Alberta
Audit of supervised consumption site in Lethbridge uncovers $1.6 million unaccounted for
From the Province of Alberta
ARCHES audit finds serious financial mismanagement
Senior executive made $342,943 in 2019
The province has released the audit of the ARCHES supervised consumption site in Lethbridge and as a result of its findings, will be ending its grant funding agreement with the organization.
The independent accounting firm Deloitte conducted a grant expenditure audit after the Alberta government learned of possible financial irregularities within the ARCHES organization.
The review substantiated allegations of asset and funding misappropriation, non-compliance with grant agreements, and inappropriate governance and organizational operations. The ARCHES organization was found to have seriously mismanaged taxpayer funds meant for the most vulnerable in our society.
“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. Our government will not stand idly by while millions in taxpayer funds are missing or misappropriated.”
Jason Luan, Associate Minister of Mental Health and Addictions
Below is a summary of the audit’s findings:
$1,617,094 unaccounted for due to missing documentation for expenditures from 2017 to 2018.
$13,000 of interest off ARCHES bank accounts was used to fund parties, staff retreats, entertainment and gift cards.
A senior executive’s compensation totalled $342,943 for calendar year 2019. This includes $70,672 in overtime for fiscal year 2019-20. The grant agreement allows for a salary of $80,000.
The Everyone Comes Together (ECT) program staff salaries and benefits also exceeded the amount allocated by the grant agreement by $16,000.
The number of ARCHES employees is greater than allowed by the grant agreement. ARCHES maintained up to 126 employees. However, the exact number could not be verified.
$4,301 spent on European travel for management to attend a conference in Portugal.
Thousands of dollars in unverifiable travel expenses, including trips charged to company credit cards but not recorded in the ledger.
A senior executive’s family member was hired, earning $9,900. The auditors could not locate a resume or personnel file to verify any qualifications.
$7,557 for management retreats, including meals and mileage where documentation for spending was unclear.
The grant agreement requires the organization to maintain the funding received from Alberta Health within a separate bank account; however, the audit revealed that it was comingled with other funding sources. As a result of ARCHES comingling their accounts, the auditors could not verify thousands of dollars of expenses.
Proper personal conflict of interest declarations were not recorded when related individuals or vendors were hired or utilized.
Vendors were repeatedly secured in secrecy with a lack of transparency and accountability.
No petty cash reconciliations have been completed.
$1,129 was used to buy gift cards for board members for The Keg, iTunes, Boston Pizza, Earls, Gap, Shell, Chapters, Cineplex, Amazon, Starbuck’s, Tim Hortons, MasterCard, and Bath and Bodyworks. The expense was recorded as “Gift cards – Board Members.”
$2,100 was spent on gift cards to The Oil Changer – a business owned by a senior executive’s spouse.
$2,205 was spent on a television with no receipt documentation to support the purchase.
The auditors were unable to complete the grant expenditure review in respect to all allegations received or provide a complete financial value attributable to each allegation, due to the state of ARCHES’ records and the related outstanding documents.
Due to missing funds and unverifiable transactions, as well as allegations, which could not be investigated in the scope of this audit, government will consult with law enforcement to determine whether further investigation is warranted.
To ensure people struggling with addiction can continue to receive services, government has asked Alberta Health Services to set up a temporary mobile overdose prevention site in Lethbridge with the goal of seamlessly transitioning services. Government will also be adding three recovery coaches to the region to assist in expediting individuals into treatment.
Quick facts
ARCHES has received more than $14.4 million in taxpayer dollars over the past two years.
In June, government announced an additional $4 million over four years to expand access to the virtual opioid dependency program to allow Albertans to use telehealth technology to access treatment for opioid use disorder.
Also announced was the opioid agonist therapy gap coverage program to cover the costs of medications to treat opioid use disorder for Albertans waiting to receive coverage through a supplementary health benefit plan.
As part of the $140-million mental health and addiction commitment to create 4,000 spaces, government has announced additional treatment spaces at Poundmaker’s Lodge Treatment Centres, Sunrise Healing Lodge, Fresh Start Recovery Centre, Thorpe Recovery Centre, and the Blood Tribe Bringing the Spirit Home detox centre.
Better, faster, more affordable auto insurance
Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.
After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.
Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.
“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”
“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”
Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.
Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.
Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.
In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.
Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.
By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.
“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”
Quick facts
- Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
- A 2023 report by MNP shows
Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.
Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.
The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.
Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.
“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”
Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:
- $716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
- $125 million to address enrollment growth pressures in Alberta schools.
- $847 million for disaster and emergency assistance, including:
- $647 million to fight the Jasper wildfires
- $163 million for the Wildfire Disaster Recovery Program
- $5 million to support the municipality of Jasper (half to help with tourism recovery)
- $12 million to match donations to the Canadian Red Cross
- $20 million for emergency evacuation payments to evacuees in communities impacted by wildfires
- $240 million more for Seniors, Community and Social Services to support social support programs.
Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.
After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.
Revenue
Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:
- $16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
- $20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.
Expense
Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.
Surplus cash
After calculations and adjustments, $2.9 billion in surplus cash is forecast.
- $1.4 billion or half will pay debt coming due.
- The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.
Contingency
Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.
Alberta Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.
- The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.
Debt
Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.
- Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.
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