Canadian Museum of History workers stole cash under noses of auditors

Box-office workers stole about $41,000 in cash from the Canadian Museum of History at the same time as an internal review of the books reported no problems.

A newly released audit says officials at the museum in Gatineau, Que., closely examined cash-management practices at the box office in 2012-13, the very period in which three contract workers were quietly siphoning off thousands of dollars.

The workers stole the money between April 1, 2012, and July 18, 2013, an external forensic investigation found. They were questioned and escorted off the premises on July 23 that year.

A Gatineau police investigation identified three suspects, two of whom were arrested, police told CBC News on Friday.

Officers have recommended charges against the two suspects and the Crown is deciding whether or not to lay the charges, police said.

The museum then asked an external firm to conduct a full audit of cash-management practices. Their report noted that the institution itself had reviewed cash controls at the box office during the period of the fraud, but the review "did not include testing of the operating effectiveness of the controls."

Gift shop worker spots fraud

A heavily censored copy of the June 2014 audit, commissioned by the museum from Interis Consulting Inc. for $68,000, was obtained by CBC News under the Access to Information Act.

The box-office fraud was exposed only after a worker at the gift shop spotted something odd, said museum spokeswoman Patricia Lynch.

"Some questionable transactions were noticed at the boutique by an employee, and statistical irregularities in our reports triggered an in-depth investigation," she said.

The fraud occurred as investigators from the office of the auditor general of Canada were also poring over the museum books, from September 2012 to April 2013, in a so-called "special examination" of the Crown corporation.

The auditor general later reported, "We found no significant deficiencies in the … corporation's system and practices.... Its assets are safeguarded and controlled, its resources are managed efficiently and economically, and its operations are carried out effectively."

It was not immediately clear how the three workers managed to pull off their box-office skimming even as auditors and investigators were scrutinizing the books of the Museum of History, formerly known as the Canadian Museum of Civilization.

The contract workers were provided to the museum by Quantum Management Services Ltd., which terminated their employment after the fraud was discovered.

"Controls were not in place," said Anne Cote, a spokeswoman for the company.

Consultant reimburses money

The three workers did not pay back the money, but Quantum itself reimbursed the $41,000 and continues to provide services to the museum, though not in the box office, she said.

Cote and Lynch said police were made aware of the theft, but neither could say whether charges were ever laid.

The Interis audit said the museum has improved some cash-handling practices, but found a raft of other financial problems, most of them blacked out in the version of the report released to CBC News. The consultant made five recommendations for improvement, which Lynch says have all been implemented.

The museum received about $10 million from admission fees, gift-shop sales, parking and memberships in 2012-13.

The museum is Canada's most popular, with more than a million visitors each year, drawn in part by an IMAX theatre and family-friendly exhibits. The sprawling structure, opened in 1989, is located across the Ottawa River from the Parliament Buildings. The Canadian War Museum is also under the corporate wing of the history museum.

The Museum of History has been struggling financially for years, running deficits and chopping 32 positions in 2013-14 alone. At the same time, the facility was given a one-time cash injection of $25 million over four years to transform its displays to better reflect Canada's historical past. The last of that cash — $17 million — is being spent in the current fiscal year.

Follow @DeanBeeby on Twitter