Iris Kirby House fundraising foundation refiles public charity disclosure documents to fix errors
Expert says mistakes show potential issue with management
The fundraising arm of a women's shelter that has been under scrutiny over a perceived lack of financial transparency has resubmitted its most recent charity information return to the Canada Revenue Agency to correct significant discrepancies.
A non-profit group that analyzes Canadian charities says it is unusual to see disclosure forms with as many mistakes, adding it presents an inaccurate picture to donors who are pondering where to send their cash.
But IKH Foundation Inc. — which collects donations to help run Iris Kirby House in St. John's, along with sister shelter O'Shaughnessy House in Carbonear — said such revisions are "common," and attributed the incorrect numbers to staffing issues, deadline pressures, and the charity's auditors.
We as board members for IKH Foundation know there is no wrong-doings or issues within the organization and we are protecting our reputation.- Glenn Furlong, IKH Foundation board chair
"We as board members for IKH Foundation know there is no wrong-doings or issues within the organization and we are protecting our reputation," Glenn Furlong, chair of the charity's board of directors, noted in an email to CBC News.
Last week, CBC asked about differences between the information form the charity is required to file each year, called a T3010, and its financial statements.
A charity's T3010 information is posted publicly on the CRA website. Financial statements are not.
Iris Kirby foundation officials won't release financial statements linked to the shelter. CBC News obtained the records from federal charity regulators, who consider them public documents.
For the year ended March 31, 2015, the original T3010 showed big variations between revenue and expense numbers compared to the financial statements, and the apparent hiring of external fundraisers for nearly $16,000, with a return of just $1,250.
There is a six-month deadline to submit the charity information form.
"Our auditors at KPMG, due to timelines had to file our return by the Sept. 30, 2015 deadline," Furlong wrote in response to a CBC News email that had questioned those numbers.
"As a result, which is common, once the audited financial statements were completed, the T3010 form had to be amended. Therefore your questions are centred around inaccurate data."
Filing revised July 4, 15 months after year end
IKH Foundation sent revisions to its T3010 on July 4 — more than 15 months after the end of the fiscal year, and nine months after they were originally submitted.
The new numbers are in line with the financial statements, and take out the reference to fees paid to external fundraisers.
In total, there were 32 lines changed between the two documents. Among the more significant revisions were an increase of more than $100,000 in total revenues for the year, and about a $60,000 change in the expenses that had previously been classified as "other."
While the foundation sent the form listing its T3010 changes to CBC News, it declined to provide audited financial statements it also sent to the feds.
"Our client's audited financials contain information such as donor identity which is confidential," noted Harold Smith, the lawyer who replied to follow-up questions on behalf of the foundation.
"It also contains information as to the beneficiaries of funding which is a matter of privacy. Moreover all information is contained online that members of the public are entitled to. These statements have also been refused by our client in response to requests from government."
As of Monday, the inaccurate T3010 financial information was still posted online.
"Our clients have no control over when the corrected information will appear on the CRA website," noted Smith, a partner with Stewart McKelvey in St. John's.
According to Smith, the foundation approved the audited statements in December, and approved the return in January.
"It was given to the auditors to file as has been the practice for many years," Smith noted. "Our client was unaware that the replacement return had not been filed until sometime in June when it tried to replicate and reconcile a series of tables produced by government.
"Our client then demanded that the corrected return be filed as the numbers being used by government not only were wrong but seriously so. During this exercise the tables were also found to be not established in accord with generally accepted accounting principles and were founded upon an erroneous premise. We cannot explain why our client's auditors failed to file the corrected return in a timely fashion but have asked that question of them."
Asked about the 32 lines of changes to the form sent to the charity regulator, Smith said "staff errors and staff inattention to detail was the root cause along with the time to fastidiously perform a detailed review of all transactions and making the necessary correction of the errors thereby creating an accurate picture of the true financials of the foundation."
He added: "Bottom line is that there are no concerns with the audit neither from the CRA nor the auditors themselves. What qualifications do you possess to question the audited statements?"
'Completely wrong picture of the charity'
Greg Thomson, director of research with Toronto-based Charity Intelligence, has nearly a decade of experience with the group.
He says it is unusual to see charity disclosure forms with this many errors.
However, in the case of this example, the T3010 that was filed was completely wrong, it was completely inaccurate, and would give any donor looking at it the wrong picture of the charity — completely wrong picture of the charity.- Greg Thomson of Charity Intelligence
"We often see one or two lines of a T3010 that were filled out wrong, incorrectly," Thomson told CBC News.
"However, in the case of this example, the T3010 that was filed was completely wrong, it was completely inaccurate, and would give any donor looking at it the wrong picture of the charity — completely wrong picture of the charity."
Thomson says it's irresponsible to have waited so long to fix the problem.
"The fact that they did file such an inaccurate statement and did not as quickly as possible work to correct that, leads me to believe that there is potentially — potentially — an issue with the management team at the charity," he said.
He says IKH Foundation's inaccurate filing to the Canada Revenue Agency is compounded by a lack of financial disclosure elsewhere.
"In the case of this charity, they don't post their financial statements online, so anybody wanting to take a look at the financials of this charity would have to go to the T3010 filing," Thomson said.
"That's all they could rely upon. And given the fact that it was completely unreliable and inaccurate data, any donor that looked at this information would be misled."
The donation decision is based almost entirely on the donor's belief system and their desire to support the work of Iris Kirby House and the seriously disadvantaged community it serves. Unlike some in the press where the only intent is to criticize, undermine, and malign.- IKH Foundation lawyer Harold Smith
But lawyer Harold Smith dismissed those concerns.
"Our client understands the frustration same might cause to an extremely small group as it is unlikely that many donors know that a T3010 is online or care," Smith wrote.
"The donation decision is based almost entirely on the donor's belief system and their desire to support the work of Iris Kirby House and the seriously disadvantaged community it serves. Unlike some in the press where the only intent is to criticize, undermine, and malign."
Past financial disclosure issues
Iris Kirby House has been under the microscope over financial disclosure issues in the past.
A CBC News investigation last year revealed that Iris Kirby House declined to provide its audited financial statements to Eastern Health while receiving millions in provincial tax dollars from 2006 to 2013. That was contrary to government operational standards.
- Iris Kirby House releases 5 years of financial records
- Iris Kirby House grants kept flowing despite repeated rebuffs of requests for financial disclosure
At the time, officials noted there was no binding agreement between Iris Kirby and Eastern Health to provide "historical documents." The shelter is now providing those current financial documents to the province and health authority.
And four months ago, a CBC News investigation found that Iris Kirby House spent $335,000 in tax dollars and donations to buy and renovate a house in Conception Harbour to help women escape domestic violence.
But the property instead fell into unused disrepair before being sold for just $60,000 last fall.
Last year, Iris Kirby House received $2 million from the public purse to run its operations.
IKH Foundation Inc. is a separate entity that collects donations to "provide funding for the programs of Iris Kirby House," according to its federal charity filings.
Harold Smith, the lawyer for both Iris Kirby House and the foundation, alleged in an email that past CBC News coverage has been targeted at damaging the shelter.
"Our clients believe you have been co-opted by the small but vocal group of critics and are being used by them to intentionally harm Iris Kirby House funding and thereby impair its good work in the community," Smith noted.