Vanished Canadian mint gold not a miscount, audit says


Just imagine if they audited Fort Knox next.

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By Ian MacLeod and Philip Ling
Ottawa Citizen
Monday, June 29, 2009

OTTAWA -- There may have been a massive gold heist at the Royal Canadian Mint, an external audit has found.

The findings of the long-awaited audit, released Monday, conclude that $15.3 million in missing gold is not the result of accounting or bookkeeping errors, raising the distinct possibility it might have been stolen.

The Royal Canadian Mint says the precious metals seem to have vanished from its inventory in the 2008 fiscal year, according to the third-party review conducted by Deloitte and Touche.

External auditors have been working since early March to determine whether theft or an accounting error is behind an "unreconciled difference" between the mint's 2008 financial records and its physical stockpile of gold and other precious metals at its downtown Ottawa headquarters.

The report released Monday concluded that "the unaccounted-for difference in gold does not appear to relate to an accounting error in the reconciliation process, an accounting error in the physical stock count schedules, or an accounting error in the record-keeping of transactions during the year."

It is not clear at this stage whether any gold is physically missing from the inventory, the corporation said in a release.

About 17,500 troy ounces of gold, which represents 0.32 per cent of the mint's stock, were unaccounted for, the report said. "A higher amount of gold should be on hand than the physical amount of gold counted."

The $15.3-million figure is based on gold prices on Dec. 31, 2008, the mint's fiscal year-end date. At Monday's prices, the precious metals would be worth about $16.3 million.

The corporation says that the unreconciled precious metals only relate to metals owned by the Royal Canadian Mint and not the stockpile owned by the mint's customers stored in its Ottawa headquarters.

"All individual customer holdings and metal deposits entrusted with the Royal Canadian Mint are secure and have been fully accounted for," the corporation said in its release.

"All possible explanations for the inventory difference need to be investigated."

The Deloitte and Touche report identified three other areas for consideration:

-- A technical review of operations: "As the Mint applies scientific processes and formulae to various aspects of refining, such as process losses, the mint may wish to review and update its benchmarks and/or third-party studies regarding such technical processes and formulae."

-- An accounting review of prior periods: "Precious metal reconciliations have been performed by the mint twice annually in prior years. Although, in theory, revisiting prior period reconciliations could explain the difference, it would be difficult to complete such a review due to the passage of time, the availability of supporting documentation and the turnover of mint staff."

-- Security reviews: "A more in-depth review of systems security and an assessment of potential inappropriate activity by both internal and/or external parties."

The RCMP launched an investigation June 9 into unaccounted-for precious metals at the mint after the federal government ordered the Crown corporation to contact the police. The police investigation came after a March 23 letter from the Crown corporation, saying had lost track of the metals, that was sent to Minister of State for Transport Rob Merrifield, whose department is responsible for the mint.

Ian E. Bennett, president and CEO of the Royal Canadian Mint, said Monday the mint continues to work with third parties to assist the corporation in its review of specific aspects of its operations. "We have also requested the RCMP's assistance to investigate the matter and the mint has committed to fully co-operate with them."

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