Audit, Inspection and Inquiry - Municipal Government Act

Under the new Municipal Government Act, the Minister has a much wider range of powers and tools to ensure greater accountability, transparency and good governance.

Financial Audit

The Minister will be able to appoint an auditor to examine the accounts of a municipality, municipal committee or other group established by a council or by a controlled corporation. The Minister will have the power to appoint an auditor if requested to do so by a municipal council, if the Minister considers it necessary or if the Minister receives a petition requesting an audit that is signed by at least 2,000 electors or 30% of the electors listed in the list of electors for the municipality compiled by Elections P.E.I. at the date of the petition, whichever is less. If no list of electors for the municipality has been complied in the last three years prior the petition, the Minister may accept a petition from 15% of the total population of the municipality.

An auditor appointed by the Minister will be required to prepare a report and deliver it the Minister, the council and the committee or other body established by a council or controlled corporation that has been audited. The auditor will also be required to prepare a report for the public in a form that has been authorized by the Minister 

If an auditor appointed by the Minister finds any irregularities related to the accounts of a municipality, committee, or other administrative body established by council or a controlled corporation as a result of completing an audit, the auditor will report these results separately to the Minister.

A municipality, council committee or a municipally controlled corporation will be responsible for all of the costs associated with an audit completed under the authority of the Minister.

Inspection

The Minister will have the power to order an inspection of any matter connected with the management, administration or operation of a municipality, council committee or other administrative body established by a council or a controlled corporation at any time that the Minister considers it necessary to do so.

The Minister may also order an inspection when requested to do so by a municipal council or if the Minister receives a petition requesting an inspection signed by at least 2,000 electors or 30% of the electors on the list of electors for the municipality compiled by Elections P.E.I. at the date of the petition, whichever is less. If no list of electors for the municipality has been complied in the last three years prior the petition, the Minister may accept a petition from 15% of the total population of the municipality as shown on the most recent census for that area.

The Minister has the power to appoint a person to conduct an inspection. After the completion of an inspection, the inspector will be required to report the results to the Minister, the municipal council, the controlled corporation or a committee or other administrative body of council.  Any information disclosed in the report may also be disclosed to the public only by the Minister in a manner that the Minister considers appropriate or by the municipal council with the written approval of the Minister. 

The municipality is responsible to the Minister for the costs of an inspection, as determined by the Minister.

Inquiry

The Minister will be able to order an inquiry at any time that the Minister considers it necessary to do so or on the request of a municipal council. The Minister may order an inquiry into the affairs of the municipality, a council committee, a controlled corporation or any other group established by the council. Furthermore, the Minister may also order an inquiry into the conduct of a council member, municipal employee or agent, committee member or a member of any other body established by council.

The Minister may appoint a person to conduct the inquiry and he or she will have the same powers as those given to a commissioner under provincial legislation. The Minister also has the authority to determine the person’s compensation and expenses. However, the municipality is liable to the Minister for the costs associated with it including the compensation and expenses of the person conducting it.

The person appointed to conduct an inquiry will be required to report the results to the Minister, the council, the board of directors of a controlled corporation or the committee or other body of a controlled corporation. At the end of an inquiry, the Minister may declare that a council member is disqualified and dismiss him or her from council.  

Orders of the Minister

The Minister has the power to determine the action to be taken as a result of an audit, inspection, inquiry or other examination as well as any other contravention of the Act.  The Minister has the power, by order, to direct a council to take any action that the Minister considers appropriate in the circumstances including appointing a person to act as a supervisor to monitor and report on the progress of the action the Minister has ordered. The Minister can also specify the compensation that is to be paid to the supervisor by the municipality.

Dismissal of Council

If an order of the Minister is not carried out to the satisfaction of the Minister, the Minister may dismiss any member of council or dismiss the entire council. The Minister may also recommend that the Lieutenant Governor in Council order that money payable by the Government to the municipality be withheld pending compliance with the Minister’s order or that the municipality be declared ineligible, for the period of time specified in the order, to apply for funding programs administered by the Government.

On the dismissal of a council or a member of council, the council or member is no longer qualified to act on behalf of the municipality or to exercise the powers granted to it under the Act. The Minister may appoint a person to take the place of the council member who has been dismissed for the balance of that member’s term of office. On the dismissal of an entire council, the Minister will be able to appoint a person immediately as the official trustee of the municipality.

Other Powers

The new Act gives the Minister other powers and discretion in many different areas such as municipal financial matters and the establishment, restructuring and dissolution of municipal boundaries.

Existing Legislation: What’s in Place Currently

If a municipality fails or neglects to hold an election according to the rules for conducting elections under the legislation, the Minister has the power to conduct of survey of residents in the municipality to determine whether or not they wish to continue to have municipal status. The Minister also has the power to act in the place of council for the purpose of holding an election.

If a survey of residents in a municipality shows that the majority of those residents do not want to have municipal status, the Minister has the power to recommend to the Lieutenant Governor in Council (LGIC) that the municipality be dissolved and the LGIC may then decide to issue an order to do so.

Note: This document has been prepared by the Municipal Affairs Section of the Department of Communities, Land and Environment for general information purposes. This document should not be relied upon as a substitute for specialized legal or professional advice. 
Published date: 
January 6, 2017
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General Inquiries

Department of Communities, Land and Environment
4th Floor, Jones Building
11 Kent Street
PO Box 2000
Charlottetown, PE   C1A 7N8

Phone: (902) 368-5044
Toll-free: 1-866-368-5044
Fax: (902) 368-5830

CLE@gov.pe.ca