Summary report on recipient audit performed on NLHA'7 KAPMX Child and Family Services Society
Name: NLHA'7 KAPMX Child and Family Services Society
Location: British Columbia
Population: N/A
Default status at time of audit: not in default
Current default status: not in default
Current executive (s): board of directors
Time period covered by audit: April 1, 2014 – March 31, 2016
Amount of INAC funding audited: $2,127,571
Background
Indigenous Services Canada (ISC), formerly Indigenous and Northern Affairs Canada (INAC), selected the NLHA'7 KAPMX Child and Family Services Society for a recipient audit.
The objective of the recipient audit was to provide assurance that funding provided to the recipient by the Government of Canada was spent for its intended purposes and compliant with the terms and conditions of the 2014–2015 and 2015–2016 funding agreement. The objective was achieved through:
- reviewing the recipient's program management and financial framework control practices in relation to the funding agreement
- conducting audit procedures on the eligibility of the expenditures claimed under the terms and conditions of the funding agreement with ISC
Samson and Associates, an independent audit firm, was commissioned by ISC to undertake the recipient audit. The audit procedures were performed from March 6, 2017 to March 14, 2017. The audit was completed and the auditors have examined sufficient and appropriate evidence to support their conclusions.
Findings
The audit procedures performed identified best practices, as well as control weaknesses in Governance and Band Management under program administration, expenditure oversight and financial management. If well designed and operating effectively, they 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.
Program administration
NLHA'7 KAPMX Child and Family Services Society governance structure is based upon a six (6) persons Board of Directors, of whom four (4) constitute a quorum. The Executive Director reports to the Board of Directors and provides informative financial and operations summary reports at each Board meeting. Roles and responsibilities within the organization were clearly established in accordance with the organization chart. The finance team provides monthly budgets to relevant managers, the finance committee and to the board of directors to enhance financial accountability. The audit also identified areas where there are opportunities to improve governance and administration. Review of the policy and procedures manual, which includes personnel and financial policies and procedures, revealed that the policies and procedures were not always followed. The recipient should ensure that it is in adherence with the policies and procedures outlined in the manual. Policies should be updated regularly.
Financial management
Accounting systems and procedures needed to implement the agreement have mostly been established. The audit also identified areas where there are opportunities to improve band financial management procedures. Expenditures for set funding programs were recorded under the same general ledger account. The recipient should ensure that the structure of the chart of account be modified to ensure that set funding program expenditures are accounted for separately by programs. Since the recipient was not registered with the Canada Revenue Agency (CRA) for claiming the applicable GST/HST, the GST was being claimed to INAC Program. The recipient should register with the CRA for GST/HST purposes as this would entitle the organization to claim input tax credits and rebates for GST/HST paid on eligible purchases. It would also increase funding available to the organization. Expenses were processed without sufficient appropriate documentation. The recipient should implement controls to ensure that all payments are supported by appropriate documentation such as invoices, receipts, etc.
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 NLHA'7 KAPMX Child and Family Services Society 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.