000). They estimated additional professional fees (engineers, lawyers, etc.) would eat up another $10,000.
But that $78,000, is not counted by Carol Bellringer when she added up the loss on the Swinford Park development. That's because she stopped counting in January, 2005 even though she says her audit was through May 2006, a date she picked out of her hat to begin with.
Although her report came out almost 18 months later, she failed to update the expenses of the development project, thereby hiding 20 percent of the loss by keeping it off the books in her report.
Why the auditor general couldn't make one phone call in 18 months to see whether some or all of the $78,000 had been spent, is unexplained.
She could have contacted The Black Rod -- and we would have told her that the only sign of a nature pond according to residents is pools of stagnant water that breed mosquitoes in the spring and summer.
But Bellringer's lack of curiousity as well as effort doesn't stop there.
* On Page 22 of her special audit into O'Learygate she writes of an unusual recommendation made to the Seven Oaks School Board.
"On July 23, 2003, after analyzing the tenders submitted by builders and individuals for the purchase of the Swinford Park lots, the Planner recommended to SOSD that all tenders be rejected. The Planner believed that if the tenders were accepted, the builders would take an unreasonably large portion of the profit. His view was that it would be more profitable to SOSD for them to complete the development."
"In interviews with SOSD Board and staff, we were told that it was at this point that they became fully committed to being the developer..."
* In June, 2005, Education Minister Peter Bjornson presented the legislature with a report into O'Learygate prepared by his department with help from the Department of Finance. Carol Bellringer must have been aware of this report.
On Page 2 of that report, in a "chronology of significant events", is this:
"November 18, 2002: final land purchase agreement -- 0.35 acres -- SOSD commits to undertake development of the land as part of the agreement."
So according to the Education Minister, the Seven Oaks School Division became developers in November, 2002.
But according to Manitoba's Auditor General, they didn't make that decision until eight months later, in July of 2003.
- Did the school board lie to Carol Bellringer?
- Did they, in hindsight after being caught red-handed misusing public funds, concoct a new chronology to explain their actions?
- Or did Carol Bellringer try to mislead the public, and the Legislature, by ignoring this evidence in her report?
She knew or, in her own terminology, "should have known" what was in the Bjornson report.
Just as she overlooked the outbreak of mass amnesia among at the trustees ( http://blackrod.blogspot.com/2005/06/black-rod-exclusive-seven-oaks-land.html ), she overlooked the commitment by the board to become land developers at a time they are claiming they had no such intention.
O'Learygate is not over yet, not by a longshot.
Carol Bellringer's credibility as Auditor General is another story.