Implementation Testing and Grant Monitoring

Financial Administration Law (FAL) and By-Law (FAB) Implementation Testing

The 10-Year Grant Comprehensive Funding Agreement signed between a First Nation and Indigenous Services Canada, requires certain minimum provisions of a First Nation’s FAL or FAB to be brought to life. As part of the Memorandum of Understanding dated November 6, 2018 between the FMB, the Minister of Indigenous Services, and the Minister of Crown-Indigenous Relations, the FMB has agreed to perform testing of the implementation of these minimum provisions using an approach co-developed by Indigenous Services Canada, the FMB, and the Assembly of First Nations.

This one-time implementation testing will be performed by the FMB 12-18 months after the effective date of the 10-Year Grant agreement (or, exceptionally, as mutually agreed by Indigenous Services Canada, FMB and the First Nation). The approach involves the FMB conducting a set of standardized procedures that have been agreed upon with Indigenous Services Canada. FMB’s report on the findings from the procedures will allow both the First Nation and Indigenous Services Canada to determine to what extent the required FAL / FAB provisions have been brought to life. The results are intended to inform and contribute to meaningful capacity development discussions between grant recipients, Indigenous Services Canada, and the FMB.

Implementation testing will be conducted remotely and will require the FMB to collect a variety of electronic records and interview key management personnel. This work will be scheduled at a time that is mutually agreeable and in a way that minimizes any disruption to the First Nation.

Exemption to FAL / FAB Implementation Testing for FMS Certified First Nations

Grant recipients with an FMS Certificate from the FMB will not be required to undergo the FAL / FAB implementation testing. First Nations who have an FMS Certificate have already demonstrated implementation of their FAL and compliance with FMB’s Financial Management System Standards. This exemption demonstrates the value of FMS Certification and avoids duplication of testing.

The exemption from FAL / FAB testing for First Nations with FMS Certification will be subject to receipt by Indigenous Services Canada of a report from the FMB confirming details about the FMS Certificate, along with a signed letter from the First Nation (to be collected by FMB) confirming that the financial management systems related to the grant eligibility FAL / FAB provisions remain in place.

Annual Grant Monitoring

As part of the Memorandum of Understanding dated November 6, 2018 between the FMB, the Minister of Indigenous Services, and the Minister of Crown-Indigenous Relations, the FMB has agreed to provide 10-Year Grant monitoring services to Indigenous Services Canada. This monitoring approach has been co-developed by Indigenous Services Canada, the FMB and the Assembly of First Nations.

On an annual basis, the FMB will perform a limited scope review of a grant recipient’s financial performance that will include:

  • Review of the First Nation’s annual financial statements and accompanying Independent Auditor's Report;
  • Conduct a ‘roll-forward’ and recalculation of the five Financial Performance Ratios used for initial grant eligibility; and
  • Calculate a preliminary risk rating to guide further discussions between Indigenous Services Canada and the First Nation.

By reviewing the annual financial statements and the corresponding Independent Auditor’s Report, the FMB has developed a model that will identify the existence of potential risk factors. These risk factors will allow a multi-tiered approach to be used when the FMB is communicating monitoring results to Indigenous Services Canada. These tiered risk ratings are intended to inform and contribute to meaningful capacity development discussions between grant recipients, Indigenous Services Canada and the FMB.

The documents below contain the FMB’s Monitoring Framework and Policies and Guidelines used to do this work.

Download 10-Year Grant Monitoring Framework (PDF)

Download 10-Year Grant Monitoring Policies and Guidelines (PDF)