P.E.I.'s auditor general says the provincial government isn't doing a good enough job safeguarding the assets of some of the province's most vulnerable people.
In her 2017 annual report, Jane MacAdam examined how the province's public trustee manages more than $9 million in assets transferred from approximately 300 people deemed incapable of making their own financial decisions. This includes people declared medically unfit who have no one else to manage their affairs, and in some cases minors or people with disabilities awarded funds through court settlements and estates.
"The processes to administer and safeguard client assets are inadequate," MacAdam concluded, citing a lack of internal controls over expenditures made on a client's behalf.
Fee withdrawn from dead client's account
MacAdam found client files were disorganized and in some cases lacked basic information such as a complete listing of the client's assets, or in one case, the fact that the client had been dead for more than a decade.
The auditor general found one case where a client of the public trustee died in 2004, but the trustee was still not aware of the death 12 years later. Four thousand dollars was still held in the deceased client's bank account, against which an annual fee payable to the province's finance minister was still being withdrawn.
In another case, the auditor general discovered funds had been withdrawn from a client's bank account that could not be recovered after there was a four-month delay between the time the person came under the care of the trustee, and the time the trustee took control of the person's bank account. According to MacAdam's report, the trustee could not determine the reason for the withdrawals.
No policy for contacting heirs
The auditor general also found a lack of documentation to support financial transactions made on a client's behalf, including $125,000 in one instance which was withheld on the sale of a condominium.
MacAdam said P.E.I.'s public trustee has no documented policy for seeking out the heirs of a deceased client, and that "action taken to contact family varies."
Under legislation, five years after a client dies, if their assets haven't been claimed they're sold off and the proceeds are provided to the provincial government. In 2014, the last year on record, $545,000 in assets belonging to 72 former clients were transferred to the province in this way.
Some assets not invested
MacAdam also found there was no approved policy for investing assets held on behalf of clients of the public trustee. Those investments were worth $6.5 million in 2014. She found two cases where large cash balances were held for clients for extended periods of time (up to $225,000), where the funds could have been generating revenue for the clients had they been invested.
The report notes the limited number of staff who work for the office of the public trustee — three people — makes it difficult to segregate duties within the office. That exposes clients to risk, the AG said, with the same staff member able to set up new clients, initiate payments on their behalf, handle their investments and perform bank reconciliations.
Government 'working to implement recommendations'
The Office of the Public Trustee falls under the jurisdiction of the premier and justice minister, Wade MacLauchlan. On Wednesday he issued a statement saying government is working to implement the auditor general's recommendations.
"The role of the public trustee has evolved, with additional complexities presented by the changing nature of our demographics," the statement read.
"Additional staff resources, IT improvements and new legislation will assist the Office of the Public Trustee in protecting the financial interests our most vulnerable citizens.
"Last fall, we began work on a technological solution to support the transactions of this office. We will also be adding an additional staff member this spring.
Government will also seek legislative amendments to the Public Trustee Act and develop new legislation on guardianship.
This, along with new policies at the Office of the Public Trustee, will ensure we are meeting the needs of today's clients. We thank the auditor general for her work on this file and we will work diligently to implement her recommendations."
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