FNHMA National Conference November 15-17, 2016

Hyatt Regency, Vancouver

Understanding Health Funding Authorities

Simon Brascoupe, M.A., CFNHM, CAPA

Vice-President Education & Training, AFOA Canada November 16, 2016, 10:45 – 12:15 p.m.

Agenda

• Funding Authorities • Budgeting • Variance Reporting • Accounting and Auditing Concepts • Federal Joint Funding Agreement

Indigenous control of health

• Nation to nation relationship • Social determinant of health • Cultural safety • Increased health outcomes • Retention of healthcare workers

Evolution of Health Canada (FNIHB) Funding Authorities Models & Funding Agreements

April 2011 Renewal of FNIHB Authorities and alignment with 2008

Treasury Board Directive and Policy on Transfer

Payments

April 2007 New Funding Models introduces based on FNIHB Authorities of

2005

1989 1994 FNIHB received authority for the Integrated Community-based Health

Services

1989Transfer Authorities by

Treasury Board

General Agreements by Program

Health Transfer Agreements

General Agreements by

Program

Consolidated General Agreements

Consolidated Community-based Health Services

Integrated Agreements

Health Services Transfer Agreements

Set Funding Model

Transitional Funding Model

Flexible Funding Model

Flexible Transfer Funding Model

Set Funding Model

Flexible Funding

Block Funding Model

An array of Contribution

Agreements per Recipient

Single Contribution Agreements

encompassing all funding models per Recipient

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HFAs: Then and Now

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Then (pre 2015-16)

•“Contribution Agreements”

•Multiple types

•Carry-forward request letters required

•Audit required for flexible and block only

•Set funding: 3 years maximum

Now

•“Health Funding Arrangements” (HFAs)

•1 type with multiple funding approaches

•No carry-forward request letter required

•Audit required for all funding approaches

•Set funding: 5 years maximum

•Funding approaches can be changed within the life of the agreement without terminating the agreement.

Health Funding Arrangements 101 Source: Following 12 slides are from Health Canada, First Nations and Inuit Health Branch http://docs.firstnationsth.ca/VC9608/Handouts/Funding%20Arrangments%20Presentation_COMMS%20REV.pptx.

What is a Health Funding Arrangement? (formerly known as Contribution Agreement)

• Legal agreement between a community/tribal council/First Nations representative organization/NGO/treatment centre and Canada to support the delivery of health programs and services for First Nations in Alberta.

• Includes: Schedules, Program plan (where applicable), Notices of budget adjustments, Amendments and Series of contributions.

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Contributions

• A Contribution is used to transfer monies from federal government to organizations or other levels of government to further government policy and the departmental objectives.

• Contributions are: subject to performance conditions specified in a funding

arrangement to be accounted for and is subject to audit.

• The recipient is required to report on results achieved.

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Objective of the new Funding Arrangement framework

• Assist and support First Nations and Inuit Communities to access funding to provide health programs and services.

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Principles of the framework • Programs and Services are funded in accordance with the

mandate of First Nations and Inuit Health Branch. • Recipient will have control over management and

administration of their health programs according to their capacity and readiness.

Funding Model Names

Then Now

“Transitional Funding Model” “Flexible Funding Model”

“Flexible” or “Flexible Transfer Funding Model”

“Block Funding Models”

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Certain programs have set funding, despite being held within more flexible funding arrangements (e.g. NIHB Medical Transportation and Indian Residential Schools).

Modified to be in line with the Directive of Transfer Payment and with other Federal departments that enter into agreements with similar recipients. Set funding remains the basic funding approach.

What does this mean for Communities?

• Simplified and flexible funding arrangements • Single agreement for all FNIHB Programs • Greater program and financial flexibility • Streamlined reporting based on programs clusters • Non-Insured Health Benefits (NIHB) retains existing

requirements (i.e. set funding).

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Assessing Readiness: What funding model for whom?

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• Working with a community to assess its readiness to undertake the health planning process is a critical first step before selecting a funding approach.

• FNIHB looks at the recipient’s strengths and weaknesses in financial and program

management and other circumstances. • “Risk” is a key consideration: assessed through the General Assessment tool. • Contributes to decision-making about: the type of plan required from the recipient; the selection of a program’s funding approach; and the level of monitoring required.

Set Funding Arrangement • Foundational funding arrangement. • First Nations delivers programs based on the Program Plan which is

provided by FNIHB. • One (1) to five (5) years in duration. • No carry forward of funding, all funding must be expended within the

fiscal year.

• Any unspent funding at year end will be considered as a recovery. • First Nation may re-allocate program funding before March 31st with a

written request via letter or email to the Zone Manager.

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Flexible Funding Model • Two (2) to five (5) years in duration. • First Nations delivers programs based on a Multi-Year Work Plan. • The Multi-Year Work Plan is a living document; work plans must be

updated to reflect changes. • Annual year-end program reports as per “program cluster” performance

indicators.

• Funds can be redirected among components within authorities as long as mandatory programs are delivered.

• Allowed to carry forward from year to year but must be spent before Funding Arrangement expires.

Pre 2015–16, Flexible Funding Models were called “Transitional Funding Models

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Block

• 5 to 10 years in duration. • The Community Health Plan (CHP) must be developed by the

First Nation for the duration of the Funding Arrangement. • The multi-year CHP is a living document and must be updated to

reflect changes over time. • Funds can be redirected among components within authorities

as long as mandatory programs are delivered. • The First Nation is responsible for any surplus or deficits. Pre 2015–16, Block Funding Models were “Flexible” or ”Flexible Transfer Funding Models”

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Re-allocation of Funds • First Nations may re-allocate any funding within a Set

Arrangement among health programs and services within the same program cluster (red boxes) with FNIHB-AB’s approval.

• First Nation may re-allocate any funding within a Flexible Arrangement among health programs and services within the same program cluster (blue boxes).

• First Nation cannot re-allocate any funding out of Non-Insured Health Benefits and Indian Residential School programs, but can allocate in based on identified priorities.* *This applies to all arrangement types.

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Carry Forward • Communities can carry forward any funding that is not spent (excluding Set Funding) into the next

fiscal year for the total duration of the Funding Arrangement.

Remember:

Then (Pre-2015–16): No “carry forwards of carry forwards” Carry forward request letter required. Amount requested is not necessarily approved.

Now (Post-2015–16): Any carry forwards must be spent before end date of arrangement.

No carry forward request letter required - unexpended funding plan for 2016-17 arrangements and beyond. Carry forward amount determined through your audit.

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Program Activity Structure

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Budgeting

The Budgeting Process • When to Start • Set Goals • Determine needed resources • Determine costs of resources • Determine what funding is available • Use community priorities and funder

deliverables to make choices. – What can/should we do?

Budget • List the Budget Assumptions • Budget should use the previous year actuals as a

guide • Clear approval process for “In-Year” budget

Adjustments – Plan/budget needs to be changed/adjusted as new

information is available. i.e. Proposal approved, community crisis requires emergency resources, etc.

Budget • Budget is a financial plan to control future

operations and results • Budget allocates funds to achieve objectives • Annual and Multi-year Budgets • Important to have a budget development and

approval Process – (decision makers must be “vested” in process!!)

Multiyear Example

Program Budget Year 1 Year 2 Year 3

Salaries

Director 50000 51000 52020Admin Assistant 22000 22440 22888.8Officer 1 35000 35700 36414Officer 2 35000 35700 36414Officer 3 35000 35700 36414Total Salaries 177000 180540 184150.8

Benefits @ 15% 26550 27081 27622.62Total Salaries and Benefits 203550 207621 211773.4

Travel 20000 20000 20000Professional Fees 50000 40000 60000Training 10000 10000 10000Rent 10000 10000 10000Admin 5000 5000 5000

Total 298550 292621 316773.4

Variance Report Sheet

• Listing of “significant” variances – Based on percentage and dollar value (i.e.)

• 20% or • $10,000

Monthly and Quarterly Financial Statements • Comparison to budget • Variance reporting • Forecasting • Analysis • Recommendations

– Curb spending – Budget adjustments – Change of goals

What is Accounting?

o Accounting is the process of recording, measuring, interpreting, and communicating financial data.

o Accountants are guided by Generally Accepted Accounting Principles (GAAP) in order to achieve this goal. GAAP are the guidelines, rules, and procedures used in recording and reporting accounting information in audited financial statements.

Examples of Generally Accepted Accounting Principles (GAAP) • The Matching Principle – Revenues recognized in same

period as expenses incurred; unused revenue deferred • The Recognition Principle – two of many rules:

(1) Revenues recognized when organization has met requirements to receive the funding (2) Expenses are recognized when they are incurred

• Full Disclosure Principle – Requires all situations, circumstances & events relevant to financial statement users have to be disclosed

GAAP is the term used to describe the basis on which financial statements are prepared

What is an Audit? • Financial Audit • Compliance Audit • Special Audit • Value for Money Audit • Forensic Audit A Financial Audit is a review of the financial statements of the organization, resulting in the publication of an independent opinion on whether those statements are relevant, accurate, complete and fairly presented. An independent auditor will express an audit opinion based on whether the financial statements conform to GAAP

Objective of an Audit of a Financial Statement • Expression of an Opinion • Are financial statements presented fairly • Are financial Statements in conformity with

GAAP • The audit is conducted by

an independent auditor

How is an Audit Performed? • The audit is conducted by an independent auditor • Gain an understanding of the organization. • Establish the level of risk and materiality. • Select a sample of transactions based on the level

of risk. • Perform tests on the sample transactions. • Make observations of the operations of the

organization • Express an opinion based on the results of the tests

and observations.

Types of Audit Opinions

• Unqualified (or clean) opinion • Qualified opinion • Denial of Opinion

Management Letter

• Prepared by auditor • Informs client of recommendations to

improve business processes or controls • Differs from management representation

letter

Joint Project – Health Canada and AANDC • Two Departments have accelerated Implementation of three initiatives

– Common General Assessment (GA) Tool – Common Default Prevention and Management Policy (Health Canada to

align by April 1, 2013) – Common Funding Agreement model

• Available April 1, 2013 • Low risk according to GA score and which to be “early adopters”)

• Grants and Contributions Information Management System (GCIMS) – Health Canada to adopt beginning April 1, 2014

• Submission of one audit for both departments – Mandatory for 2012-2013 audits

Meegwetch Mahsi’ Ekosi ‘Doy-gg Mussi Cho Thank you

Contact Information For more information please contact:

AFOA Canada Suite 301-1066 Somerset Street West

Ottawa, ON K1Y 4T3 613-722-5543

Toll Free: 1-866-722-2362 info@afoa.ca http://www.afoa.ca

Simon Brascoupé MA CAPA CFNHM Vice President, Education and Training sbrascoupe@afoa.ca

Questions & Answers

Health Funding Arrangements http://www.hc-sc.gc.ca/fniah-spnia/finance/agree-accord/index-eng.php#type

Health Funding Arrangements 101 PPT http://docs.firstnationsth.ca/VC9608/Handouts/Funding%20Arrangments%20Presentation_COMMS%20REV.pptx.

Templates - Contribution Agreements 2016 - 2017 • Health Funding Consolidated Contribution Agreement • Health Funding Contribution Agreement - Project Based

Funding Arrangement • Program Plan Schedule • Canada Common Funding Agreement for First Nations and

Tribal Councils 2016 - 2017 Related Information • Transfer Payment Service Standards Source: http://www.hc-sc.gc.ca/fniah-spnia/finance/funding-financement/index-eng.php