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It has been more than six months since the Governor General of Canada gave royal assent to Bill C-27, the First Nations Financial Transparency Act. Since then, many MNP team members have been fielding questions from our First Nations clients and others in the Aboriginal community about what this Act means for them. Some of the frequently asked questions are summarized below.
What public disclosure does Bill C-27 require?
Under C-27, the audited consolidated financial statements of a First Nations community must be posted on the Aboriginal Affairs and Northern Development (AANDC) website as well as on the community’s website. In addition, chief and council’s salaries, travel and other remuneration, which formerly had to be reported only to AANDC, will now be posted on AANDC’s and the First Nation’s website. These items are to be available on the websites for ten years.
Will Bill C-27 cause audit costs to increase?
All information that must be reported under the Act was already being audited; therefore, in most cases, the time it takes to audit consolidated financial statements, and therefore the cost of an audit, will not increase.
What happens if a First Nation does not comply with the Act?
In a case of non-compliance, the government may ask the First Nation to develop an action plan that provides a path to achieving compliance. Compliance with the Act is included in the funding agreements First Nations sign with AANDC, so the government may also withhold funding or terminate a funding agreement due to non-compliance with the terms of the agreement.
Do other First Nations entities need to report under this Act?
All organizations controlled by a First Nation have to be included in both reports required by the Act. These organizations include non-profit service organizations (e.g., incorporated health clinics, education boards, etc.), trusts and for-profit businesses. Honoraria or travel reimbursement received from these organizations should be included in the salary and travel schedule.
Will C-27 give competitors to First Nations–owned businesses access to information typically viewed as confidential?
Given the limited information a single amount provides, public sector accounting standards require disclosure in the notes to the financial statements of the summarized assets, liabilities, equity, revenues and expenses of those businesses directly owned by a First Nation. This summarized information will be available to the public. This information is significantly less than what publicly traded companies on stock exchanges must disclose, and is consistent with the reporting requirements for businesses owned by municipalities and provincial and federal governments.
Under C-27, First Nations will continue to prepare the same reports with limited or no audit effect. What has changed is who gets to see the reports. For many communities, the public disclosure required by C-27 will be welcome news; for others, it will be seen as an unnecessary intrusion by the government. Regardless, this bill is an opportunity and a challenge that First Nations will have to accommodate. As always, MNP’s team of experts are available to help First Nations communities and Aboriginal-owned businesses navigate these new rules and ensure that you have all the supports in place to comply with the new Act.
Related Topics:Legislation; Government
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