Dollars and Sense - with Hamilton's Auditor General Ann Pekaruk

With the installation of a trial project, which sees Hamilton have the Services of an Auditor General, we decided to have a chat with our Auditor General, Ann Pekaruk. Enjoy this edition of Dollars and Sense, with our guest Ann.


1. Can you describe what the main difference is between your previous audit role and the Auditor General role?

In my role as Director of Audit Services, I was responsible for the Internal Audit program. This consisted of compliance and internal control audits which assessed whether City operations were adhering to specific laws, regulations, policies, directives or contracts. The purpose was to detect areas of risk and to recommend changes in systems of control and procedures to mitigate those risks. This program will continue.

The passing of the By-law to appoint the Director of Audit Services as an Auditor General conveys additional powers, duties and protections under the Municipal Act, 2001. These include: the powers to access all information and examine persons under Section 33 of the Public Inquiries Act, 2009; the duty to preserve secrecy with respect to all matters that come to his/her knowledge in the course of performing his/her functions; and the protection of not being a competent or compellable witness in a civil proceeding. These extra responsibilities provide an added degree of authority to carry out audit activities which now include value for money audits. These audits assess whether the City has obtained benefit or value from goods and services it acquires or provides and the extent to which public funds are expended economically and efficiently and the extent to which the related programs are effective in meeting their objectives.

2. How will you go about determining what you will audit? Specifically, how will you determine the subjects of your value for money audits?


Several factors and information sources will be used to develop a list of potential value for money audit candidates. A corporate risk assessment carried out several years ago will act as the foundation. (Audit staff will be conducting a new assessment this year to update the risk criteria.) Input from various internal stakeholders (e.g. Councillors and management) will be sought. Service delivery review results will also be utilized to define the scope of potential audits. In addition, we will rely on our audit staff for their expertise. I have spent 25 years working in the City/Region which I believe provides me with the background and process knowledge for use in selecting what to audit.

As Committee indicated, the initial few value for money audits will encompass “the low lying fruit”, i.e. relatively short reviews. This will allow us to gain momentum for the program and to demonstrate the worth of the program. The resulting work plan will have to be approved by the Audit, Finance and Administration Committee and Council.

3. Are you confident that taxpayers will see a return on their investment for this new role and focus?

Yes, I am confident that the value for money auditing program will result in favourable returns on the investment. In addition to monetary returns in terms of potential savings on expenditures, taxpayers may also see increased revenues (to reduce the impact on the tax levy), better customer service, improvement in the management of City programs offered and stronger, tighter controls to mitigate risks to the City. Public concern for greater accountability will be addressed through this independent appraisal process of resources and outcomes.

4. The following are some suggestions The Hamiltonian had with respect to this new function. Can you comment on these suggestions – which ones you might see as being useful and why?

        1. Value for money audit should be prioritized to projects with the greatest risk to taxpayers (cost wise and otherwise).

Risk is definitely high on the factors list influencing the prioritization of projects. However, there are also other elements to be considered. As value for money/performance audits evaluate attainment of corporate objectives and value to citizens, considerations such as the City’s strategic priorities and services of evident importance to the citizens must also have some bearing on the audits selected. At least in the initial implementation, areas likely to provide significant payback in terms of increased revenues, reduced costs, operational efficiencies and quality of services without expending much time and resources will be important to get the program in motion.

      2. The audit capacity should be positioned and received as being of assistance to staff and not as an adversarial force to be reckoned with.

You are correct. Adversarial attitudes detract from the accomplishment of the objectives of audits and can take away from what is important. Such situations need to be addressed quickly, if they occur.

Audits and the results, no matter of what nature, are meant to aid management and staff in the discharge of their duties by providing an independent appraisal of policies, procedures, standards and controls along with recommendations to improve City services and operations. Much of the initial high level information gathering and review in audits are meant to build strong co-operative relationships between staff and auditors.


    3. Number 2 above should not be watered down to the point where the audit capacity becomes ineffective and loses its value. The team would quickly lose its objectivity if it became too cozy.

To my knowledge, this has not ever been an issue with the City’s team of auditors. The Internal Auditors’ Code of Conduct and the professional standards with which audit staff must comply includes objectivity and independence, in appearance and in fact. An auditor would be expected to disclose any real or perceived conflict and a decision would be made to excuse and reassign, if necessary.

“Too cozy” should not be confused with a respectful, co-operative and reciprocal relationship.

    4. Lessons learned should be propagated to other projects.

As with our compliance and internal control audits, the results and recommendations which may apply to commonly shared procedures or similar aspects of operations in other divisions or departments of the City will be communicated with these areas and tracked for database purposes and implementation follow up. As value for money audits progress through the organization, audit procedures for testing, data analysis techniques and performance measurement which have worked well can be reused and/or adapted for subsequent audits.

    5. A return on investment for increasing audit capacity should be carefully tracked and presented to Council as a pilot project initially.

As was originally presented to the Audit, Finance and Administration Committee, a three year pilot was recommended to provide adequate time and information to evaluate the overall effectiveness of this model to carry out a value for money audit program. Council has agreed to assess the program at the end of each year in the pilot, taking into account the savings and other benefits which have been tracked and reported to Council. This exercise will determine the future of the program.


    6. A stop/go decision point will allow Council to determine whether the audit strengthening has earned its value (essentially, a value for money audit of the value for money audit dept).

In order to avoid commitment of resources in a permanent undertaking until the value is demonstrated, a three year pilot was recommended. As long as there is an adequate amount of time allowed before the stop/go decision is made to allow for audit results and recommendations to be implemented and the benefits realized, the assessment process provides a means of determining the value and continuance of the program.

    7. A public report should be available to taxpayers reporting on achievements of the audit department and rationale for a continuation or scaling back of the effort.

An annual public report will be prepared and provided to the Audit, Finance and Administration Committee to identify tangible savings/increased revenues, if any realized, as a result of the implementation of the recommendations made in the year. It is expected that facts and figures in the report will be taken into consideration by the Committee and Council when deciding on the future of the value for money audit program.

    8. There should be clear evidence that lessons learned out of audits are being applied to other projects and that desirable outcomes are a result.

See reply to 4 above.

    9. The City Manager should approve the scope of the audit department’s workplan.

In order to maintain the auditors’ independence and diminish the perception of any undue influence, the City Manager will not be approving the scope of the audit department’s work plan, but rather, approval will occur by members of Council.

    10. The City should be able to clearly demonstrate the value achieved for this investment.

The value achieved through this type of auditing should be evident. However, in some cases, the value is not easily measured in dollars or time. It may be a qualitative result such as improvements in customer service or an avoidance of a negative outcome (e.g. reputational damage), both of which are situations to which it is difficult to put a dollar value or number. Narrative comparisons may be more appropriate in such circumstances.


5. Is there anything else you would like Hamiltonians to know about this new role and your approach?

Council’s approval of this “hybrid auditor general model” (i.e. Auditor General responsibilities and duties taken over by existing Director of Audit Services without a formal name change) was meant to provide for the position and include value for money auditing without incurring the significant cost of a separate office.

Value for money relates to the extent to which public funds are expended economically and efficiently and the extent to which the related programs are effective in meeting their objectives.

Thank-you Ann for engaging with Hamiltonians on The Hamiltonian. We wish you and your staff success! To our readership- do you have any comments or suggestions for Ann and her team, as they go forward?