How does a Council lose 150 cars?

August 23rd, 2014 at 10:00 am by David Farrar

NewstalkZB reports:

The has laid a complaint with police following an internal investigation into alleged fraud.

Council CEO Sue Bidrose says the fraud totals more than 1.5 million dollars and centres around the sale of more than 150 vehicles from the council fleet.

Citifleet team leader Brent Bachop died in May, Deloitte was engaged by the council two days after his death, when staff identified apparent discrepancies in the fleet.

This is almost unbelievable. Auditors can’t and are not expected to pick everything up, but checking the fixed assets schedule against the actual assets is pretty routine.

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26 Responses to “How does a Council lose 150 cars?”

  1. Redbaiter (8,306 comments) says:

    Dunedin- apparently, like most other NZ cities, they get the govt they deserve.

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  2. Don the Kiwi (1,684 comments) says:

    He was probably an atheist. :lol: ;-)

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  3. Adolf Fiinkensein (2,875 comments) says:

    Is this the same council which paid gazillions to an IT fraudster?

    Better have a look and see if they are paying twice for the garbage to be collected.

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  4. Dennis Horne (2,339 comments) says:

    He was probably an atheist.

    Maybe, you don’t have to be crooked to be Christian but it helps. :)

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  5. mikenmild (11,246 comments) says:

    I think that was the health board there, Adolf.
    It doesn’t appear that the council physically lost the cars: probably jiggery-pokery accounting for the sale proceeds.

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  6. thor42 (971 comments) says:

    There must be hundreds of millions of dollars each year flushed down the toilet in wasteful and/or fraudulent local government spending.

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  7. Pete George (23,426 comments) says:

    Is this the same council which paid gazillions to an IT fraudster?

    If you mean Swann, no, he robbed us via the Otago District Health Board . Coincidentally another of his hidden cars has just turned up.

    While cars are common to both frauds I don’t think DCC cars would have been up to Swann’s taste.

    When the DCC car fraud story first broke it was reported as being a few hundred thousand dollars worth. Next we heard it had gone up to a million. Now it’s $1.5 million. That’s about $10k per car, that’s a lot on average to disappear off the asset register.

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  8. Callum (2 comments) says:

    “Auditors can’t and are not expected to pick everything up, but checking the fixed assets schedule against the actual assets is pretty routine.”
    Except they weren’t there to check were they? This fraud was around the proceeds from the turnover of older/surplus vehicles.
    Spread over 10 years, it would be very easy for the sale proceeds from 15 cars a year to disappear. No way an auditor could pick it up if there is collusion, depending on the number of cars turning over a year you would never find a material error. Auditors are there to audit the financial statements, not detect a minor fraud when looking at over $1 billion of assets.

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  9. Nookin (3,264 comments) says:

    Pete

    Perhaps you could invite Penny down for a week in order to sort it out. This seems to be right up her alley.

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  10. freedom101 (491 comments) says:

    Council’s are required to pay large sums to the Audit Office every year and the auditors crawl all over the organisation. What a waste of time and money when they can’t spot the obvious. It’s bureaucratic box ticking at its worst, and of course the ratepayer pays.

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  11. Couchpotatoe (28 comments) says:

    How much was SCF again? Just to keep it real.

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  12. MH (697 comments) says:

    Some of these cars may have been moving at the time of the audit. I have yet to receive a letter requesting I return mine. Bachop, I wonder what Dun’dim’in ?

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  13. peterwn (3,239 comments) says:

    Auditors are more likely to count paper clips than cars.

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  14. backster (2,141 comments) says:

    Hard to believe (and convenient) that only a dead man was involved in this major scam.

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  15. Mobile Michael (440 comments) says:

    He must have been depreciating the vehicles until they hit $0, then writing them off the register so as to not arouse suspicion from book losses. However, an auditor should have asked why so many cars on the register were being kept beyond the council’s policy for vehicle disposal without having to ask to see the physical vehicle asset.

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  16. geoff3012 (66 comments) says:

    Nookin (3,157 comments) says:
    August 23rd, 2014 at 10:43 am
    Pete

    “Perhaps you could invite Penny down for a week in order to sort it out. This seems to be right up her alley.”

    You can friggin well keep her well away from here………we’ve got enough nut cases to keep us more than happy….

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  17. peterwn (3,239 comments) says:

    Mobile Michael

    Years ago, someone stole a piano from an army camp but pleaded not guilty as it had been depreciated to zero. The judge did not buy that argument.

    With ‘straight line’ depreciation an asset will in due course will hit zero value, but with percentage depreciation, the value will approach zero but will never quite get there.

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  18. MH (697 comments) says:

    If that piano had fallen into enemy hands god only knows what fiendish music it would have wrought on us. Thank goodness it was in the right Key.

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  19. Pete George (23,426 comments) says:

    Hard to believe (and convenient) that only a dead man was involved in this major scam.

    It has been reported that other council employees are under investigation as are some people outside DCC.

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  20. Mr_Blobby (163 comments) says:

    Government needs to reign in Councils they have been a law under themselves for to long.

    Start with the super shitty City Auckland.

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  21. burt (8,190 comments) says:

    Lost 150 cars…. Better give them a few hundred million of tax payers dollars … Nice one Labour… Keep the trough topped up.

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  22. Tauhei Notts (1,678 comments) says:

    Once upon a time that sort of oversight by auditors would have been unbelievable but now their approach seems to be once over lightly.
    They are more likely to be all consumed with the unrealistic minuteae of the International Financial Reporting Standards and their unbelievable consequences; the complexity of which is incredible.
    Once upon a time we had an accounting profession in our country. It has morphed into an accounting industry and as such professional standards have been replaced by the questionable actions of industrialists.
    The external auditors, in an attempt to run for cover will blame the internal auditors. The internal auditors will blame the Council’s wish to spend money on each and every aspect of Treaty grievances, and sundry racist bullshit, thus leaving insufficient money available to pursue naughtiness.

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  23. Johnboy (15,903 comments) says:

    “Years ago, someone stole a piano from an army camp but pleaded not guilty as it had been depreciated to zero. The judge did not buy that argument.”

    I remember an old Army story where the RSM asked if any of the new recruits had a musical background.

    When some of them raised their hands (hoping to get out of strenuous work) he yelled out.

    “Right you lot, get that grand piano over there moved into the Officers mess pronto” :)

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  24. Warren Murray (299 comments) says:

    Im curious how it was done. The suggestion that the cars were depreciated to zero but sold for more seems simplistic, but maybe correct. That would be a terribly embarrassing flaw in the Council’s policies and processes, especially if it went on for so many years.

    In my experience the usual approach is to have an assumed residual value of, say 20% at the end of the asset’s usual life. So, for cars that would mean 80% of the cost is depreciated over 5 years. Lets not forget that Councils buy at a price much lower, approx. 20- 30% less than retail.

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  25. Callum (2 comments) says:

    ‘Im curious how it was done. ‘
    I would guess they simply fiddled the tender documents at sale time, either put a lower price in and pocket the difference or listed 6 cars sold instead of 4 then sell the other 2 separately. Could also have had an arrangement with a local dealer for something similar. Depending on the volume they were selling average selling price could still have looked reasonable and the number of vehicles would still be correct.

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  26. Buaidh No Bars (18 comments) says:

    This is a Green based council which has been more focused on marking cycle lanes on our state highways between parked cars where drivers opened into the cycle lanes and heavy vehicles such as stock trucks on the other side, hence they are not good at making sensible decisions especially financial ones.

    There ar two aspects to the auditors. The primary auditor is the govt auditor that missed the other fraud referred to in another post. Both are balance sheet audit issues. The second audit is the so called internal audit that often selects a particular aspect such as receivables, payables, wages, assets etc and explores the area selected for a full procedure review.

    It it yet another failure of former NZICA as the it’s practice review of auditors.

    A disturbing aspect is councillor Richard Thomson who was chairman of the ODHB when there was a 16.7m fraud. He was sacked as chairman but remains as an elected councillor. He is a councillor on the DCC. He signed of an increase in employee fraud insurance from $2m to $5m for the ODHB 28 days before that fraud was investigated. Needless to say the ODHB got no insurance claim payout.

    This is the gentleman how is promoted by the editor of the ODT as a leading light.

    Governance – suspect he has no idea what that means.

    The DCC cars is the biggest joke in Dunedin for many years and surprises few I have spoken to.

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