11/08/2013 02:45 EST | Updated 01/23/2014 06:58 EST

Portland Hotel Society Downplays BC Housing Financial Review

VANCOUVER - British Columbia's housing agency has ordered a financial review of a non-profit organization that operates housing, a safe-injection site and other services in Vancouver's Downtown Eastside, but the group is downplaying the review and says it's confident nothing untoward will be discovered.

BC Housing said it brought in an accounting firm to conduct a review of the PHS Community Services Society, also known as the Portland Hotel Society, after discovering "irregularities," but the agency has declined to specify precisely what it's concerned about.

BC Housing CEO Shayne Ramsay said in a written statement the agency expects its service providers "to fulfil their contractual obligations and to spend taxpayers' money appropriately."

"The accounting firm was brought in to ensure public resources are being spent appropriately and that the society has proper financial and operational controls in place," the statement says.

"This work includes improving financial reporting, corporate governance, compliance with agreements and expense management."

PHS Community Services Society operates a number of housing projects in Vancouver through contracts with BC Housing, as well as the Insite supervised-injection site, which is funded and overseen by Vancouver Coastal Health. It is also involved in other services, such as a clinic, an art gallery and a credit union in the Downtown Eastside.

The financial review only concerns the society's contracts with BC Housing.

Mark Townsend, executive director of PHS, said the review is focused on administration fees that are added to BC Housing contracts. He said those fees average 8.7 per cent.

Townsend said he was unable to discuss the specific issues the accounting firm is examining, but that his organization is open to making improvements where necessary.

"I feel that we sincerely try and do a good job and we sincerely think about how we structure ourselves so we are not siloed like a bureaucracy," Townsend said in an interview Friday.

"We think they (what the group spends the management fees on) help us be able to deliver the service. But can we improve and do we embrace working with a free consultant to improve stuff? Of course we do."

Townsend said PHS is currently working on ways to improve how it manages its operations, such as how it tracks purchases.

The group had an operating budget of $28.2 million in 2012, according to financial records filed with the Canada Revenue Agency.

Funding from provincial government ministries and agencies accounted for $17.1 million, according to the financial records. BC Housing confirmed Friday that it provided the group with $8.3 million in funding in 2012.

PHS is also a vocal advocate for residents of the Downtown Eastside, spending roughly $32,600 last year on political activities, according to the financial records.

The group fought a high-profile legal challenge against the federal government to keep the Insite supervised-injection site open, despite Ottawa's attempts to shut it down. The case went all the way to the Supreme Court of Canada, which ruled in 2011 in favour of Insite.

Townsend said there are times when the group's advocacy is directed at the provincial government and BC Housing, though he wouldn't speculate on whether that was a factor in the ongoing review.

"That does cause a bit of tension, but overall, we enjoy working with them," he said.

"I think they'd like to take a shot at us, and this is a good way to take one. If it's deliberate, I don't really know."

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