ARCHIVED - Report on Recipient Audit of Lac La Croix First Nation
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Name: Lac La Croix First Nation
Population: 300 on reserve; 440 total registered
Default status at time of audit: Expert Resource Support, formerly known as Co-Manager (2011-2012)
Current default status: Expert Resource Support, formerly known as Co-Manager (2013-2014)
Current Chief: Norman Jordan
Time period covered by audit: April 1, 2010 to March 31, 2012
Amount of AANDC funding audited: $9,060,854
Aboriginal Affairs and Northern Development Canada (AANDC) selected Lac La Croix First Nation in Ontario for a recipient audit in 2012-2013 based on their 2011-2012 risk assessment score and other risk factors.
This recipient audit was undertaken to:
- Ensure compliance with the Terms and Conditions of the Agreements;
- Ensure compliance with Treasury Board’s and AANDC’s policies and directives;
- Evaluate the efficiency and effectiveness of the Financial Management Framework in place to manage the Program, as well as the recipient’s organizational capacity; and
- Assess the quality (adequacy) of the financial control measures and mechanisms in place to manage risks effectively.
Deloitte LLP, an independent audit firm, was commissioned to undertake the recipient audit. The audit took place in the winter of 2013.
A sample of 100 transactions in total was tested. The audit identified expenditures in the amount of $108,525 not in compliance with the funding agreement and potentially recoverable.
The audit identified control weaknesses in the areas of governance, budgeting process and capacity that, if addressed, would help ensure funds were spent for the intended purpose and in compliance with funding agreements.
The audit found that the Lac La Croix First Nation has an Executive Act that sets out governance items such as the roles and authority of Chief and Council, the code of ethics, conflict of interest, and remuneration. However, the audit notes that there remains a need to improve governance and administration of band programs, and support compliance with the Executive Act and the AANDC Funding Arrangement.
Opportunities observed for improvement include:
- AANDC requested that the Lac La Croix First Nation complete a five year Governance Strategic Plan, to create a roadmap in building a strong and accountable governing and operating structure complete with codes, policies and plans. At the time of the audit, Lac La Croix First Nation had not established the Plan, nor developed policies, codes or directives that define the roles and responsibilities for Chief and Council.
- Chief and Council help to ensure transparency by making Band Council Resolutions (BCRs) available to all Band members; however, based on the review of the BCRs in the scope of the audit, it was noted that program activities related to AANDC funding are not reported.
- AANDC Contribution Agreements require the submission of regular financial and non-financial reports. Interviewees noted that reports provided are appropriate, however not submitted in a timely manner which puts into question the recipient’s accountability framework.
- The Contribution Agreement Remedial Management Plan states that the recipient shall develop program and/or operating budgets. Through discussions with the Co-Manager and a Councillor, the audit noted that the Lac La Croix First Nation has not documented financial and administrative controls related to the funding agreements; there are no policies, codes or directives in place which describe the process to establish budgets, or the process to challenge assumptions and related resource allocations within the budgets.
- The audit also noted that the Lac La Croix First Nation had not developed operating budgets for program delivery for the period under audit; however, program budgets are currently being developed for upcoming periods.
- The audit noted that the Water Treatment Operator has recently received his certification to provide safe drinking water to community members.
- The audit noted that there is currently no intention to hire a qualified financial officer as required by the Contribution Agreement, as the current Co-Manager* provides sufficient financial management support for the First Nation.
- The audit noted that the current accounting software is considered by users to be appropriate for the current requirements; however, users noted that the accounting system does not have adequate technical support and there are no off-site back-ups.
- The audit noted that the Accountability Framework required by AANDC Contribution Agreements has not been developed. Policies have been developed in lieu; however, these policies have never been implemented and have not been reviewed for continued relevance. In addition, it was also noted that there has been insufficient training provided to staff to build capacity necessary for program delivery.
- The audit recommends that Lac La Croix First Nation implement appropriate procedures and financial controls, including documentation retention procedures, to enable it to demonstrate that expenditures incurred are supported by appropriate documentation and that expenditures funded by the Government of Canada were incurred in accordance with the terms and conditions of the funding agreements between Lac La Croix First Nation and the Government of Canada.
- The audit recommends that Lac La Croix First Nation should develop, approve and implement a Strategic Governance Plan and implement policies and/or codes that include roles and responsibilities for Chief and Council.
- The audit recommends that Lac La Croix First Nation should submit required reports in a timely manner and as described in the Contribution Agreements.
- The audit recommends that the Chief and Council should implement a budget for all programs that is aligned with the requirements of the Contribution Agreements. On a regular basis, Lac La Croix First Nation should conduct budget to actual variance analysis and ensure significant variances are substantiated by Program Managers.
- The audit recommends that Lac La Croix First Nation should develop, approve and implement an Accountability Framework, as well as policies and codes as required by the Contribution Agreements.
- The audit recommends that Lac La Croix First Nation should ensure proper access to technical support for its accounting system, and that a backup process be developed to ensure the integrity of the financial data.
A copy of the final report has been sent to the recipient.
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