Archived - 2018-2019 Financial Reporting Requirements

3.1 First Nations

Produced by the Chartered Professional Accountants of Canada (CPA Canada), the Public Sector Accounting Handbook (PSA Handbook) applies to all forms of governments in Canada, and First Nations are considered governments from an accounting perspective.

3.2 Tribal Councils and First Nations Political Organizations

Tribal Councils and First Nations Political Organizations must adhere to the PSA Handbook accounting recommendations of the Common Government Reporting Model unless Canadian Accounting Standards definitions and recommendations deem them to be profit-oriented enterprises, or not-for-profit organizations, or government not-for-profit organizations, under the definitions in the CPA Canada Handbook.

It is the Recipient's responsibility, with the help of their auditor, to determine which of the CPA Canada Standards recommendations are relevant to their organization.

3.3 Recipients other than First Nations, Tribal Councils and First Nations Political Organizations

Recipients other than First Nations, Tribal Councils and First Nations Political Organizations must adhere to the PSA Handbook accounting standards unless Canadian Accounting Standards definitions and recommendations deem them to be profit-oriented enterprises, or not-for-profit organizations, or government not-for-profit organizations (if applicable).

It is the Recipient's responsibility, with the help of their auditor, to determine which of the CPA Canada Standards recommendations are relevant to their organization.

3.4 Agencies

In some instances, the Department of Indigenous Services Canada / INAC may provide a transfer payment(s) to a Recipient who may in turn transfer a portion or all of this amount(s) and the related obligations i.e. delivery of programs and services, as outlined in its terms and conditions of the funding agreement, to an agency. In such instances, the funding Recipient who signed the funding agreement with the department(s), remains accountable to the Department of Indigenous Services Canada (DISC) / Indigenous and Northern Affairs Canada (INAC) for the performance of its obligations as set out in the terms and conditions of the funding agreement.

Therefore, where the Recipient has transferred funding to an agency, the Recipient must require that agency to provide to the Recipient, the terms of the transfer as well as its financial statements. In addition, the Recipient must provide its own financial statements to the funding department (s). Also, upon written request from the Department of Indigenous Services Canada (DISC) / Indigenous and Northern Affairs Canada (INAC) to the Recipient, a copy of the agency's financial statements must be made available to the Department of Indigenous Services Canada (DISC) / Indigenous and Northern Affairs Canada (INAC).

6.1 First Nations, Tribal Councils and First Nation Political Organizations (using the Common Government Reporting Model)

6.2 Recipients Other than First Nations, Tribal Councils and First Nation Political Organizations (includes Not-For-Profit) (using the General Reporting Model)

7.1 Annual Audited Financial Statements

a) Recipients using the Common Government Reporting Model - First Nations, Tribal Councils and First Nation Political Organizations

Recipients reporting under the Common Government Reporting Model shall provide Audited Consolidated Financial Statements (ACFS) in accordance with the CPA Handbook

The Audited Financial Statements package must include, at a minimum, the following:

• Management Letter;
• Auditor's Report;
• Consolidated Statement of Financial Position;
• Consolidated Statement of Operations (including budget figures);
• Consolidated Statement of Changes in Net Debt;
• Consolidated Statement of Cash Flows; and
• Notes to Financial Statements

The financial statements package is to be signed by an official authorized to represent the Recipient.

b) Recipients using the General Reporting Model - other than First Nations

Recipients reporting under the General Reporting Model shall provide Audited Consolidated Financial Statements (ACFS) in accordance with the CPA Canada Handbook.

The Audited Financial Statements package must include, at a minimum, the following:

• Management Letter;
• Auditor's Report;
• Consolidated Balance Sheet;
• Consolidated Income Statement (including budget figures);
• Consolidated Statement of Retained Earnings;
• Consolidated Statement of Cash Flow; and
• Notes to Financial Statements

The financial statements package is to be signed by an official authorized to represent the Recipient.

7.2 Schedule of Revenue and Expenses

NOTABLE

A separate Schedule of Revenue and Expenses must be provided for EACH Program/Service/Activity/Project for which the Recipient has received funding through a funding agreement.

The following parameters are relevant to the Revenue and Expenses Schedules:

• be presented on an accrual basis (Revenues/Funding received during the statement period less expenses incurred):
• Revenues are accounted for in the year in which the transactions or events occur giving rise to the revenues for monetary transactions; and
• Expenses are accounted for in the year in which the goods and services are acquired and a liability is incurred, or transfers are due for monetary transactions but do not include non-monetary transactions e.g. amortization expenses
• present each schedule's revenue and expense information for the Programs/Services/Activities/Projects separately and individually by Set, Fixed, Flexible or Block Contribution funding type, as identified in the funding agreement
• disclose all revenues/funding received by source and expenses incurred by object for each Program/Service/Activity specified in the funding agreement
• include a revenue section that outlines funding/revenue from all sources including funds received from other government departments, private enterprises and other sources
• present unexpended funds i.e. prior year unexpended funding - where applicable
• detail opening and closing balances of deferred/unexpended funding
• disclose budget figures
• be approved by an authorized representative of the Recipient through signature on the financial statement package submitted
• include any additional information to the schedules/financial statements, if relevant;
• when there is more than one funding source for a Program/Service/Activity/Project, it would be beneficial for the recipient to provide additional detail on all funding sources as this information may be considered in the calculation of proportional reimbursements, where applicable.

7.3 Schedules of Remuneration and Expenses (Annexes B and C)

7.4 Auditors Recommendations Letter to Management (Auditor's Letter)

The CPA Canada Handbook recommends that the auditor must present to the audit committee or a similar governing body, any shortcomings in internal controls identified as a result of the audit process (Ref. 5220.07 – CPA Canada Handbook). This communication is referred to as either an "Auditor's Letter" or an "Internal Control Letter". These letters and the recommendations contained therein, are valuable management tools with may assist the Recipient in building financial and administrative capacity.

The Handbook also requires that the auditor communicate, in writing and on a timely basis, significant deficiencies in internal controls identified during the audit, to those charged with governance. It is strongly recommended that the "Auditor's Letter" or "Internal Control Letter" be provided to the Department of Indigenous Services Canada / INAC. However, its submission becomes a mandatory reporting requirement in the following cases:

1. Where a recipient is already in default, as defined under default provisions of a funding agreement, this reporting requirement will be in addition to previously imposed requirements; and
2. When a Recipient is in default of the terms and conditions of its funding agreement and the Department of Indigenous Services Canada / INAC has notified the Recipient that a default management action is required.