Township’s numbers didn’t add up
Rideau Lakes had a treasurer, auditor and CAO who couldn’t handle finances
When cities and towns in Ontario complain that Queen’s Park doesn’t take them seriously as real governments, it’s because of goofball townships like Rideau Lakes.
The council in the community of about 10,000 north of Brockville got a report Monday night from a special ombudsman appointed to explain just how it overspent its budget for years without anybody noticing. If you don’t live there, the tale told by investigator Nigel Bellchamber is hilarious in a cringe-comedy sort of a way.
Municipal governments in Ontario aren’t allowed to run operating deficits. They have to plan for balanced budgets each year and if they overspend they have to explicitly vote on how to cover the bill and how to prevent a repeat.
Rideau Lakes apparently lacked anyone with that capacity, so over about five years it racked up an accumulated deficit of nearly $1.2 million. That’s about $120 per citizen. In Ottawa terms, we’d be talking $120 million; the worst Ottawa deficit in memory was in 2015 and it was a $40-million one-off.
Rideau Lakes had the reserves to cover the deficits so they didn’t provoke an immediate crisis, but eventually a new treasurer and chief administrator spotted the problem.
Part of the cleanup was bringing in Bellchamber — a former city treasurer in London and chair of Canada’s standards body for public-sector accounting, among many other things. According to his report, the councillors are ultimately responsible for the township finances. They might not be experts, but they do need to know what they don’t know.
But they had a treasurer who didn’t have an accounting credential. That might be OK in a small municipality, Bellchamber writes, but a council needs to bring in qualified help when it needs some.
“It should not assume that it can figure it out on its own or with the assistance of wellmeaning but not adequately trained staff,” his report says.
They had an auditor who became ill and missed council meetings where he was supposed to give reports, who even let his auditing qualification lapse, but was reappointed anyway.
They had a chief administrative officer who claimed, according to Bellchamber’s report, that after some rule changes in 2009 he no longer understood municipal finance.
Between them, these officials decided a deficit was a shrugging matter. When they had doubts, they relied on each other’s subpar expertise to reassure themselves.
At the top, Rideau Lakes had a mayor and councillors with no substantial finance knowledge, who didn’t seek training, and who were fascinated by the township’s cheque register but indifferent to the bigger question of whether their spending was matching their budgets.
“While who received how much and for what may be something easy to comprehend, it does little or nothing to inform anyone as to the performance of actual expenditures compared to budgeted amounts,” Bellchamber observes. “It does not give any indication at all as to the overall financial health of the municipality.”
The Ministry of Municipal Affairs, which gets financial reports from all of Ontario’s 444 cities and towns, had people who detected that the numbers didn’t quite jibe and they would write to Rideau Lakes periodically (they’re also the ones who noticed the township auditor was no longer credentialed and made several of his clients redo his work). The staff at the township would revise the ledgers but never twigged that they had anything they needed to tell their council overseers.
“In summary, all elements of the municipality’s own financial system failed to some degree,” Bellchamber says.
All the township staff involved have turned over. The new treasurer is even an accountant — though Bellchamber still recommends basic finance training for Rideau Lakes councillors.
“I see no significant increase in skill across the current council. This was confirmed for me both in interviews with each member and in listening to misguided council discussion by the current council on financial matters on audio files of meetings,” Bellchamber’s report says.
They’re still studying the cheque register, he notes, and should knock that off immediately. Get quarterly reports and talk about those.
Rideau Lakes’ longtime mayor Ron Holman emphasized how badly let down the township was by its now-departed staff.
“As with any councillor or mayor, it doesn’t matter what municipality you’re in … you rely on your auditor to give you accurate information and timely information as to the status of your finances,” Holman said Tuesday.
The township got incomplete information but acted honestly with the numbers it got, he said. Nobody stole anything, they just overspent and didn’t know it.
Provincial rules also require two sets of numbers — one based on accrual accounting, one based on cash — that track the same real-world transactions differently, and that’s confusing throughout Ontario, not just in Rideau Lakes, he said.
Why does this matter outside Rideau Lakes? For one thing, Holman is chair of the Rural Ontario Municipal Association (ROMA), which speaks to the province on behalf of millions of Ontarians — Ottawa is even a member, in view of the city’s big rural area. ROMA is suddenly very hard to respect on anything involving money.
For another, Ottawa and Toronto and other bigger cities are constantly telling Queen’s Park they deserve more respect, more freedom to govern as they see fit, more right to levy taxes, more power over urban planning. When they make the case, provincial types must be thinking, “Yeah, but what if we let Rideau Lakes do that?”