Reported by Sarah Stone
News Talk 980 CJME
Two First Nations communities in Saskatchewan have spent hundreds of thousands of federal dollars that do not follow a funding agreement.
During the winter of 2013, both Black Lake Denesuline First Nation and Montreal Lake Cree Nation were audited based on their 2011-2012 risk assessment score by Aboriginal Affairs and Northern Development Canada (AANDC).
“Our government believes that aboriginal peoples, like all Canadians, deserve transparency and accountability from their elected officials. By making recipient audit summaries public, we are ensuring that community members are informed of their community’s financial situation and that their elected officials have the appropriate management mechanisms in place,” the AANDC wrote in an email to paNOW.
According to a report conducted by the independent firm KPMG on the Black Lake Denesuline First Nation, based on a sample of four per cent of the in-scope funding, 51 per cent of that was in compliance with the intended purpose and terms of the applicable funding agreements signed with AANDC. This means expenditures in the amount of $403,651 were not in compliance with funding agreements.
KPMG identified “control weaknesses within governance, 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.”
The report indicates several issues with governance such as lack of documentation of Chief and Council meetings and decisions and no evidence chief and council review financial information regularly.
In addition the report states a "comparison of the salary budget to actual for chief and council illustrates the need to present the annual budget and audited financial statements to the members as well as the need to monitor budget to actual over the fiscal period. While the budget for 2011/12 was planned to decrease by 26 per cent in an effort to reduce the First Nation's deficit, the deficit increased by 50 per cent.”
Band financial administration and management of First Nation funds were described as requiring improvement. It states management were described as needing improvement because payments were made with little or no supporting documentation. Also, there was no reporting of actual spending to budget amount variances to explain why funds allotted to varying programs were under or over budgeted amounts.
“Additional review of payment authorized on cancelled cheques for each fiscal year found that while all cancelled cheques had the signature of at least one signing authority, there were a number of cheques that had the second signature of an individual who was not authorized for the portfolio expenditure,” the report stated.
Montreal Lake Cree Nation sees inappropriate spending
Federal money allocated to the Montreal Lake Cree Nation doesn’t fare any better than that of Black Lake Denesuline First Nation.
According to the audit report by KPMG, between April 1, 2010 and March 31, 2012 only 20 per cent from a sample of one per cent of the in-scope funding was in compliance with the intended purpose and terms and conditions of the funding agreements signed with AANDC. This means $156,756 worth of expenditures was not in compliance with the funding agreement.
Montreal Lake had some of the same issues as Black Lake with exact roles of chief, council and band management unclear and council minutes undocumented. The report also stated there was no evidence that a finance committee was established to approve annual budgets and review results of operations.
Both communities received a copy of its individual reports along with several recommendations to ensure they follow the funding agreement with the AANDC.
Funds outlined in the audits that did not follow the agreement with AANDC can be recovered by the government, but the AANDC has not made any clear moves yet to do so.
“Government officials will be in touch with this First Nation to determine an appropriate course of action and seek to recover funds,” the AANDC told paNOW in an email.
The audits done by KPMG are part of an AANDC recipient audit plan where communities across Canada are selected based on a risk evaluation, the value of the funding agreement and random selection.
Twenty-five recipient audits were initiated and conducted in the 2012-2013 fiscal year, which have all been completed. Next on the list in northern Saskatchewan are James Smith Cree Nation, Saulteaux Band and Shoal Lake No. 40 First Nation.
Multiple attempts have been made to contact Montreal Lake First Nation and Black Lake Denesuline First Nation, but neither returned messages before publication.