Report on Recipient Audit of Sheshatshiu Innu First Nation (SIFN)
Name: Sheshatshiu Innu First Nation
Location: Newfoundland and Labrador
Population: 1,291 on reserve; 1,447 total registered
Default status at time of audit: Not in default (2011-2012)
Current default status: Not in default (2012-13)
Current Chief: Andrew Penashue
Time period covered by audit: April 1, 2010 to March 31, 2012
Amount of AANDC funding audited: $6,844,502
BACKGROUND
Aboriginal Affairs and Northern Development Canada (AANDC) entered into several contribution agreements with the recipient to provide funding in fiscal years 2010-2011 and 2011-2012.
This recipient audit was undertaken to provide assurance that funding provided to the Sheshatshiu Innu First Nation, Newfoundland, was spent for its intended purposes and in compliance with the Terms and Conditions of the funding agreements signed with AANDC. The audit was conducted by Samson & Associates at the end of January 2013.
FINDINGS
The auditor has examined sufficient evidence to support his conclusions. Overall, other than the reporting requirements and the audit adjustments identified during the audit, the audit revealed that the recipient did comply with the terms and conditions identified within the Agreements.
Program Administration
The recipient has a number of governance documents in place. A general governance policy detailing the roles and responsibilities of Chief and Council exists, as well as policies for a number of programs including housing, outpost, tendering, and personnel. The recipient has put in place Terms of Reference for its committees and documented several of its finance and administrative procedures. Council minutes are recorded and retained. The recipient received governance training from AANDC in 2012.
However, awareness of governance and policy documents could be improved among the current administration. Contributing factors include the turnover of the Chief, some Council members and some of the management team, as well as a fire that occurred several years ago.
Financial Management
The auditor performed a review of the internal control framework implemented by the recipient. Comments and recommendations are based on discussions with the financial staff and management of the organization, and a review of documentation.
The auditor's observations to improve financial management include: creating a formal finance policy and procedures manual, documenting their policy concerning expenditure approvals, and creating an inventory of all financial documents.
Management Reporting Systems
The recipient maintains multiple general ledgers for the various programs and activities it manages. The auditor encountered difficulty in reconciling the general ledgers as they did not clearly identity their link to expenditures, funding agreements, programs, project activities, AANDC activities and type of funding approaches.
RECOMMENDATIONS
- The recipient should improve its governance by adding documentation and by creating a comprehensive set of policies and procedures. In addition, annual work plans should be used as a management tool.
- Although the recipient has some written documentation concerning policies and procedures, the recipient could strengthen financial and administrative controls by ensuring that:
- a complete formal finance policy and procedures manual is created and approved;
- the recipient documents their policy concerning expenditure approvals;
- the recipient creates a governance framework to identify all documents that it should have and then create an inventory of these.
- The recipient should improve internal controls and accounting procedures by:
- ensuring that all invoices are approved and contain sufficient details for review;
- ensuring that the responsibility for the receipt of cheques includes preparing a cheque list and is a separate function from the update of the accounting records;
- ensuring that bank reconciliations are signed and evidenced as being approved;
- ensuring that a control is established to ensure that refundable GST/HST is not coded as an expense;
- maintaining the recipient's records in such a way as to facilitate the reconciliation between the general ledgers, the funding agreements and the schedule of revenues and expenditures. Expenses related to different types of AANDC funding should be clearly separated in the general ledger; and
- ensuring that AANDC reports are completed in a timely manner.
- Human resource processes should be improved in the following areas:
- perform employee appraisals;
- apply a consistent approach to pay increases; and
- create a formalized pay grid by position type.
Several other recommendations are noted in the management letter.
CURRENT STATUS
A copy of the final report has been sent to the recipient.