RED DEER COUNTY – While a forensic accounting investigation of Red Deer County has found "allegations of corruption were not substantiated,” it did find instances of non-compliance with policies, according to the municipality.
Red Deer County’s council received KPMG’s confidential report in a closed session during a special meeting held Monday.
“An independent investigation has concluded that allegations of corruption related to Red Deer County’s public procurement practices were not substantiated,” a prepared statement issued by the county Monday evening said.
KPMG examined relationships, procurement and contracting processes involving several county vendors and included an in-depth review of certain county tenders, agreements, general ledgers and purchasing and payment data.
The investigation focused on the 2019 through 2023 fiscal years but, in some cases, the county said it examined as far back as 2014.
The final report will not be made public as it “is subject to solicitor-client privilege and will remain confidential” the county’s statement said.
The July 21 communication “is the only public statement Red Deer County council will be making regarding the investigation’s findings.”
KPMG was initially retained by Red Deer County in December 2023 to examine several concerns brought to the attention of county council and staff.
In March 2024, the county says KPMG was retained by external legal counsel, Kingsgate Legal, on behalf of the county’s council to conduct an independent forensic investigation into certain allegations related to Red Deer County’s procurement, contracting and spending.
According to the county’s statement, while KPMG did identify “events that may have contributed to a perception that certain tender selection processes and the awarding of work were somehow unfair and favoured certain vendors, the investigators concluded the awarding of additional work to the successful proponent was contemplated in the public procurement documents and contractual language.”
An allegation of spending exceeding the council-approved budget on one large capital project was also reviewed, the county noted.
“KPMG found spending was in line with or under the cumulative budget approved by council, except for fiscal year 2022 in which the budget was overspent by $23,266,” the county’s statement said. “This overspend was subsequently formally reported and the variance report accepted by council as part of the Fiscal Year 2022 Budget Variance Report.”
KPMG did find a pattern of instances of non-compliance with the county’s internal procurement policies and procedures, the county’s statement said.
“After a very thorough investigation, we are pleased to finally be able to provide an open and transparent statement to our public that KPMG identifies the following deficiencies,” the county's mayor, Jim Wood, said in the prepared statement.
Deficiencies noted included:
• Issuing verbal change orders where county policy required all change orders to be in writing.
• Not completing a process of independent market assessments on a series of works performed under a services agreement after having publicly committed to do so.
• Failing to communicate in the manner committed to in the tender documents.
• Using hourly rate pre-qualified vendors and standing offer agreements for work above the procurement value thresholds set out in county policy ($9,999 and $29,999 respectively).
• Not adequately documenting and addressing potential conflicts of interest.
• Not adequately documenting delegations of signing authority when individuals were assuming an acting role in the absence of a county official and signing/authorizing beyond their delegated authority limits.
• Failing to include a required piece of work within the scope of certain public tenders resulting in the additional work subsequently being sole sourced to the original successful bidder.
• Underestimating the volume of works on some unit price tenders.
• Maintaining purchases below certain thresholds avoiding procurement processes that involved additional steps.
• Failing to accumulate volumes of business or failing to combine similar works.
• Failing to submit into county records certain quotes received, bid evaluations and scoring sheets on some public tenders and other procurements.
• Failing to prepare or maintain services contracts in several instances required under county policy.
“Council takes these findings by KPMG very seriously and looks forward to reviewing these findings with the chief administrative officer on a path moving forward,” said Wood in the prepared statement.
