The Chartered Professional Accountants of Ontario has sanctioned the KPMG accountant in charge of auditing finances at Laurentian University just before it declared insolvency in February 2021. Laurie Bissonette, who retired a few months before LU declared for creditor protection under the Companies’ Creditors Arrangement Act (CCAA), agreed to accept the sanctions. They include a $50,000 fine, a suspension of her status with the CPA Ontario and that she would pay two-thirds of the total costs of the investigation, which was conducted by the Professional Conduct Committee (PCC). According to the investigation, Bissonette led the KPMG audits of Laurentian since 2005 until her retirement in September 2020. By April 30, 2019, LU had a deficit of $14,544,000 in addition to new challenges brought on by the COVID-19 pandemic, which devastated enrolment forecasts. Despite all those challenges, Bissonette “did not identify any significant audit risks,” the investigation said. While an investigation by Ontario’s auditor general concluded that spending on capital projects was the main reason for the university’s “financial decline,” the PCC investigation found that “there is insufficient documentation in the 2020 audit working papers that identifies LU’s debt load as a related going concern issue at any time during the audit.” A February 2020 memo to Laurentian’s finance committee flagged a potential deficit of $12 million and said that LU’s financial metrics ranked near the bottom of its peer universities. “Bissonette admits that, before the onset of the COVID pandemic, she believed, notwithstanding the $12 million deficit forecast from 2019, that sustainability measures were in place and LU would be at break even for 2021,” the investigation report said. She concluded that Laurentian was financially sound, “notwithstanding an absence of relevant analysis, and she felt that LU was basically at break even.” “Bissonette had previously worked with another institution that received a government bailout, and she expected LU to have similar discussions with the government,” the report said. Increased enrollment By September 2020, she was satisfied that increased enrollment and other revenues meant that the university was not in financial danger. She had also been reassured that “LU had sufficient funds to meet its obligations beyond April 30, 2021.” “Bissonette admits that she did not appropriately evaluate and document management’s assessment of the entity’s ability to continue as a going concern,” the report said. She also failed to realize the implications of the fact LU hired Thornton Grout Finnigan LLP, a firm that specialized in insolvency proceedings, and made “no effort” to find out why the university had retained them. “An internet search readily identifies TGF as a Toronto law firm specializing in commercial litigation and insolvency,” the investigation said. “Bissonette made no effort to determine TGF’s retainer mandate.” On Sept. 4, 2020, Laurentian hired Ernst and Young to help with, among other things, filing for CCAA and to act as the court-appointed monitor for insolvency proceedings. “Bissonette did not seek clarification of TGF’s or EY’s respective role on behalf of LU from either LU management or EY,” the investigation said. She attended a finance committee meeting Aug. 24 to talk about pensions and post-retirement benefits, but was not invited to a closed-door meeting where the CCAA filing was discussed. “Bissonette admits that as the 2020 audit engagement partner, she chose to believe that if LU did not meet its financial targets, a primary course of action was for the provincial government to bail out LU,” the report said. She found out about the CCAA filing when everyone else did – when LU announced it publicly Feb. 1, 2021. Bissonette also admitted she failed to provide appropriate direction and supervision to her audit team reviewing LU’s finances and to realize there had been major changes in the university’s finances from 2019 to 2020. Substandard work “In overseeing the 2020 audit up to her retirement, Bissonette believed LU would achieve a balanced budget, however, she was unable to identify to the investigators how this would be achieved,” the report said. “Bissonette admits that her audit work and documentation failed to meet the accepted audit standards of the profession.” She also relied too heavily on cash flow forecasts from the school, which proved unreliable. It later emerged that LU was using money from restricted funds from research projects, donations and benefit plan donations “which flowed through their books but did not belong to them, to fund operations.” Bissonette also assumed that, if LU’s financial situation became dire, a provincial bailout would be forthcoming. “She was not aware that meetings to discuss LU’s deteriorating financial condition were taking place with the provincial government, but they were unwilling to provide additional funding,” the report said. “Bissonette admits she inappropriately assumed that the provincial government would provide financial support to ensure the continued operation of LU.” A message to Bissonette Wednesday was not immediately returned, while Laurentian responded that “this is not a topic that the University is in a position to provide an interview or a statement on.” Fabrice Colin of the Laurentian University Faculty Association told CTV News that the investigation showed that Bissonette was as shocked as everyone else about the CCAA filing. “I find it quite surprising not to see any kind of clear warnings, I would say, from auditors,” Colin said. “There’s a shared responsibility here because the former administration failed to provide the individual with appropriate documentation.” Read the full report here.
