The report found that the corporation had entered into a deal to act as a general contractor in the construction of housing units in Alaska. The Auditor General is of the opinion that it is not clear whether the corporation has the legal authority to engage in out-of-territory activities, thereby exposing itself and the government to financial risks.
The Auditor General found that the corporation may have interpreted its own mandate too broadly, allowing itself to engage in any activities that may have some connection to housing. The corporation was created to address housing needs for the residents of the Northwest Territories. The Auditor General is concerned the Corporation may have exceeded its mandate and authority by acting as a general contractor in Alaska.
The report warned that if the corporation is involved in unauthorized activities, the corporation's normal rights and protections under the law would not apply including enforceability of contract, particularly revenue collection, and liability limitations enjoyed by public sector corporations.
Committee members pointed out that it is to the advantage of the Alaskan organization to choose the corporation as the general contractor over private firms. There is minimal risk to the client as the corporation is secured by the territorial government.
The committee also responded to the corporation's assertion that the project was successfully completed with minimal risk.
Committee members commented that while the project came in at $1.1 million and revenues came in at almost $1.2 million, the slim profit margin is barely enough to cover overhead costs such as marketing and other management responsibilities. For example, the committee noted that the corporation has been developing the Alaskan market over a number of years and committee members have not seen the amount of money expended to date on the corporation's marketing initiatives. The corporation rationalized the return on investment is secondary to economic and other development opportunities for northern businesses. In the report, the corporation made a commitment to not pursue any further general contracting activities in other jurisdictions without a clear legislative framework to support its activities.
Committee members remain concerned about the corporation's activities outside of its mandate and their associated risks. Despite assurances during the review that there were no issues outside the corporation's mandate other than the Alaskan housing development, the committee noted the corporation is also developing and marketing software. According to the corporation, this fits in with their mandate as the software can be used to manage social housing services. Moreover, it had developed the maintenance management operation system, which was provided to the Department of Municipal and Community Affair's School of Community Government.
In conclusion, committee members and the Auditor General recommended the corporation go back to the Financial Management Board or the Executive Council to clarify its mandate. Many committee members noted that the corporation had clearly moved beyond its original social housing obligations to include other activities.