03/04/2014 21:01 EST | Updated 05/04/2014 05:59 EDT

Portland Hotel Society spending questioned by B.C. Housing

The B.C. government will soon be announcing what it will do about spending by a Downtown Eastside community services organization. 

Portland Hotel Society provides social housing and support to people with mental health and substance-abuse issues in Vancouver's poorest neighbourhood. Last fall, however, the government hired an outside auditing firm to examine the organization's bookkeeping and spending habits.

"We do a routine audit of all our housing providers on a regular basis — about once every three years. We saw some flags so we brought in an outside auditor," said B.C. Housing Minister Rich Coleman in a news conference on Tuesday. 

Those flags, said Coleman, are about "management of money, spending, what it's spent on."

Coleman did not say how the province will address Portland Hotel Society's spending problem, but one option could be receivership. 

"It's one of the options, but not necessarily," he said.

Coleman insisted that whatever happens, services provided by Portland Hotel Society will not be impacted. 

'It's all about how you manage the funds and manage the operation. And they have a number of employees who already give great service to the people that they serve, and those people would never be affected by whatever we did." 

Portland Hotel Society 'surprised'

Mark Townsend, executive director of Portland Hotel Society, said the society has been working through issues with B.C. Housing and was "surprised" by the minister's comments.

"They hadn't told us that there was some sort of new issue," said Townsend.

He said the society is seeking clarification from the government what exactly the issues are and how they might be resolved. 

"We haven't spoken to [Coleman]. We've reached out and sent a letter and said, 'Hey, could you clarify what your comments mean?'"

Townsend said the organization has been working "earnestly" and "sincerely" with B.C. Housing staff.

"We try and deliver efficient, relevant, and cost-effective services. They're often complicated, and they're challenging, and were dealing with hard-to-reach groups and often against a cross-government silos or sectors. And we do that in an innovative way," he said.

"We're happy to identify areas in which we can improve, in which we can do our job better."

Coleman said the government will decide what to do about Portland Hotel Society's spending in the next week to 10 days. He also said the results of the financial audit could me made public at a later date.