The FAL requires that a policy is created and followed that includes procedures around Finance and Audit Committee member appointment, eligibility, removal, replacement and substitution.
Member Appointment
The FAL requires that Council create a Finance and Audit Committee policy that has procedures on how Finance and Audit Committee members are appointed. These must include:
- the conditions to be a member on the Finance and Audit Committee that include that a member be independent (and what it means for a person to be considered independent).
- how potential members show that they meet the conditions for membership and are independent. This must be done in writing before a person becomes a member.
- how new members are selected and their terms of office.
- how a chairperson and a vice-chairperson will be selected for the Finance and Audit Committee. Either the chairperson or the vice-chairperson must be a chairperson will be selected for the Finance and Audit Committee. Either the chairperson or the vice-chairperson must be a chairperson must be a Councillor.
- written approval for each member of the Finance and Audit Committee to show that he or she meets the conditions for membership. This has to be done every year.
Member Eligibility
The Finance and Audit Committee policy must also have conditions on member eligibility that include:
- the Finance and Audit Committee must have the number of members stated in the First Nation’s FAL. The committee must not have less than three members
- at least one Councillor must be a member of a Finance and Audit Committee with three or more members. At least two Councillors must be members of a Finance and Audit Committee with four or more members
- all members of the committee must meet the conditions for membership and must be independent
- most of the members must have financial competency
A person’s independence is decided by Council. A person may not be considered independent if a financial relationship with the First Nation’s government may change a person’s thoughts or actions. If Council decides a person is not independent, he or she may not become a member of the Finance and Audit Committee.
Any person who helps in the management of money or property for the First Nation is not considered to be independent and is not eligible to be a member of the Finance and Audit Committee. This includes the planning, organizing, directing or controlling of the First Nation’s money and property as well as budgeting, financial accounting, financial reporting, and gaining and using funds.
The Finance and Audit Committee policy also sets out steps to make sure that the length of time committee members are on the committee is:
- long enough to allow the members to gain knowledge of the First Nation’s financial management system
- varied so that not all members of the committee are new members. This allows for continued success of the committee and good planning for future members
Member Removal
The Finance and Audit Committee policy also includes the steps for removing a member of the committee, including:
- the standards and conditions for removing a member from the Finance and Audit Committee that are set out in the FAL
- the standard that Council must document and confirm that all steps for removing a member have been followed and agreed to when a member is removed from the Finance and Audit Committee
Member Replacement
The Finance and Audit Committee policy must also include the steps for replacing a member of the committee who has been removed, leaves, or dies before their term of office expires. When a member leaves, for any reason, Council must assign a new Finance and Audit Committee member to take the position. This must be done as soon as possible.
Substitute Members
Council may assign a substitute member of the Finance and Audit Committee if the Nation has specified this in its FAL. The Finance and Audit Committee policy must also include the steps for the substitute member that specify that they:
- may attend Finance and Audit Committee meetings
- may vote in place of a member who is unable to attend the meeting
- may vote if there is a conflict of interest for a current member
- must also meet all rules and conditions for being a member of the Finance and Audit Committee