IWK's finance chief steps down in wake of expense scandal

The IWK Health Centre's top financial official has resigned, the latest development in an expense scandal at the Halifax-based children's hospital.

CFO Stephen D'Arcy was placed on paid leave 2 weeks ago to allow for objective external review

IWK Health Centre chief financial officer Stephen D'Arcy has resigned in the wake of an expense scandal involving the hospital's former CEO. (CBC)

The IWK Health Centre's top financial official has resigned. 

Stephen D'Arcy has been on paid leave since an auditor's report showed former CEO Tracy Kitch expensed $47,000 in personal charges to the Halifax children's hospital. The hospital's board confirmed Monday that D'Arcy tendered his resignation on the weekend. He is not entitled to severance.

Kitch resigned in August, a week before the report on her expenses was released.

The board's level of concern

D'Arcy was shown to knowingly help Kitch prepare an incomplete expense statement to meet provincial reporting requirements. A CBC News investigation revealed D'Arcy also removed critical emails related to expense preparation for a freedom-of-information disclosure.

Karen Hutt, the IWK board chair, said it was D'Arcy's decision to leave.

But she said, "I think that it's fair to say that we've been signalling that we're concerned about how we found ourselves in this place."

Tracy Kitch resigned as CEO of the IWK Health Centre in August, a week before a report showed she expensed $47,000 in personal charges to the hospital. (Career Women Interaction)

To ask D'Arcy to step aside during the review "is a good indication of the level of concern that the board had," said Hutt.

She said she has no specific concerns about the rest of the finance department at the hospital, but that's why they are doing a review.

Could be more for police

Amanda Whitewood will take over as interim CFO for six months. Whitewood has served as CFO for Halifax Regional Municipality and Capital Health, and has held vice-president positions with Mount Saint Vincent University and the Nova Scotia Hospital.

The province's auditor general announced last week his office would be investigating the IWK's books, and the hospital's board referred the matter of Kitch's expenses to Halifax Regional Police. 

During a board meeting Monday, Hutt said an officer has been assigned to the file and the process is expected to take "a couple of months." Hutt didn't directly say whether matters related to D'Arcy would be turned over to police, but she said, "if there's more that they want to take a look at we'll obviously be supportive of that."

One more year with audit firm

At the same meeting, the board approved Grant Thornton to do the hospital's financial audit for 2017-18. The auditor general will take over the work starting next fiscal year.

Although Grant Thornton has been doing the work for several years, Hutt said she isn't concerned the auditing firm missed problems with executive expenses.

IWK board chair Karen Hutt said Stephen D'Arcy tendered his resignation on the weekend. (CBC)

"I think that Grant Thornton is an excellent organization and I think that they were doing what we asked them to do over the past couple of years and that was to complete a review of the financial statements of the organization and I think they've done that."

Hutt said it's not uncommon for an annual audit to include testing of different processes or controls and she thinks if that had happened in the case of CEO expenses "we would all be in a very different place right now."

Health Minister supports move

Health Minister Randy Delorey said if the board thinks this is the right move, he supports the decision.

"I think, as the board chair indicated, that's probably in the best interest of all parties."

Delorey said he continues to stand by the efforts the board has taken since becoming aware of the situation with Kitch and if new information is coming out, Delorey said it's because the board continues to work on resolving the situation.

About the Author

Michael Gorman


Michael Gorman is a reporter in Nova Scotia whose coverage areas include Province House, rural communities, and health care. Contact him with story ideas at michael.gorman@cbc.ca

With files from Jean Laroche