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Opinion: Financial transparency is essential to keep Hockey Canada clean

Opinion: Organizations that receive public funding should publish their financial statements. Hockey Canada has objected to the disclosure of its financial statements.

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At the root of the Hockey Canada scandal is the issue of transparency. By now most Canadians are well aware of how the organization used funds to cover up allegations of sexual misconduct. , also betrayed its own stakeholders.

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When Hockey Canada chose not to notify funders, sponsors, members, players and parents of how funds were used, it betrayed the trust of its stakeholders. For the commercial sector as a whole, it also has significant implications for financial transparency.

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As a result of the scandal, Hockey Canada lost the support of numerous corporate sponsors and state members. This loss of confidence will have significant financial implications for Canadian hockey in the years to come.

Transparency in financial disclosure is an important part of ethical and responsible governance. Unless Hockey Canada prioritizes financial transparency, any reform attempt will fail.

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The funds used by Hockey Canada to settle the sexual misconduct allegations came from the National Equity Fund, which is funded by amateur hockey participant fees. Amateur hockey participants may not opt ​​out of the fund.

This information was not publicly available. The amateur’s parents, funders and sponsors were unaware that their funds were being used to cover non-hockey related expenses for the amateur. Last year’s financial statements made no mention of the sexual assault allegations.

Hockey Canada’s decision to use these funds is puzzling given their profitability. Financial statements for 2013, 2017 and 2021 reveal Hockey Canada’s cash and short-term investments increased from his $5 million to his $9 million to $25 million. Long-term investments increased from $65 million to $86 million to $118 million and net worth increased from $61 million to $93 million to $119 million.

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For the 2018-21 period, Hockey Canada earned a total net profit of $26 million. About 30% of Hockey Canada’s total revenue comes from marketing (approximately $20 million annually).

Additionally, Hockey Canada claims income tax exemption as a registered Canadian Amateur Athletic Association. Hockey Canada has also received significant funding from the federal government, including over $4 million annually over the past three years. The Hockey Canada Foundation added $27 million in net worth as of June 2021.

Hockey Canada has since announced that it will not collect entry fees for the following season, claiming the reserve will no longer be used to settle claims.

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There are some suggestions on how Hockey Canada can improve its financial transparency, organizational governance and accountability.

Find out who the Registered Canadian Amateur Athletic Association (RCAAA) is: RCAAA was introduced in the 2011 federal budget to increase transparency in the charity/eligible donor sector. Limited information about them is available from the Canada Revenue Agency. Core financial information such as tax returns and financial statements are not included on the CRA website.

Accessing Hockey Canada Financial Statements: Financial statements are not posted on Hockey Canada’s website. All financial statements discussed in this article were obtained through Access to Information Requests. Hockey Canada’s website has only one annual report for 2020-21 and does not include financial statements.

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Because Hockey Canada is a solicitation corporation under the Not-for-Profit Corporations Act, the financial statements should have been available on the website of Corporation Canada, but Hockey Canada did not file them until recently. In fact, Hockey Canada has fought the federal government to block disclosure of its financial statements.

Disclosure of financial information: In addition to financial statements, information on many financial topics, such as management compensation, is also unavailable. Details of the investigative reports surrounding the scandal (Cromwell report, International Ice Hockey Federation investigation, investigation by Hennin Hutchison LLP) should also be made public.

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Financial transparency is very important for a publicly funded organization like Hockey Canada. Organizations that receive public funding are required to make their financial statements public, not just to government officials. All RCAAA and charities are required to post annual reports and audited financial statements on their websites to provide greater clarity about their use of funds.

Other organizations should learn from the Hockey Canada scandal and take necessary steps to increase financial transparency. This is necessary to prevent further loss of stakeholder trust in the non-profit sector. Transparency is a journey of trust, and it’s time for the sports community to embark.

Marc Pilon is Assistant Professor of Accounting in the School of Business Administration, Laurentian University. Andrew Webb is an associate professor at Carleton University’s Sprott School of Business. Francois Brouard is Professor of Accounting and Tax at Carleton University’s Sprott School of Business. Original location of this article theconversation.coman independent source of news and views from the academic and research community.

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Opinion: Financial transparency is essential to keep Hockey Canada clean

Source link Opinion: Financial transparency is essential to keep Hockey Canada clean

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