Air raid sirens

Ahead of its upcoming annual general meeting in July, Advocis says its finances have reached “a stable state.”

The comment came in a letter sent to members Thursday from interim CEO Harris Jones.

“You already know Advocis was in trouble,” Jones wrote. “There’s no point in sugar-coating it.” 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 for the 2022 fiscal year. However, “the financial statements have been restated for 2022,” Advocis said in a statement emailed to Investment Executive. The 2023 financial statements, which will be presented on July 31, have “substantial improvements in transparency,” it added.

Grant Thornton LLP previously provided auditing services; when asked about its relationship with Advocis, a spokesperson for the auditor said it couldn’t disclose confidential client information.

According to its existing 2022 financial statements, Advocis subsequently raised cash by increasing its line of credit to $500,000, arranging a loan of $610,000 against the cash surrender value of life insurance policies held, and establishing a $1.7-million line of credit 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 arising with the pandemic and a subsequent drop in membership and education demand. Further, the association faced increased costs as a credentialing body under Ontario’s title protection regime.

Amid the restructuring, former longtime president and CEO Greg Pollock sued Advocis in December 2023, alleging wrongful termination. 

Two other lawsuits followed. In March, now former chief operating officer Julie Martini alleged constructive and wrongful dismissal. In April, Martini became vice-president of public affairs with the Ontario Chamber of Commerce. Last month, Advocis’ lawyer had no comment about Martini’s claim.

Also in April, Advocis settled with Ontario-based SeeWhy Financial Learning Inc. over a claim of non-payment of study materials that totalled almost $100,000.

Following the ousting of Pollock, Jones was appointed interim CEO. In Jones’s letter on Thursday, he said his primary job was bringing spending in line with revenue.

“We have stabilized cash flow, providing the breathing room needed to develop a comprehensive plan towards recovery,” he wrote.

Underlying issues included the litigation, as well as human resources, personal privacy and competitive long-range planning, he wrote.

In stabilizing the organization’s financial position, all spending 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 all involved,” Jones wrote. “It required a staggering number of changes both big and small. It had major impacts on every part of the organization, and every business process within it.”

The association hopes 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 remain our top priorities. By staying 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’s letter said the association has also focused on areas such as nurturing “a more productive relationship with our regulators, based on an improved understanding of our respective missions and objectives” and taking steps to protect the association’s interests in education.

When asked if working on its relationship with regulators was in reference to title regulation, Advocis responded that those efforts are “rooted in regular, open communication and collaboration. By maintaining this open line of communication, we assist one another in understanding market trends and challenges. This collaboration is key to our shared goal of ensuring a stable and transparent financial environment in the best interests of Canadians.”

Jones’s letter said the association is working with new auditors “towards improved transparency” in financial reporting.

Transparency is “crucial for the trust and confidence of all stakeholders,” Advocis said in its statement.

Further, “We recognize the importance of making financial statements more understandable. We’re actively working to enhance their readability, ensuring that all stakeholders can easily comprehend our financial position.”