Ont. auditor general releases full report on Laurentian University

Laurentian report reveals cause of insolvency After a review of Laurentian University operations from 2010 to 2020, the Ont. AG has released her findings on why it declared insolvency

As Laurentian University in Sudbury creeps closer to emerging from insolvency, the Ontario auditor general released her full report Thursday morning on what led to the unprecedented move by a publicly-funded Canadian institution.

"There is a general expectation that public sector and broader public sector organizations that receive significant taxpayer funds operate with transparency, accountability and high standards of governance. Our review of Laurentian University’s operations and decision-making over the past decade provides a striking example of what can happen when these principles are neglected," Lysyk said in the report.

"We found that the primary cause of Laurentian’s financial decline was its pursuit of major capital projects without adequate consideration for how they would be collectively funded or ultimately used. As the University began to accumulate more than $87 million in debt, it started to inappropriately draw on funds that were restricted for research projects or retirement health benefits for faculty and staff."

Due to the reliance on external legal and financial advisors, the school chose to use a legal process designed for private sector entities, she said.

"That decision was made because the taxpayer-funded university was in a perilous financial position, resulting largely from a series of questionable strategic decisions made by senior administration and a lack of competent financial oversight and transparency from the board of governors," Lysyk said.

"Laurentian's leaders made a bad situation worse by declining government assistance, circumventing obligations to work with faculty and staff and opting to file for court protection under the Companies' Creditors Arrangement Act. A succession of oversight failures allowed the university's financial health to decline so precipitously that the academic careers of 932 students were short-circuited, 342 jobs were lost and millions of dollars wasted."

Read the full 118-page report here.

“We respect the auditor general’s mandate and the work she undertook at the request of the Standing Committee on Public Accounts to investigate how Laurentian became insolvent," said Jeff Bangs, who was elected chair of the Laurentian University board of governors in January.

"It is now incumbent on us to learn from her advice and, most importantly, accept and implement each of her recommendations. When combined with the external operational and governance reports the University has already obtained – and the commitments made to its stakeholders through the Plan of Arrangement – the University has a strong foundation to make much-needed changes and ensure the mistakes of the past are never repeated."

Nearly three months after Laurentian filed for creditor protection under the Companies' Creditors Arrangement Act (CCAA) on Feb. 1, 2021, Lysyk was tasked with reviewing the school's operations between 2010 and 2020.

In April, Lysyk released a 13-page preliminary report prior to the provincial election concluding Laurentian did not have to file for CCAA protection.

"As a result of Laurentian’s consistent lack of co-operation and delays in allowing us our normal unfettered access to documents and people, it is unlikely we will be able to table our special audit report before the Legislature is dissolved," she said in her preliminary report.

Now, after nearly 19 months of auditing, the full picture of the situation is expected to be revealed.

More to come on this developing story. Check back for updates.