Auditing days for Hartley Bay

The Department of Indian and Northern Affairs has begun what is called "a scoping audit" of a number of complex issues of the village government of Harley Bay. A process that could lay the preparation work for a larger audit of the financials of the band government in the village.

The initial phase will consist of about three weeks of investigation and questioning on a number of concerns that have been brought to the Department's attention, from that point it will be determined if a full audit is required or if the concerns can be addressed with some direction and recommendations without further action.

The process has been going on with the cooperation of those that the Department has been working with, providing for a relatively easy path so far for the auditors to work with in their quest for details and information.

If the current investigation determines further causes for concern, then the Department of Indian and Northern Affairs would have to decide the scope of the next phase of the audit process and whether legal decisions need to be made as well.

The Daily News had a background piece on the current audit plans as part of the Friday paper.

Hartley Bay audit underway: INAC
Expert's begin close look at community's books receive full cooperation

By Kris Schumacher
The Daily News
Friday, June 06, 2008

Pages one and three

After a team of auditors from Indian and Northern Affairs Canada (INAC) travelled to the North Coast and undertook an assessment for the village of Hartley Bay, the federal department has announced a formal audit is now underway.

Anne Scotton, chief audit and evaluation executive with INAC, said the purpose of the audit assessment was to determine whether enough information and documents exist to warrant sending an individual auditor or auditing firm to begin work. Scotton said in addition to documents, what is also important for work such as this is the cooperation of the First Nation or the band or organization in question.

"In this respect, we do have the cooperation of the people with whom we're working, and we're very pleased about that," she said. "So the conditions are right, the recommendation has been made and I've authorized that an audit be conducted."

Michael Pongray is the audit manager contracted by INAC, and one of three representatives who travelled to British Columbia recently to meet with several First Nations and listen to concerns and requests for INAC audits.

Pongray said that after having met with Hartley Bay's Chief and Council and with the band members as well, there was adequate information to proceed to the first phase of an audit - what is referred to as a 'scoping exercise.' Pongray and the INAC audit team will further identify what the issues are, whether those issues are material, whether the resolutions of those issues would be of benefit to the First Nations, their people and to INAC, and the likelihood that there is information, documents, evidence and people to interview that would help the exercise.

"Now, the process is to identify the appropriate resources, i.e. an auditing firm that can undertake this work," he said.

Pongray said he hasn't drawn up a statement of work to hand over to an auditing firm yet because he is still working his way through a "plethora of documents" that he received, which will give a better idea of how many issues there might be and how complex those issues are. He hopes to have the statement of work ready within weeks and anticipates it will take the contracted auditor two to three weeks to report back with their findings.

"Some of these have gone fairly quickly, but each case is different and we don't know until they are actually on the ground doing the audit," said Pongray.

Once the auditing party reports back, they will tell INAC whether an issue such as a wrongdoing had occurred, make recommendations so as not to have a similar action or situation occur again, or present any legal issues that may need to be followed up upon.

"If it was found there was something quite serious going on, it might turn into a different kind of audit, but we don't know that in this case," said Scotton.

"We believe there are audit issues that need to be examined."

Scotton said there are many types of audit that can be undertaken, such as a recipient audit, which would come about if there were issues with the operations of a funding arrangement with a band. In such a case, the auditor would identify money that wasn't spent on the area it was allocated for, and would then require those responsible to explain where the funds went.

A forensic audit is the most extreme, and is required when it's believed a criminal act such as fraud or theft has been committed. If enough evidence was gathered to support criminal charges in any audit, INAC would then pass that information along to the proper authorities.

"We will be making a report on the findings and conclusions of the audit, and on any follow-up action that the department has taken," said Scotton.

"I can confirm we are in contact with other First Nations and are getting the cooperation that we would need to conduct the kinds of audits that they are asking."