Alberta's auditor general wants to find out what happened to millions of dollars worth of taxpayers' money now that a Calgary advertising company with ties to the Tory government has gone into receivership.

Fred Dunn has received a formal request from Liberal leader Kevin Taft to launch a systems audit of Highwood Communications Ltd.

"We are very interested in (a systems audit), definitely," said Lori Trudgeon, a spokeswoman for Dunn's department.

Highwood owner Barry Styles has links to current Premier Ed Stelmach and his predecessor Ralph Klein, and has assisted in Tory election campaigns. The company sought protection from creditors in June after losing a provincial ad-buying contract that it held for more than a decade.

Last year, the firm received $6.4 million for its role in purchasing newspaper, TV, radio and online ads for 19 ministries. Highwood received a four-per-cent commission for the purchases, according to Dunn.

Highwood filed for debt protection in July and has offered 350 creditors, including dozens of publications that are members of the Alberta Weekly Newspapers Association, less than 40 cents on the dollar on more than $5.3 million in debts.

Dennis Merrell, the association's executive-director, says its members are owed $800,000 for unpaid bills between January and May of this year.

"While it looks like Kevin Taft is onto something, I'm not convinced myself," Merrell said. "Clearly, if there was some wrongdoing or something untoward, that would have come out."

Merrell said the auditor general's findings won't make a difference to creditors, who are slated to receive 38 cents on the dollar, which is higher than the 10 cents usually provided in bankruptcy cases.

The association will absorb the loss because it acts as an agent for individual newspapers, Merrell said. But members may have to provide more money to the association over the next year or two in order to help it get back on solid financial footing.

The Liberals say a police investigation may be needed to find out what happened to the money.

Earlier this year, the provincial New Democratic Party urged a special audit to determine whether the Highwood contract had been fairly tendered.

"These public funds are being transferred to a Tory-friendly advertising firm," NDP leader Brian Mason said. "I think Albertans deserve to know if any of these contracts will aid the Conservatives' coming election campaign."

Trudgeon said on Sept. 25 that a response to Taft's request would be issued within a week, adding Dunn still had to determine whether he could audit Highwood in accordance with provincial parameters.

"We're considering, based on our mandate, how and when we can conduct a systems audit," said Trudgeon.

She said the auditor general's department develops criteria for conducting the audit and then discusses it with a firm's management.

"Our goal is to determine if the audit would be able to determine whether the government of Alberta achieved value for money (spent)," she said.

Highwood owner Styles did not return a phone call from Business Edge before press time.

Premier Stelmach says taxpayers got what they paid for because the ads did appear, so he's not asking anyone to find out why the media outlets were never paid.

But, the premier also says he's asked officials to set up monthly reporting from media to ensure they're being paid on time for government advertising in the future.

- with files from The Canadian Press