The auditor found that the recipient has not complied with the Terms and Conditions of the AANDC Funding Agreement, whether financial or non-financial. The auditor was unable to obtain sufficient appropriate audit evidence to conclude that the program funding was properly handled and accounted for and that all funds were spent in accordance with the terms and conditions of the funding agreement, and has issued a denial of opinion on this matter. Furthermore, the audit found that the recipient does not have a suitable management framework in place to administer and deliver the programs.
The Mosakahiken Cree Nation is governed by a Chief and Council who are the elected representatives of their members. The Council is made up of seven members and includes the Chief and six Councillors who are elected for a period of two years.
The Chief and Council hold meetings on an ad-hoc basis only and the topics of discussions are not identified in a formal agenda. Furthermore, minutes of these meetings are not prepared, leaving no tangible documentation as to what was discussed and what has been decided.
The audit determined that the recipient has not developed and implemented work plans that would provide details and explanations on program-related activities to be undertaken by staff on behalf of their community. It has also not developed and implemented policies and procedures to support the delivery of Programs and provide tools to staff to assist them in their daily tasks.
The recipient has experienced vacancies in key positions and as a result, has had issues managing the programs efficiently and exercising good controls over its finances. In order to improve its financial management capabilities, the recipient hired a full-time Director of Finance in April 2012 to oversee the financial operations of the Band. However, as of the audit date, a number of key positions remained vacant.
The recipient did not prepare budgets in support of its programs and exercised minimal on-going financial monitoring and reporting on the programs. The recipient relied on annual audited consolidated financial statements prepared by an external auditor to determine the status of expenditures incurred for the year as they did not have access to qualified accounting staff.
The auditor examined the financial systems and processes that the recipient put in place to support program delivery and to seek assurance of adequate and effective control.
The auditor found that the chart of accounts set up in the accounting system does not match the budget lines identified in the Agreements, which makes it difficult to reconcile information and monitor expenses efficiently, and monthly bank reconciliations have not been completed.
While revenues were properly accounted for in the accounting system and deposited into the general bank account, the auditor's review of expenditure transactions did not provide assurance that the funds were used for the purpose for which they were secured. The sample examined by the auditor found transactions that were not properly approved; could not be necessarily linked to activities; and were not supported by appropriate documentation.
The recipient has made a large number of advances to staff and Band members but has failed to account for these in the accounts receivable ledger. Consequently, the recipient is finding it difficult to keep track of the advances.
The recipient's filing system showed that financial records and supporting documentation are not adequately maintained. The information necessary to support the processing of financial transactions could not be obtained.
Management Reporting System
Discussions with AANDC representatives determined that the recipient had submitted the required activity reports; however, these reports did not meet the reporting schedule detailed in the Agreements.
Furthermore, as of the date of the audit, the recipient had not submitted final 2011-2012 audited consolidated financial statements to AANDC, as they were in draft form only at the time of audit. An external auditor review of these same statements provided a Disclaimer of Opinion, as the external auditors were unable to obtain sufficient appropriate evidence to provide a basis of opinion on the audit. The external auditor found that the systems of accounting and internal controls that were in place throughout the years were inadequate and, as a result, revenues and expenditures were not subject to satisfactory audit verification.