ARCHIVED - Report on Recipient Audit of Manitoba First Nations Education Resource Centre Inc.
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Name: Manitoba First Nations Education Resource Centre Inc. Location: Winnipeg, Manitoba Default status at time of audit: Not in default (2012-2013) Current default status: Not in default (2015-2016) Executive Director: Lorne Keeper Time period covered by audit: April 1, 2011 to March 31, 2013 Amount of AANDC funding audited: $41,307,161.18
Aboriginal Affairs and Northern Development Canada (AANDC) selected the Manitoba First Nations Education Resource Centre Inc. (MFNERC) for a recipient audit based on their 2012-2013 risk assessment score and other risk factors.
This recipient audit was undertaken to:
Ensure compliance with the Terms and Conditions of the AANDC Funding Agreement;
Ensure compliance with Treasury Board and AANDC policies and directives;
Evaluate efficiency and effectiveness of the financial management framework in place to manage the programs, as well as the recipient's organizational capacity; and
Assess the adequacy of the financial control measures and mechanisms in place the manage risks effectively.
Spearhead Canada Management Ltd, an independent audit firm was commissioned to undertake the recipient audit, which was conducted in March 2014.
The audit identified a recoverable amount of $0.
The audit identified control weaknesses within expenditure oversight and financial management that, if well designed and operating effectively, would help ensure funds were spent for the intended purpose and in compliance with funding agreements.
Governance by Board of Directors
Roles and responsibilities of the Board of Directors appointed by the Assembly of Manitoba Chiefs Executive Council of Chiefs are formally documented and communicated to Directors and employees in a timely manner. The Board of Director meeting minutes obtained and reviewed and it was noted that various subjects were discussed including interim financial reports, human resource reports and other relevant business activity indicating established oversight on the activities of the Recipient.
Strategic and Operational Planning
It was noted that MFNERC has a documented vision, mission and set of goals that form the basis for its overall strategy in developing, implementing and monitoring the programs and activities in accordance with guidelines set forth by AANDC.
It was also noted that the Recipient has a communication strategy in place to establish an efficient and timely approach for communicating to key audiences that are specifically listed, including AANDC.
Review of Program Expenditures
In addition to the review of control practices, the audit selected a risk-based, judgmental sample of 82 transactions, of which 80 were recorded in the proper Fiscal Year. As part of the audit, the two samples recorded in the wrong fiscal period were reclassified. In addition, of the sampled expenditures, three adjustments totaling $9,011 were identified due to program ineligibility.
Adjusted audit findings include:
Two transactions totaling $3,791 were adjusted as they relate to international travel expense claims that are ineligible under the program.
One transaction totaling $5,220 was adjusted as the expense claim relates to salary costs for an information worker in a period outside the fiscal years under audit.
Two transactions netting to $8,464 were reclassified where the expense was recorded in the period when they were paid instead of when the services were performed which occurred in a different period.
The following recommendations are formulated to address the issues identified in the report and to help strengthen the existing internal controls in place to deliver the programs:
It is recommended that when required, amendments to approved purchase orders, specifically ones that result in an increased expenditure, be authorized prior to processing the order with the third-party vendor.
It is recommended that invoices be reviewed by the Director of Finance and expense claims be recorded in the period to which the expense relates, based on when the service is provided or goods are received.
It is recommended that expenditure claims be reviewed by the Director of Finance to verify validity and eligibility under the programs and related guidelines.
It is recommended that formal approval be obtained from AANDC prior to deviating from the approved work plan to reduce the risk that expenditures claimed not be in compliance with program guidelines.
A copy of the final report was sent to the Recipient. No recoverable amount was identified. The Department is working with the Recipient to develop an action plan to address the recommendations.