Every Bit of Ink

Outrage After Audit Surprise

Cassandra Jowett, National Post
Published: Tuesday, April 14, 2009

Mississauga city councillors are outraged after an audit revealed the city has lost hundreds of thousands of dollars by not charging interest on the overdue accounts of businesses.

Although it is the city’s policy to charge interest on non-governmental accounts after 30 days, internal audit director Sally Eng found the city has not done so.

This is because most of Mississauga’s collections system’s processes are manual — it cannot automatically calculate interest or notify city staff which of the thousands of accounts are consistently delinquent.

Councillor Eve Adams demanded at council last week that city staff explain why residents are charged interest on their overdue payments, while businesses are let off the hook.

“If a resident of mine doesn’t pay their tax bill — boom! Interest is charged right away.”

An additional report by Brenda Breault, commissioner of corporate services and treasurer, indicated at the end of last year that there were almost 1,500 invoices totaling $1.348-million from non-government agencies and individuals that were at least 90 days overdue, and should have been charged interest.

“I don’t think it’s appropriate that residents of Mississauga subsidize some of the businesses that aren’t paying their bills on time, especially when [residents] get hit … immediately,” said Councillor Maja Prentice.

The audit was requested by Mayor Hazel McCallion in March following the surprise bankruptcy of Infoplace Ticket Centres Ltd., a ticket agent that sold Mississauga Transit tickets and passes. The company owed the city more than $700,000 when it folded.

In her report, Ms. Eng said flaws in the system allow the city’s customers to accumulate significant outstanding balances without being noticed. “While charging interest on overdue accounts does not guarantee that payments will be made on time, not charging interest provides no incentives for customers to pay on time.”

City staffers say manual procedures to charge interest on non-government invoices over $1,000 will be in place by June 30, but additional system and policy adjustments will not be completed until later this year.