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Report finds BC Hydro needs fraud risk management program for 1.1 GW Site C project

Report finds BC Hydro needs fraud risk management program for 1.1 GW Site C project

A report released by the Office of the Auditor General of British Columbia concludes that BC Hydro’s internal framework of control includes elements of fraud risk management but it has not established a fraud risk management program for the 1.1 GW Site C hydropower project.

The office said the objective of completing this audit was “to determine if [BC Hydro] has established a program to effectively manage fraud risk on the Site C dam and hydroelectric energy project.”

Site C, under construction on the Peace River in northeastern British Columbia, Canada, is the largest and most expensive infrastructure project in the province’s history – with an estimated construction cost of $16 billion – and fraud related to projects of this scale and complexity can be costly and wasteful. “Effective fraud risk management is essential for financial and operational integrity,” the report said.

The audit period was December 2014 to January 2022. The report indicates BC Hydro’s board of directors approved a fraud risk policy in January 2022. Before that policy was approved, “no documentation clearly assigned fraud risk management responsibility to a senior BC Hydro executive, including Site C,” the report said. Under the new policy, fraud risk management has been delegated to BC Hydro’s chief financial officer.

The office did not audit other areas of BC Hydro unrelated to Site C, did not focus on any aspects of Site C construction not related to fraud risk management, did not conduct a fraud investigation and did not look for potential instances of fraud on the project.

The report includes five recommendations, all of which it says BC Hydro has accepted:

  • Implement the new fraud risk policy
  • Provide fraud risk management training
  • Conduct regular fraud risk assessments
  • Develop a fraud investigation procedure
  • Regularly evaluate fraud risk management program effectiveness

The Site C project is anticipated to begin operation in 2025.