N.S. residential facility had licence suspended after review flagged spending concerns

Aresidential facility outsideBridgewater, N.S.,is being monitored by the Department of Community Services after a review found tens of thousands of dollars in credit cardpurchases, while having no budget, growing yearly deficits and a debt of almost $600,000.

The Department of Community Services quietly suspended Riverview Enhanced Living's licence for eightmonths last year following the review by accounting firm Grant Thornton without the knowledge of residents, CBC News has learned.

"[Riverview Enhanced Living's] existing governance and financial practices are not sustainable or conducive to ensuring that, as a publicly funded organization, it is being a good steward of that funding," said the report, which wassent to the Department of Community Services and obtained by CBC News though access-to-information laws.

"This presents a significant risk to the entire organization and its ability to continue to remain in operation/service its clients."

Riverview CEO Kathleen Bell took charge of the operation in March. The report did not mention anything offraud, and Bellsaidshe viewed the report as a to-do list of things thatneeded to change immediately at the facility, which is home to people with physical and mental disabilities.

"Coming into an organization where you're new, there can always be red flags," Bell said in a recent interview. "Here, it was extremely transparent what a third-party business thought the red flags were, and frankly, they're all fixable."

The Grant Thornton review

The review, which was commissioned at the request of the Department of Community Services,started in 2019 and was delivered in February 2021. It is one of a number of similar reviews being done at an average cost of $45,000 each.

Maria Medioli, the executive director of the disability support program for the department, said Riverviewhas a plan to implement 29 recommendations from the review. The facility, located in Dayspring,delivers monthly progress reports to the department.

Medioli wouldn't say what the 29 recommendations were, but said23 were complete and six were in progress as of last month.

"Well, of course I'm concerned. We fund that facility," she said. "More importantly, it's important that it's in good financial standing to support the participantsbecause that's really our No.1 concern."

She said resident care was not affected by the issues raised in the review. Fifty-eightresidents live in the facility, with 30 others being supported for small options or independent living in the community.

Bell agreedcare was never compromised.

"With everything that the report outlined, not once did it ever outline residential care," she said.

Riverview is a non-profit organization and a registered charity with an independent board of directors, but most of its funding comes from the Department of Community Services. For the past three years, it has received between $6.1 million and $7.1 million annually.

Growing debt

Grant Thornton did interviews and examined Riverview's policies, board meetings and minutes, and audited financial statements from 2016-19.

The organization had a deficit of $92,979 in 2017, which grew to $384,594 by 2019.Grant Thornton reported the organization's unrestricted net debt sat at $591,666 in 2019.

It was the responsibility of Riverview's CEO to present an annual budget to the board of directors, but the reviewers could not find one for the years they examined.

"Based on discussions with staff, there is no budget created or budgeting process followed," the report said.

TheCEO at the time, Joanne Wentzell, was replacedin April 2021 after the report's release. The minister of community services subsequentlyappointed an interim CEO and suspended the home's licence, whichwas reinstated on Dec. 2, 2021.

When reached by CBCNews, Wentzell said she had no comment and had retired.

The former finance director, Sue MacIsaac, came into the organization in June 2018, stayed on through the change in leadership, and left in October 2021 to take another position.

Bell and Medioli said they could not answer questions about why the former staff left, butMedioli confirmed therewas no reason to think there was anything fraudulent or criminal in Riverview's finances, and no one from the Department of Community Services contacted the police.

Thereview attributed the growing deficits to the home hiring staff above and beyond what's funded by the department.

According to the department, Riverview isapproved for 75 full-time equivalent positions, which range from rehabilitation workers, nursesand housekeeping staff to the CEO.

The review found the organization made several unfunded hires "due to concerns for safety of residents."

However, the review suggested there wasn't enough money to cover the new hires, and the home was underpaying some department-funded positions to cover the unfunded positions.

Bell said there are approximately 120 staff positions in the organization but only 112 staffers. She acknowledged there are some positions at Riverview that are unfunded, and the number of unfunded positions is a "single-digit percentage" of the total staff complement.

Bell said it is her role as CEO to find funding to cover all staff whether from the provinceor another source. She is planning to present a business case to the Department of Community Servicesin the coming months for why the unfunded positions should be covered to provide the best resident care.

Credit cards and petty cash

The Grant Thorntonreviewers also examined company credit card statements for the former CEO and finance director, looking for any unusual transactions.

The review included a chart of credit card spending over time, which noted a significant jump from approximately $5,000 a month or less, up to more than $40,000 a month around September 2018.

"Our understanding is that the board approved an increased use of credit cards to accumulate more RBC Avion rewards points in that September/October time frame," the reviewers wrote.

Bell isn't sure what happened, but said many not-for-profits choose to use loyalty points for fundraising purposes.

"When they host a gala, a fundraiser, a golf tournament, they can collect those points and buy raffle prizes, trips, things like that to raffle off and make more money for the organization," she said.

"Because we do not fly as an organization or utilize the points, that is what I would say those points were there for."

Riverview has held fundraising galas in the past, though not during the COVID-19 pandemic.

Bell said she's not certain whether any RBC Avion rewards points were redeemed.

Spending exceeded $442K

The accounting firm totalled $442,448.36 in purchases. Of those, it counted $10,115 in travel expenses, $8,903 in restaurant meals, $1,209 in alcohol purchases and $48,215 in retail or gift store purchases.

Almost 1,200 purchases were made at more than 190 locations, including the Hampton Inn Sydney, Ryan Duffy's Bar in Halifax, Charm Diamond Centres, and the NSLC.

Bell said she isn't able to speak about individual transactions since she was not CEO when the purchases were made, but she said staff sometimes travel for work. The home occasionallytakes residents on holidays, which involve hotel and restaurant purchases.

"So they could be reflective of that," she said.

Bell said she couldn't speak about the purpose behind the alcohol purchases, but said she has created a policy on credit card use where the home didn't have one before.

The reviewers also questioned the organization's use of petty cash, which they said "greatly exceeds typical use of petty cash." Riverview logged about $42,000 in petty cash disbursements to various employeesfor reasons that weren't always clear.

Some descriptions in the logs included "birthday money," "expense," "pay mix-up" and "mole removal."

Bell said she has also created policies around petty cash use, saying she has tried to balance good business practices with the understanding that Riverview staff need some flexibility to offer enjoyment and fun to residents.

"When you work with 100 people and you decide to take some for ice cream and the ice cream shop only accepts cash, petty cash is very much justified, and it's very much something that it is part of our day-to-day world," she said.

"I'm 100 per cent certain that these policies make sure that we follow good business practice and sound business practice, as well as making sure that there's checks and balances and spending limits."

Residents unaware

Except for the change in CEOs, none of this was common knowledge among Riverview residents, according toDylan Robar.

Robar, who has lived at the home for five years,learned of Riverview's licence suspension in spring 2022 as he was trying to organize a lotto fundraiser that needed a provincial licence.

He was surprised to learn of the licence suspension and further surprised in July when he learned about the findings in the Grant Thornton review from CBCNews.

"It's like they're trying to keep everything confidential," Robar said.

Mediolisaid she contacted many families to tell them about the change in leadership, but Robar saidthe rest was news to him and his family.

"I think they have a responsibility to inform us clients and stop thinking that people with disabilities are different and incapable of understanding," he said.

However, Robar offered praise to the new CEO, saying he believes Bell is doing a "phenomenal job."

Board oversight

The five-person board of directors for Riverview is responsible for overseeing the CEO and management. However, the report noted there is no training or onboarding to make sure board members have the skills for effective oversight.

Board chairJohn Robartsbriefly accepted a call from CBCNews about the review, but referred questions toBelland said he had no official comment on the board's behalf.

Thereport said theDepartment of Community Servicestold Grant Thornton some information it received from the home "may have been manipulated or altered," although that was an allegation neither the departmentnor Grant Thornton could verify in February 2021.

The departmenttold CBCNews there was some uncertainty about "one area where information was provided,"but "the matter was resolved and no changes to the report or its finding were made."

The review is just one part of a governance review of all eight adult residential facilities, which is still underway.