Audit uncovers irregularities at Penticton Indian Band business operations - InfoNews

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Audit uncovers irregularities at Penticton Indian Band business operations

An audit of Penticton Indian Band companies discovered Westhills Aggregates to have overstated its income by $880,000.
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April 01, 2019 - 4:05 PM

PENTICTON - An in-depth review of the Penticton Indian Band’s businesses has revealed troubling financial irregularities and business practices, the company managing economic development for the band says.

The K’ul Group, which was previously known as the Penticton Indian Band Development Corporation, recently outlined its findings in a March 20 letter sent to band members. A five-year review of business practices at the band’s gravel pit operations, channel cruise tours and Sn’pinktn Forestry operations is underway in order for K’ul to understand where each business stood.

Midway through a full audit, the group is reporting evidence of possible fraud, overstated earnings, health and safety risks, lack of management process, unauthorized use of credit cards and spending, and questionable subcontractor arrangements in the band’s three operations.

“The last months have proven to be a difficult task as we routinely discovered error upon error and misstep after misstep,” K’ul Management Group chief executive officer Jonathan Baynes stated in the letter. He said many of the concerns discovered have already been addressed.

Baynes said the findings were being made public due to a commitment from the K'ul group to provide improved practice and performance, as well as reporting and transparency to band members.

He said economic development at arm’s length from the band’s political arm “is critical for success as it provides the surest direction forward to prosperity and sustainability.”

The group has "captured the scale of the problem and are addressing it with haste and are introducing a number of changes to make sure this doesn’t happen again," he said.

The K’ul group’s review discovered poor accounting procedures and “shoddy management practises” at Westhills Aggregates, the band’s gravel pit operations, that resulted in more than $880,000 in overstated income.

The report also revealed practices that put workers at risk, reduced the service life of equipment and conducted pit operations in such a way to threaten the capacity of Westhills' non-renewable pit resource.

The report described Westhills employees as “an excellent group of dedicated employees who take a lot of pride in working in the business,” who were committed to doing a good job for the company, but a lack of leadership, direction and communication disconnected them from management.

The Coyote Cruises audit revealed poor accounting practices that left Coyote’s bank account unreconciled with the general ledger, unfiled Canada Revenue Agency payroll and GST remittances that resulted in costly fines, evidence of invoices being paid twice and uncashed cheques that eventually became stale-dated. The review also found Coyote Cruises $76,000 in the red for 2018.

In February of this year, Sn’pinktn Forestry submitted a file to the RCMP regarding a fraud case against the band, the outcome of which is still pending.

The report also described a business opportunity the band was losing out on by giving Pattison Outdoor Advertising sole and exclusive rights to erect and maintain 16 billboards on band property located on Highway 97. It said the lease agreement cost the band up to $165,000 annually in lost income because it did not manage the signs themselves. The Pattison contract expires this May.

Baynes said steps were already being undertaken to improve the band’s business practises, implementing health and safety plans, implementing more structured systems of checks and balances, improving morale and reducing maintenance costs at Westhills Aggregates.

At Coyote Cruises, outstanding remittances were being paid, systems put in place to ensure proper accounting practices, and improvements were being introduced to the human resource and maintenance departments of the business.


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