A.1. The First Nations Financial Transparency Act will help ensure that First Nations have democratic, accountable and transparent governments by requiring in legislation that a First Nation, defined as an Indian band under the Indian Act, prepares annual audited consolidated financial statements and the Schedule of Remuneration and Expenses of their chiefs and councillors, which must then be made public.

This Acttherefore:

• ensures that First Nation community members have the information necessary to make informed decisions about their leadership; and
• creates a better environment for private sector investment which could lead to greater economic development opportunities and improve the quality of life for First Nation communities.

A.2. Aboriginal Affairs and Northern Development Canada (AANDC) was approached by First Nation members across the country asking for greater transparency as a result of difficulty obtaining financial information from their elected local officials. Until now, First Nation governments operating under the Indian Act were the only governments in Canada that did not have a legislated requirement to make basic financial information public.

A.3. An audited consolidated financial statement is a financial synopsis of an entity (whether it is a First Nation Government or a business) for a period of time (usually a year, undertaken at a specific point in time). The financial statements are prepared by the First Nation and audited by an independent auditor. The Act requires the publication of this information on a website maintained by or for the First Nation and on the AANDC website.

A.4. The Act requires that each First Nation make their audited consolidated financial statements and a Schedule of Remuneration and Expenses available to their members as well as publish it on a website. The information found in these audited consolidated financial statements relates to the assets, the liabilities, the results, as well as the other various elements of economic activities undertaken by the First Nation for a particular year. The standards with respect to what information is provided in these statements are determined by Generally Accepted Accounting Principles   (GAAP).

Examples of information disclosed in the Schedule of Remuneration and Expenses to the financial statements include the salaries, wages, commissions, bonuses, fees, honoraria, dividends and any other monetary or non monetary benefit that chiefs or councillors are receiving. The expenses of First Nation leadership, such as transportation, accommodation, meals and hospitality and incidental expenses, are included. Chiefs and councillors are also required to disclose remuneration paid to them by any entities which, according to Generally Accepted Accounting Principles, are to be consolidated with the First Nation.

A.5. The legislation does not require businesses owned by the band to publish their   own detailed financial statements. Nor are individual government business entities required to publish detailed financial statements.

The Act requires that the audited consolidated financial statements of First Nation governments be prepared annually and disclosed to community members and the public. These audited consolidated financial statements include any entities controlled by the First Nation, such as band-owned businesses, in accordance with generally accepted accounting principles.

The audited consolidated financial statements are accompanied by a Schedule of Remuneration and Expenses, detailing any remuneration and reimbursement of expenses paid to chief and councillors (both in their capacity as chief or councillor and in their personal capacity) by any entity controlled by the First Nation, such as a band-owned business.

A.6. This year First Nations are required to complete a maximum of 39 reports – many complete fewer reports. This is a reduction of 65 per cent from last year. In addition, consistent financial reporting year over year will allow First Nation members to see the results of the investments their elected official are making with the funds available to them. AANDC concentrated on reports of value and interest to First Nations, building on best practices that a number of First Nation leaders have developed in reporting annually to their own communities. This accountability and transparency has inspired the department to collect and make public not only financial information but performance results information. This is the practice for government at any level.

A.7. The Act applies to the First Nation’s first complete financial year following Royal Assent. First Nations communities, defined as Indian bands under the Indian Act, will be required to disclose salaries and expenses for the 2013-2014 fiscal year, which begins April 1, 2013. First Nations will have 120 days following the end of the financial year to publish their audited consolidated financial statements and schedules of remuneration.

A.8. As not every First Nation has a website, a community may request that another organization, such as a First Nation organization, post the information online. In situations where a First Nation can not post on their own website or a First Nation organization’s website, they can meet the compliance requirements by asking AANDC to post their audited consolidated financial statements and a schedule of remuneration and expenses on their behalf.

A.9. The Minister of Aboriginal Affairs and Northern Development is required to publish the audited consolidated financial statement and the Schedule of Remuneration and Expenses for each First Nation, when received, on the Aboriginal Affairs and Northern Development Canada website.

A.10.   Should a First Nation not publish their financial information, a First Nation member, any citizen or the Minister may apply to a superior court to obtain an order to require publication.

The Actprovides the Minister of Aboriginal Affairs and Northern Development with the following options:

• The Minister may require the Council of the affected First Nation to develop an appropriate action plan, ensuring the release of the financial information in a timely and organized fashion.
• The Minister may also withhold funding moneys payable as a grant or contribution to the First Nation under an agreement. Examples of funding moneys payable as a grant or contribution include the Aboriginal Business Development Program, Community Economic Opportunities Program, and Acquisition and Construction of Infrastructure Assets related to recreation. These withheld funds would be released immediately upon compliance of the legislation.
• Finally, the Minister may terminate active grant and contribution agreements should a First Nation fail to comply with the legislation or refuse to provide AANDC with its audited consolidated financial statements.

A.11. First Nation members, the public and the department. For AANDC’s part, the department will post all First Nation audited consolidated financial statements on the website. The department's website will also indicate those First Nations who have or have not complied with the publishing requirements of the legislation. AANDC will also actively monitor First Nation websites.