The CEO of Toronto Community Housing Corporation says she is "shocked and appalled" by some of the staff expenses uncovered by the city's auditor general.

Spending by staff at the housing corporation — the largest social housing provider in North America — included almost $2,000 for manicures and pedicures at a local spa for eight staff members and Christmas parties costing more than $40,000 each.

A report by Auditor General Jeff Griffiths also questioned expenditures such as $1,800 for a boat cruise, retail gift cards for employees and $6,000 for an offsite planning session in Muskoka. Employees also spent $1,000 on chocolates from upscale department store Holt Renfrew.

Speaking to reporters Monday, corporation CEO Keiko Nakamura said she was "outraged" by Griffiths's findings and vowed to bring in changes to prevent such spending in the future.

"It angers me that the poor judgment of a few individuals has impacted the reputation of the entire company," she said. "Staff are being disciplined. Those responsible for the most flagrant actions no longer work for this company."

When asked to explain how such spending could have happened, board chair David Mitchell said he would not go into details about "human resources matters."

"I realize that people in whom I put my trust were not deserving of that trust," Mitchell said. "Frankly, I feel betrayed. … Processes are now in place to prevent this kind of thing from happening again."

Coun. Josh Matlow said spending practices outlined in the report are "absolutely out of whack" with the city's financial situation.

"It just seems egregious, if these allegations are true, that staff would be spending money on such thoughtless expenditures," Matlow said.

While reining in misspending alone may not be enough to put a significant dent in the projected City of Toronto's $774-million budget shortfall next year, Matlow said it "sends a really really awful message to people who are struggling to make ends to meet, who are relying on these services, who are waiting for repairs to be made."

'Complete dumps'

Steve Hayden, a tenant who was forced to leave his apartment in a TCHC building at 200 Wellesley St. after a massive blaze, said he's eager to look at the report, particularly in light of the problems he says are prevalent among many corporation-run properties.

"We're living in places that are complete dumps," he said. "This is the biggest housing building in Canada. It's the biggest for bed bugs, crime and … worst for maintenance."

Matlow said that while the report will not reflect well on TCHC, it does not provide justification to shut the agency down entirely in favour of a model that would provide people subsidies in order to find dwellings in the private rental market.

Ford floated that idea during his election campaign, although it's unclear where he currently stands on the issue.

"Toronto Community Housing is a vital service for over 160,000 Torontonians," Matlow said. "These are some of the most vulnerable people in the city who needs this support. I don't agree it should be abolished."

A TCHC spokesperson wouldn't comment on the report before its release, but said the corporation's board plans to hold a special meeting to discuss the audit findings and the response.