ManitobaA new report by Manitoba’s auditor general looked into allegations of municipalities skirting rules related to spending and conflicts of interest — and suggests some of it was able to happen due to a lack of robust oversight processes by the province.Allegations against 3 of 6 municipalities at least partially substantiated by AG Tyson Shtykalo’s reportCBC News · Posted: Aug 28, 2025 2:02 PM EDT | Last Updated: 9 hours agoThe Auditor General of Manitoba has made a range of recommendations, including that the province develop more comprehensive risk assessment and compliance protocols related to municipalities’ financial obligations. (Gary Solilak/CBC)A new report by Manitoba’s auditor general finds several allegations of municipalities skirting rules related to spending and conflict-of-interest rules — and suggests some of it was able to happen due to a lack of robust oversight processes by the province.The report, prompted by a cyber security incident involving the rural municipality of Westlake-Gladstone five years ago, found three municipalities failed to follow guidelines for purchasing, bylaws around councillors’ spending on travel, and governance norms related to conflicts of interest.”This highlights the need for all municipalities to implement controls based on a recognized cyber security framework, to protect them from cyber security threats,” Manitoba Auditor General Tyson Shtykalo said in the report, out Thursday.Shtykalo’s report includes five recommendations for provincial oversight and says municipalities should develop cyber security protocols based on best practices from the Canadian Centre for Cyber Security.The report was done after concerns were raised about Westlake-Gladstone falling victim to a cyber security attack that cost the rural municipality $430,000. Unauthorized withdrawals were made from one of its bank accounts between Dec. 19, 2019, and Jan. 5, 2020. The auditor general said the municipality failed to properly investigate the incident.’Critical opportunity was missed'”As a result, a critical opportunity was missed to understand how the incident occurred and how to prevent future breaches,” the report says.Manitoba’s finance minister asked the AG to review that case and complaints against six other municipalities. Shtykalo said he found evidence “partially” substantiating allegations in at least three of the cases.In Swan Valley West, the municipality purchased two fire trucks and there was no evidence of tendering, which violated the RM’s own purchasing policies, the report says.Councillors in the rural municipality of Springfield claimed about $3,000 in ineligible travel expenses, the report says, and a former head of council for the RM of Ethelbert “operated unilaterally” and violated governance and conflict-of-interest rules.Shtykalo said the province’s Department of Municipal and Northern Relations failed to adequately look into complaints about municipalities and came up short on oversight of how municipalities use grants.The department doesn’t conduct robust enough reviews of financial information from municipalities that are obligated to share financial plans and statements with the province, he said.In addition to enhanced cyber security protocols at the municipal level, Shtykalo recommended the Department of Municipal and Northern Relations implement oversight processes to monitor municipalities’ compliance with rules.The department should also put forward a risk-based approach to oversight of grants to RMs and create a defined process for when non-compliance is observed, the report says.Finally, the AG report said the department ought to also develop a “comprehensive risk-based process” that includes guidelines to ensure municipalities complete financial documents and “what red flags should be examined.””All government departments have stewardship of the public funds that they disburse,” the report says.”The department disbursed $67 million to municipalities (not including the City of Winnipeg) during the 2022-23 fiscal year through unconditional grants. There are no requirements to receive the funding or any deliverables required to account for the funding.”Municipal and Northern Relations Minister Glen Simard says the government is reviewing the report to determine what safeguards it can implement, but he added that it’s ultimately up to municipal governments to manage their decision-making.”We provide support to municipalities with capacity issues, really, to these requirements in the Municipal Act. Like, I’m thinking specifically of annual financial plans, audited financial statements, things like financial accountability matters,” he told CBC News in an interview.”But we also have to respect their ultimate jurisdiction over their budgetary decisions. So we obviously take any breaches to the conditions for funding agreements very seriously and we’ll continue to work with them to be able to make sure that they can address these situations as they arise.”Simard said the province has set up a department dedicated to innovation and new technology, led by Minister Mike Moroz. He said that department, along with his department, have been talking with municipal officials about “their abilities and challenges as they relate to online protection.”In a statement, Manitoba Municipal Administrators thanked the auditor for the report and said it supports initiatives “to promote transparency, accountability, and continuous improvement in municipal governance.””We look forward to reviewing the report in detail and are committed to working with the Office of the Auditor General, the province of Manitoba, AMM [Association of Manitoba Municipalities] and our members to learn from the findings and identify the best path forward,” association president Nicole Chychota said in the statement.With files from Cameron MacLean
Auditor general urges province to develop stronger oversight policies for municipalities
