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Federal audits reveal questionable spending at three Manitoba reserves

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Three Manitoba reserves are among seven First Nations found to have questionable spending after the federal government released recipient audit reports recently.

In Manitoba, reports on all three First Nations audited identified numerous "weaknesses with governance, expenditure oversight and financial management."

The Department of Aboriginal Affairs and Northern Development Canada has posted 11 recipient audit reports online, with more online releases to come, as part of a government strategy to give First Nations citizens a chance to see where government funding is being spent in their communities.

It will also give the federal government an opportunity to recover hundreds of thousands of dollars in misspent funding.

The Roseau River Anishinabe First Nation, which received about $13.5 million in funding during the two-year audit period, fared the best. The report showed "compliance of 97 per cent with the intended purpose and terms and conditions of the applicable funding agreements with the AANDC over the audit period." But it found $18,093 was not used in compliance with the funding agreement and that amount was "potentially recoverable."

The Mosakahiken Cree Nation, which received about $10.6 million in the two-year audit period, was given a "denial of opinion" from the auditor because it could not find enough information to conclude an audit. The report stated the Mosakahiken Cree Nation "does not have a suitable management framework in place to administer and deliver the programs" and there were "large cash advances to staff and band members" that were not accounted for in the accounts receivable ledger.

At the Sayisi Dene First Nation, which received $7.7 million during the two-year audit period, the auditor questioned $67,381 in expenditures. It also noted that the band’s debt had increased by $500,000 in six years, there were complaints from band members about the lack of transparency and communication and "the chief and council are often absent from the community."

The First Nations Transparency Act, passed in March 2013 by the Conservative government, requires a random selection of about 24 First Nations per year from the more than 600 across the country to undergo independent audits to ensure the government funding they are receiving is being properly spent.

The reports are giving First Nations citizens "an unprecedented picture of how chiefs and council manage funds on their behalf," Aboriginal Affairs Minister Bernard Valcourt told the Globe and Mail in a recent story.

Terry Goodtrack, president and CEO of the Aboriginal Financial Officers Association of Canada, said in the Globe story that communities are unclear about the new disclosure rules and the latest reports are more like commentary rather than audits.

"First Nations are at different levels in their journey toward economic prosperity and so forth," he told the Globe. "So there’s many different ways these things could be handled. To me, this is not the way."

Each report included detailed recommendations for improvements such as having regular meetings, documentation of minutes at those meetings, document spending with receipts and preparing and presenting annual budgets and audited financial statements to band members.

Read the reports here.

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