Sue's Blog

Tuesday, October 10, 2017

McLeod and Paddon - Spin on the Spin

James McLeod presented a news story on October 7th in the Telegram.

It was headlined "Nalcor audit won’t be done before retirement: AG"

As usual - pose a question - get an answer - print answer. No follow-up, no definitions of terms used, and no independent thought respecting the answer.

I'll get into Auditor General in another post - but for now - let's watch this "journalistic" masterpiece unfold.

The conversation between the two must have wandered into the need for a forensic audit. McLeod reports as follows on that question:

Paddon was cautious when talking about a potential forensic audit for Muskrat Falls. He said he knows it wouldn’t be cheap though.

“I’m not quite sure that the word ‘forensic audit’ is appropriate. I mean, I think really what people are looking for is for somebody to go in and look at, perhaps, the decision-making process and the execution process, and those sorts of things,” he said.

“It would take a lot of time and a lot of resources. The outcome? I have no idea what the outcome would be.”


1. Paddon was cautious but did say it wouldn't be cheap though.

Question: what's cheap? why are you cautious? 

2. Paddon was not quite sure that the word 'forensic audit' is appropriate.

Question: why is it not appropriate? what part of a forensic audit would be inappropriate? 

3. Paddon believes he knows what critics are calling for - decision making and execution process

Question: how does that fall out of the purview of a forensic audit? Why do you believe "people" are only looking at those components? 

4. Paddon believes it would take a lot of time and a lot of resources.

Questions: How much time would this forensic audit need? How much would it cost. Cost relative to what? What might be the cost of NOT doing it? 

5. Paddon has no idea what the outcome would be.

Question: is that perhaps why people want one done? Is the reason you can't speculate on the outcome because you do not know what perimeters would be set? 

and of course: Based on the doubling of the costs, hidden documents, continued extension on time-table for completion, independent contractors information hidden from shareholder. Don't these things present a red-flag to an accountant? 


Now let's do a bit of research ourselves and see if a forensic audit is exactly what we are asking for and know that we need.

Forensic auditing is a specialization within the field of accounting, and forensic auditors often provide expert testimony during trial proceedings. Most large accounting firms have a forensic auditing department.

The audit covers a wide range of investigative activities performed by accountants. The process may also include serving as an expert witness in a fraud trial.

The investigation process follows a similar path as a regular audit of financial statements. The steps can include planning, review and a report. If the investigation was undertaken to discover the presence of fraud, evidence is presented to uncover or disprove the fraud and determine the amount of the damages suffered. The findings are presented to the client — and possibly the court should the case go that far.
During the planning stage, the forensic auditing team establishes objectives, such as identifying if fraud has been committed, how long it has been going on, the parties involved, quantifying the financial loss and providing fraud prevention measures. While gathering evidence, the team collects evidence in the proper manner in order for it to be used in a court case. There are various techniques used to gather evidence. A report is produced for the client with the findings. Lastly, those involved in the forensic audit may be asked to present their findings to the court.
Forensic audits uncover several types of fraud. The most common involves theft, including cash, inventory and fraudulent payments. Another type of fraud is corruption, such as a conflict of interest, bribery and extortion. The last major category is financial statement fraud. This relates to misstatements of the financials of a company.

Above information can be found HERE

There are many other sites - but this should suffice to ensure that what we are asking for is exactly what we want and need. 

This blog has already posted the RED FLAGS post on the need for a forensic audit. 
McLeod should have put to a few known critics - the responses of the Auditor General and get another take on it. 
This - let me find a source who has a title and a designation - and I can write a news piece is flawed and can lead to the readership relying too much value on the information presented. 
This is the spin of spin and is yet another artificial deterrent to completing a forensic audit and attempting to curtail increased calls for a forensic audit. 
It seems to me there are many people who just want this whole sordid mess to disappear. Unfortunately for them - social media is alive and growing. 


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