Report on Recipient Audit of Sayisi Dene First Nation
Name: Sayisi Dene First Nation
Location: Manitoba
Population: 308 on reserve; 772 total registered
Default status at time of audit: Not in Default (2011-2012)
Current default status: Expert Resource Support, formerly know as Co-Managed (2013-14)
Current Chief: Peter Thorassie Jr.
Time period covered by audit: April 1, 2010 to March 31, 2012
Amount of AANDC funding audited: $7,736,734
BACKGROUND
Aboriginal Affairs and Northern Development Canada selected the Sayisi Dene First Nation in Manitoba, for a recipient audit in 2012-2013 based on their 2011-2012 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 to manage risks effectively.
This audit was conducted by KPMG in February 2013.
FINDINGS
The audit identified numerous control weaknesses with governance, expenditure oversight and financial management that if operating effectively, would help ensure funds were spent for the intended purposes in compliance with funding agreements. In addition, a judgmentally selected sample of 4% of the in-scope funding identified a compliance rate of 78% (based on the dollar amount of samples reviewed). The audit identified that expenditures in the amount of $67,381 were not in compliance with the terms and conditions of the funding agreement and are potentially recoverable.
Expenditures
The audit reviewed a sample of transactions based on the following criteria: significance of the annual expenditure by program; the nature of the program; results of other compliance work completed by AANDC over the scope period; volume of transactions; and dollar amount of individual transactions. No issues were identified by AANDC’s Manitoba regional office arising from compliance work conducted on the nominal role for the Education program or other compliance work on Social programs. The audit considered other areas identified from discussions with AANDC staff, including: discretionary spending, payments to Band Council and travel.
Internal Controls
The following elements of the control framework had been previously noted as potential weaknesses during the audit scope period:
- Accumulated debt totalling approximately $1.5M predating the audit scope period resulted in a remedial management plan that the recipient agreed to, and which forms part of the funding agreements of this current audit scope period. The audited financial statements for 2010/11 and 2011/12 reported annual expenditures in excess of revenues of approximately $2.8M and $2.0M respectively. The recipient has not reduced the amount of the accumulated debt, in fact it has grown from $1.5M in 2005/06 to $2.0M as of March 31, 2012;
- Management oversight (governance) and financial management are weak due to lack of capacity; and
- In regards to transparency and communication, there are complaints from Band members of lack of communication and that Chief and Council are often absent from the community. Chief and Council rarely holds band or program meetings and minutes not produced when meetings are held. Audited financial statements are not made available to members.
RECOMMENDATIONS
Sayisi Dene First Nation Chief and Council require improvement to their governance and expenditure oversight practices applicable to the funding provided by AANDC. In addition, Band Management requires significant improvements to practices relating to the financial management of funding provided, including: planning, budgeting and monitoring of programs, services and activities.
- The audit recommends that Chief and Council improve the governance and oversight of the funding provided by AANDC through:
- Documentation of minutes for all Chief and Council meetings and provision of minutes for review by Members, AANDC, auditors and other stakeholders as appropriate;
- Regular review of financial information (quarterly at a minimum, monthly is optimal) to assess actual program and administration expenditures compared to the budgeted amounts;
- Clarification of the roles of Chief and Council should be documented and communicated, and should include responsibility to review and approve the annual budget, and to review the actual expenditures compared to the budgeted amounts on a monthly or quarterly basis; and
- Presentation of annual budgets and audited financial statements to Members on a timely basis following their completion.
- The audit recommends that Chief and Council prepare a strategic plan, in order to articulate the objectives of the Band over the next one to three years.
- The audit recommends that Band Management prepare operational plans for all significant programs, which may include: Education, Social, facilities O&M and housing, and Band support.
- The audit recommends that Band Management improve the financial administration and management of funding provided by AANDC through:
- Documenting financial policies including the requirements for cash receipts, cash disbursements, accounting and record keeping, and financial reporting. These policies should be communicated and implemented with appropriate training provided as needed;
- Conducting a more thorough and documented review of monthly variance reporting; and
- Providing Chief and Council with financial information on a regular basis that includes budget and actual results with explanations for significant variances over and under budget.
- The audit recommends that the Band Management document the cash disbursement process to clearly outline the process and related financial controls that must be followed for the procurement of goods and services and the payment of funds for program expenditures. The key financial controls related to the disbursement of funds provided by AANDC should include, at a minimum, the following requirements: original invoices and contracts must be provided or available to support all cheque requisitions; receipt of goods or services must be approved by band management; cheque requisitions must be approved by authorized individuals only; and a list of individuals authorized to approve cheque requisitions, sign cheques, and issue bank transfers must be maintained.
CURRENT STATUS
A copy of the final report was sent to the recipient.