Management Letter - Sheshatshiu Innu First Nation (SIFN)

Chief Andrew Penashue
Sheshatshiu Innu First Nation
P.O. Box 160
SHESHATSHIU NF A0P 1M0

Ref: 2012-13 Recipient Audit Results and Follow-Up

Dear Chief Penashue:

Aboriginal Affairs and Northern Development Canada (AANDC) conducted a number of recipient audits in fiscal year 2012-13, including an audit of the Sheshatshiu Innu First Nation. Attached please find a copy of the full audit report and a summary of the report. The summary will be published on the department's website in the coming weeks, along with this management letter. Should you wish to, you may provide a written response to the audit to me within 30 days. Your response will also be posted along with the summary report.

No recoverable amount has been identified as a result of this recipient audit. The audit report included the following recommendations which we advise you and your organization to address:

• It is recommended that the Recipient create policies and procedures related to items such as Band bylaws, grievance and dispute resolution procedures for Band Members, code of ethics and conflict of interest guidelines for the Chief and Council, election procedures, as well as formal procedures to allow Band members to be involved in community decisions. In addition, policies should be formally documented with respect to programs, such as for public works, including water safety and wastewater, the safe house and emergency shelters. Council should approve these policies.
• It is recommended that the Recipient prepare detailed, internal work plans for each program area that show activities for each project, timelines for completion and persons responsible. We recommend that these internal work plans be approved by Band Council and used to monitor and correct performance throughout the year.
• It is recommended that the Recipient prepare a formal comprehensive financial and administration manual and that this be approved by Council.
• It is recommended that the finance and administration manual document the Recipient's policy on expenditure approvals. The policy should indicate which individuals have approval authority, the nature of expenses (e.g. operating expenses, third party contracts, salary increases, overtime) and the maximum dollar value that the individual can approve and the appropriate delegation of authority for approval when an individual is absent. We recommend that the Chief and Council approve this approval matrix.
• It is recommended that the Recipient create a governance framework to identify all documents that it should have and then create an inventory of these reports. The reports should be maintained in a central, controlled location and the content and location should be communicated to the Chief and Council as well as to staff and Band Members, as appropriate, so that these documents are available for guidance when conducting Band business.
• It is recommended that the Recipient ensures that its tendering policy is followed and that where tenders are received, they be retained on file for transparency audit purposes. Where work is sole sourced to a supplier, justification should be documented and retained on file.
• It is recommended that Program Managers document their approval to pay on all invoices relating to their program. Program Managers have full authority over their budgets and, as such, should document their payment approval to indicate that goods and services have been received before invoices are submitted to Finance for payment.
• It is recommended that the Recipient ensures that timesheets, with a daily breakdown of services performed, are received from Innu Project Management Ltd. for all time billed before payment is approved.
• It is recommended that the Band performs the annual employee appraisals and maintain these in the personnel files.
• It is recommended that the Band apply a consistent approach with respect to initiating pay increases, such as preparing a formal letter to the employee. These letters should be retained in the personnel files.
• It is recommended that the Band continue their effort to create a formalized pay grid by position type. This should be approved by the Chief and Council.
• It is recommended that the Band follow the overtime policy detailed in the Personnel Policy Manual or have the Chief and Council amend the policy accordingly. Note: Subsequent to the site visit, a policy, also dated October 2010, was presented requiring payment of overtime if not taken as time off within 60 days.
• It is recommended that the function for managing standing payroll data be separated from the processing of payroll transactions. Either Human Resources should take the responsibility for maintaining payroll standing data or someone in Finance, who does not have access to process payroll transactions, should manage the new hires or pay rate changes.
• The responsibility for the receipts of cheques should include preparing a cheque list. It is recommended that this be prepared by a person who does not have access to the accounting software. When the person who deposits the funds returns from the bank, a comparison of the cheque listing to the deposit should be made and evidenced as such.
• It is recommended that the person who prepares the bank reconciliation sign and date the reconciliation. In addition, the CFO should sign and date the reconciliation at the time of reviewing the reconciliation.
• It is recommended that the Band should record the HST that is included in a travel allowance or on gas receipts as a recoverable amount from CRA. Staff should be trained and monitored to ensure that the treatment of HST is correctly and consistently applied.
• It is recommended that the Recipient maintain its records in such a way as to facilitate the reconciliation between the general ledgers, the funding agreements and the schedule of revenues and expenditures. More specifically, the Recipient should ensure that a general ledger for each agreement is created and explore the practicality of maintaining one general ledger for each AANDC funded program with the possibility of separate, parallel accounts within the general ledger for each funder. According to Section 4.3 in the 2011-12 Agreement, the Recipient is to maintain accounts for each program, service and activity for which funding is provided; and
• It is recommended that the Recipient ensures that all of the required reports are sent to AANDC by the due dates.

Please contact your local AANDC representative to follow up on any questions or concerns you may have.

Sincerely,

Susan MacGowan, CMA
Chief Financial Officer

c.c.:  Ian Gray, Regional Director General
Ron Hallman, Senior ADM Regional Operations
Brahim Achtoutal, Acting Chief Audit and Evaluation Executive
Ms. Melinda Baikie, Sheshatshiu Innu First Nation
Samson & Associates