Finance minister orders probe into NB Liquor's books after fiscal fumble

New Brunswick Finance Minister Ernie Steeves has asked for a review of the financial affairs of NB Liquor following a CBCNews report this week detailing a costly mistake at the agency in 2018, when executives and the board of directors lost track of when the fiscal year ended and had to spend more than $404,000 to fix it.

"Today's decision is about accountability to all New Brunswick taxpayers," Steevessaid in a news release announcing he has ordered an audit of NB Liquor by the province's Office of the Comptroller.

"It is important to be up front about how we manage their taxpayer dollars.

The Office of the Comptroller, headed by Paul Martin, provides accounting and internal auditing services for the province and prepares its financial statements. It enforces accounting standards but, unlike the Office of the Auditor General, isnot independent of government.

"As with any other agency or department, we expect NB Liquor to manage its business and to administer taxpayers' money in a responsible and prudent way," Steeves's statement said.

NB Liquor budgeted for a 52-financial-week year in 2018 ending on March 25 but later discovered that five-year-old legislation required the year to end on April 1 instead.

To fix theproblem, it added a 53rd week to its fiscal year but did not increase corporate profit targets to account for an extra week of sales.

Listen to Robert Jones explain how a mistake in the fiscal calendar led to extra bonuses

That allowed employees who have a profit-sharing plan with NB Liquor, including some executives, to shatter annual and quarterly profit targets and earn $404,736 in extra bonuses during that additional week of sales. That boosted total employee bonuses for the year to a record $978,750.

None of that was disclosed in NB Liquor's 2018 annual report or in quarterly financial reports the organization is required to release to the public.

Management credited for profit surge

A news release issued by NB Liquor on May 4, 2018, about the period mentions an unusually large $9 million jump in sales during its final quarter but credits good management for the increase, not the extra week of sales caused by management's fumbling of year-end dates.

"NB Liquor has experienced a great fourth quarter," Brian Harriman, NB Liquor president at the time, wasquoted as saying about the final chaotic weeks of the 2018 fiscal year.

"We have grown the business by $9.1 million in sales versus the same quarter last fiscal. Fourth-quarter results were higher than last year's fourth quarter, which was driven by well-planned marketing programs like the Exprience Wine program and our everyday beer price offer."

In his announcement about the NB Liquor investigation,Steeves did not specifically mention the year-end error in 2018 and the bonuses it triggered, but his decision comes just two days after the CBC's report about it.

UNB accounting professor Matthew Wegener applauded the decision.

"If they had budgeted that year for a 52-week period, reported a 53-week period and had bonuses related to the difference they would be getting bonuses related to their reporting decisions as opposed to actual performance," said Wegener.

"It needs to be looked into."

Steeves said he has asked for a report by September.