Media Release - Forensic Review Finds Procurement Processes Insufficient to Protect Town from Fraud

December 5, 2024

(GREATER NAPANEE, ON) – The Town of Greater Napanee has released a forensic review
detailing deficiencies in its procurement process that could leave it exposed to fraud.

The forensic review conducted by KPMG Forensic Inc. (KPMG), which occurred in two phases, found
that an emergency purchase of a $200,000 trackless sidewalk snow clearing machine did not
contravene the Town’s procurement by-law, but that the by-law and associated purchasing processes
were unclear, insufficient, and vulnerable to internal and external misuse and fraud.

The first part of the review involved a review of the purchase of the trackless sidewalk machine
following the breakdown of an existing Town machine in 2022. The second part of the review focused
on the vulnerability to fraud and misuse of the Town’s procurement by-law and associated processes.

In the first portion of the review, KPMG determined that the procurement by-law was not contravened
in the purchase of the trackless sidewalk machine. KPMG also determined that by-law definitions
surrounding who had the authority to declare a purchase as an “emergency purchase” were
insufficient and that requirements to engage with procurement staff in a purchase under the by-law’s
emergency provisions were discretionary. This means that despite the fact that procurement staff
were not involved in the $200,000 purchase, it did not contravene the procurement by-law.

In the second portion of the review, KPMG found a number of areas of the Town’s purchasing
process that needed improvements to better protect from potential internal and external
vulnerabilities, including:

• Processes and documentation supporting the proper use of the procurement by-law were
  incomplete making procurement confusing for Town staff.
• There is inadequate record keeping and documentation of approvals, and procurement support
  related to Town purchases leaving the Town susceptible to wrongdoing.
• The Town lacks a standalone conflict of interest policy for staff, which makes it difficult to
  identify what does and does not qualify as a conflict of interest.
• There is insufficient training for Town staff related to procurement, conflict of interest, and fraud
  awareness.
• The Town does not have standalone whistleblower mechanisms in place to allow for
  anonymous reporting or a clear way of reporting incidents of concern.

The review was called for by members of Town Council after they first learned of the August 2022
purchase in the Spring of 2023.

The equipment, a trackless sidewalk snow clearing machine, was purchased in August of 2022, two
days before Council entered the “lame duck” period of its mandate under the emergency provisions of
the Town’s procurement by-law. Prior to the lame duck period, all matters can be presented to
Council for approval during regular Council meetings or at a special meeting of Council that does not
require notice.

Lame duck refers to the two-month period prior to an election where Town Council’s authority is
restricted, including restricting its purchasing powers from unlimited purchasing authority to
purchases of no more than $50,000.

During the lame duck period, Council’s purchasing authority is delegated to the Chief Administrative
Officer, who normally has purchasing authority of no more than $100,000.

The purchase of the sidewalk snow machine was made by a senior staff member, whose purchasing
authority outside of the procurement by-law’s emergency provisions cannot exceed $50,000.

Town of Greater Napanee
99-A Advance Avenue
Napanee, ON K7R 3Y5
T: 613-354-3351
E: info@greaternapanee.com

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