Financial Administration Law
The decisions made by leadership of First Nations today can have a profound effect on the economic and financial health of First Nations in the future. Financial administration is linked to everyday activities of First Nation and increasingly, the complexity of these activities and the overall pace of change have increased the volume and complexities of risks facing First Nations.
The new reality is that First Nation leadership faces increased scrutiny from membership and other stakeholders on accountability and transparency but at the same time must make critical decisions which may involve taking some risk. The big challenge is how to effectively oversee the First Nation’s governance and decision-making in a way that balances managing these risks while adding value, accountability and transparency to the decision-making process.
Having an effective financial administration system is fundamental to ensuring good governance and protection of the economic and financial health of a First Nation by connecting the decision making to the acceptable level of risk.
Prior to The First Nations Fiscal Management Act (FMA), there were no standards or comprehensive guidance that addressed the complexity of financial administration for First Nations in Canada. The Indian Act does not specifically address financial administration and other fiscal initiatives primarily deal with management of specific revenues and not an expansive approach to financial management. To assist First Nations in this new reality, the FNFMB was created with the legislative basis to provide a mechanism for First Nations to establish their own comprehensive Financial Administration Law (FAL) that is appropriate to their particular needs and meets applicable standards where required.
Any First Nation in Canada can develop and adopt their own Financial Administration Law. First Nations that participate in the FMA can establish their own Financial Administration law without approval of the Minister or the FNFMB. The only exception is where a First Nation wants to borrow money through the FMA (i.e. borrow from the First Nations Finance Authority), in which case they must obtain a compliance approval from FNFMB stating their (FAL) meets the standards set by FNFMB.
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