New auditor general's past in Finance Department raises concern about potential for bias

New Brunswick's new auditor general says he'll take a hands-off approach to files he dealt with as a senior Finance Department official, in order to avoid any perceptions of a conflict of interest.

Paul Martin says the challenge of jumping from the bureaucracy to the role of independent watchdog is not new, and he'll approach it the way his predecessors did.

"The office has successfully dealt with this transitionin the past and there were no independence issues," he said Wednesday as he packed up his office in Chancery Place."The same process will be applied in my case as well.

"You just have to use your professional judgment and know when that turns into an actual or perceived conflict and when are the right times to back out."

Martin is leaving the position of comptroller in the Department of Finance, which means as auditor general he'll be in charge of independent audits of some programs he worked on or reviewed as a civil servant.

He's the third consecutive auditor general to make the leap from the comptroller's job, which functions as an internal auditor for government departments. Five of the eight auditors general in the province's history were comptrollers first.

To avoid any perception problems, Martin said he won't have any role in auditing the province's financial statements in his first year as auditor general.

He will approach performance audits of individual programs case by case, recusing himself if the office tackles anything in which he played a major role.

Martin was responding to a former auditor who worked in the Office of the Auditor General and is urging Premier Blaine Higgs to reverse theappointment.

Brent White, now a professor at Mount Allison University, saidplucking someone from Finance to become auditor general violates key tenets of the accounting profession's code of conduct.

Self-review and familiarity with key players are two of five "threats" to independence that accountants guard against under their professional standards.

"I feel pretty strongly about this, and I think there are probably other accountants who feel strongly," saidWhite, who worked as an auditor in the Auditor General's Office for two decades.

"The one person who can do something about this is Blaine Higgs."

In fact, Martin officially took over the job Jan. 1, and it would now take a two-thirds vote of the legislature to remove him.

The legislature endorsed Martin's appointment on Dec. 8. Opposition Liberal Leader Roger Melanson seconded the motion making the appointment, even though he had endorsed White's call for a more independent selection process for the job.

Melanson said in December that Martin, who the Liberal leader worked with when he was a cabinet minister, was "independent, obviously" and highly qualified for the job.

White said that's not enough.

"I think the political class has come to define independence as kind of the equivalent of 'He's a nice guy' or 'He's an OKchap,' as opposed to saying, 'Does he meet the accounting profession's criteria of independence in fact and appearance?'"

Martin was recommended by a selection committee made up of the clerk of the executive council, the clerk of the legislature, a judge and a university vice-president.

Higgs said on the day he announced the appointment that he had raised the question himself when the committee recommended Martin but was assured files he had handled as comptroller would be "treated independently so you're not reviewing your own work."

White first raised his concerns last year when he circulated his doctoral dissertation on the subject.

Besides the repeated choice of bureaucratic insiders for the job, White said the hiring process itself should be changed to remove the clerk of the executive council, the province's top civil servant, from the selection committee.

White's conclusions were endorsed by former Progressive Conservative Finance Minister Norm Betts, who sent the dissertation to the four political party leaders in the legislature.

The three opposition leaders all said they shared his concerns, and Melanson's Liberals introduced a motion calling on the province to create "a revised selection process that is independent of the Executive Council." That motion has still not come to a vote.

Last March, the Chartered Professional Accountants of New Brunswick made a public offer to help the province come up with a more "rigorous" selection process.

"You can't be an auditor of a company that you either own or have a significant influence on, or that your spouse is the president or CEO of," John Clark, the organization's board chair, said Wednesday.

"That just flies in the face of the independence and objectivity."

Choosing a Finance Department official as auditor general "doesn't appear to be the optimum," Clark said."In an ideal world, it would be a case where you'd have somebody who was appointed in that position who had no previous role in any of that situation."

Clark said having "mitigating controls," such as Martin's promise to recuse himself from certain audits, is acceptable. But hiring an auditor general from outside the civil service would avoid the need for that.

Previous comptrollers who became auditors general, including, Kim Adair-MacPherson and Mike Ferguson, were "beyond reproach in terms of their ethics, but it's the situation as it pertains to the optics of it," Clark said.

Higgs's office did not respond Wednesday to a request for a comment on White's call for him to reverse Martin's appointment.

Instead spokesperson Jean Bertin explained the selection process and pointed out that the Auditor General Act gives Martin the power to delegate some responsibilities to avoid potential conflicts.

"Through its selection process, New Brunswick has had great success in appointing Auditors General who previously held the role of Comptroller," he said. "They have had the confidence of both the Legislative Assembly and the public."