What is a Financial Administration Law?
A Financial Administration Law (FAL) is a set of and finance practices that helps Council and staff make informed decisions and run their First Nation well. A Nation that lives by its FAL commits to good administrative governance and finance practices over the long-term.
Why Develop a FAL?
Governance and finance affect every aspect of community life. It is too important to leave it to individual Council and staff members to develop their own practices. Even if their way of doing things works, when those people are gone, so is the knowledge.
Your FAL makes administrative governance easier by putting the same good finance practices into the hands of current and future Council and staff members. This makes your First Nation more stable and strengthens citizens’ confidence in how it is run.
A FAL Can Help You:
- run your First Nation more smoothly
- build a strong financial future
- grow your economy in a sustainable way
- be transparent about Nation finances
- borrow money to bring needed projects to life, and
- show that you use administrative governance and finance practices.
How the FMB Can Support You
Upon request, our staff provide Chief and Council and their administration support and guidance through the process of developing a FAL. This support comes at no cost to your First Nation, and we work according to the Nation’s timetable. An FMB Relationship Manager is assigned to each client Nation to support them in pursuing their FAL.
Getting Started With Your FAL
The FAL contains several sections. Together, these sections form a set of governance and finance practices. When you pass the law, you commit your First Nation to living by these practices. The main sections are:
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Administration
This part sets out the roles and responsibilities of the people who manage your First Nation’s finance practices and bring your FAL to life, including councillors, members, employees, and contractors.
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Financial Management
This section sets out practices around how every part of your First Nation’s finances will be managed. This includes:
- Planning and budgeting
- Controls for managing revenues and expenses
- Rules for borrowing
- Risk management
- Finance reporting
- Information technology
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Capital Projects
This details practices around how your First Nation manages its assets, such as roads, buildings, computers, and so on. It also covers finance practices around new capital projects, such as the construction of a new building.
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Miscellaneous
This part depends on your First Nation. For example, it could cover oil, gas, and land management.
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Conflicts of Interest
This section sets out rules to help the people who manage your First Nation avoid or reduce the impact of conflicts of interest.
How Does It Work?
Before you develop your own FAL, take a look at the process the FMB recommends. It can take from a few weeks to more than a year. The average time taken is three months.
It looks like a lot of steps, but we have broken the process down to show you what to expect and to help you plan your time and resources. We are here to support you at every step.
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Step 1
Get Scheduled to the First Nations Fiscal Management Act (FMA) if Your Nation is not Already Scheduled
The first step is to check if your First Nation’s is listed on the Schedule to the FMA. Check online.
If your First Nation is not scheduled to the FMA, use the Council Resolution template below to get scheduled. Please contact us if you need any help.
BCR template – Request to have official name added to Schedule of the FMA – EN
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Step 2
Agree to Work with the FMB
Your First Nation then needs to formally agree to work with the FMB by sending us a signed Letter of Cooperation and Council Resolution. Please contact us to request these templates.
Note: These are not legally binding.
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Step 3
Choose Your Team
To help things run smoothly, find someone to be the main contact for the FAL process. This could be the finance manager, general manager, or a consultant working with your First Nation.
It is also a good idea to seek legal counsel and inform the at an early stage. Having a lawyer and an auditor as part of your team can help make sure everyone is clear about what’s in your FAL.
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Step 4
Draft Your FAL
You can change the sample law to better suit your First Nation so long as they remain in compliance with FMB FAL , or use the Sample FAL in full. Work with your lawyer to draft your FAL using the FMB FAL Standards.
After one or more rounds of the FMB’s informal review and feedback, your draft FAL should be ready for formal review and approval by the FMB.
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Step 5
Submit for Formal Review
When your draft FAL is ready for formal review, we will ask you or your lawyer to submit a number of signed documents, including your FAL, to the FMB.
The FMB usually meets every three months to formally review FALs and give compliance approvals.
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Step 6
Submit for Approval
The FMB will tell you whether or not your FAL has been approved.
If your FAL is not approved, we will work with you to make changes and submit it for formal review again.
Training Services
After the FMB has approved your First Nation’s FAL, it’s time to bring it to life. That means putting the administrative governance and finance practices described in the FAL to work for your community. This helps you achieve a well-run Nation with a strong financial future.
Why Bring Your FAL to Life?
Bringing your FAL to life will help you strengthen community members’ confidence in their First Nation.
A good way to do that is to make it easier for staff to use these practices in their daily work. By working with us to bring your FAL to life, you can:
- benefit from training and other supports that help your First Nation run smoothly,
- show through certification that you are living by your FAL, and
- make it easier for your First Nation to access the money needed for important projects.
How the FMB Can Support You
We provide practical advice, training, and workshops. The main goal for some of our First Nations clients is to govern and manage their finances better. Working with us to bring your FAL to life can also lead to Financial Management System (FMS) Certification, which helps First Nations show to their members and others that they have brought their FAL to life.
How Does it Work?
A FAL is a long-term commitment. Bringing it to life takes tools and training to support you to do things as written in your FAL. We usually work with our clients over a period of one to three years to achieve your goals. We work with your timetable and provide support based on your needs. Our services come at no cost to your First Nation.
Before getting started on bringing your FAL to life, you will need to:
Enact Your FAL
In order to work with us to bring your FAL to life, you must have enacted your FAL and had it approved by the FMB.
Be Clear About Your Goals
Some of our First Nations clients want to be able to borrow money through the First Nations Finance Authority (FNFA) more than once. If this is one of your goals, your First Nation will need to achieve FMS Certification, which can happen after bringing your FAL to life.
Taking Your First Steps
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Step 1
Assess where your First Nation is now
This is the first step toward bringing your FAL to life.
We work with you to build a clear picture of where your First Nation is now. Together, we look at what you have agreed to in your FAL and how ready you are to bring it to life.
The Initial Readiness Assessment allows us to learn about what’s important to your First Nation and your priorities, and build a work plan to support your Nation to get to where it wants to be.
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Step 2
Create a work plan
After the FMB has worked with you to get a clear picture of where your First Nation is at now, we can help you create a Work Plan to get you to where you want to be.
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Step 3
Review your existing policies
To bring the administrative finance and governance practices in your FAL to life, you will need to develop that guide Council and staff in their work for the Nation.
You can choose to change your existing policies, or adopt and change FMB sample policies, or combine both approaches. To compare your existing policies to your FAL requirements, the Initial Policy Gap Assessment can be used. The FMB’s Capacity Development Managers can do this policy review at no cost to your Nation. Contact a Capacity Development Manager using the webform below to get started.
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Step 4
Draft your policies
Your Relationship Manager is ready to assist as you draft your policies. Once you have drafted your policies to meet your FAL requirements, you will need to send them to the FMB. These policies go through one or more rounds of informal FMB review and feedback until they are ready for formal review and approval by Council.
Council approves all policy changes.
The FMB’s Standards and Certification team tests the policies to make sure they are in line with your First Nation’s FAL and the FMB’s Standards.
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Step 5
Live by your FAL
Once all policies are approved by your Council, the final step is to live by your FAL.
The FMB offers tools, templates, and workshops to support you to live by your FAL. Once all policies are being followed, the FMB then completes a Final Readiness Checklist with your team, so that we can help you work on any last items.
After the Final Readiness Assessment, the FMB can recommend your First Nation for on-site testing to see how well your governance and finance practices are working.
Request a review of your existing policies
