After a 12-month review, Saskatchewan’s provincial auditor has raised concerns about how Northern Lights School Division awards service and supply contracts and monitors employee use of school division credit cards.

Auditor Judy Ferguson wrote that the division, which includes nearly 4,200 students and roughly 630 full-time staff, “did not consistently adhere to its purchasing policy or purchase card guidelines.”

In almost 90 per cent of all tenders Ferguson looked at, the division did not document its evaluation process or selection criteria.

“Effective processes are transparent, fair and achieve best value,” Ferguson wrote. “These characteristics are especially important in Northern Saskatchewan, where fewer suppliers are available to provide goods and services, and where authority to buy goods and services is decentralized…. Not having effective purchasing processes increases the risk of not using public resources wisely and placing the division’s reputation at risk.”

Ferguson also wrote that the division’s policy of favouring local and northern contractors when deciding on tenders “was not consistent” with rules set out in the New West Partnership Trade Agreement and Canadian Free Trade Agreement.

Northern Lights’ purchase policy allows the division to go with local contractors who don’t submit the lowest bid, provided it’s is no more than 10 per cent higher than lowest bidder and the contract costs more than $100,000. For northern contractors, the bid can be no more than five per cent higher.

The school division has similar, but not identical, policies in place for contracts below $100,000. These policies do not affect capital projects funding by the Ministry of Education.

Northern Lights’ administrative procedure laws define a local contractor as either a business located in the community in which the goods are services will be provided, or a person who has resided in the applicable community for not less than 15 years. It defines a northern contractor as a business located within the school division’s boundaries, or an individual who has lived within those boundaries for not less than 15 years.

“Having criteria favouring the selection of local or Northern suppliers increases the risk of the Division violating terms of external trade agreements, which may result in unfair or inequitable treatment of suppliers,” Ferguson wrote. “It may also expose the Division to financial penalties under these agreements.”

Ferguson added that it’s difficult to say how much the school division is overspending because there’s so little documentation. Changing that purchasing policy and extending the purchasing period would go a long way towards saving some money, she explained.

Northern Lights reported roughly $21.8-million in expenditures for the 2018-19 fiscal year, ending Aug. 31. That’s down from the $25.9-million the school division spent in 2017-18, and the $25.5-million spent in 2016-17.

“They’ve got a lot of little things that kind of add up here,” Ferguson said during an interview Thursday afternoon. “They just need to turn their minds to it and start chipping way at it.”

Auditor urges tighter rules for using school division fleet and credit cards

As of November 2018, Northern Lights had assigned 41 credit cards to division staff, who spent an average of $34,000 each month. Ferguson reviewed 30 random credit card statements during the audit. During that search she found three instances where the division agreed to increase the card’s limit for large one-time purchases, but then failed to reduce the limit following the transaction. Ferguson also found four instances where card limits were changed without evidence of school division approval, six instances where staff did not submit their receipts for approval, and three instances where staff only handed in some of their receipts. In one instance, a monthly credit card bill was paid even though no one approved the spending.

None of the 30 cardholders had completed application forms, however Ferguson emphasized that they looked for “strange” purchases on all 30 statements, but found nothing that seemed out of place.

“While we did not identify staff misuse of purchase cards, detailed guidelines regarding the appropriate use of purchase cards would help staff understand what types of purchases are acceptable,” Ferguson wrote. “This would reduce the risk that staff inappropriately use their purchase cards.”

The concerns also extended to fleet cards used for fuel purchases. As of November 2018, Northern Lights had 31 fleet cards available to fuel the passenger vans used to transport students to school-related extracurricular activities. According to the auditor, staff combined to spend around $9,000 a month on fuel.

According to the auditor’s report, Northern Lights does not monitor monthly travel logs for their passenger van fleet, and lacked receipts for more than 60 per cent of fuel purchases made over a two-month period. The school division was not aware that those receipts were missing.

Northern Lights director of education taking report seriously

Northern Lights’ Director of Education welcomed the report, but added it will take time to plot a new course.

Director Jason Young said the board plans on reviewing the findings at their next meeting in June, with the goal of implementing a few quick changes. Long-term change, however, won’t likely come until the next school year at the earliest.

“The feedback is welcome, definitely,” Young explained during an interview on Thursday. “I think it’s given us an opportunity to reflect. We certainly want to incorporate all of the recommendations into our operation, and of course that will take some time to do as we engage our board of education.”

Young said they wanted to support local communities and local employers when it comes to handing out supply and service contracts. However, that results fines and lawsuits because it violates trade agreements, he said they’ll have no choice but to cooperate.

“The challenge for us in Northern Saskatchewan is we are, economically, a very poor region, one of the poorest in Canada,” he said. “There’s very little economic opportunity up here. You see that more recently with the mine shutdowns and more people being laid off and less people working. I think it’s great that our board is advocating for local employment, but one of the challenges that I see in the report is that we have to be in compliance with other legislation and trade agreements that are in place. That will be difficult for us to address, but we have no choice.”

Young added that updating their purchase and fleet card policy is on their to-do list. However, it’s going to be part of their new overall purchasing policy, rather than an individual item.

Young said he’s hopeful they’ll be able to make the changes as soon as possible, but added it is going to take time to chart the best course forward. Those conversations are going to start as soon as possible though.

“Once the conversation is in the report and it’s in your hands, it’s not one of those things where you can set it off to the side and say you’ll get to it when you can,” he said. “It’s an expectation that we react to the recommendations, so (discussions) happen immediately.”

Ferguson issued her audit report on Thursday. A follow-up audit of Northern Lights School Division is scheduled for two to three years down the road.