An ambitious exhibition hall expansion and overly optimistic Canadian Finals Rodeo revenue expectations were key causes of Westerner Park’s financial troubles, says a forensic audit report.
Auditors also identified deficiencies in financial controls, a lack of qualified finance staff and failure to market the exhibition hall expansion properly as contributors to Westerner Park’s money woes.
Tackling multiple projects at the same time, changes to the board’s governance, lack of communication on the board and a decision to tap a maintenance fund also played roles.
All of these issues were happening at a time when Alberta’s economy was struggling because of the continuing oil and gas downturn and other challenges.
The City of Red Deer ordered the third-party financial audit after it assumed control of the non-profit organization and agricultural society’s operations earlier this year.
The city wanted to know if any misappropriation had taken place during the $18-million exhibition hall construction and to get a detailed review of Westerner Park’s business decisions, including the successful bid to host the rodeo finals.
“While the report is very detailed and requires a thorough review and analysis, we have concluded there was no fraudulent activity or misappropriation on behalf of Westerner Park,” said city manager Allan Seabrooke in a statement Friday.
City council will get a look at the audit at a special meeting Tuesday.
“This forensic audit, along with the financial sustainability report, are critical components as council and administration consider a long-term, sustainable future for Westerner Park,” said Seabrooke.
“While this forensic audit does not necessarily provide recommendations, it is the first step towards developing a more sustainable future for Westerner Park,” said Seabrooke.
Westerner Park first told the city about its financial struggles and asked for assistance last December. The city, which owns the land Westerner Park is located on, leases it to the organization under a 50-year agreement.
In January, the city assumed temporary oversight of Westerner Park and has provided financial help, including an emergency $1-million operating grant in February and a $2-million loan approved last July, which is expected to keep the operation going until next spring.
To make ends meet, Westerner Park has had to lay off most of its staff. In January, 14-full-time and 24 part-time and casual staff were laid off.
In March, 90 per cent of the remaining staff were temporarily laid off because of the financial situation, greatly exasperated by the COVID-19 pandemic, which has meant the cancellation of hundreds of events, including the Canadian Finals Rodeo, Westerner Days, World Junior Hockey Championships and the Agri-Trade Equipment Expo.
After the temporary layoffs were recently made permanent, 16 staff remain, many with reduced work hours.
In better times, Westerner Park generated an estimated $150 million in local economic activity.