Mr. Speaker, Bill C-27 would strengthen transparency and accountability by requiring that the audited consolidated financial statements and schedules of remuneration and expenses of a first nation be shared with the members of each first nation community, as well as the general public.
I know the committee made amendments to the bill, which helped to clarify this point. However, I feel it is important to discuss the motivations behind the specific reference to band entities in Bill C-27.
The consolidated financial statements of a first nation include the financial statements of the entity that, according to generally accepted accounting principles, are required to be consolidated with the first nation and to be presented as a single economic entity. It is, therefore, necessary to ensure clarity around what constitutes an entity for the purposes of this act. “Entity”, for the purposes of this bill, is defined as a corporation or partnership, a joint venture or any other unincorporated association or organization. As an example, a band-owned business would be considered an entity under the proposed act.
Members of first nations are ultimately the owners of any businesses owned by their band and, as a result, should have a right to know what the values and activities of those businesses are. Although some first nations may be reluctant to provide the full picture of their financial results for competitive reasons, it is important for the users of financial statements, especially first nations members, to see summary statements that capture the range of activities of their government.
Bill C-27 would require that an aggregate summary of the values and activities of the businesses that are consolidated into the financial statements of the first nations be published. This does not mean, however, that each individual business owned by the band would need to be publishing its own detailed set of financial statements. Instead, it is only the consolidated financial statements of the first nation to which the bill would apply. Any information concerning businesses would be highly aggregated and, in most cases, should not reveal any proprietary information.
AFN regional chief, Jody Wilson-Raybould, raised concerns about the inclusion of band entities in Bill C-27. She said during her appearance at the committee that was studying this bill:
...while public sector accounting standards do deal with government business enterprises, Bill C-27 seems to go further by adding definitions of “consolidated financial statements” and “entity”, as well as its own interpretation of what it means for an entity to be controlled by a first nations government under subclause 2(2). It is not clear what the intention is here. Why not just make the public sector accounting standards apply? We would like clarity, and we need to ensure that this bill does not inappropriately modify the rules that currently apply to other governments in Canada with respect to government business enterprises.
Once again, I know that the committee made amendments to the bill that address this point and improve the language. However, I want to be clear and bring to the attention of the House that the bill does not intend to seek to put into place the same rules that apply to businesses owned by other governments in Canada. These rules are developed not by the government but by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants, which are referred to in the bill.
The new language used to define “consolidated financial statements” reads as follows:
“consolidated financial statements” means the financial statements of a First Nation—prepared in accordance with generally accepted accounting principles—in which the assets, liabilities, equity, income, expenses and cash flows of the First Nation and of those entities that are required by those principles to be included are presented as those of a single economic entity, as if the First Nation were a government reporting on its financial information.
This definition includes a specific reference to the fact that the preparation of financial statements is to be done, not in accordance with the rules established by the government but by generally accepted accounting principles. These principles include the public sector accounting standards demanded by Ms. Wilson-Raybould. This would ensure that the same standards that apply to businesses owned by other governments in Canada would apply to first nations governments in precisely the same way. Furthermore, this definition also makes it clear that first nations are to be treated as governments in the manner in which their financial information is presented.
The intention of this bill has always been to put into legislation the same practices with respect to the treatment of band entities that are currently in place in the funding agreements. It is important for the users of financial statements, especially first nations members as owners of those businesses but other users as well, to see summary statements that capture the activities of their government.
While we would encourage first nations to provide as much detail as possible to their memberships about the specifics of band-owned entities, the overall objective of this bill does not require it. The financial information for those entities that are considered to be part of the first nations overall economic activities would be aggregated. We believe this will be enough, albeit a minimum.
Bill C-27 may be seen by many progressive first nations as an opportunity to put into place or expand upon their own practices that aim to enhance the overall accountability of their government. In this way, the bill would serve as a catalyst for change in many communities which would lead to greater confidence in many first nations governments.
The challenge has been to find language that balances both the need for precision in the legislative drafting with accounting concepts that are both complex and constantly evolving. I congratulate the committee on finding solutions that skilfully strike a balance.