Auditor General report confirms ARCHES grant discrepancies
By Al Beeber - Lethbridge Herald on March 25, 2022.
LETHBRIDGE HERALDabeeber@lethbridgeherald.com
A report by the Office of the Auditor General about handling of grant funding for ARCHES in Lethbridge confirms the former NDP government removed accountability and oversight, says the Associate Minister of Mental Health and Addiction.
The report, issued Tuesday by Auditor General Doug Wylie, concluded there were shortcomings in how grants to ARCHES were handled by Alberta Health.
The report, available at oag.ab.ca, says between Sept. 2017 and August 2020, ARCHES received total grant funding from Alberta’s Department of Health of $18.3 million to operate a supervised consumption site here.
In March 2020, “upon concerns of potential expenditure irregularities at ARCHES, the department initiated an expenditure review. The review concluded the grant funds were unaccounted for and lacked appropriate documentation. This resulted in the department terminating its grant agreement with ARCHES,” said the provincial government.
“This report confirms what we already know, that the former NDP government was so focussed on flowing as much money to their political supporters as possible that they removed any accountability and oversight from the ARCHES organization,” said Associate Minister Mike Ellis in a statement.
“An independent grant expenditure review of ARCHES completed by Deloitte found over $1.6 million in taxpayer dollars unaccounted for, in addition to trips to Europe and luxury staff retreats on the taxpayer’s dime. We recognized this issue and have ensured the resources are in place so that there is proper oversight of taxpayer funds and that a misuse of taxpayer dollars like this never happens again,” said Ellis.
The report says the Department of Health didn’t ensure financial information was certified by ARCHES, and didn’t maintain sufficient documentation to evidence that it adequately monitored grant reporting information received from ARCHES; and has not fully assessed whether third-party assurance should be required in grant agreements.
In Feb. 2020, Alberta Health Services got an anonymous tip alleging financial mismanagement at ARCHES, says the report. An external firm was then tasked with performing a grant expenditure review of the funding awarded to ARCHES.
The review, released in July 2020, “identified instances of non-compliance with grant agreements, ARCHES policies and procedures manual, misuse of government funding and inappropriate governance,” says the report.
It also stated that about $1.6 million of grant expenditures from the 2017-18 fiscal year had no supporting documentation. That money was later determined by LPS not to be missing.
The report said “the most significant grant related to the operational funding of the SCS had total funding of $16.8 million since December 2017. The grant agreement was amended three times over the terms of the agreement.”
The report said the first two amendments increased the SCS scope of activities that it was allowed to offer while the third allowed existing services to continue for an extra six months to Sept. 30, 2020 with additional funding of $3.3 million.
“We noted that all six grant agreements the department had with ARCHES contained specific reporting responsibilities to which it needed to comply. These responsibilities included providing the department unaudited financial information and a progress report on whether the objectives of the grant were being met,” said the report.
It added that AHS wasn’t able to provide documented evidence that staff reviewed or evaluated the reporting information received from ARCHES.
The report also says ARCHES didn’t have a “typical senior financial officer; rather it had one executive director and three director positions who could act as a backup to the executive director. We noted that the executive director and director always signed the financial reports as ‘the program contact.'”
The report said government couldn’t determine how AHS staff ensured that the executive director, or any directors, qualified to be considered a senior financial officer. Nor could it determine how staff ensured financial reports were being certified by an appropriate senior financial officer.
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Blame it on the bureaucrats all the way up the ladder: including the Deputy Minister whose job when funding a project is to perioidically monitor all aspects of the grant agreement (included are finances, project objectives, quality of service, staffing, etc.). This is an example of bureaucracy out of control.