Aboriginal Affairs and Northern Development CanadaBritish Columbia RegionFinancial Reporting Processes Presentation to First Nations, Other Recipients and Auditorsfor 2012/2013 fiscal year reporting
2012/2013 Year-End Reporting Handbook • AANDC and HC-FNIH have consolidated their audit reporting requirements into the this YERH and Audited Consolidated Financial Statements (ACFS). Both departments are referred throughout the document as AANDC and/or HC.
Financial statements are essential elements of accountability. They depict a Recipient’s financial health and provide information on how much funding was spent and for what purposes. Financial statements also assist in future decision making. • Financial statements are prepared by the Recipient and audited by an independent and qualified auditor.The auditor’s function is to determine the completeness and fairness of the financial statements in all material respects.
2012 2013 BC Region Overview • F-0080 Annual Audited Financial Statement • F-0081 Annual Unaudited Schedule of Revenue and Expenditure • F-0190 Annual Audited Financial Statement
2012 2013 BC Region Overview • F-0191 Annual Audited Schedule of Revenue and Expenditure • F-0192Annual Unaudited Schedule of Revenue and Expenditure
F-0080 – Annual Audited Consolidated Financial Statements • First Nations, Tribal Councils and First Nation Political Organizations use the Canadian Public Sector Accounting Standards (CPSAS) • This is based on the recommendations of the 2008 Financial Reporting by First Nations study from CICA • http://www.afoa.ca/acfme/pdf/Financial_Reporting_by_First_Nations_Report.pdf
F-0080 • Recipients other than First Nations, Tribal Councils and First Nation Political Organizations, should consult their auditor as to which accounting rules apply (Canadian Public Sector Accounting Standards or non-profit)
F-0080 It is acceptable to send the financial statements in 2 distinct packages which must arrive at AANDC together.
F-0080 - First Package • Annual Audited Financial Statements includes: - Auditor’s Report, signed by auditor - Statement of Financial Position, signed by chief & Council. - Statement of Operations (revenues by source, AANDC revenue must reconcile) - Statement of Changes in Net Debt (or Assets) - Statement of Cash Flow - Notes to Financial Statements - Comparative figures for previous year must be presented. - A budget column for all revenues and expenditures. - Schedules of SFGF and Salaries & Honoraria with auditor’s Attestation.
F-0080 - Reconciliation from Statement of Operations to AANDC funding confirmation • AANDC and/or HC must be able to reconcile funding provided to the Recipient. The following reconciliation is to be submitted as part of the Audited Financial Statement package:
F-0080 – SFGF Annex A (YERH) • Schedule of Federal Government Funding Format must match YERH • Auditor’s attestation or review engagement report is required • or Band Council Resolution authorizing release of entire audit on internet • Reconciliation from Schedule of Federal Government Funding to AANDC funding confirmation
F-0080 - Second Package • 1. Program/Service/Activity Revenue and Expenditure Schedules • With signed approval by Chief and Council and/or senior management OR • An accountants notice to reader. • Formats are included in YERH.
F-0080 • AANDC Revenue by code must reconcile to revenue on funding confirmation • Expenditures listed by object • Each capital project (including housing) must be reported separately • SET, FLEX, FIXED, and aggregated BLOCK funding and matching expenditures must be presented separately • Transfers between Block Funding activities must be clearly traceable per line item.
F-0080 • BC Region will net out deficits with surpluses in unexpended Fixed Funds in the areas of Elementary/Secondary Education and O&M. • Example, a surplus in Student Transportation may be used to cover deficit in Ancillary Support.
F-0080 - Auditor’s Management Letter • The CICA Handbook assurance recommendation 5220.07 states that “The auditor should communicate to the audit committee or equivalent, significant weaknesses in internal control which the auditor identifies during the course of the financial statement audit”.
It is strongly recommended that the “Auditor’s Management Letter” or “Internal Control Letter” be provided to AANDC and/or HC in all instances. • However, this becomes a mandatory reporting requirement in the following cases: • Where, a recipient is already under default provisions of a funding agreement (a continuation of a previously imposed default; and
When a Recipient is in default of its funding agreement and AANDC and/or HC has notified the Recipient that a default management action is required, AANDC and/or HC will request the “Auditor’s Management Letter” or “Internal Control Letter”.
F-0080 • Audited Statement of Receipt and Expenditure of Indian Moneys (Trust Funds - if any withdrawals) is no longer required. However, it must be reflected in Financial Statements and Notes.
F-0080 – Schedules of Salaries and Honoraria • Two separate Schedules of Salaries, Honoraria, Travel, and Other Remuneration for elected and unelected officials. • Auditor’s attestation or review engagement report (Format must match YERH Annexes B & C)
F-0081 – Package must include • Schedule of Salaries, Honoraria, Travel Expenses and Other Remuneration, for Elected (Annex B) and Senior Unelected (Annex C) Officials – AUDITOR’S ATTESTATION • Schedule (Annex E) of Federal Government Funding – AUDITOR’S ATTESTATION • Unaudited Program/Service/Activity Revenues and Expenses Schedules (Annex A)
F-0190 • Annual Audited Financial Statements • Program/Service/Activity Revenues and Expenditures Schedules • Funding Reconciliation from FNITP Funding Confirmation to Statement of Operations
F-0191 • Audited Program/Service/Activity Revenues and Expenditures Schedules. • Auditor’s Report
F-0192 • Unaudited Program/Service/Activity Revenues and Expenditures Schedules (Annex A)
Types of Funding – SET • Surpluses are recovered at the end of each fiscal year • BC Region uses the lower of the reported expenditures or the audited schedules to determine the recoveries and reimbursements. • Deficits on capital projects or reimbursable deficits in Social Assistance may be brought forward from prior year.
SET – Continued • Reimburseable set deficits in social assistance can be: • Basic Needs (Transaction Activity Code 02305) • Child Out of Parental Home Allowance (Transaction Activity Code 02307) • Maintenance – Institutions (Transaction Activity Code 02370) • Maintenance – Foster Homes (Transaction Activity Code 02371) • Maintenance – Group Homes (Transaction Activity Code 02372) • Maintenance – Kinship Care (Transaction Activity Code 02379) • Maintenance – Post Adoption Subsidies (Transaction Activity Code 02380) • Institutional Care – Type II (Transaction Activity Code 02397) • Adult Foster Care (Transaction Activity Code 02398)
SET – Continued • April expenditure recognized as deferred revenue by AANC may appear in the previous year column.
Types of Funding - FIXED • Surpluses may be retained for one fiscal year if: • surpluses are used in the same program in the next fiscal year, or • The recipient sends a plan to AANDC within 120 days after end of the fiscal year to use the surplus in a different program, and AANDC must approve the plan . • A plan may be communicated to AANDC via email addressed to Program manager and FSO.
Fixed – Continued • Unexpended Fixed Funds will be held as deferred revenue in AANDC analysis. • AANDC assumes that unexpended fixed funds are used first before tapping into new year funding. • Deficits are not brought forward, except for Capital projects.
F-0080 – CFNFA OLD BLOCK • The following recipients had CFNFA funding arrangements with old funding types (AFA, contribution, FTP) • 676 Kitamaat • 700 Boothroyd • 713 Canim Lake • 1071 Nuu-Chah-Nulth Tribal Council
Types of Funding: NEW BLOCK • Flexibility to transfer between Block Funded Programs. • Net transfers between Block funded programs must net out to zero and must be clearly traceable. • Ineligible expenditures or transfers will be recovered in the same fiscal year. • Aggregate surplus/deficit is carried forward until the end of the agreement.
NEW BLOCK - Continued • Opening surpluses and deficits at beginning of funding arrangements are not brought forward • Surplus will be classified as Long Term Liability until the last year of the agreement, and then it will be classified as Deferred Revenue for the following year. • Aggregate surpluses may be retained for one fiscal year after the end of the agreement if:
NEW BLOCK - Continued • Surpluses will be used within block services, • or • The recipient sends a plan to AANDC to use the surplus in a different program outside block services, and AANDC must approve the plan . • A plan may be communicated to AANDC via email addressed to Program manager and FSO.
NEW BLOCK - Continued • In presentation of schedules, AANDC and other revenues should be shown at the top, followed by all expenses by object with Transfers shown below the surplus/deficit line. • If a program has AANDC plus other sources of revenue, AANDC will pro-rate revenue against expenditures.
NEW BLOCK - Continued • Block fund revenues should be divided among all block funded activities within each program – it is better not to show revenues as a transfer. • For example in education total revenue $100,000 should be divided among all schedules with eligible expenditures within education ie. Tuition $25,000, ancillary services $75,000 guidance and counselling $25,000
Block Block Fund
Types of Funding - GRANTS • GRANT – same as previous years, recipient may retain if they qualify for the grant
Notificationof Auditor • Recipients report to AANDC who their auditor is by March 15 each fiscal year. • FN Approval for AANDC to contact the auditor directly.
AANDC sends confirmations to auditors in May each fiscal year Packages include: Funding Confirmation Checklist for AANDC audit acceptance Trust fund balances Guaranteed loan balances Social Development statistical rollup List of funded Capital projects List of PAYE
AANDCreceives audits July 29 Please see page 5 of the program guide for information on how to send in reports. http://www.aadnc-aandc.gc.ca/dci/RRG/2012-2013/E/UR/MG/Regional/K_1213E_BC_Program_Guide.pdf
AANDCchecklist for incoming audits • AANDC’s target is to accept or reject audits in 15 days (Initial Review) • Is the audit consistent with the Year End Reporting Handbook (YERH)? • Does AANDC have enough information to proceed with the review?