Sophisticated software is helping auditors parse through thousands of emails, included those that were previously deleted, and hundreds of expense reports, according to forensic auditors reviewing the books at the Thompson-Nicola Regional District.
On Thursday, July 15, the board received an update from BDO Canada. The board heard a forensic audit, which was launched in the wake of a series of KTW articles on spending at the regional district, is now two-thirds of the way complete. It is expected to conclude in mid-August, with a report to follow at the board’s September meeting.
BDO Canada partner Jervis Rodrigues said specifics related to the investigation remain confidential, due to the matter currently under investigation not only by auditors, but also the RCMP.
Simon Padgett, BDO director of forensic investigations, said well-known forensic auditing software, called Relativity, has helped search through some 40,000 emails with the use of key words, reducing the number of emails down to 12,000 that should be examined, as they could be potentially relevant to the investigation.
So far, 6,500 of those emails have been reviewed, the board heard. Also under examination are expenses submitted by senior management and board members, as well as controls around those expenses, including policy and bylaws. Padget said 785 expense reports are under review. The expense review is about 50 per cent complete.
Data under review is drawn from financial documents, as well as from TNRD laptops and desktop computers.
“We analyze the data and we analyze data looking for anomalies,” Padget said. “Anomalies are things that don’t follow a normal pattern. Either they don’t follow a rule or they are an outlier and don’t follow a normal pattern.”
Forensic investigations, Padget explained, look for clues that lead to areas where fraud is more likely.
“The nature of it is that the more we dig, the more we look at, the more we see, the more we find, the more questions we have, the more inquiries,” he said. “You kind of go in quite small and normal and [it] spreads out and gets larger than it originally was. This is obviously very concerning where public money is involved, such as your organization.”
Rodrigues said it is normal for investigations to take on a “life of their own,” noting the technology being utilized allows focus and opportunity to dig deeper and investigate further.
“It’s going well,” he said, adding that regional district staff have been helpful in collaborating with the auditors.