Paperwork lacking on NSLC product selection, placement and pricing, AG finds

The Nova Scotia Liquor Corporationdoes not have the checks and balances in place to be able to fully justify the decisions it makes about what products it buys, where they areplaced on storeshelves and at what price.

That's one of the key findings of an audit released Tuesday byKim Adair-MacPherson, Nova Scotia's new auditor general. In her first report to the House of Assembly,Adair-MacPherson didn't mince words.

"Overall we found the Nova Scotia Liquor Corporation does not have adequate processes and documentation to ensure important decisions over the procurement and promotion of retail beverage alcohol are made and supported in a consistent manner,"stated her 27-page audit report.

"Generally, we found processes in place lacked clarity; document retention was not a priority; and approval and review processes were almost nonexistent."

In an interview from her Halifax office,Adair-MacPherson said the audit results were unexpected given the size of the Crown corporation's sales and the fact decisions related to its core business were undocumented.

"We were surprised to find, given the size of the organization, over $750 million in sales each year, that the processes lacked clarity and there was a lot of reliance on the staff within the organization," she told CBC News.

"There is opportunity for fraud, although it's important to point out that we did not find any indication of fraud. But the staff within the organization are vulnerable."

The AG's office makes 10 recommendations aimed at the corporation, including a call for NSLC to properly document the decisions it makes, and put in place the proper procedures to be able to justify those decisions and approvals.

NSLC spokesperson Bev Ware said although the corporation "respects" the work of the AG's office and hasagreed to make the changes recommended in the report, it characterizes the audit as "a snapshot in time" that no longer reflects the current situation.

"This audit looks at 2017 to2019," said Ware. "So it's reflective of that time period and a lot has changed since then. We do have new leadership in place and work is underway to address a number of those issues."

Ware also disputed the report's claim the corporation does not have the processes in place tojustify certain decisions.

"We do have the processes in place or we did have the processes in place," she said. "It's the documentation that's required, so that's the area that we need to work on and that we have been working on."

But the auditors paint a different picture in the report. They said there were no policies or procedures for the processes to reviewprices or selectproducts.

"This includes the listing of new products, the delisting of existing products, and determining where they are sold," the report said.

Auditors also found the decisions on how products were to be be displayed on all 108 NSLCstore shelves rested with a single person at head office.

"The absence of controls creates an environment for decision makingwhich does not support the goals of the organization and increases the risk of fraud," concluded the auditors, who were quick to also note they uncovered no evidence of any fraud.