Senior managers at the Portland Hotel Society are resigning because of an ultimatum from the provincial government, according to executive director Mark Townsend.

The Portland Hotel Society runs Insite, which is Canada's only stand-alone supervised injection site for drug users, and a number of social housing and support facilities on Vancouver's Downtown Eastside.

The resignations come after the B.C. government hired an outside auditing firm to examine the organization's bookkeeping and spending habits last fall. The audit raised concerns about perks for staff and the lack of proper documentation of how the society spends its administration fees.

Townsend, who has been with the society for 21 years, said the managers were given the choice of resigning or having their contracts with the province cut.

"We were given a stark choice: Fight an effort to put us into receivership, in which case the government would pull all the contracts that we have that you can pull without cause, or alternatively we would let them choose a new board and a new leadership team."

Townsend confirmed fellow executive director Liz Evans and other board members decided to step down by the end of the month to avoid any service disruption, and relinquish control to a new board selected by the provincial government.