Report on Recipient Audit Performed on Aroland First Nation
Name: Aroland First Nation
Location: Ontario
Population: 16 on reserve; 724 total registered
Default status at time of audit: Recipient-Appointed Advisor (Formerly called Co-Manager)
Current default status: Recipient-Appointed Advisor
Current Chief: Dorothy Towedo
Time period covered by audit: April 1, 2011 to March 31, 2013
Amount of AANDC funding audited: $5,605,569
Background
Indigenous and Northern Affairs Canada (INAC), formally known as Aboriginal Affairs and Northern Development Canada (AANDC), selected the Aroland First Nation in Ontario for a Recipient audit based on their 2013-14 risk assessment score and other risk factors.
The objective of the Recipient audit was to provide assurance that funding provided to the Recipient by Canada was spent for its intended purposes and was in compliance with the terms and conditions of the 2011-2012 and 2012-2013 Funding Agreements with INAC. The objective was achieved through:
- Examination of the effectiveness of the operations of the Financial Management Control Framework in place at the Aroland First Nation; and
- Conduct of audit procedures on the eligibility of the expenditures claimed under the terms and conditions of the Funding Agreements with INAC.
Ernst & Young LLP, an independent audit firm, was commissioned by INAC to undertake the Recipient audit. The audit procedures were performed from February 24, 2014 to February 28, 2014.
Findings
The procedures performed identified some weaknesses in the internal financial control processes that are in place for program administration, financial management and reporting systems. As a result, some of the expenditures examined as part of the recipient audit did not comply with the terms and conditions of the Funding Agreements.
Governance by Chief and Council
The procedures performed identified opportunities to improve governance in support of programs funded by INAC. The controls surrounding governance were determined to be insufficient. A key recommendation was that the Recipient should ensure that personnel files for all current employees should have documentation pertinent to hiring of employee that confirms salary and job description for the position. It is also recommended that all new hires should be required to sign an employment contract detailing the terms of their employment including salary information.
Another key recommendation was that the Recipient should increase their oversight over the financial operations of the organization, specifically with respect to obtaining periodic (e.g. monthly) program-specific financial statements and having meetings to discuss financial results.Band Management
The procedures performed identified areas where there are opportunities to improve band management in support of programs funded by INAC. A key recommendation was that the Recipient should ensure that all purchases be confirmed to supplier in writing (e.g. a purchase order) and authorized by the Program Coordinator, to provide support for the approval of orders prior to purchase. Another key recommendation was that the Recipient should ensure that invoices are reviewed by the cheque signing authorities in detail to verify validity and eligibility of expenses against the Program guidelines.
Current Status
A copy of the final report has been sent to the Recipient. INAC and the Recipient are working together to address the findings.
Disclaimer: This audit summary was prepared based on information contained in a Recipient Audit Report on Aroland First Nation for INAC. The report produced for INAC is intended solely for the information and use of the Recipient and INAC Management. The audit summary only presents limited information on the general findings based on the audit procedures performed and does not provide information on the detailed procedures of findings. Consequently, this summary may not be appropriate for the purpose and use of the reader.