Backgrounder - Introduction of Additional Clauses in INAC Funding Agreements

The federal government has made a commitment to improve results of programs and to enhance the federal government’s transparency and the accountability of its programs including its Aboriginal programs. To fulfil this commitment, Indian and Northern Affairs Canada (INAC) has notified recipients of its intent to amend funding agreements to include right to audit clauses in 2008.

Funding arrangements with First Nations recipients for 2008-2009 have a clause ensuring cooperation when INAC conducts evaluations on any or all of the programs and services funded under these agreements. To strengthen its ability to assess the effective use of funds transferred to recipients, INAC is adding clauses which will be incorporated as an amendment to the 2008-2009 funding agreements and will take effect July 1, 2008. These clauses will ensure the department’s right to conduct audits of recipients when necessary.

Furthermore, these clauses will enable INAC to conduct risk-based audits of funding agreements to ensure contributions are used for the provision of intended programs and services and that First Nations have appropriate management, financial, and administrative controls in place. Departments throughout the federal government have similar audit clauses included in their funding arrangements including Health Canada, Human Resources and Social Development Canada, Canadian Heritage and the RCMP. With these clauses not only is the government able to be accountable to all Canadians, but also First Nations and Tribal Councils will be able to show their members that they too are accountable for the funds they receive from the federal government.

Audits may be conducted under specific circumstances such as: requests by Chiefs and Councils for an audit; information contained in the audited financial statements of First Nations and Tribal Councils; evaluations, management practices reviews, and compliance reviews previously conducted by INAC. The results from these evaluations and audits will inform decisions about new program and policy approaches, provide guidance on necessary policy and program improvements and support departmental accountability to Parliament and Canadians.