Manitoba’s auditor general says some allegations of financial irregularities at Winnipeg’s Main Street Project have been proven true following a forensic audit of the community health centre.
In a 46-page report released Friday afternoon, Tyson Shtykalo said the investigation uncovered inappropriate credit card use and travel claims as well as an instance where former executive director Rick Lees filed claims with separate funding agencies for the same costs.
The audit also showed the non-profit’s board of directors had weak oversight of Lees as well as lax administrative policies and practices.
“Main Street Project serves an important role in our community by providing shelter and access to services for those experiencing mental and physical health issues, homelessness, or substance use disorders,” Shtykalo said.
“There is a duty of care when entrusted with public funds.”
In 2019, Main Street Project received $4.8 million in provincial funding. The audit was requested by Manitoba’s finance minister, he said.
Lees and the charity parted ways a year ago, after he had spent four years at the helm. Board chair Vince Warden said at the time his departure had nothing to do with the forensic audit or the allegations of financial impropriety.
The audit report does not name Lees directly, calling him only “the former executive director.”
The audit, looking at the period from Jan. 1, 2015, to March 31, 2019, also found a number of allegations made were not substantiated or only partly substantiated. It did not evaluate the non-profit’s effectiveness as a charitable organization nor its services.
Auditors examined Lees’s $71,221 in credit card expenses from the time he was hired in June 2016 and found just more than 11 per cent — $8,128 — were not supported by receipts or invoices.
It also found a small amount of airfare charged to the organization was not supported by documentation about the purpose of the trips. The tickets were between Winnipeg, Toronto, Hamilton and Sudbury. Lees owns property in the Toronto and Sudbury areas, the audit report said.
“We asked the former executive director about these flights and whether any personal amounts or incremental costs because of personal travel should have been repaid to MSP,” the report said.
“He agreed that any personal amounts should be repaid. We could not find any evidence that any repayment was made.”
Lees would also lend his Main Street Project credit card to staff to cover operating expenses. When asked by an administrator to verify the expenses, he said most of them “weren’t his, and that others were using his card,” the audit report notes. “Despite this, he approved the expenses.”
Adding to this, the audit found there was “excessive” credit card use by staff, also for operating expenses. A total of $135,365 in employee card purchases were made during the audit period.
“While we recognize the requirement for MSP to be able to make purchases for unexpected program needs, there is a pattern of credit cards being used to pay operating expenses,” the report said.
Missing personnel file, lax board oversight
The report also chides the Main Street Project board on a number of fronts, including for not maintaining proper oversight of the director’s position and their expenses, as well as for not doing due diligence prior to hiring for the position.
Lees was a program director at the non-profit prior to becoming acting executive director and then taking the job permanently, the report said.
“There is evidence in emails that the board did not perform sufficient due diligence prior to promoting the former executive director to the acting role. A review of emails shows that the board asked the former executive director questions about his previous employment while he was already employed as executive director,” the report said.
Lees told auditors he was required to provide substantial documentation to the board during the vetting process for the job. They requested his personnel file from Main Street Project but it could not be found, the report said.
The board didn’t conduct any self-evaluations nor fill out any conflict of interest forms during the audit period, the report said.
In all, the auditor made 12 recommendations for improvement. The report notes the organization has agreed with all of them and either has or is taking steps to implement changes.
In a joint statement from Main Street Project, the Winnipeg Regional Health Authority and provincial department of Health and Seniors Care, the partner agencies said the recommendations will be taken “very seriously.”
“In addition, we are aware that Main Street Project has undertaken a comprehensive risk review to ensure that it is complying with best practices in every aspect of its operations.”
Allegations had also been levied at the organization on a number of other fronts, including that its outreach van program didn’t run for the whole time it was being funded, as well as that funding for a naloxone program wasn’t used as intended.
These were not substantiated in the audit, Shtykalo’s report said.
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