by Terry Payan
Vice President, Internal Audit and Review
(613) 992-7703
Payan.Terry@cfpsa.com

The ratings indicate that most of us at one time or another tune into programs such as Survivor, The Amazing Race, Fear Factor, and The House. We watch, for whatever reasons, and are treated to a steady stream of personal drama, group dynamics, snippets of intrigue, and glimpses of greed.

At the end of the evening, we turn off the TV and, generally speaking, we live our lives none the worse for wear. Our weekly exposure for an hour or so to reality TV, is not reality.

Recently, viewers have followed a different and more profound drama play out in the media. Unless one was living a life of media deprivation, it would be difficult not to know about ENRON, the U.S. energy company whose plunge into bankruptcy topped the viewer charts for weeks.

Despite the intrigue, drama, suicide, massive loss of pension income, lying, corruption, and outright personal greed, I dare say ENRON was a news item with a short interest span for many people.

What has ENRON got to do with the CFPSA and the NPF community at large?

While reading the CFPSA Annual Report (available on the Web), you will note that we have a Non Public Property Board of Directors, an Investment Committee, and an Audit & Accountability Committee. In addition to that, the CFPSA has a Pension Committee that exercises fiduciary responsibility over the NPF Employees Pension Plan.

Each of these entities or activities depends to some extent on the quality of work performed by external auditors. Arthur Andersen, the firm hired, and recently fired, by ENRON, is one of five firms engaged by the CFPSA to provide independent external audit services to NPF operations.

In light of the ENRON/Arthur Andersen debacle, should we be concerned?

CFPSA management and the Board's Audit & Accountability Committee are taking steps to ensure that our NPF operations, external audits, and consultancy engagements are open, transparent, and able to withstand scrutiny in the area of potential or real conflict of interest.

Situations such as ENRON continually challenge us to assess our risk monitoring processes and relationships with external auditors. We have in place, and continue to refine, training programs to raise the level of awareness on the part of employees to the risks of fraud, susceptibility to theft (both internal and external), and inappropriate benefits attributable to conflict of interest. Within the Internal Audit and Review Division, our internal auditors are well versed in computer assisted applications and analytics and the use of analysis in detecting 'red flags' indicative of potential fraud.

On a larger scale, CFPSA's President & CEO has undertaken a complete review of non-audit services provided by firms contracted to render external audit opinions. Equally assuring is that, on a continuing basis, the Audit & Accountability Committee oversees the work by outside accounting firms to ensure appropriate independence of our external auditors. Based on the foregoing, we are confident that we have all the bases covered.

Our commitment is to the members and families of the military community to work with NPF managers and the NPP (non-public property) Board of Directors to lessen the likelihood that inappropriate NPP operations become the topic around the coffee pot.

There will always be instances where the Monday Morning Quarterbacks second guess what others do. In an ideal world, we would prefer that the second guessing relate to reality TV.

But that's not reality.