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‘Stable’ financial status achieved, says Advocis
“You already know that Advocis was in trouble,” Jones wrote. “There is no point in sugarcoating the situation.” In 2022 and 2023, “unprecedented” financial losses and a liquidity crisis posed an “existential threat to the organization,” he wrote.
Expenses exceeded revenues by $2.5 million in fiscal 2022. However, “the financial statements have been restated for 2022,” Advocis said in an emailed statement to Investment Executive. The 2023 financial statements, which will be presented on July 31, have “substantial improvements in transparency,” she added.
Grant Thornton LLP has previously provided audit services; when asked about its relationship with Advocis, a spokesperson for the auditor said it could not disclose confidential client information.
According to its existing 2022 financial statements, Advocis subsequently raised money by increasing its credit facility to $500,000, arranging a $610,000 loan against the cash surrender value of life insurance policies held, and establishing a $1.7 million credit facility from its Century Initiative Fund, from which it also received support.
The 2022 financial statements said the association was reducing operating expenses and completing a restructuring plan.
The association was forced to cut costs due to the pandemic and a subsequent drop in membership and demand for education. In addition, the association faced increased costs as an accrediting body under Ontario’s title protection regime.
Amid the restructuring, former chairman and longtime CEO Greg Pollock sued Advocis in December 2023, claiming unfair dismissal.
Two other lawsuits followed. In March, the now former chief operating officer Julie Martini alleged constructive and unfair dismissal. In April, Martini became vice-president of public affairs for the Ontario Chamber of Commerce. Last month, Advocis’ lawyer had no comment on Martini’s complaint.
Also in April, Advocis reached an agreement with Ontario-based SeeWhy Financial Learning Inc. over a complaint about non-payment for study materials which totaled almost $100,000.
After Pollock’s resignation, Jones was named interim CEO. In Jones’ letter Thursday, he said his primary role was to align spending with revenue.
“We have stabilized cash flow, providing the necessary breathing room to develop a comprehensive plan for recovery,” he wrote.
The underlying issues included litigation as well as human resources, personal privacy and long-term competitive planning, he wrote.
By stabilizing the organization’s financial situation, all expenditures and activities are now aligned with the association’s three strategic imperatives: code of conduct, continuing education (CE), and community.
The turnaround was “a long, tedious and painful process for everyone involved,” Jones wrote. “It took an impressive number of changes, big and small. It has had major impacts on every part of the organization and every business process within it.”
The association expects to soon announce a permanent CEO “to lead the association beyond the turnaround,” Jones wrote.
In its emailed statement, Advocis said its code of conduct, community strength and CE offerings are “the foundation of our association and continue to be our top priorities. By remaining true to these core values, we ensure that we continue to meet the needs of our members and uphold the integrity of our association in the best interests of Canadians.”
Jones’ letter said the association also focused on areas such as cultivating “a more productive relationship with our regulators based on a better understanding of our respective missions and objectives” and taking steps to protect the association’s interests in education.
When asked whether working on its relationship with regulators was in reference to securities regulation, Advocis responded that these efforts are “rooted in regular and open communication and collaboration. By maintaining this open line of communication, we help each other understand market trends and challenges. This collaboration is essential to our shared goal of ensuring a stable and transparent financial environment in the best interests of Canadians.”
Jones’ letter said the association is working with new auditors “to improve transparency” in financial reporting.
Transparency is “crucial for the trust of all interested parties,” Advocis said in its statement.
Additionally, “we recognize the importance of making financial statements more understandable. We are actively working to improve its readability, ensuring that all stakeholders can easily understand our financial position.”