Achieving Financial Management System Certification April 1, 2016 - - PowerPoint PPT Presentation

FIRST NATIONS FINANCIAL MANAGEMENT BOARD

“SUPPORTING FIRST NATIONS THROUGH CERTIFICATION”

Achieving Financial Management System Certification April 1, 2016

Our first FMS Certificate

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Membertou achieves Certification

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Agenda

 Our Certification model explained  What can you expect during Certification  The Certification journey – Lessons learned  Best practices – Tips and Traps  VIDEO - Reflections on Membertou Certification  3 things to do next

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FMS CERTIFICATION EXPLAINED

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Types of Certifications

Financial Performance Certificate

Financial ratios Risk assessment

Financial Management System Certificate

Design of system

Implementation review

Financial Administration Law

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Financial Administration Law

Governance Financial Management Financial Administration

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A FAL is the foundation for an effective Financial Management System

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Financial Management System Certification

• Evaluates compliance with

Financial Administration Law

– “Are we doing what we say we are?”

• Operational review of the

design and implementation

• f policies and procedures

Financial Management System

Budgets and Forecasts Finance and Audit Committee Financial Reporting Risk Management Expenditure Policy

FAL

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Financial Management System Certification

• The FMS Certificate is an opinion whether a first nation is in

compliance, in all material respects, with the FMS Standards as at a point in time

• Does not provide assurance over the operating effectiveness of

a FMS over any period of time

• Is a risk based model

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FMS Standards and Certification Framework

FNFMB Framework COSO Framework

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343 FMSS 70 Point of Focus 20 Control Objectives 17 Principles 5 Components

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20 Control Objectives

The first nation has all provisions of the Board approved Financial Administration Law (“FAL”) in force on the date the first nation requests the Board to conduct a formal review of its FMS. The duties, reporting lines, appointment of the key FMS personnel and structures are established, documented and communicated. All financial institution accounts are appropriately safeguarded and regularly reviewed, reconciled and recorded. Information technology used by the first nation in its operations provide a reliable

• perating

environment and support the effective

• peration
• f

application controls. The Council establishes policies and procedures to support that tangible capital assets including capital projects are documented and related contract and tendering requirements are in compliance with the requirements of the FAL. The Council defines, limits and monitors the permitted delegation of any functions or duties of the Council and officers. Human resource management procedures are established to support all key FMS personnel are qualified. All key financial processes include appropriate authorization and monitoring

• f

control activities to accurately record transactions. All financial reports and other reports are prepared, approved and made available to appropriate personnel in accordance with requirements of the FAL in a timely manner. The compliance status of all Board standards and specific legislations are monitored and tracked, and any non- compliance is rectified in a timely manner. The first nation’s FMS policies, procedures and directions are established, updated and made available in accordance with the FAL. Conduct expectation for key FMS personnel are established, documented and monitored for compliance. The council establishes policies and controls to support an integrated risk management strategy. The annual financial statements of the first nation are audited by a qualified auditor in compliance with requirements of the FAL and approved by Council in a timely manner. The Council establishes policies and procedures to define, report and remediate the breach

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financial misconduct. The Finance and Audit Committee is established and maintained in accordance with the requirements of the FAL. The integrated strategic plan and budget is prepared, approved and communicated to members in a timely manner. The council establishes policies and controls to identify, assess and respond to the risk of fraud. The Council establishes policies and procedures to ensure records relating to the FMS are appropriately and securely maintained and made available to authorized personnel. The FMS is reviewed for continuous improvement and for resolution of any concerns identified in the internal assessments.

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FMS Certification Overview

FMS Certification 20 Control Objectives Met FAL Compliance

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WHAT CAN YOU EXPECT DURING CERTIFICATION?

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How the FMB will provide support

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Capacity Development Standards and Certification

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FMB roles in the FMS Certification Process

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Capacity Development Support communities to identify their needs to ensure the right supports and tools are in place along the process to prepare for formal assessment Standards and Certification Provide guidance and tools and perform technical work and conduct formal assessment

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FMS Certification Process Steps

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STEP 3 Formal Assessment STEP 0 Initialization STEP 1 Capacity Development STEP 2 Policy & Implementation

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FMS Certification Process Steps

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STEP 3 Formal Assessment

• Evaluation against

control objectives

STEP 0 Initialization

• Review status
• Assessment

needs

• Gap analysis
• Capacity

development changes

STEP 1 Capacity Development

• Confirmation of

support requirements

• Review support
• Ongoing client

support

• Continuous

improvement

STEP 2 Policy & Implementation

• Critical issues
• Handover for

formal assessment

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What to expect?

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LESSONS LEARNED

The Certification Journey

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Lessons learned

• This is uncharted territory for both First Nations and the FMB
• A risk based certification approach is appropriate
• Clear milestones must be identified in advance and used to

measure progress

• Progress takes longer than originally expected

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Lessons learned (cont’d)

• The ‘tone from the top’ will drive commitment, cooperation

and desire

• Project and change management skills are essential
• Be patient – steep learning curve for all involved
• Not everything needs to change – build on what you have

already

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BEST PRACTICES TO FOLLOW

Tips and Traps

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Know where your First Nation is at today

• Conduct a self-assessment in terms of:

– Capacity (what is missing?) – Financial performance (historical trends) – Governance (stable / unstable) – Reporting (on time? Reliable?)

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Continuous planning

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Plan Implement Review Assess

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Traps to avoid

• Underestimating scope (and cost)
• f change
• Leadership not fully informed or

engaged

• Over-reliance on external

consultants

• A ‘gap’ assessment will help

define scope of change

• Establish steering committee and

reporting lines

• Identify an internal project

champion

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Traps to avoid (cont’d)

• Lack of coordinated approach /

not prioritising

• Lack of communication or

miscommunication

• Assuming it will be too expensive
• Apply a risk based strategy to

determine optimum approach

• Keep staff and leadership

informed

• Identify system elements that

already exist

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Tips to follow

• Apply a risk based approach

– Not all system ‘gaps’ are of equal significance

• Use limited resources wisely

– Clearly define role of any consultants

• Specify deliverables and milestones

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Tips to follow (cont’d)

• Measure, share and celebrate success

– Even the small wins

• Establish a strong ‘tone from the top’
• Ask for help

– FMB, peers

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Strategies for success

Barriers

• Lack of involvement or support by

leadership

• Lack of project management or change

management experience

• Not knowing where to start
• Resistance to change

How to Overcome

• Steering committee with

representation by Council

• Engage a qualified consultant, use of

work plan

• Start with strategic planning and risk

assessment

• Employ change management (ADKAR)

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ADKAR

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Develop realistic timelines

• Different elements of change will take different amounts of

time to design and implement

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Working with a consultant

• Define scope and deliverables up front

– What are the desired outputs? – What are the phases of the project? – Who is the responsible party?

• Use a staged approach to measure progress and to help define

deliverables

• Beware of ‘scope’ or ‘mission’ creep – have a change order process

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Reflections on Membertou Certification

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3 things to consider

• What could FMS Certification allow us to do?
• What value could a well designed financial management

system offer?

• How could certification serve our members?

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QUESTIONS?

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First Nations Financial Management Board

Suite 905 – 100 Park Royal West Vancouver, BC V7T 1A2 Toll free: 877.925.6665

facebook.com/FNFMB @FNFMB YouTube.com/FNFMB

Scott Munro, Director, Standards and Certification

Scott_Munro@fnfmb.com

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