The Auditor General noted the corporation purchased a detoxification facility from a non-profit organization which had defaulted on its mortgage. In doing so, the corporation purchased the property without obtaining the specific approval as required under legislation.
Committee members and the Auditor General were concerned that any borrowing by public agencies adds to the government's overall debt; and when agreements of this nature are entered into, all implications and risks should be identified and undertaken prior to receiving approval.
The corporation explained that under the Social Housing Agreement with Canada Mortgage and Housing Corporation, CMHC, it is Responsible for making payments to CMHC even if it does not receive payment from individual mortgage holders. However, the Auditor General pointed out that it was not clear that the Financial Management Board had given the corporation a "blanket" approval to take over individual
mortgages.
In its response to the Auditor General's recommendations, the corporation, as noted in the report, gave notice that it had already entered into another similar transaction where the third party, a non-profit organization, had defaulted on its mortgage. The corporation added that in this case, it had gone through the process to request and receive the approval of the Financial Management Board, FMB, to acquire the asset and assume the debt.
The committee concurred with the Auditor General's recommendation that the corporation seek clarification from the FMB and the Executive Council on whether they approved the assumption of mortgages at the same time as approving the social housing agreement. The report added that for any future arrangements of this type, the corporation should specify each condition that requires approval relative to existing legislation, and request that each be approved by FMB.
Furthermore, committee members were in agreement with the Auditor General's suggestion during the meeting that the corporation should go back to FMB and the Executive Council to better clarify its mandate. The government added that it is currently reviewing the mandates of all government organizations and departments and will ensure the concerns of the committee and the Auditor General are incorporated into the evaluation process.