“We are working with the new leadership at BC Housing to implement all 20 of the report’s recommendations”
A new forensic investigation of BC Housing tabled in the legislature has found mismanagement related to a conflict of interest between the former CEO of BC Housing and his spouse, the CEO of Atira Women’s Resource Society, the Province announced on Monday.
The independent investigation identified 20 recommendations to improve financial oversight, prevent conflicts of interest, and ensure accountability for public funding being used to provide housing. Several of these reforms have already been implemented resulting from an earlier review that included similar recommendations.
“We expect the rules to be followed. There must be strong safeguards in place to preserve the public’s trust,” said Premier David Eby. “In 2021, I ordered a review into concerns at BC Housing, which ultimately led to today’s findings. We are working with the new leadership at BC Housing to implement all 20 of the report’s recommendations to ensure that BC Housing operates effectively as we deliver housing for people.”
In March 2021, Premier Eby, then-Minister Responsible for Housing, ordered an external review be conducted of financial and operational systems at BC Housing. Following that review, work began on strengthening oversight processes and the board of BC Housing was replaced to ensure the organization had the appropriate financial expertise.
During the course of the initial review, further concerns came to light that were outside the scope of that review. In July 2022, at the request of then-minister Eby, the Office of the Comptroller General initiated a full forensic investigation to further evaluate details of BC Housing’s operations. In September 2022, the CEO of BC Housing resigned.
“We’re building a record amount of housing, but we need to do even more. That means our organizations must be equipped to properly manage these public funds,” said Ravi Kahlon, Minister of Housing. “We have a new leadership team in place at BC Housing, who are leading the work to implement these recommendations and those from last year’s review. We’re united in our efforts to strengthen BC Housing’s processes and capacity as we continue to deliver the homes people need.”
While the financial investigation found no evidence of public funds being dispersed outside of their intended purpose or to provide material benefit to any one individual, Ernst and Young identified concerns with BC Housing’s financial oversight processes, including its conflict-of-interest protocols and the requirements under which funds were provided to Atira. Ernst and Young made 20 recommendations to modernize BC Housing’s financial accounting capabilities and improve its project and fiscal tracking systems.
BC Housing has already taken steps to enhance its financial accounting capabilities, policies and processes, stemming from last year’s external review, that address many of the report’s recommendations. BC Housing accepts all 20 of the report’s recommendations.
Work is complete or underway on all recommendations and will be fully implemented by spring 2024. This work includes:
* creation of an anonymous employee whistleblower hotline (complete);
* changes at the executive committee level to ensure enhanced controls in the way that projects are approved (complete);
* enhanced governance and oversight through new processes and structures created with the new Ministry of Housing (complete/underway);
* a government representative on the board (complete);
* strengthened standards of conduct/conflict of interest policies including annual mandatory training with policies overseen and reviewed annually by the board (complete/in progress);
* changes regarding how budget and financial reviews of housing providers are completed, including expected timelines and mechanisms for compliance (in progress); and
* enhanced tracking and reporting to the board of the budget and financial review process (in progress).
“The board recognizes the serious nature of the issues identified in this report, along with the report released last summer. That is why BC Housing has taken significant steps since fall 2022 to strengthen its organizational structure and capacity, financial systems, governance practices, and policies related to oversight, transparency and conflict-of-interest processes. In addition, BC Housing is already making progress on an action plan to respond to the recommendations in the forensic investigation,” said Allan Seckel, Chair, Board of Commissioners.
“Our board has complete confidence in BC Housing’s current executive committee to lead the organization through its evolution into the more complex organization we are becoming.”
BC Housing and government will be exercising its full rights under the Operator and Operating Agreements with Atira to carry out the following:
* reviewing Atira Women’s Resources Society (AWRS) and Atira Development Society (ADS) and its financial transactions with related entities, pursuant to applicable BC Housing operating and operator agreements;
* restricting any new funding to AWRS and ADS until the operational review is complete and concerns are addressed. Atira will not be considered for new funding calls or to manage new buildings until this is complete;
* suspending the renewal of all AWRS operating and operator agreements until the review is complete; and
* physically inspecting all Atira-operated buildings, beginning May 9.
Learn More:
To read the forensic review of BC Housing, visit:
https://news.gov.bc.ca/files/
To read the list of forensic review redactions, visit:
https://news.gov.bc.ca/files/
BACKGROUNDER
BC Housing steps to implement recommendations
Under the guidance of the new Board of Commissioners, BC Housing has developed a comprehensive response plan to the 2022 external review and the 2023 forensic investigation that addresses the major findings and recommendations. BC Housing will address all 20 recommendations from the forensic investigation report by spring 2024. Outlined below is progress to date:
Recommendations and Corresponding Actions
1. Recommendation: consider strengthening the current conflict of interest (COI) policies to explicitly prohibit a COI of this magnitude from recurring in the future.
* Action (complete): incorporated into BC Housing’s updated Standards of Conduct Policy
2. Recommendation: consider updating the Standards of Conduct to clarify that employees, including members of Executive Committee (ExCom), are prohibited from enabling others in the organization to act on their declared COI’s. This would include an obligation for BC Housing employees, including ExCom members, to report COI violations directly to the Board of Commissioners.
* Action (complete): incorporated into BC Housing’s updated Standards of Conduct Policy
* Action (underway): implementation plan to include strengthened annual training, communication from Board Chair to all employees, and oath swearing by senior leadership
3. Recommendation: consider implementing an anonymous whistleblower hotline to provide employees the opportunity to report on matters of noncompliance with the Standards of Conduct, including the COI policies, and declarations made thereunder. The Standards of Conduct should then be updated to refer to the whistleblower hotline.
* Action (complete): whistleblower hotline has been established and training has been implemented
* Action (complete): incorporated into BC Housing’s updated Standards of Conduct Policy
* Action (underway): Board Chair communication on standards of conduct to reinforce whistleblower protections is underway; CEO communication is complete.
4. Recommendation: consider implementing annual, organization-wide COI training, including continued annual signoff of the Standards of Conduct. Consider implementing annual signoffs of the COl declarations, as applicable.
* Action (complete): incorporated into BC Housing’s updated Standards of Conduct Policy.
* Action (underway): mandatory standards sign off for all BC Housing employees by May 2023
* Action (underway): sign off through oath taking by senior leadership by May 2023
5. Recommendation: consider implementing a process to ensure that the Standards of Conduct are reviewed by the Board of Commissioners at least annually and updated, where necessary.
* Action (complete): incorporated into BC Housing’s updated Standards of Conduct Policy
* Action (complete): updated Board of Commissioners Terms of Reference approved
6. Recommendation: consider requiring Providers to submit ongoing financial information. At a minimum, this should include quarterly revenue and expense data.
* Action (under consideration): BC Housing will work with Ministry of Housing and the not-for-profit sector to strengthen reporting, while considering non-profit capacity
7. Recommendation: consider establishing a formal structure and documented procedures outlining how budget and financial reviews are to be completed, including expected timelines and mechanisms for enforcement of those timelines.
* Action (underway): initiate process for revising financial oversight and budget process, which will incorporate feedback from engagement with the not-for-profit sector
* Action (underway): implement changes to financial review and budgeting processes identified as part of BC Housing’s Business Transformation Program
* Action (planned): identify IT solutions for processes that are currently manual
8. Recommendation: consider requiring that financial reviews are completed prior to analyzing and approving budget requests for subsequent fiscal years.
* Action (underway): update process and procedures to address this issue and reflect the need for funding certainty while financial reviews are completed
* Action (planned): amend operating agreements to reflect process change
9. Recommendation: consider developing a status tracking framework, including key performance indicators and oversight responsibility matrix, illustrating BC Housing’s progress in performing budget and financial reviews. This status tracking framework can be presented to the Board of Commissioners on at least a semi-annual basis to promote enhanced governance practices.
* Action (complete): BC Housing tracking status of financial reviews
* Action (underway): enhanced reporting of the status of financial reviews to the Board of Commissioners
10. Recommendation: consider restructuring financial reviews to be under Audit Advisory Services’ (AAS) purview, given AAS’s mandate to “provide effective non-profit financial oversight… of BC Housing’s largest and complex housing providers” and their financial qualifications, supplemented with support and consultation from the Operations team.
* Action (underway): BC Housing will develop a new interim model of undertaking financial reviews
* Action (underway): introduction of new manager role with accounting and finance experience
* Action (underway): analyze organizational and staff roles within the financial review process
11. Recommendation: prioritize hiring additional individuals with an accounting and/or finance background to supplement both the AAS and Operations teams with the budget review and financial review processes.
* Action (underway): retain firm to support advancing finance-related projects as part of Business Transformation Program
* Action (planned): BC Housing to incorporate review of job descriptions and roles into organizational analysis underway
* Action: (planned): deliver enhanced training for staff
12. Recommendation: consider if steps can be taken to simplify the funding models utilized by BC Housing to promote more efficient processes.
* Action (planned): BC Housing to work with the Ministry of Housing to review funding program requirements
13. Recommendation: consider implementing additional preventative controls within BC Housing’s information systems to require explicit confirmation of Excom approval for disbursements in excess of the relevant threshold.
* Action (underway): BC Housing to incorporate consideration into review of Executive Committee terms of reference
14. Recommendation: consider implementing a triaging protocol whereby, in the event that BC Housing becomes aware of an actual or suspected breach of an operating agreement provision, a formal assessment and response plan is developed by ExCom with the assistance of legal counsel that requires reporting to the Board of Commissioners. We understand that BC Housing is introducing an Office of General Counsel and Corporate Secretary, which may aid in the implementation of this recommendation.
* Action (underway): interim triaging protocol to escalate any compliance issue to the attention of the Vice President of Operations, who will engage outside legal counsel to provide formal assessment and remedies
* Action (underway): development of framework for the formal assessment process – Planned
* Action (planned): procedures updated to replace external legal counsel with General Counsel once office established
15. Recommendation: consider implementing a process whereby quantitatively or qualitatively significant Executive Committee submissions are circulated to the full Executive Committee in advance of finalization, to help ensure the completeness of ExCom submissions and associated documentation prior to decision-making.
* Action (underway): incorporate into Executive Committee terms of reference
* Action (underway): improved processes for Executive Committee to review reports
* Action (planned): implement subcommittee structure for ExCom to ensure focused time to consider submissions
16. Recommendation: consider limiting business decision-making to formal communication methods such as email and virtual/in-person discussions supported by detailed meeting minutes. In the event that business decisions are made via text message, BC Housing should communicate the requirement for these records to be retained in the official record management system.
* Action (underway): incorporate into Executive Committee terms of reference
* Action (underway): document practice that texts and instant messaging should not be used as a method where a record for decision making is required
* Action (underway): update records and information management policy to align with the Province
* Action (underway): incorporate guidance for Microsoft Teams chats in policy
* Action (planned): implement new annual training
17. Recommendation: consider establishing a Provider Code of Conduct, which can be incorporated into BC Housing’s operating agreements, that includes the following elements: request and communication protocols, minimum standard required information for funding requests, and COl policies.
* Action (under analysis): BC Housing to work with Ministry of Housing and non-profit housing sector to analyze options to meet this recommendation
18. Recommendation: distribute and obtain written acceptance of the Provider Code of Conduct from existing and future Providers.
* Action (under analysis): BC Housing to work with Ministry of Housing and non-profit housing sector to analyze options to meet this recommendation
19. Recommendation: update the language in the Standards of Conduct policy to align with the expectations set forth in the Provider Code of Conduct.
* Action (under analysis): BC Housing to work with Ministry of Housing and non-profit housing sector to analyze options to meet this recommendation
