Internal audit shows Vaughan city staff still reluctant to speak up

Anonymous reporting system pilot wraps up

Yorkregion.com
June 1, 2016
By Adam Martin-Robbins

Many city staffers are still unwilling to speak out, even anonymously, about unethical behaviour or potentially illegal activity for fear of reprisal, according to a new internal audit report.

“Despite the recognition of its value, there remain a large number of employees who would be reluctant to use the Anonymous Reporting System to report suspected fraudulent or unethical activity because they feel that their anonymity may be compromised or their report will not be kept confidential,” Vaughan’s Director of Internal Audit Kevin Shapiro wrote in an update to the city’s finance, administration and audit committee Monday detailing outcomes of a pilot program to test out the system.

“This is consistent with the results of the 2015 Governance and Accountability Survey, in which fewer than 50 per cent of respondents agreed with the statement that ‘prompt communication of mistakes, bad news and other related information is given to those who need to know without fear of reprisal.’”

Shapiro’s report notes this issue was first identified through an employee survey in 2013 and, ultimately, led the city to launch an anonymous reporting system for a two-year trial period starting in 2014.

That system is provided by a firm called NAVEX Global, which operates similar systems for thousands of clients.

The company provided benchmark data derived from its other clients to compare with Vaughan’s results at the completion of the two-year pilot program.

Among the results identified in Shapiro’s report were:

• The city received 35 anonymous allegations - 22 in the first year, 13 in the second year - during the two-year pilot program.
• 19 of those tips, or 54 per cent, related to human resources issues such as hiring irregularities, discrimination, harassment and favouritism. Five of those reports were substantiated.
• Eight allegations, 23 per cent, related to the misuse or misappropriation of corporate assets including theft and time abuse. One of those reports was substantiated.
• Five allegations related to business integrity including conflict of interest and vendor/customer issues. Two of those reports were substantiated.

“It should be noted that a substantiated report does not always reflect unethical conduct. It may reflect the absence of or non-enforcement of policy or procedures or improper application of a business process,” Shapiro told the committee. “In addition, unsubstantiated reports do not necessarily mean that the report is without merit or did not add value. Unsubstantiated reports can still highlight potential risks or internal control weaknesses that need to be addressed.”

For example, he pointed out, while the majority of allegations about hiring irregularities were classified as unsubstantiated, his department carried out an audit of the city’s hiring practices and recommended changes to policies and procedures.

The report did not mention if any of the substantiated cases led to city employees being reprimanded or fired.

Shapiro’s report also notes 90 per cent of city staff who used the system indicated they prefer to remain anonymous, which is significantly higher than the 60 per cent benchmark.

He chalked that up, in part, to concerns about retaliation.

Based on the results of the pilot program, Shapiro recommended the city continue with the anonymous reporting system and look at the feasibility opening it up to the general public as a way to report allegations of misconduct or illegal activity.

Regional Councillor Mario Ferri said he’s concerned “about the level of trust in the system,” but supports keeping the system and exploring its expansion for wider use.

Maple/Kleinburg Councillor Marilyn Iafrate, meanwhile, expressed surprise that there continues to be allegations or complaints regarding business integrity issues.

“I’m just surprised at that given the amount of work we’ve done to sort of enhance, protect and educate everyone about (inappropriate) relationships with vendors and, the core of what we do, confidential documents,” she said.

Shapiro told the committee some of the concerns can be addressed by “shoring up” the city’s policies and procedures as well as beefing up the code of conduct as it relates to non-retaliation and educating staff about what constitutes retaliation in order to bolster whistleblower protection.

“We’ve been working very closely with our human resources department to develop a new learning module that walks through, a little bit, some fraud training, but geared more toward how to actually use the anonymous reporting system and what happens when you use it and the investigation process,” Shapiro said. “We’re opening up this initiative, it's going to be here very soon and this will also include some education and formal communication to help build confidence in the system.”

The committee voted in favour of continuing the anonymous reporting system for city staff and exploring the possibility of expanding it for use by the public.

City council still has to ratify the committee’s decision when it meets next week.