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Vaughn Palmer: Auditor didn't delve too deep on spending by Lytton

Agency believes lack of reports on spending provincial aid dollars was down to staffing issues, enormity of destruction, not bad faith

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VICTORIA — Five years after Lytton was destroyed by fire, the New Democrats are unable to say if all of the millions of dollars in provincial recovery funding were used for the intended purposes by the troubled community.

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The lapse in reporting on the use of public funds was detailed in this week’s report from Auditor General Bridget Parrish on provincial government support for Lytton after the June 2021 fire.

Vaughn Palmer: Auditor didn't delve too deep on spending by Lytton Back to video

Her report tells how in the first two years after the fire, the province made lump sum payments to Lytton to support municipal operations, debris removal, archeological work and other assistance in recovery.

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Lytton was supposed to provide a regular accounting for how the money was being used. But with the village government in disarray, reporting was inconsistent and, at times, non-existent.

“This was particularly significant because the province had paid the village in lump sums up front,” says Parrish. “Without the reports, the province could only say what it expected the village to spend under the terms of the agreements. The province could not say with certainty how funds were spent.”

The lack of financial reports did not mean provincial staff were completely in the dark about what was happening in the village, says the auditor general.

Still, by the second anniversary of the fire, the province became sufficiently concerned to hire an outside contractor to check up on how the village was using the funding.

When the contractor reported back in November 2023, the findings were far from reassuring.

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“The report noted that the village’s documents were often missing and incomplete, and that frequent changes in village management resulted in information gaps,” says the auditor general. “The firm could not locate contracts to support 13 of 34 procured goods and services selected as a sample.”

Nevertheless, Lytton was given the benefit of the doubt: “Although the management and council were acting in good faith, it appeared that they lacked the leadership and governance capacity to manage such substantive and complex contracts.”

By then, provincial disbursements for the years 2022 and 2023 totalled $43.632 million, according to the auditor general’s report.

The auditor general’s office now says some more of that money has been accounted for. But as of Thursday afternoon, it refused to provide an estimate of how many of those millions were not covered by the required reports from the village.

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Following the consultant’s report, the province implemented a new funding agreement with Lytton. Starting in January 2024, the village had to submit receipts to receive reimbursement.

From then on, there has been a full accounting of a further $7.7 million in reimbursements up to the end of March 31, 2025, when the inquiry ended.

But when Parrish spoke to reporters this week, she was unable to shed any additional light on the disposition of the millions that went out the door in 2022 and 2023.

Why didn’t her report get into specifics about how that money was used and whether it benefited residents?

“There wasn’t complete information about how the funds were spent,” she replied. “The province sent in someone to take a look at the books as well and they were not able to substantiate a number of the contracts, and figure out where the money was going. And so we didn’t expect to be able to find the information to be able to categorize what it was spent on.”

Did the investigation uncover why there was so little reporting over two years?

“It didn’t look at why the money wasn’t being reported,” she said. “Just the reports did not come after a certain period.”

Did the auditor general’s office have any concerns about how the money was spent?

“Not so much,” she replied. “We do see a lot of turnover in the administration working in the village. And somewhere in there, the records have not been maintained, and that’s why the province wasn’t able to obtain detailed information about how the money was spent.”

That said, her staff gave local officials the same benefit of the doubt as the earlier investigation: “They didn’t believe that there was any bad faith there and that everyone was attempting to operate in good faith, but that the records were just not easily maintained.”

Such a breathtaking lack of curiosity on the part of an office whose main purpose is auditing for the proper use of public money.

Later in the same news conference, Parrish referred to her own lack of involvement in the Lytton investigation.

“You may have also noticed a little bit of turnover in our office,” she told reporters. “So I’m new, and so that also can play a part in some of these things a little bit as well.”

Parrish started her term as auditor general on Dec. 1 of last year, nine months after the end of the period covered by the investigation when the final report was already in the works.

Still, those who preceded her could have used the considerable powers of the office of the auditor general to pursue a more thorough investigation into the whereabouts of the province’s money.

vpalmer@postmedia.com

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