British Columbia's New Democrats used publicly-funded constituency money to conduct partisan party activities and pay off caucus expenses, says a report from the office of the auditor general.

Leaked portions of a draft report from auditor general John Doyle said by March 2009 the NDP amassed $260,000 from monthly constituency office payments and most of the money was used to fund partisan activities.

"Our review of supporting documentation underlying expenditure amounts charged to this account indicates that funds accruing to this account were being used for partisan purposes and not for goods or services consistent with the original purpose of the constituency office," said the draft audit for the year ended March 31, 2010.

The audit stated the NDP created a liability account it called the "NDP-Members Constituency Office Centralized Fund" that dated back to November 2005. The fund was created following a request of the NDP caucus and was authorized by all NDP members at that time.

"The stated purpose of the fund was to 'collectively and efficiently respond to common constituency needs,'" said the documents. "We note as well that draw-downs from this account by legislative assembly staff are done at the specific request and instruction of the NDP caucus."

The audit documents said the NDP also used some of these funds to balance their caucus expenses.

"Similarly, at the end of fiscal 2009, NDP caucus contractor expenses of approximately $45,000 were reclassified to this same payable account," said the audit documents. "This reclassification meant that NDP caucus expenses were effectively paid out of NDP MLA constituency office funds. We note as well, that without this entry NDP caucus expenses would have been over budget in 2009."

NDP caucus chairman Shane Simpson acknowledged the existence of the fund.

He said the caucus members voted to approve making $200 monthly contributions from their constituency funds to create a pool of money for events, activities and programs primarily in Asian communities.

Simpson said the caucus made the legislative comptroller's office aware of the fund.

"He (Doyle) raised an issue, and we're happy to debate this one, about the use of the money for caucus and for caucus members," said Simpson. "Things we did, were they political, well, to the extent that caucuses are political."

He said some of the money was used to receive political advice from people, including former NDP candidate Gabriel Yiu, whom the Liberals were suggesting last week was a hired NDP gun in multicultural communities.

Simpson, who said last week Yiu took unpaid leaves of absence to run as an NDP candidate and never offered advice to the party, said the same applies to the centralized fund.

"Not one dime went to the party," he said. "No advice was given to the party in any way, shape or form. It was all applied to the caucus and caucus members."

Simpson said they've stopped collecting money and the cash was returned to the constituency offices.

Former legislative comptroller general Dan Arbic was laid off last fall after an audit by Doyle concluded the legislature's finances were in such a state of disorganization he couldn't determine if bills were being paid.

Community, Sport and Cultural Development Minister Bill Bennett, who raised questions about Yiu's connections to the NDP last week during heated exchanges over Liberal aims to woo ethnic voters, called the NDP fund an unethical use of constituency dollars.

"For a party to claw back some of that money that is supposed to be used to service our constituency... is an abuse of our obligations," he said. "What it looks like is the NDP caucus were basically taking kickbacks from their constituency offices to generate this fund to use for partisan political purposes."

Doyle could not be immediately reached for comment.

Dirk Meissner reports for the Canadian Press.