BC Housing’s record-keeping, financial transactions under microscope in financial audit

A forensic audit is putting BC Housing’s record-keeping and financial transactions over the past seven fiscal years under the microscope.

The audit examining the Crown corporation’s decision-making and procedures for funding its housing providers has been underway for some time, Premier David Eby revealed Wednesday, as the BC Liberals accuse him of allowing “mismanagement” to thrive there under his watch.

The audit, whose results are expected early next year, is being conducted by Ernst & Young and overseen by B.C.’s Office of the Comptroller General, which is responsible for the overall quality and integrity of the provincial government’s financial management systems.

“I can assure all members of this House, on receiving that, that we will release all of the documents that we can, to the extent the law allows for the Opposition and the public,” Eby said during Question Period on Wednesday.

A redacted copy of the audit’s terms of reference, shared with Global News on Thursday, instructs auditors to conduct a risk-based analysis of cash outflow to “selected housing providers,” and perform limited data analysis on the payments made by BC Housing with an eye for potential fraud risks.

With the comptroller general’s approval, it authorizes the auditors to interview “any person who, in their professional opinion, could contribute to information related to the issues.” The terms of reference also state records may be requested from ministries, Crown agencies and certain service providers.

Eby said the forensic audit was ordered as a result of the May report on BC Housing by Ernst & Young, which made 26 findings and 44 recommendations. That report found that the Crown corporation’s organizational structure had resulted in siloed service delivery, that its systems were not meeting the needs of “functional areas,” and with 80 to 85 per cent of its services delivered through non-profit providers, that its manual oversight process was limited.

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In Question Period on Thursday, the BC Liberals characterized the development as “previously unannounced,” and have criticized Eby for not releasing the May report until right before the Canada Day long weekend.

2:07 Opposition BC Liberals say leaked audit shows housing sector in disarray

Eby was also in the hot seat earlier this week, when the Official Opposition circulated a leaked report outlining extensive mismanagement at the Atira Women’s Resources Society, whose primary funder is BC Housing. Atira provides housing services in Vancouver’s Downtown Eastside, Burnaby, Surrey and White Rock.

This report, by BDO Canada LLP, claimed the non-profit society’s board made decisions based on “incorrect, incomplete or misleading information,” applied “inconsistent accounting practices across the portfolio,” and operated on “assumptions that BC Housing will cover any overages” to its budget.

BC Liberal Leader Kevin Falcon accused the premier of a “total lack of accountability” when Eby was minister responsible for housing, and of burying the Atira report while attorney general (to whom BC Housing reports).

The BC Liberal government was the one to commission the financial review with BC Housing and Atira. A 65-page document of findings and recommendations was sent to the non-profit in November 2018.

It said financial mismanagement at Atira had led staff to look for ways to reduce the pressure on cash flow, resulting in “other downstream consequences.” It made 11 recommendations, including a clarification of the relationship and budget approval process between Atira and BC Housing, clarification of its procurement and purchasing process, improved tracking of commitments and payments, and a review of the competencies and capacities of key roles within its oversight, operations, finance and human resources teams.

“The BC Housing board, and Atira, worked to address the recommendations, including a variety of new communication protocols designed to share information and aid in financial reporting and record keeping,” BC Housing said Thursday in response to the leaked findings.

Global News has also reached out to Atira for comment.

5:00 B.C. premier’s cabinet to include new housing ministry

The premier told 980 CKNW’s The Jas Johal Show on Tuesday he had never seen the Atira report “to the best of (his) knowledge,” but corrected himself in the legislature Wednesday.

“I didn’t recognize the report that (Johal) was describing to me. I am familiar with that report,” he said. “In fact, it’s a report into what happened at BC Housing under the BC Liberal government, which is an important detail that was missing.”

The Atira review was first reported on by The Globe and Mail and The Tyee earlier this year. It covered the fiscal years ending in March 2009 and March of 2017, as well as a review of the non-profit’s financial position in March 2018.

The BC Liberal government held the housing portfolio from 2001 to mid-2017, when John Horgan ousted Christy Clark as premier.