Since at least 2007, Laurentian University has been misusing restricted funds to finance its expensive capital projects, Ontario Auditor General Bonnie Lysyk said Thursday.
She made the remarks as she released her full report on Laurentian University's decade-long financial decline and decisions to declare insolvency and pursue creditor protection under the Companies' Creditors Arrangement Act (CCAA).
According to Lysyk report, this began as its ability to obtain funding diminished. Funds earmarked for academic research projects and employees’ retirement health benefits were diverted to other activities.
Laurentian obscured the improper use of funds by labelling activity as “internal financing.”
By April 2022, the university had used at least $2.6 million dollars of “internal financing” to pay for projects like energy retrofits and heating plant improvements. At least $1.2 million of those dollars were from restricted assets. It also failed to segregate its bank accounts to differentiate restricted funds, further obscuring their practices.
Laurentian’s lack of transparency was consistent throughout the audited period, and during the audit process itself.
The report found that Laurentian's board of governors did not follow best governance practices and became increasingly less transparent. It held unnecessary closed-door meetings, did not evaluate its own performance, and did not avoid practices that created a perception of conflict of interest.
It also failed to work with faculty and staff unions. The report found that Laurentian intentionally delayed providing financial information to the Laurentian University Faculty Association up to the filing under CCAA, and did not trigger the financial exigency clause in their collective agreement, despite multiple requests from LUFA to do so.
In addition, Laurentian was resistant to the auditing process.
The office said it “faced unprecedented restrictions from Laurentian and a challenge to the Auditor General Act that restricted its direct and unfettered access to information and people.”
“We encountered the most pushback from an organization that I’ve seen in my professional career,” said Lysyk. “We were challenged in our ability to access overall information. We were told that we could not have free access because electronic information contained privileged information.
"Our concern has been that by citing privilege, an auditee can hide behind the veil of privilege because they do not want us to see what information they may be potentially hiding.”
Mia Jensen, Local Journalism Initiative Reporter, The Sudbury Star