There are a few things boards can do [to avoid compensation scandals]… I am a big believer in getting
third party advice, but that is not necessarily going to be enough… You have to pay very close attention
to the public sector debate going on and the perspectives that are provided by the Ministry and the government. You may have the best third party advisor using world-class best practice benchmarking approaches, but if the results are not going to withstand the political test in a public sector environment…
then it is not going to be sustainable if the board does get into the public eye.4
Due to the biases of general consultants, CPA firms can provide independent, objective assurance over the stated performance of these organizations to respond to the public’s concerns.
CPA firms have extensive knowledge on, and experiences with, financial reporting and corporate
governance. Using the most up-to-date auditing tools and perspectives, CPA firms can provide
reasonable assurance to the external constituents that performance, including management compensation, is at an appropriate level compared to the industry in which they operate and to prior
periods. This high quality third party assurance will enhance the reliability and credibility of
NFPO and public sector results, increasing the probability that the organization will withstand
the political test in public sector environment.
Spotlight on ORNGE
ORNGE is a NFPO, established in 2005, that operates the air ambulance services in Ontario on behalf of the Ministry of Health. Between 2005 and 2011, ORNGE developed a web of multiple forprofit and NFPOs under its umbrella. This complex structure provided management with the opportunity to misappropriate assets
amongst the organizations. ORNGE became a mini-conglomerate with virtually no government
oversight and in 2011, the fraudulent behavior of ORNGE’s President and CEO, was exposed.
What Went Wrong?
As discussed above, it is the role of the governing body to provide effective oversight, ensuring
they are well informed of operations and develop a policy for routine and timely performance
evaluation. In this case, the Ministry and the board of ORNGE were responsible for obtaining
and evaluating performance information regularly, however, the 2011 Auditor General’s report
revealed significant flaws in the governance of ORNGE.
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