ACCOUNTABILITY OTTAWA STYLE: BILL C-27 First Nations Financial Transparency Act

Reacting to calls from organizations like the Canadian Taxpayer’s Federation, and negative media reviews on First Nations accountability, the Conservative Government pulled together C-27 and introduced it into parliament on November 23, 2011 for First Reading.

The issue of “accountability and transparency” has been one that has been kicked around politically for some time alleging that Chiefs and Council have not been accountable or transparent to their members or the Canadian public with regard to money they receive from the Federal Government. Every First Nation has been tarred with this brush regardless of the degree of accountability they have to their members. This does not account for the fact that First Nations are the most audited, make the most reports, and are required by the agreements they sign with Aboriginal Affairs and Northern Development Canada (AANDC) to jump many hoops for every dollar they are given. This is not opt in legislation as others like the First Nations Election Act and First Nations Land Management Act have been.

If this Bill becomes law in this sitting of Parliament, First Nations will be putting their financial statements and schedules of Chief and Council salaries and expenses on their website. Of course the law doesn’t say what happens when the First Nation does not have a website as there is a large percentage of First Nations in Canada who do not have broadband in their communities.


The main object of this Act is to provide (i) financial statements of the First Nation that includes (ii) any entities that are controlled by the First Nation, (iii) schedules of moneys paid to Chief and Councils, and (iv) auditors letters on both First Nation audits and its entities to:

1. Members of the First Nation within 120 days of the end of the Fiscal year (usually March 31 so to the members by July 31). Has to be a paper copy and cannot just be on their website. First Nation can charge members for cost of making copies.

2. Publish these four types of documents on the website of the First Nation

3. AANDC must also publish these four documents on their website.

There are of course penalties for First Nations who do not comply including the withholding of further money not only from AANDC, but from any other Federal Department, or the cancellation of existing agreements. There is also the ability of a member or the Minister to go to court to get an order for the Chief and Council to provide the statements to members and to publish these financial documents.


The Financial statements a First Nation must produce are the financial statement of the First Nation and ANY ENTITY that is controls that are presented as those of a single economic entity. Entity can mean a corporation or a partnership, a joint venture or any other unincorporated association or organization. So, we are talking about money generated through revenues of a business to which the Federal Government has no control over and cannot legislate about.

What this means is the First Nation must publish financial statements of its corporation and businesses that other like corporations in Canada do not have to. Corporations that are not “public” are not required to publicize their financial statements. Why is a First Nation being putting to a different standard?

One of my biggest concerns is that by publishing the financial statements of companies it puts at risk the First Nation business and can affect the financial viability of the business. Letting your competitors know your financial information can make a company vulnerable to those competitors. This really needs to be questioned of the Minister, the Prime Minister. If the object is to help First Nations get ahead economically, and this law impedes it, why are they doing this? .

Not only this, but why should the general public know what the assets of the business of the First Nation are, the amount of indebtedness the company has, its revenues and expenses. The money from a business would likely not have come from the First Nation, but rather from loans, or organizations or government grants. This should never be for public viewing except as required by the law that established the legal entity.

The question of whether every First Nation corporation/partnership or business has to have its financial statements public depends on how much control the First Nation has over the corporation. The proposed Act states that the factors to be used are those set out in the Public Sector Accountant Handbook of the Canadian Institute of Chartered Accountants. I went to try and find these factors so I could share them with everyone. For a mere $550.00 plus HST I can receive a copy of this Handbook. Not too transparent of the government to require First Nations to buy this handbook to find out what these factors are.

It seems to me that there will always be questions of interpretation as to the “degree” of influence of the Chief and Council, Economic Development Committee or Board or Economic Development Officer has over the First Nation’s businesses. There will be continual disputes as to whether or not a company’s financial information should be included in the consolidated financial statements of the First Nation and posted to the websites.

A lot of First Nations have an economic development strategy and other direction to any First Nation business. The company is incorporated under the laws of the province or Canada is a separate legal body, but if there are a large number of First Nation members on the board, is that a degree of influence, or if the Chief and Council are on it, is that a degree of influence? If the First Nation and their company share a CEO? If any of you accountants out there have access to this and can send me the factors for a degree of influence I could blog further on this point.

The fallout of this is that in an effort to remove a First Nation business from the need to publish its financial statements publically, that the business is too far removed from the First Nation and has no connection or accountability to the members of the First Nation. This whole provision needs to be seriously rethought with a business perspective as well as one of equality of other companies and businesses out there that do not need to publish their financial statements for the world to see.

I also question whether the Federal Government has the jurisdiction to override provincial laws such as the BC Business Corporations Act. S.196 that allows directors to see financial statements and the shareholders (which normally would be the members of the First Nation-usually held by a trustee on their behalf) if the articles of the corporation allows for it. S. 92(11) of the Constitution Act 1867 gives the provinces power over companies with provincial objects. Provinces also incorporate societies and BC Societies Act requires that all members of the society get copies of the financial statements. There is no requirement in either the BC Corporations Act or Societies Act to make the financial statements of these legal entities available to the public. This definitely needs to be re-thought by the Federal Government or face constitutional challenges in court.  

Thinking further on this, no matter how much of a degree of influence the First Nation has over the corporation, the Chief and Council are not the final decision makers on a corporation/society/legal entity.  The board of Directors are.  The Chief and Council may ask the board, but if the Board in its wisdom choses not to, the Chief and Council have no control over that.  So why should AANDC penalize a First Nation for not posting their corporation's financial statements on its  website when it does not have the ultimate control over the corporation?


Controversy created by the Canadian Taxpayers Association about what Chiefs and Councils are paid has also found a reaction in this proposed Act. Right now, every audit must include a schedule of what the Chief and Council make, along with top paid employees. This is not normally provided with the audit to First Nation members as it is a schedule to the audit. It continues to be a schedule in this proposed law, but it must be provided to members and posted on websites of the First Nation and AANDC. Therefore, any money or benefit paid by the First Nation to its Chief and Council becomes very public.

This includes any money paid to chiefs and council for salaries, wages, commissions, bonuses, fees, honoraria, dividends and reimbursement of expenses including the cost of transportation, accommodation, meals, hospitality and incidental expenses and any other monetary and non monetary benefits must be included in this schedule. I am unsure what a non-monetary benefit could be or hospitality expense.? There is definitely some ambiguity in the terms being used and they should be defined.

I have no problem with Chiefs and Council salaries/wages/honoraria, etc being made public but what if the Chief or council member holds a job in the administration like forestry manager, or economic development officer, or janitor, why should that wage be made public if none of the other salaries of other employees are not made public and it has nothing to do with their position as Chief and Council. Again, a different standard if you happen to be a Chief or Council member.

The auditor is required to make a report or review engagement report on the audit of the First Nations, its entities that are controlled by the First Nation and on the Schedule of Chief and Council remunerations. These letters must also be posted which share things like how the accounting practices of the First Nation could be done better. I seriously question why this kind of information should be available to the general public, definitely for the members, but this should be an internal matter. How will accountants feel knowing their letters become publicized on the web?


The proposed Act requires First Nations to maintain their finances and financial statements in accordance with generally accepted accounting principles (GAAP). I do not know of any First Nation that does not do this now. Any financial professional that you hire would do the accounts and statements in accordance with GAAP. There are also requirements to do an independent audit. First Nations have been doing independent audits for as long as I can recall.

Any agreement you sign with AANDC requires each First Nation to keep their books in accordance with GAAP and to have an independent audit. If you don’t do these things, you don’t get money the next year from them.

Additionally, any First Nation that is looking to take out a loan for infrastructure or business needs to have audited financial statements.

This is the governance requirement and business structure of every First Nation and I find it very paternalistic that this is put in this piece of legislation. This proposed Accountability Act is a continuation of the legacy of the Indian Act-no real change and no authority for First Nations to govern themselves as they see fit. The government continues to feel the need to direct every move of First Nations in a manner that may undermine the economic development and define accountability Ottawa style, not First Nations. Self determining First Nations must be able to be accountable to their members in a manner established by the government of the First Nation with the consent of the members. Then there will truly be accountability and transparency in First Nation communities.


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