On Monday (Dec. 7) the Office of the Auditor General of Ontario released its first value-for-money report on the operations of the Alcohol and Gaming Commission of Ontario (AGCO) as part of its audits of Ontario public-sector and broader-public-sector programs.
The news release from the Office of the Auditor General is as follows:
Ontario’s gaming, alcohol, and cannabis oversight function lacks operational transparency on its financial and regulatory activities, states Auditor General Bonnie Lysyk in her 2020 Annual Report tabled today in the Legislature.
This is the first time the Office has audited the operations of the Alcohol and Gaming Commission of Ontario (AGCO). The agency regulates the alcohol, gaming, horse-racing and private cannabis retail sectors in Ontario and oversees about 78,500 licensees across the four sectors.
The Auditor General concluded the AGCO does not have strong processes and systems in place to effectively carry out its regulated activities across the four sectors. Compliance officials have significant autonomy to select which establishments to inspect and did not document the rationale for their selections. The report also states AGCO’s performance measures do not focus on regulatory compliance.
“Despite the fact that the AGCO receives subsidies and spends about $86 million annually, we found that the AGCO, contrary to a government directive, does not produce and publish audited financial statements,” Lysyk said. “We were surprised to learn it is the only regulatory government agency in Ontario to not publish such an important accountability document.”
Among the concerns raised were the lack of action on an increase in suspicious transaction reports at casinos and inventory controls over recreational cannabis sold in retail stores.
“At the time of our audit, the AGCO had identified money laundering as a major risk in casinos and recognized it had gaps in its regulatory processes, but it had not developed a plan to address those gaps,” Lysyk said.
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Auditor General Report: Value-for-Money Audit - Alcohol and Gaming Commission of Ontario -- Open in new window
In response to the report, the AGCO issued the following reply:
"Today the Auditor General published a Value-for-Money Audit report on the Alcohol and Gaming Commission of Ontario. The review identified some valuable areas for improvement. The AGCO has always been committed to continuous improvement and will work closely with the Government of Ontario and with the regulated sectors as it addresses many of the recommendations set out in this report.
"In doing so, the AGCO will maintain its focus on delivering strong and effective regulatory services that are in the public interest. It will guide these further improvements using its existing principles, which are central to AGCO’s strategic planning process:
Being a modern regulator, using evidence-based regulatory approaches that are focused on risk, outcomes and supporting enhanced compliance.
Providing excellent service to the regulated sectors, by reducing regulatory burden, supporting innovation and consumer choice, and having a customer-centred and industry responsive service approach.
Putting people first, by sustaining relationships of accountability and trust, be they with licensees, registrants, sector patrons and participants or the AGCO’s own workforce.
"The AGCO strongly supports the value-for-money purpose of these audits and appreciates they are meant to cast an objective third-party look at government programs with the ultimate goal of ensuring the public interest is served. While every noted opportunity to improve value and effectiveness will be closely assessed, some of the recommendations would have the AGCO revert to an outdated approach to regulation that would increase burden and costs on the sectors. The AGCO is committed to finding appropriate solutions that would address any concerns raised without deviating from a modern regulatory approach. We also regret the Auditor General did not set these recommendations within the context of the AGCO’s many achievements in establishing oversight of new sectors, realizing service improvements, providing burden reduction, expanding sector engagement and partnership and most recently, offering fast and meaningful sector support in response to the pandemic.
"Nevertheless, the AGCO is committed to addressing the report’s recommendations as a priority. Regulating with effectiveness and in the public interest drives all of the agency’s work on behalf of the people of Ontario. The AGCO values the strong reputation it has earned with government and businesses thanks to its history of hard work, dedication and partnership. The Auditor General’s report is an opportunity to improve its effectiveness even further."
(Office of the Auditor General / AGCO)