Auditor General Michael Ferguson's office has found "significant deficiencies" in the way a federal Crown corporation has been run — citing, among other things, $11,000 in "spousal expenses" charged to the corporation in 2016.

In a special examination of the Great Lake Pilotage Authority, Ferguson's office also found expense account receipts were missing and the board of directors wasn't doing a good enough job of overseeing Chief Executive Officer Robert Lemire's expense claims for travel, hospitality, conferences and events.

"Overall, we found significant deficiencies in corporate management practices," the auditors wrote. "The Board of Directors oversight of the Corporation was not sufficient because the Board did not properly monitor the Chief Executive Officer's travel and hospitality expenses, did not receive consistent and complete information on the implementation of some risk mitigation strategies, and did not ensure that the corporation conducted internal audits."

The auditor general's office also criticized Prime Minister Justin Trudeau's government, saying its delays in appointing board members "resulted in a significant deficiency that was out of the corporation's control."

Lemire said the corporation already has moved to address many of the problems identified by Ferguson's office. For example, new expense account procedures went into effect on Jan. 1 — and he is no longer allowed to take his wife on business trips, such as the conference in South Korea she accompanied him to in 2016.

"We inherited a brand new directive from the government in 2015 on travelling and it is something we have been struggling with," Lemire said. "We did put in a new directive in March 2016 – it probably didn't capture everything but with this report it will let us capture everything that we need to, to meet the requirements."

Environment Minister Catherine McKenna with Robert Lemire, CEO of the Great Lakes Pilotage Authority. (Twitter)

The previous Conservative government adopted new rules to rein in spending on travel and hospitality after an investigation by CBC's The Fifth Estate revealed lavish expense account spending by some Crown corporations, including the Royal Canadian Mint.

While the auditor's office examined 21 different aspects of the pilotage authority, it only found problems in three areas and all of them were administrative, Lemire said.

"The deficiencies that have been recognized have been dealt with and at no time was marine safety or the Canadian public at jeopardy (of) a navigation spill on the Great Lakes."

The Great Lakes Pilotage Authority, headquartered in Cornwall, Ont., runs the system of ships pilots who help large foreign ships safely navigate the St. Lawrence Seaway and the Great Lakes, from Montreal to Thunder Bay.

While Crown corporations traditionally have had more latitude than government departments to decide how to run their affairs, they do have to periodically undergo special examinations by the auditor general's office.

Insufficient documentation

Some of the key findings of the special examination completed in January 2018 focused on the way the corporation handled expense accounts – particularly the practice of paying for spousal expenses.

"[The reimbursement of spousal expenses] was permitted by the Corporation but did not ensure the sound management of public funds," the auditors wrote. "In the course of this special examination, we noted reimbursement of at least $11,000 for spousal expenses for the period from January 2016 to February 2017."

A sampling of 10 of Lemire's expense claims found insufficient documentation for six of the claims, the AG's office said.

"One concern was insufficient documentation to determine whether some executive travel and hospitality expenses were reasonable and job-related."

A review by CBC News of online reports found that Lemire filed $48,539 in expenses — $13,673 for airfare and $6,610 for hospitality.

The report also found that the corporation couldn't show that it had complied with the rules governing potential conflicts of interest by board members.

"We examined declarations of conflict of interest made by Board members. We found that for four of the five declarations that contained a potential conflict of interest, the Corporation did not document any measures to mitigate the potential conflict."

The government's delay in appointments to the corporation's board could also cause problems, the report said.

"This significant deficiency matters because if many incumbent Board members were to be replaced within a single year, continuity would be affected, thus putting at risk the Board's ability to exercise effective oversight," the report said.

"Also, achieving quorum can be more difficult if the number of Board members in office decreases."

Auditor General Michael Ferguson's office found significant deficiencies in the way the Great Lakes Pilotage Authority was being run. (Sean Kilpatrick/Canadian Press)

At the moment, only two members of the seven-member board have current appointments. One seat is vacant. The appointments of four directors are past their expiry date but they are allowed to remain on the board until they resign or are replaced by the government.

Lemire said Transport Minister Marc Garneau's office, the Privy Council and the Prime Minister's Office have been taking steps to renew the board and interviews for prospective directors will be held "shortly."

Lemire said many of the expense account problems identified by the auditor general's office were for things such as receipts for gas for rental cars or staying an extra night after a conference.

The change to the directives in 2015 also led to confusion about spousal expenses, because the directive was silent on the question, said Lemire.

The report was also critical of the way the pilotage authority was monitoring vessels in the area under its jurisdiction. Lemire said a change to the law in 2012 "overwhelmed" the pilotage authority for two to three years, but it's now clear sailing.

Elizabeth Thompson can be reached at elizabeth.thompson@cbc.ca