MIL-OSI Canada: Auditor general finds unexplained decisions impacted NB Liquor profits and pricing

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Source: Government of Canada regional news

FREDERICTON (GNB) – Auditor general Paul Martin tabled a report today in the legislative assembly, highlighting concerns regarding the New Brunswick Liquor Corporation’s role in the development of the liquor industry in the province.

The report highlighted that NB Liquor did not meet its legislated requirement to participate in the development of the industry. Martin said issues in lack of planning and engagement were uncovered, including that NB Liquor did not adopt solutions to issues raised by local producers.

The audit found issues within NB Liquor’s product management and planning processes.

“Our work identified weaknesses and inconsistencies in the corporation’s key internal processes guiding the selection and pricing of products for sale,” said Martin. “Weaknesses identified in product management processes increase the risk of favouritism, poor decision-making and lack of transparency.”

The report also identified issues within NB Liquor’s pricing process, which impacted its profits.

“NB Liquor’s income is an important source of annual revenue for the province, with $1.7 billion contributed over 10 years. In several instances we found no records to support key financial decisions in product management and pricing,” said Martin.

The audit also found that NB Liquor suppliers can maximize product costs to NB Liquor, and that NB Liquor typically relied upon producers to set retail prices, which creates risk of decreased profit for NB Liquor.

In addition, the audit found that NB Liquor had created special arrangements with some producers in the province, resulting in lower NB Liquor profit margins. Special arrangements can also lead to claims of inequity among producers and represent a lack of transparency, said Martin.

The report also noted widespread issues in documentation and data retention at NB Liquor.

“Information provided by NB Liquor in response to our audit requests was often incomplete or did not adequately address the enquiry,” said Martin.

The report highlights NB Liquor’s poor recordkeeping as a challenge in holding NB Liquor accountable for its performance.

The auditor general made 19 recommendations to address these outstanding issues in his report, which is available online.

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