FIRST NATIONS FINANCIAL MANAGEMENT BOARD Moving beyond the status - - PDF document

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

FIRST NATIONS FINANCIAL MANAGEMENT BOARD

Moving beyond the status quo, taking charge FMB Pre-Conference Workshop February 7, 2017

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Learning Objectives

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Benefits Structure Roles and Responsibilities

Requirements for Financial Management Systems Certification

Keys to Success

Gain an understanding

• f the Finance and

Audit Committee (“FAC”)

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

FINANCE AND AUDIT COMMITTEE

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Introduction

• Raise your hand if your First Nation has a Finance and Audit Committee

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Outline

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BENEFITS ROLES AND RESPONSIBILITIES ACTIVITY 1: ROLES AND RESPONSIBILITIES ACTIVITY 3: TERMS OF REFERENCE QUIZ

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QUESTIONS STRUCTURE ACTIVITY 2: FINANCE AND AUDIT COMMITTEE SELECTION

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

BENEFITS

https://www.youtube.com/watch?v=CGBVn-g_EW8&t=3s

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Benefits

Provides forward- thinking oversight

• f investments

Creates a structured decision-making approach for Chief and Council Supports Council in making good financial decisions Reinforces Council’s financial responsibility, accountability, transparency

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Takeaways – Finance & Audit Committee

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Independence and expertise to financial oversight Not a decision-making body, makes recommendations to Council Required to be in place for FMS Certification Community success is possible with a well- developed structure, relevant expertise and teamwork

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

ROLES AND RESPONSIBILITIES

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Roles and Responsibilities

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Council Senior Manager

Approve

External Auditor appt. Financial Statements

Recommend

External Auditor appt. Financial Statements

External Auditor Other Committees Finance and Audit Committee

Prepare and Process

RFP for Audit Services Records for Audit Manager

Senior Financial Officer

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Roles and Responsibilities – Finance & Audit Committee

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Audit and Finance Oversight Financial Responsibilities

• Financial

Planning

• Financial

Performance

• Financial

Statements

Audit Responsibilities

• External Auditor
• Audited

Financials

• Risk

Management

• Internal Controls

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Roles and Responsibilities – Finance & Audit Committee Financial Planning and Reporting

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Financial Statements Financial Performance Financial Planning

Policy Monitor Review Recommend

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

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Reporting Risks and Mitigating Controls Audited Annual Financial Statements and Other Reports Planning, Conduct and Results of Audit Activities External Audit Selection, Engagement, Performance

Monitor Review Recommend

Roles and Responsibilities – Finance & Audit Committee Audit

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Roles and Responsibilities – Council

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Community Leaders Approvers Oversight Responsibility

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Roles and Responsibilities – Senior Manager, Senior Finance Officer

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Internal Control Development and Compliance Financial Strategy, Plan and Report Development Financial Operations Risk Management Planning

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Roles and Responsibilities – External Auditor

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Performance Audit Compliance Audit Financial Statement Audit

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Takeaways – Roles and Responsibilities

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Make recommendations Exercise professional judgment Leverage expertise Assess structure and framework

Monitor Review Recommend

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

ACTIVITY 1

Case Study: Roles & Responsibilities

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

STRUCTURE

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Structure – Constitution

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• Report to Council
• Chair and Vice-Chair are appointed by Council (one must be Councillor)

Reporting

• Minimum 3 members (at least 1 Councillor)
• For 4 or more members (at least 2 Councillors)

Membership

• Majority of members must have financial competency
• All members are independent

Qualification Criteria

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Structure – Financial Competency

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• Financial literacy or related financial management expertise
• Qualification requirements interpreted by Council
• The ability to read and understand a set of financial statements;
• An understanding of internal controls and procedures for financial reporting

and risk management processes;

• An understanding of the First Nation’s strategic objectives;
• The ability to assess the general application of accounting policies and

principles Sample Financial Competency criteria

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Structure – Independence

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• No direct or indirect relationship with the First Nation government
• Council required to make policies or procedures for independence criteria
• Establishing independence eligibility criteria in compliance with FMB Standards

⎼ Senior Manager, Finance Manager, Finance department ineligible ⎼ Other employees may be eligible

• Requiring confirmation from candidate about independence
• Requiring annual conflict of interest disclosure statement

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Takeaways – Structure

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Unbiased Best Interest of the Community Financial Expertise

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

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ACTIVITY 2

Finance and Audit Committee Selection

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

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ACTIVITY 3

Terms of Reference Quiz

DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Keys to Success – Finance and Audit Committee

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Improve Community Well-Being

Assistance Capable Chair Technical Expertise Well-Defined Mandate Communication

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

QUESTIONS

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DEMYSTIFYING THE FINANCE AND AUDIT COMMITTEE

Contact First Nations Financial Management Board

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Managers of Financial Management Systems Development:

Hayley Hodgson, CPA, CMA • hayley_hodgson@fnfmb.com Melanie Lyons, CPA, CA • melanie_lyons@fnfmb.com Mindy Smith, CPA, CA, CIA, MBA • mindy_smith@fnfmb.com Ramona Tkachuk, CPA, CA, CAFM • ramona_tkachuk@fnfmb.com Ritesh Desai, CIA • ritesh_desai@fnfmb.com

Director of Capacity Development and Intervention:

Suzanne Trottier, CFA, MBA suzanne_trottier@fnfmb.com

Phone: 1-877-925-6665