In 2017, DRFN Council, with the support of the Band Manager and the First Nations Financial Management Board (FNFMB), developed the Financial Administration Law (FAL). The FAL is a set of governance and finance practices that helps Council and staff make informed decisions to effectively run the Nation’s operations. As a requirement of the DRFN FAL, the Finance and Audit Committee (FAC) is appointed by DRFN Council to support the financial administration of the Nation.
The mandate of the Finance and Audit Committee is to review and make recommendations to Council on the financial administration matters of the Nation. The Committee assists Council in fulfilling its oversight responsibilities for the financial reporting and audit processes, the internal control system as well as the process for monitoring compliance with laws, regulations and the code of conduct.
Key Responsibilities of the Finance and Audit Committee
Financial Accounting and Reporting Oversight
- Subject to DRFN’s Financial Administration Law, review draft annual budgets as well as multi-year financial plans and recommend them to Council for approval
- Monitor the financial performance of the Nation against the budget and report significant variations and their reasons to Council
- Review the quarterly and annual financial statements of the Nation and recommend them to Council for approval
- If the Nation collects local revenues, review the annual financial statements of the Nation’s local revenue account and recommend them to Council for approval
- Review the annual special purpose reports of the Nation and recommend them to Council for approval
- Review the annual report of the Nation and recommend it to Council for approval
- Make recommendations to Council on any matter respecting the financial administration of the Nation
- Review management’s approach for safeguarding the Nation’s assets and information systems as well as the adequacy of staffing of key financial functions and any plans for improvement
- Review (with management and external auditors) emerging accounting issues and their potential impact on the Nation’s financial reporting
- Review (with management) the Nation’s financial policies and compliance with such policies
Auditor Oversight
- Make recommendations to Council on the selection, engagement and performance of the Nation’s independent auditor
- Receive assurances regarding the independence of a proposed or appointed auditor
- Review and make recommendations to Council to approve the annual audit plan of the external auditor, including scope of the audit to be performed and estimated audit fees
- Review and make recommendations to Council respecting audited annual financial statements, including audited local revenue account financial statements, if applicable, and any special purpose reports
- Review management letters containing recommendations of the external auditor and management’s response
- Recommend to Council pre-approval of all audit, audit-related and non-audit services to be provided to the Nation by the external auditor
- Periodically review and make recommendations to Council respecting policies, procedures and directions on reimbursable expenses and perks of Council members, officers and employees
- Monitor financial reporting and fraud risks as well as the effectiveness of internal controls designed to mitigate those risks, taking into consideration the cost of implementing any change to internal control
- Review the Nation’s FAL and recommend amendments to Council
- Review and make recommendations to Council on the terms of reference
Risk Management
- Review annual risk management plan and fraud risk assessment completed by the Band Manager and provide input to the identification, monitoring and reviewing of annual risk assessment process
- Provide recommendations to Council on the annual risk management plan and fraud risk assessment
- Provide updates to Council on any significant changes to the assessment and adequacy of monitoring activities
- Review requests for non-budgeted funding for the Nation’s business enterprises and make recommendations to Council
Other
- Review expenses of Council members as well as officers and assess the Nation’s policies with respect to expense reimbursement and allowances
- Evaluate the adequacy of these terms of reference at least annually
Members of the FAC must have financial competency, including:
- the ability to read, understand and analyze the Nation’s annual audited financial statements as well as notes to the financial statements
- the ability to understand accounting policies, including any estimates used or judgments applied by management in the application of the Nation’s accounting policies, when these are explained by the Nation’s Director of Finance and the auditor
- an understanding of the Nation’s objectives and operations that may impact the selection or application of accounting policies
- knowledge and understanding of the strategies that have been adopted by the Nation and risks involved with any new strategies
- an ability to understand the Nation’s risk environment
FAC Member’s Must be Independent
An individual is independent if they do not have a direct or indirect financial relationship with the Nation that could, in the opinion of Council, reasonably interfere with the individual’s exercise of independent judgment as a member of the Finance and Audit Committee.
