Audit finds financial irregularities at Main Street Project

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This article was published 25/06/2021 (1593 days ago), so information in it may no longer be current.

As he ran an agency that helped Winnipeg’s vulnerable homeless population, the executive director of Main Street Project — who has since been removed — used credit cards improperly, filed inappropriate travel expenses and submitted expense claims with two funding agencies for the same expenses.

The irregularities were uncovered by a forensic examination of the not-for-profit agency that was conducted by Manitoba’s auditor general, Tyson Shtykalo, whose report was released Friday.

“There is a duty of care when entrusted with public funds,” Shtykalo said in a statement.

The finance minister had ordered the forensic examination in fall 2019, prior to Rick Lees’ departure.

Lees ran the agency, which includes an overnight shelter, from 2016 to July 2020. At the time of his departure, the board chairman said the organization wanted to go in a different direction than Lees’ vision. His departure raised eyebrows because of his high standing in the community.

The auditor discovered the federal government paid just over $15,000 for flooring for the shelter during a renovation. An invoice for flooring expenses was also submitted to the Winnipeg Regional Health Authority, which paid the shelter $10,000 — the maximum allowed under its agreement with the WRHA, resulting in Main Street Project getting $25,000 for a $15,000 expense.

It also found there was weak oversight on the executive director’s credit card claims — the not-for-profit has an overall credit card policy, but not one specific to the executive director.

The auditor examined $71,000 of Lees’ expenses; all but $8,128 in charges were properly documented.

Items that aren’t considered properly supported included those without a receipt or invoice, restaurant charges without an itemized receipt, or with a receipt but with no details provided about the purpose for the meal or who attended.

Some regular operating expenses were paid for with the executive director’s credit card, which the auditor deemed improper, instead suggesting accounts be set up with suppliers instead.

Certain travel expenses filed by Lees weren’t adequately supported, the auditor found. That included two airline tickets worth $407, with which the former executive director travelled from Toronto to Winnipeg, and returned to Sudbury, Ont., the following day. He owns property in Toronto and Sudbury, the auditor said. The explanation on the expense claim indicated the flights were for a meeting in Winnipeg.

The auditor also found a $1,070 ticket to fly from Winnipeg to Sudbury, including a $198 charge for the Toronto to Sudbury portion of the trip that was bought two days before the former director left, but the expense claim said the trip was to meet with a federal minister in Ottawa.

Weak board oversight of the former executive director as well as weak administrative policies and practices allowed the incidents to occur, the auditor general said in a news release.

The auditor also said Main Street Project’s board of directors’ due diligence wasn’t sufficient when it hired Lees.

However, other allegations of misused funds and misplaced equipment at the non-profit were unfounded, the audit report shows.

The auditor made 12 recommendations, most of which focused on the executive director position and the board, such as improving policies on executive director expense limits and approvals, performance reviews, purchasing and credit card policies, and recordkeeping.

Main Street Project’s board chairman said the non-profit strongly supports the auditor’s findings.

“We have already implemented, or are in the process of implementing, all of the audit recommendations,” Vince Warden said in a statement.

The not-for-profit received $4.8 million from the province in 2019. Other funding, worth $1.7 million, came from the federal government and other sources.

erik.pindera@freepress.mb.ca