Anchor: B.C.'s most prominent animal welfare group continues to sit in the financial doghouse. The BC SPCA has racked up a 4.6 million deficit for the last year, topping the previous year's record deficit. Despite those bleak numbers the organization's CEO says the agency has turned a corner on the road to recovery. CTV's Hazel MacClemment joins us now live with more. Hazel.

Hazel MacClemment: Critics say the shortfall means the organization has to rethink its priorities, but the CEO says the numbers are somewhat misleading and predicts the society's darkest hours are behind it.

Craig Daniell: (clip from yesterday's award lunch) The BC SPCA investigator of the year, Irene Towell.

Hazel MacClemment: The BC SPCA was handing out awards at its annual general meeting yesterday, but it wasn't winning any prizes for financial management.

Maria Soroski: I thought 'Oh, my goodness this is not getting better.'

Hazel MacClemment: SPCA member Maria Soroski was shocked to see the SPCA had racked up a 4.6. million dollar deficit.

Maria Soroski: Under 2002, it was a net operating deficit of 4.5 million and under 2003 it is 4.6 million.

Hazel MacClemment: And that doesn't include a nine hundred thousand dollar deficit for the first quarter this year. The BC SPCA is a 20 million dollar a year organization. It is both a charitable society and a law enforcement body for animal protection. Because of that very public role and the taxpayer's money that supports it Soroski says the BC SPCA must be more accountable.

Maria Soroski: We're very scared of bankruptcy for these animals.

Hazel MacClemment: The Chief Executive Officer for the BC SPCA says some of that deficit isn't actually a cash loss. Instead he says that it's a depreciation on assets like buildings. For example, this shelter in Vancouver may have been valued in 2002 at 90 thousand dollars. In 2003 it was valued at, maybe, 80 thousand dollars, 10 thousand dollars less but the only loss is on paper because the building is still there. And while the property value may be actually be increasing in value, the only way to realize that gain would be to sell it, which the society doesn't want to do. Craig Daniell thinks the society's cash deficit is actually 3.3 million dollars which he admits is still a big hole but thinks the society has turned a corner because last year's lay offs have reduced operating costs and donations are on the rise again.

Craig Daniell: It has been a difficult ride but I think the staff, the volunteers and the members who make up our society believe that things are slowly starting to turn around and I think that's been proven in some of the things we're doing lately.

Hazel MacClemment: Daniell predicts the society's cash flow woes will be under control by next year.

Maria Soroski: For the sake of the animals Soroski hopes that's a promise the SPCA can keep.

Hazel MacClemment: Now you would expect some fall out from such a financial statement and there was. The treasurer of the BC SPCA resigned. In a statement released today Howard Gray says he stepped aside because he favours giving more ownership to local branches and their communities. Many feel such a move could bolster local donations and the society's ability to access gaming funds, but the idea was defeated at yesterday's meeting.