Questions and Answers Related to the First Nations Financial Transparency Act (FNFTA)

The following questions have been received by the department from recipients, auditors and from information sessions and conferences held across Canada on the First Nations Financial Transparency Act.

Q.1 Financial statements are now legislated to be released to the public. Does this effectively remove the requirement of First Nations to submit a Schedule of Federal Government Funding?

To further reduce the reporting burden on recipients and after a comprehensive consultation process with stakeholders, the Schedule of Federal Government Funding was deemed redundant and removed from the Financial Reporting Requirements (formerly known as the Year-End Reporting Handbook) starting in the 2013-2014 version.

This change is reflected in the newly consolidated Reporting Guide (formerly known as the Year-End Reporting Handbook and Recipient Reporting Guide) published on AANDC's Internet site as of October 2013.

Q.2 How does the First Nations Financial Transparency Act (FNFTA) impact Financial Reporting Requirements (formerly known as the Year-End Reporting Handbook)?

The FNFTA applies in respect of the fiscal year beginning April 1, 2013 and ending March 31, 2014 (and for fiscal years thereafter). The FNFTA was considered when developing the 2013-2014 Year-End Reporting Handbook and Financial Reporting Requirements and they reflect the FNFTA requirements.

Q.3 To whom does the First Nations Financial Transparency Act (FNFTA) apply?

As per Section 2 of the FNFTA, the legislation applies to all First Nations that are Bands under subsection 2(1) of the Indian Act. This represents approximately 600 First Nations. It does not, however, apply to First Nations who are a party to a comprehensive self-government agreement that has been given effect by an Act of Parliament. This represents about 35 First Nations.

Q.4 Does the First Nations Financial Transparency Act (FNFTA) apply to self-governing First Nations?

No. As per Section 2 of the FNFTA, it will not extend to a First Nation operating pursuant to a comprehensive self-government agreement. This is because accountability and transparency measures are already built into their agreements.

Q.5 Why was there a need for this legislation?

Each year AANDC receives requests from First Nation members looking for basic financial information relating to their community that they should be able to access directly from their Band. In the past members could make a formal complaint to the department. With the greater transparency provided by the First Nations Financial Transparency Act (FNFTA), these requests will not be necessary.

The legislation removes the Minister from the situation in which he or she plays a role in policing what should be matters of local accountability. The previous approach prevented clear lines of accountability from developing at the community level.

Section 10 of the FNFTA puts into the hands of individual members the legal tools to hold their own governments to account. In doing so, the Minister is not required to referee local disputes about access to basic financial information.

The FNFTA ensures that First Nation community members have the information necessary to make informed decisions about their leadership, the financial health of their community, and to create a better environment for private sector investment which could lead to greater economic development opportunities and improve the quality of life for First Nations communities.

Prior to the FNFTA receiving Royal Assent, the Minister could not release Schedules of Remuneration and Expenses of First Nations elected leaders, as these schedules likely contained personal information covered by the Privacy Act. The Privacy Act governs disclosure by federal government institutions like AANDC of personal information.

With the FNFTA legislation, AANDC is in compliance with the Privacy Act when publishing this information because the Privacy Act (Section 8) authorizes federal government institutions like AANDC to disclose personal information in accordance with federal legislation like the financial transparency legislation.

Q.6 Does the First Nations Financial Transparency Act (FNFTA) apply to tribal councils and aboriginal political organizations?

As per Section 2 of the FNFTA, the legislation applies to all First Nations that are Bands under subsection 2(1) of the Indian Act. It does not, however, apply to First Nations who are a party to a comprehensive self-government agreement that has been given effect by an Act of Parliament.

Q.7 Is a person’s salary information private? How does the First Nations Financial Transparency Act (FNFTA) relate to the Privacy Act?

The FNFTA requires the publishing of a Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation on the AANDC Internet site if it is provided to AANDC by the First Nation or if the First Nation has already posted it on the Internet.

The Privacy Act governs disclosure of personal information by federal government institutions like AANDC. Schedules of Remuneration and Expenses of First Nations’ Chiefs and Councillors that AANDC collects may contain personal information covered by the Privacy Act.

AANDC would be in compliance with the Privacy Act when publishing this information since the Privacy Act (Section 8) authorizes federal government institutions like AANDC to disclose personal information in accordance with federal legislation like the financial transparency legislation.

Q.8 How does the First Nations Financial Transparency Act (FNFTA) affect businesses owned in whole or in part by a First Nation?

The FNFTA 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 of the First Nation would include, at an aggregated level, information relating to any entities, including businesses owned in whole or in part, which, according to Generally Accepted Accounting Principles (GAAP), are to be consolidated with the First Nation.

The audited consolidated financial statements will also be accompanied by a Schedule of Remuneration and Expenses for Chiefs and Councillors. As per Section 6 of the FNFTA, the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors – acting in their capacity as such and in any other capacity, including their personal capacity – by the First Nation and by any entity that, in accordance with GAAP, is required to be consolidated with the First Nation.

Q.9 Is the financial information of Band-owned businesses now included in the consolidated financial statements that are submitted annually to AANDC?

Yes.

Q.10 Why do the financial statements of Band-owned businesses need to be publically disclosed? Won’t this undermine their competitiveness? Do non-Aboriginal businesses need to do this?

Members of First Nations are ultimately the owners of any businesses owned by their Band and, as a result, should have a right to know the value and activities of those businesses. It is important for the users of financial statements, especially First Nation members, to see summary statements that capture the range of activities of their government.

Individual businesses owned by a Band will not need to publish their own detailed set of financial statements. Instead, it is only the consolidated financial statements of the First Nation, in accordance with generally accepted accounting principles, to which the First Nations Financial Transparency Act (FNFTA) will apply which are highly aggregated and, in most cases, will not reveal any proprietary information. This summary information will provide members with a better understanding of the activities of their governments and the value of its holdings.

The FNFTA puts into place the same rules that apply to businesses owned by other governments in Canada. These rules are set out in the Canadian Institute of Chartered Accountants' handbook, the Canada Public Sector Accounting Handbook as referred to in the FNFTA. The handbook contains the accounting standards for federal, provincial, territorial and local governments and government organizations.

Q.11 Many First Nations do not have access to the internet. How will they comply with the First Nations Financial Transparency Act (FNFTA)? How will their members access this information?

The FNFTA requires First Nation governments to make the audited consolidated financial statements and Schedule of Remuneration and Expenses for Chiefs and Councillors available to its members. This may be achieved, for example, by distributing printed copies to all community households, and/or posting the information in readily accessible locations in the community including at the First Nation Band offices.

Section 8 of the FNFTA requires the First Nation government to publish these documents on the Internet within 120 days after the end of each fiscal year. Not every First Nation has an Internet site, therefore a community may request that another organization, such as a First Nation organization like a Tribal Council, or AANDC, post the information on its behalf. Publishing these documents on a website does not fulfill the obligation held by a First Nation government to make copies available to its members.

In compliance with the legislation, AANDC will also post the audited consolidated financial statements and Schedules of Remuneration and Expenses for Chiefs and Councillors on the departmental website once it has access to them.

Q.12 Does this First Nations Financial Transparency Act (FNFTA) create additional paperwork for First Nations?

No. First Nations are already required to produce annual consolidated financial statements which are audited by independent accredited professional auditors and Schedule of Remuneration and Expenses for Chiefs and Councillors as part of their funding agreements with AANDC.

The FNFTA strengthens transparency and accountability by requiring that the statements be shared with the members of each First Nation community as well as the general public.

This reduces the burden for First Nations in providing copies of the audited consolidated financial statements and Schedule of Remuneration and Expenses for Chiefs and Councillors to those that request them, as these documents will be available on the Internet.

Q.13 For what period of time must a First Nation publish its audited consolidated financial statements and Schedule of Remuneration and Expenses for Chiefs and Councillors?

As per Section 8 of the First Nations Financial Transparency Act (FNFTA), First Nations must make their audited consolidated financial statements and Schedule of Remuneration and Expenses for Chiefs and Councillors available on an Internet site for a period of at least 10 years. This is consistent with practices followed in most jurisdictions to keep financial records for 7 to 10 years, and the potential to enter funding agreements up to 10 years in duration.

Q.14 When would the Minister of Aboriginal Affairs and Northern Development use his option to terminate a First Nation’s grant and contribution agreement?

This law was put in place to ensure that First Nation band members have access to the information they require and deserve about basic financial management practices of their Chief and Council, and to empower them to ensure band revenues are being used for their benefit. It applies the same principles of transparency and accountability to First Nations governments that already exist for other governments in Canada.

First Nation band councils are expected to comply with the disclosure provisions in the First Nation Financial Transparency Act.

Bands which failed to comply by the deadline - which was July 29, 2014 - will receive several formal reminders. After 120 calendar days, if there is no resolution, for bands that are refusing to comply with the law, the government will take action according to the provisions of the law, which could include withholding of funding.

Q.15 The First Nations Financial Transparency Act (FNFTA) requires First Nations to report their audited consolidated financial statements 120 days after the end of the fiscal year, but the Government of Canada does not report its Public Accounts until the fall. How is this fair?

The Federal Government is an example of a complex entity and its financial statements contain aggregated information from numerous organizations that are nearly, if not equally, as complex. The coordination and consolidation of this information requires a significant amount of resources and time to complete. Furthermore, although the government fiscal year does end on March 31, certain processes that affect statement balances (e.g. Payables at Year-End) continue until late May.

The Federal Government also prepares a number of in-year reports including, but not limited to, quarterly proactive disclosure on items of high public interest (such as grants and contributions), and departmental quarterly financial reports. In committing to continuously enhancing government transparency and accountability, many of these in-year quarterly reports are published on the Internet and available for public viewing throughout the fiscal year.

Q.16 Some First Nations are quite complex. Is 120 days after the close of the fiscal year enough to do the necessary work?

All government financial reporting is inherently complex, and several other levels of government use similar reporting deadlines to that of a First Nation, especially taking into consideration that certain processes that affect statement balances (e.g. Payables at Year-End) continue after the fiscal year end.

For example, the provincial government of Alberta, as per the requirements of the Government Accountability Act, must prepare and make public its statements on or before June 30 of each year for the fiscal year ended on the preceding March 31.

In addition, much of the audit work performed by an external audit / accounting firm is to test the internal controls and the procedures of an entity. In many cases a substantial portion of the audit work can be completed before the end of the fiscal year.

Q.17 First Nations are required to publish their audited consolidated financial statements and Schedules of Remuneration and Expenses. Why must they continue to prepare and submit to the department the Schedule of Remuneration and Expenses for unelected officials?

The Schedule of Remuneration and Expenses for unelected officials, which summarizes the remuneration and expenses by a First Nation to its senior, non-elected staff (e.g. Band manager, senior administrators, etc.), has been collected from First Nations for many years, and will continue to be collected. Although the financial statements of each First Nation may report an aggregated amount of remuneration and expenses paid to unelected officials, there may not be sufficient detail in how these amounts are reported to meet the reporting requirements to the department. As a result, it was decided that the Schedule of Remuneration and Expenses for unelected officials would remain in place, until such time as an alternative method for ensuring this detail is reported can be approved and implemented.

The Schedule of Remuneration and Expenses for unelected officials is not related to the Schedule of Remuneration and Expenses provided for in the First Nations Financial Transparency Act (FNFTA), which applies only to the remuneration and expenses paid to Chiefs and Councillors. Note that, although the Schedule of Remuneration and Expenses for unelected officials will continue to be collected by the Department, it will not be published by the Department.

Q.18 First Nations A, B and C are members of a Treaty Association, and the Chiefs of each Nation are required to travel to monthly meetings of the Treaty Association. The Treaty Association pays each Chief’s travel costs and gives them a per diem of $500 per meeting that they attend.

i. What is reportable in the Schedule of Remuneration and Expenses of First Nation A?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), in the circumstance when the Treaty Association is consolidated with First Nation A, as required by Generally Accepted Accounting Principles (GAAP), remuneration paid as well as expenses reimbursed to a Chief or Councillor of First Nation A by the consolidated entity, are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As a per diem is a form of monetary benefit, it should be included as a form of remuneration in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Any travel costs that fit within this definition should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

In the circumstance when the Treaty Association is not consolidated with First Nation A, as required by GAAP, there is no requirement to include the remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

ii. What if, instead, the Treaty Association pays the Nations for the Chiefs’ travel, and the First Nations pay the Chiefs. What is reportable in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A?

The source of the funding is still the same thus, whether the remuneration and expenses are paid or reimbursed directly or indirectly by the Treaty Association, the treatment for the costs should be as follows:

In the circumstance when the Treaty Association is consolidated with First Nation A, as required by GAAP, remuneration paid as well as expenses reimbursed to a Chief or Councillor of First Nation A by the consolidated entity are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As a per diem is a form of monetary benefit, it should be included as a form of remuneration in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Any travel costs that fit within this definition should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

In the circumstance when the Treaty Association is not consolidated with First Nation A, as required by GAAP, there is no requirement to include remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of First Nation A.

Additionally, the amount paid by First Nation A would still be accounted for in its Financial Statements and it is suggested that proper disclosure be provided.

Q.19 Mr. D is the proprietor of a construction business that builds houses on and off reserve. On April 1, 2013 Mr. D was elected to council, and his business continued to build houses for the First Nation. For the year ended March 31, 2014, Councillor D was paid $40,000 for his duties as a Councillor, and his construction business was paid $400,000 by the First Nation for building houses.

i. What is reportable in the Schedule of Remuneration and Expenses for Councillor D? Does the reportable amount change if Councillor D’s construction business reported a net loss of $200,000 for the year?

As per Section 2 of the First Nations Financial Transparency Act (FNFTA), the definition of "remuneration" includes "any other monetary benefits" that the Councillor in this example would receive, such as contracting fees, due to the Councillor’s company being contracted by the First Nation or any entity that, according to Generally Accepted Accounting Principles (GAAP), is to be consolidated with the First Nation.

As the business in question is unincorporated, and thus not a separate legal entity, the Schedule of Remuneration and Expenses for Chiefs and Councillors should include disclosure of, in addition to the $40,000, any direct contracting fees received by the Councillor and any other applicable remuneration related to such fees which they may receive, in other capacities, including personal capacity. The financial results of the business, whether a gain or a loss, are not relevant. Only the direct contracting fees would be included.

The Schedule of Remuneration and Expenses for Chiefs and Councillors should disclose Councillor D’s proprietorship of the unincorporated construction business which was contracted by the First Nation to build houses during the fiscal year under discussion.

ii. What if, instead, Mr. D’s construction business is incorporated, and Mr. D is the sole shareholder. What is reportable in the Schedule of Remuneration and Expenses for Councillor D?

As per Section 2 of the FNFTA, the definition of "remuneration" includes "any other monetary benefits" that the Councillor in this example would receive, such as contracting fees, due to the Councillor’s company being contracted by the First Nation or any entity that, according to GAAP, is to be consolidated with the First Nation.

As the business in question is incorporated, only the $40,000 would be disclosed in the Schedule of Remuneration and Expenses for Councillor D. A corporation is considered under law to be its own legal entity, and as such enters into legally binding contracts. As such, it would not be mandatory to disclose amounts paid to the Councillor’s business for work completed on the reserve.

The Schedule of Remuneration and Expenses should disclose Councillor D’s ownership of the incorporated construction business which was contracted by the First Nation to build houses during the fiscal year under discussion.

Q.20 Chief E has to travel to Ottawa for a meeting on First Nation business. The First Nation pays Air Canada $1,000 for the flight and the Sheraton $500 for accommodation, and pays $2,000 in per diem.

i. What is reportable in the Schedule of Remuneration and Expenses for Chief E?

As per Section 2 of the First Nations Financial Transparency Act (FNFTA), "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. The FNFTA also defines "expenses" as: costs of transportation, accommodation, meals, hospitality and incidental expenses.

All remuneration and expenses defined in the FNFTA, whether paid directly or indirectly to the supplier, were incurred by the First Nation and should therefore be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors, as per Section 6 of the FNFTA.

As a per diem is a form of monetary benefit, it should be included as a form of remuneration in the Schedule of Remuneration and Expenses for Chiefs and Councillors. Furthermore, the costs of transportation (flight) and accommodation fit within the definition of "expenses" in the FNFTA, and are therefore to be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors as such.

ii. What if Chief F attends the same meeting as Chief E. Chief F likes to collect credit card points, so Chief F personally pays for the flight ($1,000), hotel ($500), and meals ($750), and then submits an expense claim, which the First Nation reimburses. What is reportable in the Schedule of Remuneration and Expenses for Chief F?

As per Section 6 of the FNFTA, the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors -- acting in their capacity as such and in any other capacity, including their personal capacity -- by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Therefore, the $2,250 of expenses for transportation (flight), accommodation (hotel) and meals reimbursed to Chief F should be reported in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation, as part of Chief F’s expenses.

iii. What if Chief F also pays for the flights and hotel costs for three of his Councillors, and is reimbursed by the First Nation F, a total of $4,000 for flights, $2,000 for hotel costs, and $3,000 for meals. The Councillors do not have to pay for any costs while in Ottawa for the meeting. What is reportable in Schedule of Remuneration and Expenses for Chief F and each of the other Councillors?

As per Section 6 of the FNFTA, the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors -- acting in their capacity as such and in any other capacity, including their personal capacity -- by the First Nation and by any entity that, in accordance with GAAP, is required to be consolidated with the First Nation.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Therefore, the expenses for transportation (flight), accommodation (hotel) and meals reimbursed to Chief F should be reported in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

To ensure greater accuracy in financial reporting and better represent the remuneration and expenses of Chiefs and Councillors on an individual basis, it is suggested that the total $9,000 (for flights, hotels and meals) be allocated amongst the three Councillors based on individual expenses and be reported as such in the Schedule of Remuneration and Expenses for Chiefs and Councillors. Chief F would only report the amount that relates to his or her actual expenses, as reimbursed by the First Nation.

Q.21 First Nation G owns DevCorp Inc., which is a Government Business Enterprise (GBE). Councillors G and H are each paid $75,000 from the Nation for their duties as Councillors. Councillor G holds the economic development portfolio and also gets paid $10,000 from DevCorp Inc. for being the portfolio holder. What is reportable in the Schedule of Remuneration and Expenses for Councillors G and H?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors -- acting in their capacity as such and in any other capacity, including their personal capacity -- by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

Although GBE’s controlled by the First Nation are included in the reporting entity of the First Nation, the Chartered Professional Accountants of Canada (CPA Canada) Public Sector Accounting Handbook does not require GBE’s, such as DevCorp Inc., to be consolidated on a line-by-line basis with the First Nation. The CPA Canada Public Sector Accounting Handbook does, however, require that the GBE’s be included in the consolidated financial statements using the modified equity method of accounting. Therefore, the GBE is included in the Consolidated Financial Statements, and the $10,000 received by Councillor G needs to be included in the Schedule of Remuneration and Expenses.

Additionally, as per Section 2 of the FNFTA "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As such, the $75,000 each, received by Councillor G and Councillor H respectively, should be reported in the Schedule of Remuneration and Expenses for Chiefs and Councillors as this amount was paid directly by the First Nation and is a form of remuneration, as per the definition in the FNFTA.

Q.22 Is remuneration earned by Chiefs and Councillors from Band-owned businesses captured, and if so why?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), in the circumstance when the Band-owned business is consolidated with the First Nation, as required by Generally Accepted Accounting Principles (GAAP), remuneration paid as well as expenses reimbursed to a Chief or Councillor of the First Nation by the consolidated entity, are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

Except in very unusual circumstances, a Band-owned business will always be included in the consolidated financial statements of the First Nation, as required by GAAP. Accordingly, the remuneration paid and expenses reimbursed would be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

Q.23 If the remuneration and travel is to include amounts received from organizations outside the reporting entity business interests or corporations, are the Chiefs and Councillors required to self report income?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors -- acting in their capacity as such and in any other capacity, including their personal capacity -- by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

If the entity paying the remuneration and reimbursing the travel is not included as part of the First Nation reporting entity, as defined by GAAP, then there is no requirement to report the amounts in the Schedule of Remuneration and Expenses for Chiefs and Councillors.

Q.24 Councillor J’s truck needed repairs so the First Nation loaned him $5,000 on March 20, 2014. The First Nation forgave the loan during fiscal year 2015. What is reportable in the Schedule of Remuneration and Expenses for Councillor J in 2014 and 2015?

As per Section 2 of the First Nations Financial Transparency Act (FNFTA), "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits.

In fiscal year 2014, the loan amount was considered repayable, therefore it does not fit within the definition of "remuneration" as per Section 2 of the FNFTA. Consequently, it should not be reported in the Schedule of Remuneration and Expenses for Chiefs and Councillors. However, it should be accounted for in the financial statements and it is suggested that it be accompanied by a note outlining details regarding the loan such as recipient name, loan amount and its term, interest rate charged, periodic repayment amounts and basis for forgiveness / write-off (if applicable). Please refer to the Chartered Professional Accountants of Canada (CPA Canada) Handbook(s) for guidance on disclosure.

In fiscal year 2015, the forgiveness of the $5,000 loan should be reported as remuneration in the Schedule of Remuneration and Expenses for Chiefs and Councillors as it now aligns with the definition as per Section 2 of the FNFTA. Loans and advances (including non-repayable loans), and any associated forgiveness or write-off, given to the Chief or Councillor by the First Nation and by any entity that, in accordance with GAAP, is required to be consolidated with the First Nation, should be disclosed in the audited consolidated financial statements. Additionally, it is suggested that the notes of the audited consolidated financial statements outline details regarding the loan such as recipient name, loan amount and its term, interest rate charged, periodic repayment amounts and basis for forgiveness / write-off (if applicable). Please refer to the Chartered Professional Accountants of Canada (CPA Canada) Handbook (s) for guidance on disclosure.

Q.25 The knowledge of the Elders is very valuable in First Nation K, and the Elders are typically paid for sharing their wisdom. Chief K is responsible for compensating the Elders, so they withdrew a total of $80,000 from the First Nation’s bank account during the year and paid the Elders. Most of the Elders do not have bank accounts, so they are paid in cash, and it would be culturally offensive to ask them for a receipt. The First Nation flowed $80,000 in cash payments through the Chief to various Elders, and everyone involved believes that the First Nation got at least $80,000 worth of knowledge and guidance from the Elders. The Chief’s salary for performing his duties as Chief was $35,000. What is reportable in the Schedule of Remuneration and Expenses for Chief K?

As per Section 2 of the First Nations Financial Transparency Act (FNFTA), "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. It also defines "expenses" as: costs of transportation, accommodation, meals, hospitality and incidental expenses.

The $80,000 is neither remuneration nor a travel expense of Chief K, and should not be reported in the Schedule of Remuneration and Expenses for Chiefs and Councillors as its disclosure requirements in Section 6 of the FNFTA only pertains to Chiefs and Councillors.

Only the $35,000 salary of Chief K should be reported on the Schedule of Remuneration and Expenses for Chief K, as it fits within the definition of "remuneration" in the FNFTA.

Q.26 Does the auditor need to review the personal financial information of the Chiefs and Councillors to comply with assurance standards?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors -- acting in their capacity as such and in any other capacity, including their personal capacity -- by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

Furthermore, subsection (3) of Section 6 of the FNFTA requires that an auditor’s report or review engagement report accompany the Schedule of Remuneration and Expenses for Chiefs and Councillors. However, "personal financial information" needs to be properly clarified in order to determine if this fits into the scope of the aforementioned reports. It is expected that the accounting records of the First Nation would be sufficient to determine the remuneration and expenses for Chiefs and Councillors without the need to review their personal financial information.

Q.27 Do all Chiefs and Councillors need to individually sign off on their personal income as reported on the Schedule of Remuneration and Expenses for Chiefs and Councillors?

The purpose of the First Nations Financial Transparency Act (FNFTA) is to enhance the financial accountability and transparency of First Nations. In the spirit of this, disclosure should be as accurate, complete and timely as possible in order to facilitate effective decision making by the users of the financial statements. As per subsection (3) of Section 6 of the FNFTA, an auditor’s report or review engagement report must accompany the Schedule of Remuneration and Expenses for Chiefs and Councillors. Although the Schedule of Remuneration and Expenses for Chiefs and Councillors, as per the model in Financial Reporting Requirements (previously known as the Year-End Reporting Handbook), does not contain a signature section, we recommend consulting with your auditor to determine if signing off on personal income will be required for the auditor’s report or review engagement report.

Q.28 Should a First Nation include compensation, honoraria or travel paid to elected officials from the following sources in its Schedule of Remuneration and Expenses for Chiefs and Councillors disclosure:

i. The community's Tribal Council?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), in the circumstance when the Tribal Council is consolidated with the First Nation, as required by Generally Accepted Accounting Principles (GAAP), remuneration paid as well as expenses reimbursed to a Chief or Councillor of the First Nation by the consolidated entity, are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As such, compensation and honoraria both fit within the definition of "remuneration" and should be included in the Schedule for Chiefs and Councillors.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Any travel expense reimbursements that fit within this definition should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

In the circumstance when the Tribal Council is not consolidated with the First Nation, as required by GAAP, there is no requirement to include the remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

ii. A Child and Family Services organization (e.g. agency) dedicated to the community but not controlled by Chief and Council?

As per Section 6 of the FNFTA, in the circumstance when the Child and Family Services organization is consolidated with the First Nation, as required by GAAP, remuneration paid as well as expenses reimbursed to a Chief or Councillor of the First Nation by the consolidated entity, are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As such, compensation and honoraria both fit within the definition of "remuneration" and should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Any travel expense reimbursements that fit within this definition should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

In the circumstance when the Child and Family Services organization is not consolidated with the First Nation, as required by GAAP, there is no requirement to include the remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

iii. A resource extraction company which provides direct travel reimbursements to elected officials for meetings to discuss activities which may impact the Band's traditional territories?

As per Section 6 of FNFTA, in the circumstance when the resource extraction company is consolidated with the First Nation, as required by GAAP, remuneration paid as well as expenses reimbursed to a Chief or Councillor of the First Nation by the consolidated entity, are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As such, compensation and honoraria both fit within the definition of "remuneration" and should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Any travel expense reimbursements that fit within this definition should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

In the circumstance when the resource extraction company is not consolidated with the First Nation, as required by GAAP, there is no requirement to include the remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

iv. Arm's length Aboriginal not-for-profit organizations which provide travel reimbursements to elected officials for attending meetings on various issues?

As per Section 6 of the FNFTA, in the circumstance when the Aboriginal not-for-profit organizations are consolidated with the First Nation, as required by GAAP, remuneration paid as well as expenses reimbursed to a Chief or Councillor of the First Nation by the consolidated entity, are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As such, compensation and honoraria both fit within the definition of "remuneration" and should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Any travel expense reimbursements that fit within this definition should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

In the circumstance when the Aboriginal not-for-profit organizations are not consolidated with the First Nation, as required by GAAP, there is no requirement to include the remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

v. A community trust where the trustees are elected by community members and include elected officials?

As per Section 6 of the FNFTA, in the circumstance when the community trust is consolidated with the First Nation, as required by GAAP, remuneration paid as well as expenses reimbursed to a Chief or Councillor of the First Nation by the consolidated entity, are to be disclosed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As such, compensation and honoraria both fit within the definition of "remuneration" and should be included in the Schedule for Chiefs and Councillors.

As per Section 2 of the FNFTA, "expenses" is defined as: costs of transportation, accommodation, meals, hospitality and incidental expenses. Any travel expense reimbursements that fit within this definition should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

In the circumstance when the community trust is not consolidated with the First Nation, as required by GAAP, there is no requirement to include the remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

Q.29 If an elected official has personal use of a Band asset such as a cell phone or Band owned vehicle should the related benefit be valued and included in the Schedule of Remuneration and Expenses for Chiefs and Councillors assuming the personal use portion is more than inconsequential?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors – acting in their capacity as such and in any other capacity, including their personal capacity – by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As such, as the personal use of a cell phone or Band owned vehicle is considered a "non-monetary benefit", it should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

The auditor should use his or her professional judgement in determining the materiality of non-monetary benefits.

Q.30 How does a First Nation report on its Schedule of Remuneration and Expenses for Chiefs and Councillors amounts paid to a Chief or Councillor directly by an entity which is not consolidated with the First Nation, but for whom the Chief or Councillor may have done work "in their capacity as a Chief or Councillor" of the First Nation?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors -- acting in their capacity as such and in any other capacity, including their personal capacity -- by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

In the circumstance when the entity is not consolidated with the First Nation, as required by GAAP, there is no requirement to include the remuneration paid and expenses reimbursed in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

Q.31 Are pensions to be included in the reporting of wages / honoraria in the Schedule of Remuneration and Expenses for Chiefs and Councillors?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors – acting in their capacity as such and in any other capacity, including their personal capacity – by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

As per Section 2 of the FNFTA, "remuneration" is defined as: any salaries, wages, commissions, bonuses, fees, honoraria and dividends and any other monetary benefits -- other than the reimbursement of expenses -- and non-monetary benefits. As pension payments are considered a form of monetary benefit, if the pension payments are paid to a Chief or Councillor by the First Nation or by any entity that, in accordance with GAAP, is required to be consolidated with the First Nation, then they should be included in the Schedule of Remuneration and Expenses for Chiefs and Councillors of the First Nation.

Q.32 Will a Chief or Councillor need to disclose any remuneration or expenses they receive from the First Nation other than what they receive for their work as an elected official?

As per Section 6 of the First Nations Financial Transparency Act (FNFTA), the Schedule of Remuneration and Expenses for Chiefs and Councillors of a First Nation should include remuneration paid as well as expenses reimbursed to its Chiefs and Councillors -- acting in their capacity as such and in any other capacity, including their personal capacity -- by the First Nation and by any entity that, in accordance with Generally Accepted Accounting Principles (GAAP), is required to be consolidated with the First Nation.

Q.33 How does the Schedule of Remuneration and Expenses for Chiefs and Councillors show remuneration from different areas? For example, how would a Councillor (paid $25,000) who also does some engineering work (paid $25,000) for the Band depict their remuneration? Would they be able to depict the two separately? Must they?

The language of the First Nations Financial Transparency Act (FNFTA) does not expressly require First Nations to report remuneration paid and expenses reimbursed to a Chief or Councillor as a result of his or her official capacity separately from remuneration paid and expenses reimbursed to the same individual as a result of his or her other capacities, including personal capacity.

The decision on whether these amounts are shown separately for each source or as a global figure rests with the First Nation and its accountants for the purposes of compliance with the FNFTA. It can be expected however, that many First Nations will choose to report remuneration separately from different sources, because of the transparency benefits and the clear communication associated with presenting information in this manner.

Q.34 Does the First Nations Financial Transparency Act (FNFTA) set salaries for Chiefs and Councillors?

No. The FNFTA does not set salaries for Chiefs and Councillors. First Nations are responsible for setting the appropriate level of remuneration for Chiefs and Councillors. The FNFTA provides for the public disclosure of the Schedule of Remuneration and Expenses for Chiefs and Councillors, which improves accessibility to the information which, in turn, allows the membership to decide if levels of compensation are appropriate.