The Cumberland Regional Development Authority (CRDA) should be audited, the provincial Ombudsman recommends in a draft report. (Google)

Nova Scotia's Ombudsman has called for a forensic audit of the Cumberland Regional Development Authority in a draft report, and for that audit to be handed over to police.

Ombudsman Dwight Bishop says in the draft report, the conclusion of which was obtained by the CBC, that there is evidence the CRDA created invoices and obtained money from the provincial government "without direct expenditures." The report has yet to be finalized.

CRDA is one of 12 non-profit authorities in the province designed to enhance community economic development. It receives about $700,000 in annual core funding from municipal, provincial and federal governments, and it gets funding for specific projects that can vary from thousands to millions of dollars.

It has worked on projects such as the redevelopment of the Thinkers' Lodge National Historic Site in Pugwash, and the UNESCO World Heritage designation for Joggins Fossil Cliffs.

The Ombudsman's office launched an investigation into CRDA's finances last year, after a complaint by two of the organization's former employees.

The "consultative report" the CBC has obtained is preliminary, so a spokesperson for the Ombudsman's office declined to comment on its contents, except to confirm that the document was correct.

The report says "CRDA's financial practices revealed in this investigation are not acceptable. There is insufficient financial detail on projects to allow for effective financial oversight and governance of CRDA."

It also says, "invoices have been created and used to obtain funds from Nova Scotia Economic and Rural Development and Tourism without direct expenditures. These actions undermine the accountability process and bring into question matters of credibility and integrity."

The report concludes that a forensic audit of the organization is warranted, and the results should be turned over to the police.

The Ombudsman writes that the level of monitoring performed by the province's Economic and Rural Development and Tourism Department is "inadequate." He recommends that the province review the way it audits regional development authorities, and send a copy of that review to the provincial auditor general.

Rhonda Kelly, the executive director of CRDA, wrote in an email that she's "somewhat taken aback" that the confidential preliminary report ended up in the hands of the media. She feels that's "incomplete and misleading".

She says once CRDA has gone through the entire process and a final report is issued, she'll "be in a better position to review the findings and discuss [them]." Kelly goes on to say that she's proud of CRDA's "accomplishments and track record".

Another regional development authority, the South West Shore Development Authority, dissolved in 2010, and left behind more than $2 million in unsecured debt. The province has ordered a forensic audit of SWSDA's books.

Jennifer Gavin, spokesperson for Economic and Rural Development and Tourism, also declined to comment on the Ombudsman's report on CRDA until it is finalized.

In a letter dated July 17, the Ombudsman responds to CRDA's appeal for more time to respond to the draft report, until Sept. 30. The Ombudsman refuses that request, and gives the authority until the end of today, July 31, to respond with more information.

"Absent of any new and substantive information, our final report will be issued shortly thereafter," he writes.