Province pulling funding for ARCHES after audit

By Tim Kalinowski
Alta Newspaper Group – Lethbridge

ARCHES (AIDS Outreach Community Harm Reduction Education Support Society) will be losing all provincial funding to run Canada’s most highly used supervised consumption site after the results of an independent audit conducted on the organization revealed serious financial mismanagement.

The audit findings include a catalogue of undocumented or inappropriate expenses charged to the SCS and the “Everyone Comes Together” (ECT) program by ARCHES directors, misuse of credit cards for personal expenses, unapproved overtime billing, and a general lack of strong financial oversight by board members.

The audit found over $1.6 million in provincial funding unaccounted for due to missing documentation from 2017 and 2018. Much of problem, according to auditor Deloitte, stemmed from the fact ARCHES co-mingled all its accounts, and was not able to identify which aspects of the organization were funded by provincial money, (accounting for about 71 per cent of its funding), versus those which were funded from other sources in violation of its grant funding agreement with the province. The agreement required ARCHES to keep a separate account and expense ledger for money coming from Alberta Health.

According to the auditors, among the questionable expenses originally charged to the SCS and ECT by ARCHES management were several thousand dollars worth of staff gift cards and expensive trips, both abroad and within Canada, that did not provide all the necessary receipts for the charges accrued. A $2,205 television was also acquired for the ARCHES board room without providing a receipt, and the organization’s petty cash uses were also not reconciled properly.

Referenced in the audit, one unnamed executive’s salary amounted to about $343,000 in 2018/2019, a sharp increase from $87,121 recorded in 2017/2018. Of that $343,000, $72,000 was charged in overtime expenses that the executive did not seek prior approval from the ARCHES board for, as they were required to do under the organization’s own guidelines.

The funding agreement ARCHES has with the province only allows for $80,000 to be drawn for this executive’s salary, but the auditors were unable to determine, due to the co-mingling of accounts, how much of the executive’s salary was taken from provincial funding versus other sources of funding.

ARCHES has received over $14.4 million in provincial grants over the past two years. Associate Minister of Mental Health and Addiction Jason Luan said he was disappointed an organization funded to help Lethbridge’s most vulnerable should be found so wanting in the basics of organizational financial accountability and proper fiscal management.

“It is disturbing and extremely disappointing to me that taxpayer funds allocated to this organization in order to serve the most vulnerable in Lethbridge, would be used for European conferences, expenses for retreats, entertainment and gift cards,” he said. “Our government will not stand idly by while millions in taxpayer funds are missing or misappropriated.”

Because the auditors could not account for or verify all provincial funds used by the organization, the matter will be referred to law enforcement by the Alberta government to determine if further investigation is warranted.

According to Luan’s office, in order to ensure people struggling with addiction in Lethbridge can continue to receive harm reduction services, the government has asked Alberta Health Services to set up a temporary mobile overdose prevention site in the city as they transition these services from ARCHES.

There is no word from the Alberta government yet as to what its longer term plans for harm-reduction services in Lethbridge may be with ARCHES out of the picture.

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