ADURA
Financial Administration
- Jide Afolabi
The Anishinabek Nation Governance Agreement commits signatory First Nation to maintaining a system of program and financial accountability consistent with generally accepted standards for governments and public institutions in Canada.
That commitment serves as the foundation for the necessity of a financial administration law, along with related policies - concerning integrated planning, budgeting, risk management, purchasing, and reporting.
That commitment serves as the foundation for the necessity of a financial administration law, along with related policies - concerning integrated planning, budgeting, risk management, purchasing, and reporting.
That necessity is readily answered through the vast tools made available to First Nations by the First Nations Financial Management Board (FMB).
As a result, the operational framework adopted by a First Nation with regard to financial administration will invariably be aligned with the framework made available by the FMB.
As a result, the operational framework adopted by a First Nation with regard to financial administration will invariably be aligned with the framework made available by the FMB.
In adopting the FMB’s framework, a single question comes to the fore for First Nations: should they formally adopt the FMB’s operational framework, or should they informally follow the practices generally set out by the FMB?
In choosing to formally adopt the FMB’s operational framework, First Nations would benefit from the possibility of achieving certification, affirming their governments’ finance practices meet generally accepted standards.
The practical benefit of certification is that borrowing for growth at preferred rates, through the First Nations Finance Authority and through other funding organs, is readily facilitated.
In choosing to formally adopt the FMB’s operational framework, First Nations would benefit from the possibility of achieving certification, affirming their governments’ finance practices meet generally accepted standards.
The practical benefit of certification is that borrowing for growth at preferred rates, through the First Nations Finance Authority and through other funding organs, is readily facilitated.
If a First Nation opts to formally adopt the FMB’s operational framework, it would go through four steps in order to achieving certification:
- Enact a Law,
- Adopt Policies,
- Train Staff, and
- Achieve Certification.
1. Enact a Law
To start the FMB process, First Nations must be listed on the First Nations Fiscal Management Act (FMA) schedule.
To get scheduled, First Nations simply need to pass a Band Council Resolution (BCR).
Following the passage of the BCR, a First Nation would sign a Letter of Cooperation to formally agree to work with the FMB.
It is then up to the First Nation to assign individuals to lead the certification process including a primary contact, an auditor, a lawyer, and community members to help out as well.
To get scheduled, First Nations simply need to pass a Band Council Resolution (BCR).
Following the passage of the BCR, a First Nation would sign a Letter of Cooperation to formally agree to work with the FMB.
It is then up to the First Nation to assign individuals to lead the certification process including a primary contact, an auditor, a lawyer, and community members to help out as well.
Once this team has been assembled, the actual Financial Administration Law - and the FMB has a template - needs to be brought before the community for consultation and review.
That is followed by feedback from the FMB, related to any areas amended as a result of consultation.
At the end of this process, the law is passed by Chief and Council.
That is followed by feedback from the FMB, related to any areas amended as a result of consultation.
At the end of this process, the law is passed by Chief and Council.
2. Adopt Policies
This step in the certification process involves assessing the existing financial administration policies of a First Nation to see what might need augmenting or amending, or what might be missing.
The new or amended policies would be subject to review by the FMB.
The new or amended policies would be subject to review by the FMB.
A Financial Administration Law requires complementary policies to make it practically operational. Some of those policies include:
Governance Policy – a policy to address the delegation of responsibilities, a code of conduct, conflict of interest, the appointment of officers, the establishment and operation of committees, compensation, as well as audits;
Information Management Policy – a policy to address the use of technology, the management of records, and the protection of privacy;
Finance Policy – a policy to set out standard rules for matters including community strategic planning, risk management, purchasing, budgets, spending, capital assets, the management of accounts, as well as reporting; and
Human Resources Policy – a policy to link together finance functions and human resources for employee management, typically through steps that include the creation of an organizational chart. There would also need to be standardized approaches to hiring, employee evaluations, dismissals, and the management of related records.
Governance Policy – a policy to address the delegation of responsibilities, a code of conduct, conflict of interest, the appointment of officers, the establishment and operation of committees, compensation, as well as audits;
Information Management Policy – a policy to address the use of technology, the management of records, and the protection of privacy;
Finance Policy – a policy to set out standard rules for matters including community strategic planning, risk management, purchasing, budgets, spending, capital assets, the management of accounts, as well as reporting; and
Human Resources Policy – a policy to link together finance functions and human resources for employee management, typically through steps that include the creation of an organizational chart. There would also need to be standardized approaches to hiring, employee evaluations, dismissals, and the management of related records.
3. Train Staff
For the objectives of the Financial Administration Law to be met, appropriately equipped staff need to oversee the application of the law and its related processes.
Thus, staff must be trained and must be operationally proficient, such that when the FMB conducts its “readiness assessment” to kickstart the final stage of the certification process, it can readily conclude the First Nation has not only enacted a Financial Administration Law, but in addition, it is fully abiding by the totality of the terms of that law.
4. Achieve Certification
The FMB’s “readiness assessment” marks the final stage of certification - a First Nation’s financial administration practices are evaluated to determine whether they meet the standards of the FMB.
First Nations typically take 2 or 3 years from the start of the process to the securing of certification.