First Nations Financial Transparency Act AFOA National Conference Halifax, Nova Scotia February 25-27, 2014

Transcription

1 First Nations Financial Transparency Act AFOA National Conference Halifax, Nova Scotia February 25-27, 2014

2 BACKGROUND In the 2011 Speech from the Throne, the Government committed to support transparency for First Nations communities by requiring chiefs and councillors to publish their salaries and expenses Financial information from First Nations is provided to AANDC pursuant to funding agreements, but many members of First Nations communities are not able to access such information directly from their leaders The purpose of the First Nations Financial Transparency Act, is to provide the transparency needed for First Nations citizens to hold their leadership accountable The bill received Royal Assent on March 27, 2013 Work is under way to plan for the effective implementation of the bill 2

3 THE ACT Applies to the 582 First Nations that are Indian Act bands, but not to First Nations that are party to a comprehensive self-government agreement Applies to any financial year of the First Nation that begins after the bill receives Royal Assent Requires First Nations governments to prepare annually audited consolidated financial statements and schedules of remuneration and expenses paid to chiefs and councillors Requires First Nations governments to make these documents available to their members and publish them on a website within 120 days of the end of their fiscal year Requires the Minister to also publish these documents on the AANDC website without delay after the First Nation has provided him or her with those documents or they have been published Reinforces the existing accountability measures of funding agreements for First Nations governments 3

4 Before No New Documents Now Other Schedules Required in Funding Agreement Schedule of Remuneration and Expenses Documents Published on a Website Audited Consolidated Financial Statements Audited Consolidated Financial Statements Schedule of Remuneration and Expenses Other Schedules Required in Funding Agreement Documents Submitted to the Department but NOT subject to the FNFTA 4

5 Audited Consolidated Financial Statements The Act states that 5(1) A First Nation must maintain its accounts and prepare its consolidated financial statements annually in accordance with generally accepted accounting principles, the primary sources of which are the handbooks including the handbook respecting public sector accounting of the Canadian Institute of Chartered Accountants, or its successor, as they are amended from time to time. (2) A First Nation s consolidated financial statements must be audited, in accordance with the generally accepted auditing standards of the Canadian Institute of Chartered Accountants, or its successor, by an independent auditor who is a member in good standing of a corporation, institute or association of accountants incorporated under an Act of the legislature of a province. 5

6 Schedule of Remuneration and Expenses The Act further states that 6. (1) A First Nation must annually prepare a document entitled Schedule of Remuneration and Expenses that sets out, separately, the remuneration paid and the expenses reimbursed to its chief and each of its councillors acting in their capacity as such and in any other capacity, including their personal capacity by the First Nation and by any entity that, in accordance with generally accepted accounting principles, is required to be consolidated with the First Nation. (2) The schedule does not form part of the consolidated financial statements. 6

7 Remuneration Salaries Examples What s included? $45,000 in salary earned as a result of being a First Nation councillor, and/or $35,000 in additional salary paid by the First Nation earned for work done during flood relief. Wages Commissions Bonuses Fees Note: Salary earned by the councillor from employment at any other enterprise which is not the First Nation or one of its consolidated entities would not be included. $25,000 in wages earned by a councillor as engineer of the First Nation s water treatment facility $5,000 in commission earned by a councillor who is also a real estate broker and paid by an entity consolidated with the First Nation as compensation for the sale of an asset held by the entity (e.g., a home in a sub-division on-reserve) $5,000 bonus paid to a councillor by an entity consolidated with the First Nation for achieving organizational objectives (e.g., a signing bonus for settlement agreements) $2,000 in consulting fees paid by the First Nation to a councillor who has a contract providing software consulting advice to the First Nation or one of the First Nation s entities. Note: Fees paid to the councillor through a corporation that contracts with the First Nation would not be subject to the Act even if the corporation is owned by the councillor. Note: Fees paid to the councillor by clients who are not part of the First Nation or its consolidated entities would not be included. Honoraria $30,000 in honoraria (e.g., a per diem and/or compensation for travel time) paid by the First Nation to a councillor for 30 days in the fiscal year at $1,000 a day Dividends Non-monetary Benefits Expenses (cost of transportation, accommodation, meals, hospitality and incidental expenses) $10,000 paid to a councillor by an entity consolidated with the First Nation by virtue of being part-owner of that entity (i.e., an investor or shareholder) $6,000 benefit equivalent to the value associated with the personal use by the Chief of a vehicle owned by an entity consolidated with the First Nation (e.g., the First Nation s Development Corporation) $500 reimbursed to a councillor for the cost of transportation, accommodations and meals and to attend a conference. Note: If the expenses are not paid by the First Nation, but directly to the councillor by a second organization, such as a First Nations organization, they would not be included. 7

8 A Closer Look at Personal Capacity The capacity of a chief or councillor can be either: a) The capacity which comes with being chief or councillor (e.g., as a member of the board of directors of a Band-owned enterprise, or of a tribal council or political organization of which a First Nation s chief or councillor is normally a member) b) Personal capacity, or the capacity of an individual other than those that come from holding office (e.g., as a member, or as an employee of a First Nation) Any remuneration paid and expenses reimbursed by the First Nation to its chief or any of its councillors must be listed on the schedule of remuneration and expenses, regardless of the capacity for which the individual is receiving it For example: A salary earned for serving as a First Nation s councillor (capacity as councillor) A salary earned by a councillor, but for work done as the First Nation s water plant manager (personal capacity) Salary earned by a councillor from employment at any other enterprise which is not the First Nation or one of its consolidated entities (personal capacity) An honorarium paid by the First Nation to represent the First Nation at a political event (capacity as councillor) Fees paid by a band-owned business to a councillor for consulting work (personal capacity) Expenses reimbursed to a councillor by a private firm for work done for clients other than the First Nation or its consolidated entities (personal capacity) Included Included Not included (not paid by the First Nation) Included Included Not included (not paid by the First Nation) 8

9 Providing Members with Copies A First Nation must provide copies to members upon request 7. (1) A First Nation must, on the request of any of its members, provide the member with copies of any of the following documents: (a) its audited consolidated financial statements; (b) the Schedule of Remuneration and Expenses; (c) the auditor s written report respecting the consolidated financial statements; and (d) the auditor s report or the review engagement report, as the case may be, respecting the Schedule of Remuneration and Expenses. (2) The First Nation must provide the copies without delay, but has until 120 days after the end of the financial year in question to provide them if the request is received within those 120 days. (3) A First Nation may charge a fee for providing the copies, but the fee must not exceed the cost of the service. 9

10 Publication Requirements Documents will, in many instances, be published twice (1) A First Nation must publish the documents referred to in paragraphs 7(1)(a) to (d) on its Internet site, or cause those documents to be published on an Internet site, within 120 days after the end of each financial year. (2) The documents referred to in subsection (1) must remain accessible to the public, on an Internet site, for at least 10 years. (3) Publishing any document on an Internet site is insufficient to discharge the First Nation s duty to make copies of it available to its members who request that document. 9. The Minister must publish the documents referred to in paragraphs 7(1)(a) to (d) on the Department of Indian Affairs and Northern Development s Internet site without delay after the First Nation has provided him or her with those documents or they have been published under subsection 8(1). 10

11 Publication Requirements A First Nation does not need to have a website to post the required documents: 8. (1) A First Nation must publish the documents referred to in paragraphs 7(1)(a) to (d) on its Internet site, or cause those documents to be published on an Internet site, within 120 days after the end of each financial year. Because not every First Nation has a website, a community may request that another organization, such as a First Nation organization, or even AANDC, post the information on its behalf. 11

12 Court Remedies and Administrative Measures In the event of a failure to comply 10. If a First Nation fails to provide copies of any document under section 7, any member of that First Nation may apply to a superior court for an order requiring the council to carry out the duties under that section within the period specified by the court. 11. If a First Nation fails to publish any document under section 8, any person, including the Minister, may apply to a superior court for an order requiring the council to carry out the duties under that section within the period specified by the court. 13. (1) If a First Nation is in breach of any duty imposed on it under sections 5 to 8, the Minister may take one or more of the following measures: a) require the council to develop an appropriate action plan to remedy the breach; b) withhold moneys payable as a grant or contribution to the First Nation under an agreement that is in force on the day on which the breach occurs and that is entered into by the First Nation and Her Majesty in right of Canada as represented by the Minister, solely or in combination with other ministers of the Crown, until the First Nation has complied with its duty; or c) terminate any agreement referred to in paragraph (b). 12