Merrick legal cost audit leaves questions unanswered
Toodyay Shire CEO Stan Scott (pictured left) appointed “independent” auditor to examine legal costs and set terms of reference himself instead of it being done by shire audit committee.
THREE TOODYAY shire councillors have opposed a council decision to end any further inquiry into the loss of more than half a million dollars of ratepayers’ money on failed legal action against former shire CEO Graham Merrick and a former shire president.Read more
Shire auditor Moore Stephens reported in June that it had examined 36 invoices for $548,000 in legal costs for the four-year case which ended last year in a secret settlement that left only the shire out of pocket.
Both defendants’ costs were paid by local government insurance and the case ended with no admission of liability by any party.
The council voted for an “independent” audit after figures released last year under State Freedom of Information law showed the cost could have been $571,000, an amount former shire president David Dow refused to confirm or discuss publicly.
Use of the shire’s regular annual auditors to conduct the “independent” audit of legal costs prompted strong public criticism, as did CEO Stan Scott’s decision to appoint the auditor himself and set the terms of reference instead of it being done independently by the shire’s eight-member audit committee.
The report covered only an examination of invoices, not whether the shire obtained necessary statutory approval before commencing its legal action in 2014.
Moore Stephens said its contract with the shire for the agreed audit procedures “do not constitute a reasonable or limited assurance engagement, in accordance with Auditing and Assurance Standards Board (AUASB) standards”.
“We do not express an assurance opinion on the financial information of the fund,” the company said.
“Had we performed additional procedures or had we performed an audit or review of the financial information in accordance with AUASB standards, other matters might have come to our attention that could have been reported to you.”
“In particular, we do not imply or should it be construed that we have done any formal audit of the financial information provided.”
Mr Scott’s recommendation to accept the report and “accept the view of the audit committee that this matter is now concluded” was moved by Cr Welburn, seconded by Cr Judy Dow and carried 6-3 (Crs Bill Manning, Craig Brook and Ben Bell against).
It is understood that the audit committee’s published view “that the matter is now concluded” was not a unanimous decision.