In 1984, twenty-three-year-old Wanda Liczyk received her designation as a chartered accountant. The following year, she left Coopers & Lybrand (now part of PricewaterhouseCoopers)

to become a budget analyst for the City of North York. By 1991, she had become the city’s treasurer and protégé of the mayor, Mel Lastman. In 1998, when North York was amalgamated into the City of Toronto, forming a megacity, Wanda became Toronto’s CFO and treasurer, responsible for overseeing an operating budget of \($6.5\) billion.

Prior to the amalgamation of the cities, the City of North York awarded a computer contract to a company run byMichael Saunders.

He was to develop a property tax management and collection system (TMACS).

Liczyk was one of the three people on the committee that awarded Saunders the contract.

However, she did not disclose to the other members of the committee that she had been having a sexual affair with the married Saunders. Although the affair ended in 1991, they remained friends, and Liczyk continued to give Saunders over \($3\) million in contracts. Furthermore, she convinced Mayor Lastman to select TMACS for the amalgamated City of Toronto even though a locally developed system, TMX, was already in place in other parts of the city. All of this became known only as a result of a formal public inquiry into a subsequent computer leasing scandal.

Shortly after the amalgamation, the City of Toronto signed a contract with MFP Financial Services to provide \($43\) million of computer equipment on a three-year lease.

But the contract was not carefully monitored.

After the payments almost doubled to \($85\) million, a lengthy public inquiry was conducted by Madam Justice Denise Bellamy. Her 2005 report revealed corruption, cronyism, and bribery. Former hairdresser Dash Domi became a salesman for MFP, earning a \($1.2\) million commission.

Dash used his notoriety as the brother of National Hockey League player Tie Domi to wine, dine, and entertain various civic politicians and bureaucrats, including Tom Jakobek, the budget supervisor for the city, and Wanda Liczyk, the CFO of the city.

Justice Bellamy found “credible evidence”

that Dash made a \($25,000\) payoff to Jakobek.

She also faulted Liczyk for not controlling the costs associated with the MFP leasing contract, for not reporting the overspending to city council on a timely basis, and for violating civic conflict of interest policies in her dealings with Saunders, even though Saunders had nothing to do with the MFP contract. Although the Bellamy Report is a scathing indictment of numerous civic officials, a subsequent investigation by the Ontario Provincial Police concluded that there was not enough evidence to press charges. No one was tried in a court of law, but Liczyk was charged and ultimately sanctioned by the Institute of Chartered Accountants of Ontario (ICAO).

As a result of the Bellamy Report, the professional conduct committee of the ICAO began an investigation in 2005 into the conduct of Liczyk, a member of the ICAO. After a closed in-camera session, the ICAO decided not to press charges against her. This led to a public outcry of protest. Doug Elliot, a Toronto resident, along with the City of Toronto, formally complained to the ICAO. Elliott argued that “the more sunshine that is shone on this secretive ICAO process, the greater the likelihood that justice will be seen to be done in the public interest.”1 The ICAO responded by hiring lawyer Richard Steinecke to review the professional conduct committee’s decision. The new City of Toronto mayor, David Miller, said, “I’m very pleased with this decision. We called for the Institute to reconsider and it appears that they’ve taken the public interest very seriously. Steinecke’s investigation concluded that the conduct committee gave few reasons for its decision, giving the impression that the case had not been taken seriously. Furthermore, a significant minority of the committee wanted the case to go to the disciplinary committee. As a result of his report, the ICAO reopened the investigation.

In a one-day disciplinary committee hearing in April 2007, a previously agreed statement of facts was read out. Liczyk pleaded guilty to three charges of violating Rule 201 of the Rules of Professional Conduct. She did not “maintain the good reputation of the profession”

when she was providing contract work to Saunders, with whom she had a conflict of interest. Although she did not profit personally from any of the contracts that she sent to Saunders, she had compromised her independence and professional integrity.

According to ICAO lawyer Paul Farley,

“Time and time again Ms. Liczykwas deciding to approve proposals that resulted in city work going to her friend. She could have come to her senses but she didn’t.”3 Liczyk was suspended as a chartered accountant for six months and ordered to pay a \($15,000\) fine and \($7,000\) of court costs.

Despite the Bellamy Report that severely criticized Liczyk for her involvement in the MFP leasing debacle, the ICAO initially wanted to take no action against her. Only after there was a public outcry did the ICAO reopen the case, but then it chose to prosecute Liczyk, not with respect to her involvement with the MFP scandal but rather for her involvement with Saunders.

The result of the ICAO trial was not to everyone’s satisfaction. Doug Elliott, who had initially complained to the ICAO about its decision not to investigate Liczyk, called the verdict “a whitewash” and the fine “a slap on the wrist.”4 The Toronto city councilor, Michael Walker, had wanted Liczyk to lose her chartered accountant designation. Nor was he comfortable with the accounting profession policing itself. “If professional associations cannot take care of it [the disciplinary process] scrupulously and ruthlessly, then governments should take it over because the people would have more faith in it,” Walker argued.5

Questions:-

1. If Wanda Liczyk did not benefit financially, did she really have a conflict of interest? Should she have been disciplined by the ICAO? Why or why not?
2. Should the accounting profession be allowed to police itself, or should an independent third party, such as the government, enforce professional codes of conduct?
3. Do you agree with Doug Elliott’s complaint that closed-door trials of accountants by the accounting profession is not in the public interest?
4. By not prosecuting Liczyk after the Bellamy Report was published, did the ICAO give the appearance that it was protecting its own, and not wanting to publicly acknowledge that some chartered accountants actually violate the rules of professional conduct?
5. Should Liczyk, as the chief financial officer of the city, have been prosecuted by the ICAO on the more serious charge of failing to provide the required financial oversight, competence, and necessary due care associated with monitoring the MFP lease? Why or why not?