Summary Report on Recipient Audit Performed on Shoal Lake #40 First Nation
Name: Shoal Lake #40 First Nation
Location: Ontario
Population: 286 on Reserve; 641 total registered
Default status at time of audit: Not in default
Current default status: Not in default
Current Chief: Irwin Redsky
Time period covered by audit: April 1, 2011 – March 31, 2013
Amount of AANDC funding audited: $5,940,728
Background
Indigenous Services Canada (ISC), formerly Indigenous and Northern Affairs Canada (INAC), selected the Shoal Lake #40 First Nation in Ontario for a recipient audit based on their 2013-2014 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 is in compliance with the terms and conditions of the 2011-2012 and 2012-2013 Funding Agreements with ISC. The objective was achieved through:
- Examination of the effectiveness of the operations of the Financial Management Control Framework in place at the Shoal Lake #40 First Nation; and
- Conduct of audit procedures on the eligibility of the expenditures claimed under the terms and conditions of the Funding Agreements with ISC.
Deloitte LLP, an independent audit firm, was commissioned by ISC to undertake the recipient audit. The audit procedures were performed from March 10, 2014 to March 13, 2014. The audit was completed with success and the auditors have examined sufficient evidence to support their conclusions.
Findings
The procedures performed identified certain control weaknesses within governance, program administration, expenditure oversight and financial management that, if well designed and operating effectively, would help ensure that funds are spent for their intended purposes and in compliance with the terms and conditions of the Agreement. The following are some key findings and key recommendations identified in the audit report.
Governance by Chief and Council
The procedures performed identified best practices and areas where there are opportunities to improve governance and administration in support of programs funded by ISC. The audit identified the following best practices. Supporting documentation should continue to be a minimum of two authorized individuals and maintained in an organized manner, with cheque requisitions, invoices and cheque copies attached. It is recommended that the recipient's monthly bank reconciliation should continue to be prepared on a timely basis. Shoal Lake #40 First Nation should develop formal accounting policies to ensure that there is an appropriate control framework, consistency in financial reporting and adherence to the Canadian Public Sector Accounting Standards, which the organization uses to prepare and present its annual financial statements.
Band Management
The procedures performed identified the following areas for improvement with respect to Band financial management procedures. In cases where the Recipient's supporting documentation was insufficient, it is recommended that all expenses claimed by the recipient be supported by invoices and evidence of the work performed, in addition to payments issued. Segregation of duties is also important for effective internal controls, so it is recommended that the approval function, the accounting/reconciliation function and the asset custody function be separated among employees.
Current Status
A copy of the final report has been sent to the recipient. ISC and the recipient are working together to address the findings. In addition, the recipient was provided with a verbal briefing on the results of the audit.
Disclaimer: This audit summary was prepared based on information contained in a Recipient Audit Report on Shoal Lake #40 First Nation for ISC. The report produced for ISC is intended solely for the information and use of the Recipient and ISC 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.