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Management Action Plan Band Council of the Abénakis de Wôlinak Audit March 2005

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• Introduction
• Audit objectives
• Audit scope
• Audit approach
• Conclusion
• Auditors’ report 4
• Schedule 1 Summary of Budgeted, Reported and Eligible Amounts
• Schedule 2 Summary of Audit Adjustments
• Schedule 3 Audit Observations
• Schedule 4 Non-compliance with the Agreement
• Schedule 5 Financial and Internal Controls and Police Service Policy and Procedure Deficiencies

Introduction

A financial audit relative to the Contribution Agreement signed on March 31, 2004, by the Department of Public Safety and Emergency Preparedness Canada (Solicitor General of Canada) (the "Department"), the Province of Quebec (" Quebec ") and the Abénakis de Wôlinek Band Council (the "Council") was conducted on behalf of the Department's Aboriginal Policing Directorate during the month of October 2004.

The subject of this audit is the contribution of up to $175,000 (Department - $91,000, Quebec - $84,000) paid to the Council to continue to provide policing services in the community of the Abénakis de Wôlinek.

The Council is responsible for maintaining the Police Force, which is entrusted with the task of maintaining peace, order and public security in the community of the Abénakis de Wôlinak, preventing crime and other violations of the applicable laws and regulations, and apprehending offenders.

The period covered by the audit is April 1, 2003, to March 31, 2004.

Audit objectives

2.1 The general objectives of the audit were:

2.1.1 to ensure that reported expenditures have been incurred by the Council and are in accordance with the Contribution Agreement, and departmental and central agency guidelines;

2.1.2 to verify and report the costs incurred and claimed and indicate the concurrence, or otherwise, of the Council with the audit findings; and

2.1.3 to bring to the attention of the Department any matters that are considered of significance or that require management action.

2.2 Specific objectives included determining that:

2.2.1 the Council is meeting both the financial and non-financial terms of the Contribution Agreement.

2.2.2 in relation to to the contribution agreement that:

• financial operations were conducted properly;
• financial statements were presented fairly;
• financial reports contained accurate and reliable information.

2.2.3 the Council has an adequate internal control system to account for and manage the contribution received.

Audit scope

3.1 The audit scope was limited to the verification of the Council's financial records, supporting documentation, and reported expenditures for the period of April 1, 2003, to March 31, 2004, and included:

• an examination and assessment of the quality, propriety and accuracy of the Council's financial records, accounting procedures and internal controls, as they relate to the costs charged under the terms of the Agreement;
• an assessment of the reasonableness and eligibility of the expenditures incurred or charged in accordance with generally accepted accounting principles and with the terms of the Agreement.

3.2 The audit was conducted in accordance with generally accepted auditing standards, and in accordance with the Office of the Comptroller General's Guide on the Audit of Federal Contributions.

Audit approach

Our approach was based on recognition of the need to focus on the key issue, which is the Council’s compliance with the terms and conditions of the Contribution Agreement, and primarily to ensure that the reported expenditures have been incurred, and the Council is meeting the financial terms of the Agreement.

The audit was undertaken in three phases:

• planning;
• field work and analysis; and
• reporting.

The planning phase included an orientation/familiarization with the mandate, obtaining information and documentation from the Department, developing the detailed audit program, and arranging the on-site visit with the recipient.

The fieldwork and analysis consisted mainly of undertaking the detailed audit program to gather evidence to support our audit opinion, findings and conclusions. The principal audit activities included interviews with the Council's representatives, an examination and evaluation of accounting systems, controls and the results of tests conducted on the books and records and supporting documentation of the Council as they relate to this contribution, and obtaining the Council's response to the audit findings.

The reporting phase involved an analysis of our findings, and the formulation of an opinion on the information obtained from the Council to be included in the audit report. In addition, we have debriefed the representatives from the Department's Aboriginal Policing Directorate and Management Review Division on the results of the audit.

Conclusion

Our examination indicated that the activities undertaken to maintain and provide police services in the community of the Abénakis de Wôlinak are generally consistent with the objectives set out in the Agreement.

Based on our examination, notwithstanding the audit adjustments detailed in Schedule 2, we are of the opinion that reported expenditures were made in accordance with the Agreement. Generally, except for the observations presented in Schedule 3, the Council maintained adequate controls over expenditures funded by the contributions received from the Department and Quebec.

Our review revealed that the Council has generally complied with the financial and non-financial terms of the Agreement. Areas for improvement are provided in Schedule 5.

Details of the audit findings are presented in the Auditors' Report, and supporting Schedules 1 to 5.

Auditors’ report

Director General
Aboriginal Policing Directorate
Public Safety and Emergency Preparedness Canada
Police Service Agreement with the Abénakis de Wôlinak Council dated March 31, 2004

Period audited: April 1, 2003, to March 31, 2004

We have audited the accounts and records of the Abénakis de Wôlinak Council (the "Council") relative to the above Contribution Agreement. The preparation of the reported amounts and compliance with the Contribution Agreement are the responsibility of the Council. Our responsibility is to express our opinion on the reported amounts based on our audit and the terms of the Contribution Agreement.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance that the amounts reported are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the claims. An audit also includes assessing the accounting principles used and significant estimates made by the Council.

In our opinion, Schedule 1 presents fairly, in all material respects, the eligible amounts under the terms of the Agreement. Supporting information and related comments are provided in Schedules 1 to 5.

The Director General of the Council has been notified of the audit adjustments. He indicated that he would discuss it with the Department’s representative.

Sainte-Foy, Quebec

Schedule 1

Abénakis de Wôlinak Council
Summary of Audit Adjustments
From April 1, 2003, to March 31, 2004

Schedule 2

Abénakis de Wôlinak Council
Summary of Audit Adjustments
From April 1, 2003, to March 31, 2004

Schedule 3

Abénakis de Wôlinak Council
Audit Observations
From  April 1, 2003, to March 31, 2004

1. Police vehicle

Public Security has a vehicle (acquired as a rental for a period of 48 months, with a monthly payment of $899) to provide police services. There is no daily monitoring of vehicle use. Once a week during shift change, the vehicle’s kilometrage are recorded on the vehicle inspection sheet. Without a vehicle usage log, we are unable to determine whether the vehicle was used exclusively for policing activities.

A vehicle usage log should be kept to record kilometrage, reasons for use and fuel purchase details for each shift. The log should be updated continuously.

2. Police service premises

The police service occupies approximately 50% of the building where it is located. Since the other part of the building is unoccupied, all building expenses are charged to the police service. We have restated 50% of expenses for building insurance and heating costs. With regard to repayment of the loan for construction of the building, we are restating these disbursements because the Agreement covers only rent expenses and only part of the premises is occupied by the police service.

It is recommended that a fair and reasonable rental amount be established for the police service and that the police service only be charged for the portion of expenses related to the part occupied by the police service.

Schedule 4

Abénakis de Wôlinak Council
Non - Compliance with the Agreement
From April 1, 2003, to March 31, 2004

Reporting

Section 10.8(d) of the Agreement stipulates that, within four (4) months of the end of each fiscal year, or before July 31, the Council must provide a financial report audited by a public accountant. As a result of a misunderstanding with the auditor, the audited financial report was submitted on October 7, 2004 , over two months late.

Under section 7.3 of the Agreement, the Chief Constable must submit activity reports for its members and a report on the search warrants requested by April 1 and must provide police information to the Centre de renseignements policiers du Québec. During our visit, the Chief Constable was unable to demonstrate that these requirements had been met.

We recommend that the Council comply with all the requirements of the Agreement with regard to submitting reports and other documents to the other partners.

Separate bank account

The Council must open a separate bank account for managing the money allocated by the Agreement for the delivery of policing services under section 10.8(a).

Contributions received to date were deposited in the Band Council’s regular bank account. It should be noted that the 2003‑2004 contribution was received in June 2004.

We recommend that the Council deposit the money in a separate bank account, as per the Agreement.

Clothing

The clothing expense category included the purchase of a "taser" electrical shock device for $1,892.

Schedule 5

Abénakis de Wôlinak Council
Financial and Internal Controls and
Police Service Policy and Procedure Deficiencies
From  April 1, 2003 , to March 31, 2004

During our audit, we also noted certain areas requiring improvement with regard to internal and financial controls and policies and procedures.

Service contracts

This expense category includes compensation paid to employees for overtime worked during vacation leave, statutory holidays, sick leave and other absences. These revenues are not declared in the T4 and Relevé 1 statements issued by the Council.

It is recommended that all compensation paid to employees be declared in T4 and Relevé 1 statements.

Administration fees

Administration fees in the amount of $4,219 were charged to the police service for the 2003‑2004 fiscal year. This represents 2.41% of the amount of the 2003‑2004 Contribution Agreement, which amounts to $175,000.

Since we find this method arbitrary, we recommend that a review of the actual costs be conducted in order to validate the administration fees charged to the police service.