First Nations of Northern Manitoba CFS Authority · Sapotaweyak 21,853 12% 27,549 13% 41,761 15% 91,163 13% Chemawawin 19,625 11% 30,377 14% 33,909 12% 83,911 12% Wuskwi Sipihk 28,901

First Nations of Northern Manitoba CFS Authority

Financial Audit Component of the

Cree Nation Child & Family Caring Agency Review

November 05, 2009

The Exchange Group

Winnipeg, Canada

AUDITOR’S REPORT

The Financial Audit Component of the Cree Nation Child & Family Caring Agency Review

To the Chief Executive Officer of the First Nations of Northern Manitoba CFS Authority We have audited the information provided by the Cree Nation Child & Family Caring Agency (CNCFCA) relating to the Financial Audit Component of the CNCFCA Review requirements outlined by the First Nations of Northern Manitoba CFS Authority (Northern Authority) to The Exchange Group (EXG). The information provided is the responsibility of the management of the CNCFCA. Our responsibility is to express an opinion on this information based on our analysis and audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether information provided by the CNCFCA provide sufficient evidence to complete the Financial Audit Component of the CNCFCA Review requirements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the audited information. In our opinion, the information contained in this report presents fairly, in all material respects, the findings. �� The Exchange Chartered Accountants Winnipeg November 05, 2009

Cree Nation Financial Child & Family Caring Agency Review

The Exchange Group

Table of Contents

Introduction.................................................................................................1 I. Board Related Financial Activities ........................................................1

Board and Executive Board Expenditures for the Past Three Years Board and Employee Accounts Receivable and Other Receivables

II. Executive Director Payments ...............................................................5

Compensation through Payroll Expense Reimbursement Travel Advances / Expenses Purchase of Van Analysis Credit Card Transactions Total Payments to Executive Director

III. Payments made under Maintenance Programs for Past Three Years .........................................................................15

Family Members of the Executive Director involved in Maintenance Programs Payments Made to any Family Members of the Executive Director

IV. Payments to Swampy Cree Tribal Council......................................16 V. INAC Arrangement Amount ..............................................................17 VI. Children’s Special Services Trust Fund...........................................18 VII. Allocation of Costs Between Funders .............................................20 VIII. Finance Department and Processes Review .................................20


The Exchange Group 1

Introduction This Financial Review of the Cree Nation Child & Family Caring Agency (CNCFCA) report has been prepared based on specific areas of focus at the request of the First Nations of Northern Manitoba CFS Authority (Northern Authority). The timeframe under review included the fiscal years 2005/06 through 2008/09. The information and findings contained in this report are based on information provided to us by CNCFCA. I. Board Related Financial Activities Board and Executive Board Expenditures for the Past Three Years

1. Board Members and Meetings over the Past Three Years

Findings: 1. Over the past three years, there were 15 of 32 month end financial statements that were not noted in the minutes as reviewed / approved by the Board.

2. CNCFCA Board Honoraria, Travel Expense Reimbursement Policy

The following outlines the CNCFCA policies relating to the Board of Directors, Executive Management and Other Employees:

Travel Expense Board of Executive OtherPolicy Directors Management Employees

Honoraria $150/day N/A N/A

Meals $45/day $300/day $45/day

Accommodations $85/day Included in Meals Based on Actual (See Note 1) (Not to Exceed

$100/night)

Incidentals $20/night $30/night $20/night

Travel Time $200/day

Mileage $0.55/Km $0.55/Km $0.55/Km Note: 1. Per review of the G/L, the Board of Directors received $85/night for accommodations. There is no indication in the constitution and by-laws that this should be paid. 2. For the majority of the travel claims, individuals are receiving an extra 2 days in per diems; a day to travel to the meeting and a day to travel back home.

Findings: 1. There does not appear to be a policy regarding what types of events qualify for a Board Member to claim a Honoraria. Board members received Honoraria and travel reimbursements for both Board meetings and non-Board meetings. For example, a board member was paid a Honoraria for attendance at a staff interview.

2. It is our understanding that per INAC and the Province travel per diems

should be paid at a minimum of the Provincial rate and at a maximum the Federal rate. CNCFCA’s per diem rates are in excess of the Federal rate.



Based on our review of per diems from other Agencies, CNCFCA’s rates are higher than the majority reviewed.

3. Based on our analysis, there is an opportunity to reduce the distances and

Mileage expenses for Board meetings by holding the meetings locally in northern Manitoba.

3. Board Members’ Honoraria, Travel and Other Expenditures

The following table summarizes the Board Members expenses as presented in the audited financial statements:

Board of DirectorsExpenses per Audited Financial StatementsFirst Nation 2005/06 2006/07 2007/08 Total

Misipawistik 38,264 21% 32,284 15% 57,365 20% 127,913 19%

Sapotaweyak 21,853 12% 27,549 13% 41,761 15% 91,163 13%

Chemawawin 19,625 11% 30,377 14% 33,909 12% 83,911 12%

Wuskwi Sipihk 28,901 16% 33,791 16% 34,803 12% 97,495 14%

Marcel Colomb 15,055 8% 19,092 9% 29,690 11% 63,837 9%

Mosakahiken 29,356 16% 41,528 19% 45,865 16% 116,749 17%

Mathias Colomb 28,500 16% 32,023 15% 38,167 14% 98,690 15%

Normalized Total 181,554 100% 216,644 100% 281,560 100% 679,758 100%

Opaskwayak 84,076

Total 265,630 216,644 281,560 679,758 Findings: 1. Based on our audit of the payments to Board members, all payments were in

accordance with the CNCFCA Board Honoraria and Travel Expense policies.

2. As per CNCFCA Board Travel Expense policy, reimbursement of travel for Board members are not based on actual expenses incurred but rather per diem travel allowance.

3. There is no analysis performed by CNCFCA prior to travel by Board members to determine the most cost effective travel including air travel, car pooling, etc. It is at the discretion of each Board member to determine their travel arrangements.

4. Board Development costs are primarily travel allowance costs. In particular in 2007/08, approximately $35,000 of travel allowance expenses were incurred for the Board retreat in Kelowna, BC in June 2007.



4. Board Members’ Years of Service Payment

EXG was requested to review the circumstances surrounding the payment of certain funds to the Board of Directors on April 30, 2008.

Findings: 1. There were $13,750 in payments made to Board members for “Years of Service”. There was no motion tabled or approved to address the “Years of Service for Board” payment during this Board of Directors’ meeting or subsequent Board of Directors’ meetings reviewed.

2. At the time of this discussion by the Board there was no policy in place with

CNCFCA that addressed this matter. There has never been a policy implemented.

3. On April 30, 2008, legal counsel for CNCFCA emailed CNCFCA on this matter. The following are exerts from that email:

While there is strictly nothing illegal about doing so [Years of Services payments], the Board must be chiefly concerned with the appearance such a payment would have to the Agency’s funders and to the staff and to the general public. The Board already receives per diems for attending to any Agency business. This is sufficient compensation for their efforts. Any further payments would be harshly criticized by the funders and the Authority. If the Board does not heed this advice and still wishes to proceed with such payment then the Board should vote to change their compensation policy as a whole and not make this just a “one-tine” payment. Given the harsh criticism the Agency Board received in the Section 4 review it is not advisable for the Board to be voting itself extra payments. Please pass along this e-mail to the Board.

There was no evidence that the contents of this email were forwarded to the Board for their consideration.

4. There was no evidence presented to EXG that these payments have been reimbursed to CNCFCA.

Board and Employee Accounts Receivable and Other Receivables

1. Accounts Receivable from Board Members and Employees

The accounts receivable note in the audited financial statements includes amounts owing by Board members and employees. Child and Family Services organizations are not to have any amounts owing from either Board members or employees. The following outlines the types of accounts receivables:



Board Travel Advances Paid to Board members for travel allowances. Amounts are expenses to travel expense once the Board submits their travel expense information.

Employee Travel Advances Paid to employees for travel allowances. Amounts are expenses to travel expense once the employee submits their travel expense information.

Employee Salary Advances Paid to employees for salary advances.

The following outlines the amounts owing at each month end for the above noted accounts. Note that the March 31 balances agree to the audited financial statements:

Board Employee Employee TotalMonth Travel Travel Salary F/S

End Advances Advances Advances AdvancesApr-05 (2,468) 10,715 31,940 40,187

May-05 (2,268) 23,406 26,483 47,622 Jun-05 (2,743) 20,087 36,741 54,086 Jul-05 (2,093) 34,058 41,364 73,329

Aug-05 (693) 30,491 46,240 76,038 Sep-05 3,887 32,164 40,355 76,407 Oct-05 5,241 55,112 42,605 102,957

Nov-05 3,266 40,599 45,550 89,415 Dec-05 2,716 8,355 50,713 61,784 Jan-06 1,993 23,120 38,643 63,757 Feb-06 3,398 31,276 23,826 58,500

Mar-06 4,447 33,186 - 37,633 Apr-06 7,839 41,836 21,748 71,422

May-06 6,789 26,397 15,430 48,616 Jun-06 6,719 53,307 18,806 78,832 Jul-06 3,669 65,181 15,239 84,090

Aug-06 5,169 65,497 22,517 93,183 Sep-06 4,042 42,031 26,622 72,694 Oct-06 5,970 43,612 23,782 73,364

Nov-06 6,614 40,507 27,831 74,951 Dec-06 5,736 50,828 42,181 98,745 Jan-07 8,840 65,953 21,148 95,941 Feb-07 7,879 43,118 12,373 63,370

Mar-07 8,754 5,988 49 14,791 Apr-07 7,954 17,572 1,556 27,082

May-07 7,454 69,031 5,803 82,288 Jun-07 6,254 27,104 5,712 39,070 Jul-07 7,054 54,103 7,248 68,405

Aug-07 7,354 83,895 8,451 99,700 Sep-07 7,813 72,938 8,519 89,270 Oct-07 7,423 83,663 11,776 102,862

Nov-07 6,601 79,495 16,847 102,943 Dec-07 6,451 60,914 17,493 84,858 Jan-08 6,151 61,610 15,131 82,892 Feb-08 5,923 83,412 13,017 102,352

Mar-08 1,456 7,380 15,303 24,139 Apr-08 1,256 47,778 8,397 57,431

May-08 756 71,724 6,727 79,207 Jun-08 773 59,663 5,365 65,801 Jul-08 1,773 54,755 3,776 60,304

Aug-08 1,773 59,802 3,835 65,410 Sep-08 1,025 52,250 4,645 57,920 Oct-08 114 55,301 3,945 59,360

Nov-08 114 81,301 4,645 86,060 Findings: 1. The year end balances for the audited financial statements are the lowest at

any point in the year. Amounts in excess of $100,000 in Board and Employee Advances have occurred at numerous month end balances.



2. Balances are not reconciled at each month end. There has not been a sub-

ledger reconciling to the general ledger balances prepared on a monthly basis.

3. As can been seen in the table, the February balances every year are

significantly reduced for the March year end balances. Further investigation would need to be performed in order to determine if the amounts are being paid back or written-off to expenses.

4. There are numerous general ledger receivable balances which include

employee amounts receivable. A complete analysis of all employee receivable balances form all sources in the financial records should be performed.

5. The policy for Travel Advances states that an advance can be given in

emergency situations such as a death in the family.

6. CNCFCA charges a 15% administration fee on employee advances (eg. an advance of $500 requires the employee is to pay back $575).

7. CNCFCA has a G/L account for employee savings. Employees can request

to reduce their paycheque and leave money for employee savings. Employees can take their money at a future date when required. There is administration costs associated with this activity.

8. CNCFCA should prepare a clear definition and policy relating to Advances

including: � Definition of an emergency � Procedures for collecting � Number of open advances allowed � Timing of Advance reconciliations � Advance write-off criteria

II. Former Executive Director Payments 1. Compensation through Payroll The former Executive Director was compensated through payroll for a number of types of pay including:

Base Salary Bi-weekly salary with increases in base salary each year. Increment / Retro Pay Additional payments for retro-active payment for salary

increases. A/L Payout Additional payments for Annual Leave (vacation pay)



S/L Payout Additional payments for Sick Leave. EDO Earned Days Off based on the policy for the former

Executive Director as well as additional payments of EDOs as per requests by the former Executive Director. EDOs were provided for the position in lieu of overtime.

Advances Additional payments for salary advances requested by the

former Executive Director.

The following outlines the amounts paid to the former Executive Director through payroll during her employment:

Gross PayPayroll Type 2005/06 2006/07 2007/08 2008/09 Totals

Base Salary 57,842 74,754 88,182 63,964 284,743

Increment / RetroPay 5,902 2,856 7,324 16,082

EDO 2,803 22,185 65,847 12,619 103,454

A/L payout 2,908 7,923 3,169 27,528 41,528

Advances 3,450 1,150 4,600

Explanation states Payout 9,384 9,384

Total Payroll 72,905 108,868 164,522 113,495 459,790

Findings: 1. Base salary pay increments and retroactive pay were received each year of the former Executive Director’s employment.

2. Earned Days Off paid each year from 2006/07 onward were significant

representing the following percentage of base salary:

2006/07 30% 2007/08 75% 2008/09 20% Total EDO to Base 35%

As outlined in the 2007/08 fiscal year, the former Executive Director’s EDOs paid resulted in nearly doubling of her base salary as her compensation for the year.

EDOs are paid through a combination of a minimum EDOs guaranteed per month as well as for travel time in excess of the minimum.



3. According to the CNCFCA personnel policy for EDOs:

“All managers will be entitled to one EDO per month on the basis of work-related travel, attendance of meetings, workshops, conferences and phone calls for the month. This EDO can be carried over to the end of the fiscal year.”

According to an inter-office memo dated October 12, 2006:

“The Board of Directors approved that, the Executive Director, is now entitled to an additional 2.5 EDO’s per month. In total, she will be receiving 3.5 EDO’s per month.”

Based on the EDO policy and subsequent adjustment to the former Executive Director’s entitlement, the following outlines that the former Executive Director was paid substantially more EDO then she was entitled:

Former Executive EDODirector's EDOs Months Policy Earned Paid Out

April 2005 – March 2006 12 1 EDO 12.0 10.5

April 2006 – September 2006 6 1 EDO 6.0 October 2006 – March 2007 6 3.5 EDO 21.0

12 27.0 60.0

April 2007 – March 2008 12 3.5 EDO 42.0 121.0

Total EDOs 36 81.0 191.5

Based on this analysis, the former Executive Director was paid 110.5 days more for EDOs then the policies provided to EXG allowed.

4. Based on our review of personnel records for the former Executive

Director, all pay increments were documented through letters or memos.

2. Expense Reimbursement

During her employment, the former Executive Director submitted expense reimbursement for numerous activities including travel allowances, advances, expenses, training and additional amounts for EDOs not paid through payroll. The following outlines the expense reimbursement expenses paid to the former Executive Director through accounts payable cheques during her employment:



Bank Transactions 2006/07 2007/08 2008/09 Totals

A/P Payments for EDO Payroll 3,142 6,354 6,476 15,972 Management Salaries 2,000 2,000 Travel Advances / Expense 96,893 122,019 22,026 240,938

102,034 128,373 28,502 258,910

Employee A/R Miscellaneous A/R (Visa) 7,883 13,001 (1,863) 19,021 Salary Advances 3,968 3,359 7,327

11,850 13,001 1,496 26,348

Expenses Child Programming 4,456 4,456 CNCFCA retreats expense 3,348 1,157 4,504 Community Initiatives 1,000 1,000 Foster Expenses 1,609 100 1,709 General Expenses 3,424 6,905 6,541 16,869 Management Training 3,063 3,063 Prepaid Expenses 2,447 2,447 Staff Revenue Recovery (300) (300) PROV Basic Maintenance (2,467) (2,467)

4,004 17,573 9,704 31,281

Unreconciled Variance to Actual 2,554 (774) 336 2,116

Total Bank Transactions 120,443 158,174 40,038 318,654

Findings: 1. There are approximately 340 accounts payable cheque payment transactions to the former Executive Director throughout the period 2006 to 2008.

2. The former Executive Director received accounts payable cheque payments

for EDOs in addition to those amounts paid through payroll.

3. Salary advances were paid to the former Executive Director through payroll and accounts payable cheque payments. The following outlines EXG’s Advance reconciliation based on the financial records available during this review. In particular, not all information for the 2005/06 fiscal year were available as part of this reconciliation:

Advances Reconciliation 2005/06 2006/07 2007/08 2008/09 TotalsAdvances Through Payroll 3,450 1,150 - - 4,600 Advances Through Payables - 11,850 13,001 1,496 26,348

Total Advances 3,450 13,000 13,001 1,496 30,948

Advances Repaid in Payroll (11,643) (4,140) - - (15,783)

Net Advances (8,193) 8,860 13,001 1,496 15,164

Advances G/L Balances As Atfor Executive Director Sept/08Employee Travel Advance 326 Miscellaneous A/R 4,557

Total Receivable 4,883



Employee Advances in the general ledger have not been consistently reconciled on a monthly basis.

4. The former Executive Director was not charged interest on cash Advances

from credit cards. Nor was any other interest applied to her Receivable on unpaid balances for personal purchases.

3. Travel Advances / Expenses The following outlines the Travel Advance / Expenses reimbursements paid to the former Executive Director through accounts payable cheques during her employment:

Payments 2006/07 2007/08 2008/09 Totals

Travel Days Supported 193 168 43 404 EXG Estimate - 101 - 101 Total 193 269 43 505

Meal / Accommodations 58,100 73,192 12,000 143,292

Incidentals 4,700 5,625 950 11,275 Accommodations - - 300 300

Mileage 34,093 43,202 8,776 86,071 Kms Expensed 61,987 78,550 15,957 156,494

Total 96,893 122,019 22,026 240,939

Findings: 1. There are supporting records for the travel expenses for all of 2006/07 and 2008/09. There are $46,185 of cash disbursements to the former Executive Director in 2007/08 relating to travel that do not include supporting documentation. At the date of preparation of this report, the supporting documents had not been received from CNCFCA. As part of our analysis, EXG has prepared an estimate of the travel days for these amounts based on a prorate comparison to supported travel days and expenses.

2. Based on the analysis, there are a significant number of travel days claimed

by the former Executive Director for each year.

3. It is our understanding that an Executive Director is expected to travel to the First Nation members locations as part of his / her responsibilities. The following schedule outlines the travel destinations of the former Executive Director over the past three years:



Number of DaysDestination 2006/07 2007/08 2008/09 Total

Bell Lake 6 6 1%

Brandon 9 9 2%

Chemawaywin 4 4 1%

Cormorant 1 1 0%

Easterville 1 1 0%

Edmonton 5 5 1%

Grand Rapids 6 1 7 1%

Kelowna 9 9 2%

Lynn Lake 3 3 1%

Long Beach California 7 7 1%

Madge Lake 3 3 1%

Mathias Colomb 1 1 0%

Mosakahiken 7 2 9 2%

Ottawa 4 4 1%

Prince Albert 13 22 5 40 8%

Regina 7 7 1%

Sapotawayak 1 1 0%

Swan River 2 2 0%

Thompson 19 17 3 39 8%

Vancouver 7 7 1%

Winnipeg 114 198 35 347 69%

Total Travel Days 193 269 43 505 100%

% of Travel Days per Year 77% 108% 72% 90%

Average No. of Annual Working Days 250 250 60 560

As outlined, 69% of all travel by the former Executive Director were for trips to Winnipeg.

5. Travel expenses were paid to the former Executive Director based on the

Travel Allowance policy (see Page 1 - CNCFCA Board Honoraria, Travel Expense Reimbursement Policy). Based on an audit of amounts paid to the former Executive Director for Travel expenses, the rates paid were consistent with the policies.

4. There are a number of instances where based on the dates recorded in the

Travel expense documentation, the former Executive Director was paid twice for the same trip on two separate Travel expense reimbursements. These duplicate reimbursements total $5,267.00.



4. Purchase of Van Analysis

History Relating to Van Purchase The following provides background information relating to the purchase of the van for the former Executive Director: Feb 19/06: CNCFCA receives communication from INAC relating to the $804,749 final

adjustment for eligible Maintenance expenditures for the fiscal years 2002/03 through 2004/05.

Feb 20/06: Management Team meets to prepare a spending budget for the $804,749. This

spending budget memo includes the purchase of a van for the former Executive Director.

Feb 21/06: At the Regular Board of Director’s Meeting, the following information is

recorded in the minutes:

The Agency has received a request from Indian and Northern Affairs Canada with respect to an amendment to the funding agreement.

The Agency must expend all funds associated within this amendment by March 31, 2006.

MOTION 06-16

MOVED and SECONDED that the Board of Directors motion to sign the Amending Agreement as presented by Indian and Northern Affairs Canada.

CARRIED

The Executive Director informed the Board of Directors that the Management Team met on February 20, 2006 to plan a budget for the $804,749.00 from Indian Affairs. The budget was then presented to the Board of Directors.

Feb 22/06: A cheque requisition date Feb 22/06 to purchase a “Company Vehicle” for

$28,148.95 is prepared and signed by the former Executive Director (her signature is not dated). Cheque number 084933 dated Feb 22/06 is generated to the car dealership.

May 12/06: At a Special Board of Directors Meeting, the following resolution is Carried:

Also discussed is the issue of the Executive Director’s vehicle. Legal Counsel for CNCFCA amended the issue sheet with the request to the Board of Directors to approve. WHEREAS the Board of Directors has reviewed that performance of the Executive Director for the period of April 1, 2005 to March 31, 2006 and has been well satisfied with the performance of the Executive Director: AND WHEREAS the Board of Directors is aware that the position of Executive Director requires extensive travel throughout the Province of Manitoba and Canada;



AND WHEREAS the Board of Directors wants to ensure that the Executive Director is able to continue to travel on behalf of the Agency in a safe and cost effective manner; BE IT RESOLVED THAT: 1. The Board of Directors hereby authorizes the Executive Director to purchase for her use absolutely a vehicle of her choice with a value, including taxes and first year’s insurance, not exceeding $30,000.00. 2. The vehicle will become the personal property of the Executive Director upon purchase and shall be registered in her name. 3. The Executive Director shall be entitled to use the vehicle for her personal use and will be expected to use the vehicle for travel on behalf of the Agency. 4. The Executive Director shall be solely responsible for the payment of any taxes or liabilities that may arise after the purchase of the vehicle, including any employment benefits attributed and shall save the Agency harmless for the payment of such amounts. 5. The Executive Director shall be solely responsible for the maintenance and repair of the vehicle. The Executive Director shall be entitled to claim mileage expenses for the use of the vehicle for Agency travel as per the Agency’s travel policy. 6. The Executive Director shall not be entitled to apply for or claim an increase in salary for the next three fiscal years (April 1, 2006 to March 31, 2007, April 1, 2007 to March 31, 2008 and April 1, 2008 to March 31, 2009) and shall accept the vehicle in lieu of such salary increase. 7. In the event that the Executive Director ceases employment with the Agency, the current fair market value of the vehicle will be assessed and that value shall be used as a set-off against any severance paid to the Executive Director.

Findings: 1. The acquisition of the vehicle occurred two months prior to the Special

Board of Directors Meeting approving the purchase.

2. The minutes of the Feb 21/06 Regular Board of Directors meeting do not specifically approve the Feb 20/06 spending budget prepared by the management team.

3. A copy of the invoice from the car dealership for the purchase of the van is

not on file at CNCFCA and has not been located at the date of preparation of this report. Until this invoice is located, we are unable to determine the delivery date of the Van.

4. No evidence was found that any maintenance was paid by CNCFCA relating to the Van.



5. As per the Resolution: The [former] Executive Director shall not be entitled

to apply for or claim an increase in salary for the next three fiscal years [starting April 1, 2006 through March 31, 2009] and shall accept the vehicle in lieu of such salary increase.

The following outlines the base salary and base salary increases received by the former Executive Director:

Date Action / Supporting Documentation Salary Retro Pay

Mar 18/05 Letter of offer stating salary. 63,319$

Jun 16/05 Salary increase memo from Director of Finance & Administration based on "Board Motion".

68,487 914

Aug 5/05 Salary increase memo from CNCFCA Board Chairperson based on "Board Motion".

80,000

Undated Salary increase memo from CNCFCA Board Chairperson based on "Board Motion" with Retro Pay to Apr 1/05.

82,400 4,988

Note that former Executive Director received a Retro and Increment pay on Mar 24/06.

Sep 4/07 Salary increase per telephone conversation with CNCFCA Board Chairperson as placement of new salary scale (not an increment).

92,422 7,324

Based on a review of the payroll records, EXG confirmed that the salary increments occurred consistently with the dates above.

The September 4/07 salary increase for a placement of a new salary scale is not consistent with the May 12/06 Resolution stating that “The Executive Director shall not be entitled to apply for or claim an increase in salary…” .

6. Based on the Resolution to purchase the Van, the cost of the Van, applicable

taxes and the first year’s insurance, as well as the former Executive Director’s base salary at the time of the acquisition, the following schedule calculates the effective annual increase based on the three year timeframe (note this is a simple formula and does not attempt to factor in the cost of money):



Base Salary at Purchase Date 82,400

Van Purchase Price including taxes 28,149 Van First Year's Insurance (Estimate) 1,100

Total Value of Van Purchase 29,249

Van Purchase 29,249 2006/07 Base Salary 82,400 2007/08 Base Salary 82,400 2008/09 Base Salary 82,400

Total Base Salary Compensation 276,449

Average Salary over Three Years 92,150 Effective Annual Increase per Year 11%

Further, with the increase in the former Executive Director’s base salary in the 2007/08 fiscal year, the following schedule calculates the effective annual increase based on the three year timeframe (note this is a simple formula and does not attempt to factor in the cost of money):

Base Salary at Purchase Date 82,400

Van Purchase Price including taxes 28,149 Van First Year's Insurance (Estimate) 1,100

Total Value of Van Purchase 29,249

Van Purchase 29,249 2006/07 Base Salary 82,400 2007/08 Base Salary 92,422 2008/09 Base Salary 92,422

Total Base Salary Compensation 296,493

Average Salary over Three Years 98,831 Effective Annual Increase per Year 17%

7. As per the Resolution: In the event that the former Executive Director

ceases employment with the Agency, the current fair market value of the vehicle will be assessed and that the value shall be used as a set-off against any severance paid to the former Executive Director.

On April 4, 2008: The former Executive Director received $9,384.24

payment through payroll with the explanation “Payout”.

Further, the former Executive Director also received $12,441.42 payment through payroll with the explanation “S/L 35 days”.

The former Executive Director received her final

payment on August 9, 2008 for amounts of her base salary up to November 30, 2008.



5. Credit Card Transactions

The former Executive Director utilized the CNCFCA corporate Visa card for both business and personal transactions.

Findings: 1. There were not a substantial amount of interest charges on the Visa

statements.

2. There were substantial purchases identified by CNCFCA as personal by the former Executive Director ($50,805) and payments ($49,821). Further analysis to ensure all the payments made on the Visa card were not made by CNCFCA and credited to the former Executive Director as a personal payment should be undertaken. This should be cross-referenced to payroll deductions as well.

3. Based on this analysis, there remains a balance owing by the former

Executive Director on the Visa card of $984.04.

6. Total Payments to the Former Executive Director

Based on the information obtained during this review, the following summarizes all the amounts paid to the former Executive Director during each fiscal year:

All Payments 2005/06 2006/07 2007/08 2008/09 Totals

Total Payroll 72,905 108,868 164,522 113,495 459,790

Total A/P Bank Transactions 120,443 158,174 40,038 318,655

Purchase of Van 29,249 29,249

Total Compensation and Reimbursements 102,154 229,311 322,696 153,533 807,694

Findings: 1. Information relating to 2005/06 Accounts Payable Bank Transactions

relating to the former Executive Director were not available to be analyzed in preparation of this report.

III. Payments made under Maintenance Programs for Past Three Years 1. Family Members of the former Executive Director involved in Maintenance Programs

Based on direction provided by the Northern Authority, EXG identified family members of the former Executive Director who received payments including:

� Respite � Emergency Services � Independent Living



2. Payments Made to any Family Members of the former Executive Director

Findings: 1. The number of and payments to identified family members of the former Executive Director significantly increased over the past three years. In 2004 / 2005, there were three identified family members. By 2007 / 2008 there were 15 identified family members.

2. The ratio of payments of family members as a percentage of all support

workers steadily increased in each of the past three years.

3. Based on audit tests performed, the family members’ payments were made in accordance with Support Worker payment policy.

4. The payments to identified family members represented 22% of all Support

Workers who received payments in excess of $23,000.

IV. Payments to Swampy Cree Tribal Council Findings: 1. From the period 2005 through 2009, CNCFCA paid $149,136 to Swampy Cree

Tribal Council for a variety of charges including Board Recoveries and Computer Support, AGA, travel reimbursements, event sponsorships, etc.

2. No one at CNCFCA has any documentation or knowledge why payments to

Swampy Cree Tribal Council were being made for Board Recoveries and Computer Support ($99,681 over the past four years). Recurring invoices were received and paid based on past practice.

3. As at the week of February 9, 2009 all payments for Board Recoveries have stopped.



V. INAC Arrangement Amount The following table outlines the detailed allocation of the INAC arrangement amount of $804,749 that was released to CNCFCA on February 19, 2006 and the resulting management memo prepared on February 20, 2006. Management Memo Purpose of Payment

Allocated Amount

Action One-Time Payment

Annual Payments

Notes

Company Vehicle for Executive Director 40,000 Undertaken Prior to March 31, 2006, see Section II.4 of Report

28,149 Purchased February 22, 2006

Unit Coordinator/Senior/Provincial Workers Retreat

40,000 Undertaken Prior to March 31, 2006 40,000

LCCC Workshop 25,000 Undertaken Prior to March 31, 2006 25,000

Special Needs Worker 40,000 Position filled June 1, 2006 40,762 Annual Pay

Data Input Clerk 30,000 Position filled June 1, 2006 29,139 Annual Pay

Resource Worker 40,000 Indivisual Transferred from Winnipeg to The Pas in 2006. Laid off after one year

52,940 Position not refilled

Emergency Receiving Home Chemawawin Cree Nation

70,000 Paid - March 30, 2006 70,000

Emergency Receiving Home Sapotaweyak Cree Nation

70,000 Paid - March 30, 2006 70,000

Foster Parent Conference 40,000 Conference Held October 27 - 30, 2006

40,000

Board Retreat 20,000 Retreat Held April 7-10, 2006 and November 24-26, 2006

21,784

Management Retreat 20,000 Retreat Held May 25-29, 2006 21,068

Child Abuse Unit Worker 37,500 Position filled September 8, 2006 57,848 Annual Pay

Child Abuse Training 25,000 Not Done -

Administration Assistant Training 10,000 Training Session Held July 7-10, 2006 and August 25-28, 2006

13,581

Finance Training 10,000 Training Session Held July 7-10, 2006 and August 25-28, 2006

13,581

FACTS Computer System Upgrade 50,000 Computer System upgrade work undertaken November 2007 to March 2008

43,194

Administrative Assistant 27,500 Assistant was hired - unable to identify 27,500 Estimated by EXG

Billing Clerk 30,000 Position filled 25,995 Annual Pay

3% Retroactive Pay from April 1, 2005 179,749 Undertaken for March 15, 2006 payroll

169,200 Estimated by EXG based on 3% 2005 administrative salaries

804,749 608,497 181,244 76% 23%

Total Costs Incurred in First Year 789,741 Findings: 1. There was no specific Board motion or approval of the spending allocation

for the INAC Arrangement amount. The only discussion of these allocations was at the regular Board of Director’s Meeting on February 21, 2006 where a budget for these INAC funds was presented to the Board.



2. Of the $804,749 allocated in the management memo, $181,244 (23% of all

allocated amounts) were new positions with annual salary recurred costs going forward.

3. There were two items that were significantly over the allocated amounts in

the management memo: Memo Actual

Hiring of Resource Worker $40,000 $52,940 Hiring of Child Abuse Unit Worker $37,500 $57,848

4. The allocation of $25,000.00 for Child abuse training was never undertaken.

VI. Children’s Special Services Trust Fund Historically, the Agency had a policy of retaining half of Child Tax Benefits received for permanent wards set up as a trust asset and a trust liability. These funds were tracked on a child by child basis and paid out to the child once they reached the age of majority. The purpose of this policy was to assist the child to get an initial start in life as an adult. The second half of the Child Tax Benefit was used by the Agency for maintenance and to fund community-based programming.

Findings: 1. On January 19th 2008 the Board received a legal opinion from the CNCFCA legal counsel recommending as follows:

As there is no legal obligation to hold any of these funds in trust, the Board is free to change the policy and use the monies for maintenance purposes. This use of the funds is in line with the current government policy and audit rules. As well, the Board would avoid the situation of having monies clawed back. The Board can authorize the immediate release and use of the current trust funds for Agency operations and programming. There is no legal obligation on the Agency to hold the funds and the issuer of the funds (government) intended that the funds be used for care and maintenance of children.

2. On February 28, 2008, during the regular Board of Directors meeting, the Board carried and approved a resolution as follows:

The Cree Nation Child & Family Caring Agency will forthwith discontinue its current practice of holding in trust any portion of the Child Tax benefit payments received for children in its care. All funds so received will be utilized for program development, care and maintenance within the confines of the Agency’s annual budget and financial plan. The Cree Nation Child & Family Caring Agency will forthwith terminate all current trust accounts. The funds currently held will be



utilized immediately for program development, care and maintenance within the confines of the Agency’s current budget and financial plan.

3. This resolution resulted in the trust fund monies amounting to $1,027,000

recorded at that time as “Due to Permanent Wards re Child Special Allowances” to be transferred as at March 31, 2008 to a Deferred Revenue liability account “Child Special Allowances”. The agency had not physically set up a separate bank account to hold these trust funds but rather held them in the general bank account and accounted for the amounts in the Trust Funds liability on the financial statements.

4. It is CNCFCA policy that as these funds are expended in the future, amounts

equal to the expenditures will be transferred from the deferred revenue account to current operations to off set these expenditures.

5. On April 15, 2008, at a regular Board meeting a budget for Child Trust

Benefits funds was presented. The budget was as follows:

Expenditures AmountCurrent

7 Family Enhancement Workers $280,000

Benefits 46,800

Travel 105,000

Public Service Announcements 40,000

471,800 Balance Other: Cultural, Gatherings, Faciliators

Parent Programs: Staffing, Workshops, Public Meetings, Prevention Program Advisor

555,200

$1,027,000

At the Board meeting, the following motion was presented and carried:

7.4 Pilot Project

Allocate trust funds towards the pilot project to establish Family Enhancement Workers over the next two years. Motion 08-28 MOVED and SECONDED that the Board of Directors motion to approve that the allocation of the trust fund be put towards the establishment of the pilot project for the Family Enhancement Workers.



6. To date five Family Enhancement Workers have been hired for five communities: Winnipeg, Grand Rapids, Mathias Colomb, Moose Lake and Sapotaweyak.

7. One half of the funds have been deposited into a term deposit to be utilized

for funding the second year’s expenditure programs in 2009/2010.

VII. Allocation of Costs Between Funders

Findings: 1. Based on the information provided by CNCFCA for the current fiscal year ending March 31, 2009, the revenue and cost allocations between Provincial and Federal funding for both Child Maintenance and Administration programs are as follows:

� For all Child Maintenance Programs separate accounts are

maintained for all costs associated with Provincially-sponsored children and Federally-sponsored children.

� Administration costs are allocated based on the percentage of

the value of funding received from the Province and from INAC.

VIII. Finance Department and Processes Review 1. Additional Salaries to Finance Staff

Findings: 1. As outlined in the tables, there were substantial amounts of additional payments over and above staff members’ base salaries (for example EDOs, Annual Leave, Banked Time, Retroactive Pay). The following outlines the percentage over base salaries and the increasing trend from 2006 to 2008:

2006 11% 2007 15% 2008 23%

2. The Director of Finance’s position was specifically identified in the Days Off

policy as follows:



Days Off Executive Director of OtherPolicy Director Finance Employees

EDOs 3.5 days/month 2.5 days/month N/A

Vacation 2.5 days/month 2.5 days/month Per Schedule

Sick Leave 1.25 days/month 1.25 days/month N/A

Banked Time N/A N/A If Pre-Approved

Total Days Off Benefit 7.25 days/month 6.25 days/month Varies Based on this policy, the following table reflects EXG’s calculation of amounts earned based on each year’s salary for the Director of Finance compared to amounts paid out through payroll records:

Calendar Year

Policy Earned

Estimate Actual Paid

Out Variance2006 16,393 13,310 3,083

2007 23,732 28,462 (4,730)

2008 27,316 52,327 (25,011)

3. The salary review was limited to the Finance staff only. It did not include the other administrative staff at CNCFCA.

4. The review of the employee personnel files determined that they were not

complete in terms of content and documentation relating to salary increases or additional payouts.

5. Our review indicated that the approval and documentation process prior to

2007/2008 was not executed as to the policies set out. However, currently all additional salary payout are approved by the Finance Director.

2. Financial Reconciliations and Internal Monitoring Our review of the CNCFCA financial records and our discussions and interviews with finance staff indicates that general ledger accounts are currently being reconciled on a monthly or quarterly basis. However, as a result of the nature of some of the reconciliations, we were not able to verify whether the required monthly / quarterly reconciliations are completed on a monthly basis during each month / quarter or all at the same time at year end.

Findings: 1. There are a large number of journal entries at the year end rather than through out the year. This could indicate that reconciliations were being completed only at the year end necessitating the required volume of journal entries at the year end.

2. There are a number of general ledger account balances that increased during

the year only to be adjusted and reduced at the year end. This would also indicate that reconciliations were being completed only at the year end.



3. Our review of the Auditor’s management letters for the fiscal years 2006,

2007 and 2008 noted a series of financial and operating deficiencies and recommendations. Specifically for fiscal 2006 the management letter indicated:

The Agency does not maintain an accurate ledger of accounts receivable. A monthly reconciliation of the accounts receivable sub ledger would be useful in locating discrepancies and assessing the cash flow and payment requirements of the Agency. During the Audit, a significant amount of time was spent reconciling the various receivable accounts. We recommend that all receivable accounts be reconciled on a monthly basis.

We noted that the above recommendation or a similar recommendation did not appear in the subsequent management letters for the fiscal years 2007 and 2008.

4. EXG recommends that a monthly checklist be developed and maintained

with respect to all required general ledger account reconciliations. This checklist would be available to senior management to ensure that all reconciliations were completed as required.

3. Expenditures Processes, Controls and Documentation

The following processes were reviewed and specific areas of potential weaknesses were identified:

1. Maintenance expenditures 2. Operational expenditures 3. Payroll expenditures

Findings: 1. Suppliers The accounting technician processes the request from the case worker regardless of the completeness of the request to ensure that supplier won’t freeze up the agency’s account. The follow-up work with the case workers takes away a considerable amount of the accounting technician’s time that could be spent on reconciling these accounts.

CNCFCA should consider reviewing the type and number of suppliers which cause this inefficient process to determine if there is an opportunity to provide a deposit on hand with the higher volume suppliers in order to avoid the potential for freezing the agency’s account and allow the case workers opportunity to properly complete the request.



2. Cheque Generation

There is a lack of segregation of duties in regards to the printing of cheques. The accounting technician enters the payable, processes the cheque in FACTS, prints it and submits it to the signing authorities. There is not a control in place where upon someone from CNCFCA reviews all cheques returned from the bank to ensure authorized signatures are on each cheque. The current system has the potential for someone to obtain a salary or travel advance, using the proper methods as described above, and then simply write off the balances from their personal account via journal entry. Proper segregation of duties would state that the same person should not have:

� The ability to create new suppliers � Enter payable information � Access to unused cheques � Access to the function of printing cheques � Access to post journal entries � Receive bank statements directly from the mail � Perform bank reconciliations

CNCFCA should perform a review of the functions to identify who should have which responsibility and / or create the compensating controls where a segregation of duties are not possible.

Documents

First Nations of Northern Manitoba CFS Authority · Sapotaweyak 21,853 12% 27,549 13% 41,761 15% 91,163 13% Chemawawin 19,625 11% 30,377 14% 33,909 12% 83,911 12% Wuskwi Sipihk 28,901