First of all, I would like to thank the Auditor General's office for presenting. Certainly, at AFOA Canada, we believe in many of the things the Auditor General said. We appreciate following the Office of the Auditor General.
Thank you, Mr. Chair, vice-chair, committee members, colleagues, and friends for this opportunity to speak on the substance of Bill C-27, the First Nations Financial Transparency Act.
My name is Terry Goodtrack, and I am the president and chief executive officer of the Aboriginal Financial Officers Association of Canada, or AFOA Canada. With me is Dana Soonias, who is the AFOA Canada chair.
It is the views of the AFOA Canada membership and these views alone that I express.
The Aboriginal Financial Officers Association of Canada is a non-political, not-for-profit organization. Our mission is to contribute to aboriginal social and economic prosperity by building a professional workforce that supports effective governance and administration. The bill before this committee speaks to goals that are at the very core of AFOA Canada's mandate. AFOA Canada not only agrees with the principles of transparency and accountability, but has spent over a decade developing capacity development tools and products to advance these principles in all aboriginal communities across Canada, including Inuit, Métis, and first nations communities.
Our resources and products include education, certification programs, and the development and promotion of aboriginal finance and management credentials, including the certified aboriginal financial manager, or CAFM, designation. The CAFM designation is based on rigorous competency and ethical standards and a combination of education and experience requirements. It is quickly becoming the preferred designation for aboriginal finance and management professionals. We're very pleased to be able to say this, and pleased also to have been approached by the Canadian Institute of Chartered Accountants to weigh in on the CICA Public Sector Accounting Handbook as it relates to first nations reporting.
As mentioned by the Auditor General's office in 2009, a number of AFOA Canada professionals were part of a study group on financial reporting by first nations. This group of AFOA Canada professionals and other interested parties, including the Office of the Auditor General, recommended to the CICA that the common government reporting model described in the CICA Public Sector Accounting Handbook should apply to first nations governments.
Unfortunately, this is the first opportunity AFOA Canada has had to participate in Bill C-27. From AFOA Canada's perspective, the underlying principles of Bill C-27 are laudable. Canadian citizens may view this proposed act as primarily a financial issue associated with fundamental principles of transparency and accountability. However, we feel as though this proposed bill touches upon broader issues, some of which have been raised here by first nations leaders. We would like to discuss these and related issues from a slightly different perspective. One question our members are asking is why this proposed bill is necessary.
The requirement for consolidated audits and disclosure of salaries, honoraria, travel, and other remuneration has been within the funding agreements between first nations and the federal government for over 15 years. It is included within an AANDC document entitled the Year-end Financial Reporting Handbook, with which first nations must comply. Failure to comply means that the federal government withholds funding from the first nation. When we examine the requirement for preparing and disclosing consolidated audits, a question arises when these audits are considered under the lens of accountability. That question is this: accountability to whom, and for what?
We've heard our members working in first nations communities clearly state that they have no disagreement with providing consolidated audits and salary disclosures for their members. This is the primary accountability of first nations. In terms of the accountability relationship between first nations and the crown, our first nations members have no issue with providing financial information on the funds provided by the federal government. Why is it necessary to disclose to the federal government, or to the general public, including potential competitors to first nations businesses, those funds that are not provided by federal government transfers, such as own-source revenues?
It should be noted, however, that first nations do provide consolidated audits to the federal government because it is a requirement within the funding agreement and in the year-end reporting handbook. However, the federal government cannot disclose this information to the general public because it is protected as confidential under another piece of government legislation called the Access to Information Act.
I bring to your attention the Sawridge decision, which may have some bearing on this issue.
In terms of comparability, I ask, does this act hold first nations to a higher standard, a lower standard, or to the same standard as other like entities?
The schedules of salaries, honoraria, and travel of different levels of government have different models. Some, such as those of the Province of Ontario, have a threshold where salaries must be disclosed over $100,000, with taxable benefits, or there are the municipalities within the Province of British Columbia, where the remuneration over $75,000 is disclosed.
In terms of when audits are due, first nations are required to finalize and submit their audits 120 days after the fiscal year-end, which is July 29. Yet the Province of Ontario tables their public accounts before the assembly 180 days after year-end, except in extraordinary circumstances. The federal government must lay the public accounts before the House of Commons on or before December 31.
The current bill reads that the requirement is that a first nation's consolidated audit shall remain accessible to the public on an Internet site for 10 years. We are uncertain why this length of time was chosen.
We would like to discuss another issue, the issue of administrative burden. As stated earlier, consolidated audits have been a requirement since the mid-1990s. This is a generally accepted accounting principle in accordance with the CICA handbook. As mentioned earlier, AFOA Canada was part of recommending to the CICA's Public Sector Accounting Board that the first nations adopt the common government reporting model.
There is, however, a second document produced by AANDC that further defines additional administrative financial reporting, entitled the Year-end Financial Reporting Handbook, as amended from time to time. The additional schedules are introduced through this document, and many times at the very last minute, to accommodate the different funding mechanisms used by the federal government. The last introduction of these schedules was released May 2012 and applied retroactively to the previous year. This caused confusion among our members on what was actually required.
AFOA Canada was not involved in providing input to these financial schedules. When I review the requirements of the schedule of salaries, honoraria, travel, and other remuneration for the first nation or by any entity it controls, I can see that this will add to administrative costs.
Further clarification is required on what “including their personal capacity” actually means within the proposed bill, or whether this is an audited schedule. The act does not specify that it should be an audited schedule, yet the AANDC's year-end reporting handbook requires that it receive an auditor's attestation.
These types of reporting lead to increased costs. Who pays for these additional costs?
To further complicate matters, these types of administrative burdens are being introduced at a time when the government is cutting tribal council advisory services in financial management. Who will provide advisory services to first nations if and when required?
We have also noted that there is much discussion on comparing first nations to other governments. Minister Duncan mentioned first nations governments in his testimony here as a witness, yet the words “first nations governments” are not stated within this proposed bill. We ask, why are we comparing first nations to other governments when even this proposed bill does not acknowledge first nations as governments? Without this clarity, we are concerned that this proposed bill may be wrongly construed as requiring a group of Canadians to do more than what is asked of any other group of Canadians.
Is this act necessary? Without addressing the concerns that we have raised, AFOA Canada cannot support the current Bill C-27 as written. If it is to go forward, here are some recommendations.
AFOA Canada recommends that the committee undertake the following amendments: view this proposed act through the lens of accountability, to whom and for what; ensure that first nations are not required to do more than truly comparable entities; ensure that the requirements of this proposed legislation do not increase administrative burden without ensuring that funding of these costs is a factor; ensure that AFOA Canada is involved in any changes to the year-end reporting handbook that affect first nations financial statements and that it is resourced accordingly to undertake this work; and state within this proposed legislation the word “government” after the words “first nations”.
Thank you again for this opportunity to speak on a very important matter.
