Reducing the Administrative Burden on First Nations

A Progress Report by the Deputy Minister (November 29, 2012)

It has long been acknowledged that First Nations and other organizations that receive funding from the Government of Canada are caught in a complex web of reporting requirements, some of which are of dubious usefulness to them or to the organizations seeking the reports.

The roots of this reporting burden are deep. The basic cause is the excessive dependence on grant and contribution programs to support the services delivered by First Nations. Grant and contribution programs lead inevitably to funding agreements that are variations on the theme "here is some funding, report back what you did with it". The proliferation of programs from multiple departments, each pursuing its own agenda of how best to report to Parliament and Canadians for results achieved with the funds they manage, has led in turn to a proliferation of reporting. Some reporting is redundant but has not been dropped when new requirements arise.

The problems with grant and contribution programs were highlighted in two key reports: the 2006 Independent Panel on Grants and Contributions, which tackles the issues for the whole of government, and the May 2011 report by the Office of the Auditor General on services to First Nations. The Government has taken action to respond to both of these reports.

The path to improvement involves three related tracks:

1. Improving how grant and contribution programs work, by pruning reporting, consolidating programs, creating a challenge function to curb the instinct to ask for more data, and harmonizing processes across federal departments so the same data can serve many purposes;
2. Differentiating among funding recipients so that those with stronger track records of financial and program management are rewarded with longer funding agreements and less reporting; and
3. Shifting the accountability bargain away from reporting to government for the use of funds, toward accounting to communities and program clientele for results.

On the first track AANDC has created an internal challenge function and reduced the number of ad-hoc reports from 4800 to 800. Some of this involved removing duplication and consolidating multiple reports. Some of it involves asking for fewer data sets or asking for them less frequently. Performance indicators in some key areas are being updated and information systems are being developed that make it much easier to share with recipients and partners. Then we can focus on reporting what is essential and of use to both the Department and those with whom we work. Two major initiatives we are working on are the Education Information Systems and the Child and Family Services Information System.

On the second track the Department has worked closely with First Nations financial specialists to develop a General Assessment (GA) tool to measure the track record and therefore the risk associated with each recipient. Recipients assessed as lower risk in turn receive fewer reporting requirements and longer term funding arrangements. These scores are shared with First Nations. A third cycle of GA is now under way.

The Department's core obligation is to account to Parliament and through it to Canadians for the financial resources with which it is entrusted. This inevitably leads to asking for financial accounting from funding recipients.

In 2012, the Minister announced measures that will standardize how recipients across Canada report on financial information. There will be one method for preparing audited financial statements, so comparisons from year to year and from community to community will be much easier. And it will be easier for financial institutions and potential investors to do business with First Nations because information will be consistent and of high quality.

AANDC and Health Canada, who between them account for the vast majority of federal government funding to First Nations, are working to align their approach to grant and contribution agreements to eliminate many small differences that create additional work for recipients. The departments will take the same approach to risk assessment and funding agreements and by 2014 will share the same IT systems for both financial management, and for management of grants and contributions, making comprehensive reporting a reality.

Bill C-27, the proposed First Nations Financial Transparency Act, will require the posting of audited consolidated financial statements. This is the most important initiative on the third track because it is designed to empower community members to hold their elected leaders to account, shifting away from the old approach of only sending reports to the Department.

The consistent transparent availability of financial statements can serve many purposes. The financial statement can soon become the core of an "Annual Report to the Community" that strengthens the democratic accountability of the First Nation government or institution. Many First Nations have already moved in this direction which will in turn allow for further reduction in reporting to federal departments.

To get to solutions that work, AANDC has worked closely with several First Nations on pilot projects to develop simpler reporting and shift toward accounting to the community. Five initiatives that have guided our efforts are with Abgeweit, Madawask Maliseet, Millbrook, Swan Lake and Wagmatook First Nations.

Two projects that zero in on harmonizing reporting to multiple departments are an initiative with the Montagnais du Lac St. Jean (Masteuiatsch); and one with the Inuit community of Pangnirtung. Both have already resulted in reduced numbers of reports and clearer accountability to members.

Other initiatives are underway to streamline administration of services. Bill C-45 will accelerate the implementation of some communities' decisions to designate land for leasing purposes. The Department is engaged with many Western First Nations to give them decisions they can act quickly on and greater control of moneys held on their behalf by the Department.

The Department has also invested in ensuring there are other sources of transparent and reliable data for First Nations, and all Canadians, to assess for results. In May 2013, data from the 2011 Statistics Canada's National Household Survey will begin to flow, setting up the ability to measure progress over time, and to compare from one part of Canada to another.

As part of a deeper structural reform, the Government is moving to set out clear statutory frameworks in areas such as water and wastewater standards, and K to 12 education, directly responding to advice by the Auditor General in a number of key chapters in recent years.

In order for First Nations to realize a reduction in their reporting burden, the Government realizes it must remain diligent and refrain from asking for reports when the answers it seeks are available in the materials the First Nation prepares for its membership.