It was very interesting to read a report from the Sprott School of Business dealing with Hockey Canada and transparency entitled Hockey Canada – Financial Information: Issues about transparency and responsiveness.
The report is definitely worth reading. It was written by François Brouard, DBA, FCPA, FCA, Marc Pilon, PhD, CPA, CA and Andrew Webb, PhD.
Here are a few quick comments on the report:
- In order to prepare this report which had information on four financial years of Hockey Canada (plus information on the Hockey Canada Foundation and Hockey Canada Foundation US), the authors needed to put in information requests to the Federal government. Audited financial statements should be made available by large RCAAAs and registered charities on their website so that people don’t have to work so hard to pull that information together. Also, it is a little suspicious when an organization that receives funds from so many people and has assets of over $150 million and revenue of over $60 million does not feel the need to put this information up for various stakeholders to find it easily. There is no legal requirement to post it, but in terms of standards/ethics, one would think that it is a no-brainer.
- I am not sure, but the 2020/2021 financials seem to indicate that Hockey Canada spent 40% on administrative expenses. Not sure what that means in this case and whether it is accurate. I have been a proponent of spending a reasonable amount on administrative expenses, but in this case, it seems to be high, and it is not clear the value that Hockey Canada received from those high expenses.
- It is interesting to see what was disclosed in 2022 when the scandal came to light as opposed to what was in their financial statements in previous years.
- There is more information on the Hockey Canada Foundation and Hockey Canada Foundation (US), than Hockey Canada itself, because these other two entities are charities, and therefore, between the T3010 in Canada and the US Form 990, there is some more easily available information.
- In the note, the authors discuss grants from the Government of Canada, loss of sponsors, fees from provincial members, and the operation of the National Equity Fund. They also provide handy schedules with information on the members of Hockey Canada and the timeline of events.
- On page 18, there is an extensive discussion of transparency and RCAAAs. Issues in Transparency – A number of issues in transparency, governance and accountability are raised following the Hockey Canada crisis. Knowing who are the RCAAAs. Introduced in the 2011 Federal budget to increase transparency in the charity sector, more information (but still limited) is now available from Canada Revenue Agency regarding Registered Canadian Amateur Athletic Association (RCAAA). RCAAA can issue official donation receipts and are eligible to receive gifts from registered charities. At the moment, Canada Revenue Agency (2022) list counts 134 RCAAA. Ten years ago, the number was 119 RCAAA per Blumberg (2012). However, the financial statements are not included on CRA website representing a lack of transparency. Access to financial statements from Hockey Canada – No financial statements are posted on Hockey Canada website. Financial statements were indirectly obtained through The Access to Information Act (ATIA) for this research note. Only one Annual report (2020-2021) is posted on Hockey Canada website, and no financial statements are included. By contrast, some provincial hockey organizations, such as Hockey Québec and Hockey Alberta, have annual reports and report to the community for several years, including some financial information and financial statements. In addition to financial statements, information about a number of financial topics, such as compensation of leadership team is not available either.
- On page 19 it notes:
Access to financial statements from regulators (CRA or Corporations Canada) “As part of the Sean Blumberg Transparency Project we have requested from the CRA copies of the Registered Canadian amateur athletic associations (RCAAAs) T2052 and financial statements for each of the RCAAAs. None of this information is provided on the CRA website or anywhere else unless an individual RCAAA puts it up on their website” (Blumberg 2015). Blumberg (2022 July 25) writes about Hockey Canada Foundation: “One of the requirements of a soliciting corporation is that it is supposed to file financial statements every year with Corporations Canada (even if Hockey Canada files them separately with CRA as an RCAAA). You can see that their Certificate of Continuance is filed and By-laws but no financial statements are filed. Also, as Hockey Canada has over $250,000 in revenue and is a soliciting corporation, those financial statements are supposed to be audited.“ However, looking on the Corporations Canada website, it is possible to see that financial statements were filed by Hockey Canada for years between 2014 and 2021, but they are not available. Hockey Canada is “suing the federal government to prevent the disclosure of its financial information” (Todd, 2022). This express a lack of transparency and fighting against it.
The Conclusion notes on page 21;
Conclusion
The crisis brings a lot of questions about Hockey Canada and related organizations. There are clear requests for more transparency, better governance and accountability. It is especially true when public funding is received by an organization. An organization receiving public funding should be required to make their financial statements publicly available, and not only available to some government officials.
Yet, the opacity in terms of financial information disclosure is not limited to Hockey Canada. All RCAAA and charities should be encouraged to post all their annual reports and complete audited financial statements on their websites and be clearer about fund use. Part of the crisis is that funds collected from amateur hockey participants were used to settle a lawsuit occurring around a high performance team.
Consequences of that crisis are a major turning point for the future of Hockey Canada and oversight of hockey in Canada. Reputation of the organization and other related entities is greater impacted with the loss of major sponsors distancing themselves from Hockey Canada. A growing list of people, for example NHL commissioner Gary Bettman, aren’t happy with Hockey Canada (Cowan, 2022). It is a question of trust between all the various stakeholders around hockey. It is clear: Money talks. Some steps were taken but are considered insufficient. Because of loss of trust from poor responsiveness and transparency, a major change of leadership is required. Can’t have the same people clean up the mess. The lack of transparency doesn’t seem like an isolated incident; for examples: Hockey Canada doesn’t publish its financial statements on their website, is suing the federal government to prevent disclosure of financial information and hid the intent of funds from the public. Hope other organizations will take actions about their transparency sooner rather than later to avoid a similar crisis in stakeholder trust. A long journey for Hockey Canada and hockey in Canada (to be continued) …
Unfortunately, the lack of transparency does not just relate to Hockey Canada. It is a problem for many RCAAAs and registered charities. Here is our latest submission on the topic to the Finance Committee. I am hoping that one day that there will be a realization that without more requirements for transparency in the non-profit and charity sector, it will be easier for people to be abused, for it to be dealt with outside of the public being aware and for funds to be spent on activities that donors or contributors may not have expected. We can do better, and we should do better.