Compliance Assessment Summary Report: JG Grocery
For Funding Agreement no. 1415-HQ-000032 and 1718-HQ-000061 between Crown-Indigenous Relations and Northern Affairs Canada and JG Grocery
Name: JG Grocery
Location: Chambly, Quebec
Time period covered by audit: April 1, 2016 until March 31, 2019
Total amount of CIRNAC funding received since 2013: $122,702
At the request of the Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC), Samson performed a desk compliance assessment of the Funding Agreement between Nutrition North Canada (NNC or the 'Program’) and JG Grocery (Recipient). Nutrition North Canada is a Government of Canada Program that helps make nutritious food and some essential items more affordable and more accessible to northern communities. The purpose of the assessment, in accordance with our engagement with NNC, was to provide information on:
- Whether the Recipient is passing on the full value of the subsidy to consumers;
- Whether the amounts disbursed to the Recipient through the fiscal years 2016/2017, 2017/2018 and 2018/2019 were appropriately claimed in compliance with the Terms and Conditions of the Recipient’s Funding Agreement;
- Whether program visibility requirements are met and that the subsidy is transparent to consumers;
- The Recipient’s reporting and claiming systems and procedures with regard to gaps and controls issues; and
- Whether the Recipient respected program rules in regard to sales to ineligible clients.
The period covered by the compliance assessment is from April 1, 2016 until March 31, 2019. We determined our sample size by applying professional judgement based on the frequency of claims and the number of items in each claim.
Due to the Covid-19 travel restriction, no on-site was performed and our compliance assessment was performed as a desk assessment. As a result, our interviews were performed based on electronic communication with the Recipient to identify and document their key control activities, their procedures and processes related to the claim of funds to NNC, program delivery and reporting. In addition, due to the travel restriction we were unable to verify the accuracy of the weighting system used by the Recipient.
We subsequently performed detailed assessment procedures on the accuracy and validity of the Recipient’s claims and on the margin earned by the Recipient on the subsidized products.
Based on the procedures performed and as more fully described in our report, we did not find any significant deviations in the samples we selected; however, we identified improvements in the form of recommendations to improve the Recipient’s control environment in relation to the Program.
Our assessment revealed that from our sample of 974 transactions, there were only 10 errors found which resulted in an overpayment of $78.40 to the Recipient. It related to duplicate entries in the compiled shipment report and an addition error of the total eligible subsidy. Therefore, we provided recommendation to ensure amount claimed is accurate.
Recommendation #1: The Recipient should ensure that there is review / approval process in the preparation and submission of monthly claims to ensure amount claimed are accurate.
Based on the sample tests, discussions with the Recipient and the other procedures performed, we can conclude the following:
- The management practices in place to support the delivery of the program are, for the most part, adequate;
- With the exception of the errors noted under objective 5.3.3, the amounts disbursed to the Recipient over three fiscal years (2016/17 – 2018/19) were appropriately claimed in compliance with the Terms and Conditions of the Recipient’s Funding Agreement and there were no significant amounts of overpayment from the sample;
- Subject to the limitations of performing a desk audit, the Recipients is adhering to and is in compliance with the visibility requirements detailed in the Recipient Program Manual, and the subsidy is on invoices;
- The Recipient passed the subsidy only to eligible clients;
- The Recipient is using the most effective and cost-effective supply chain arrangements and routes; The Recipient has passed on the full value of the subsidy to consumers;
- The value of the subsidy is not being eroded by the Recipient’s profit margin practices; and
- We have one recommendation to improve the Recipient’s management systems, processes and practices that would address the deficiencies noted.
Overall, we are of the opinion that the funding provided to the Recipient was spent for the intended purposes and in compliance with the terms and conditions for 2016-2017 to 2018-2019 Funding Agreements signed with the department.
Action Plan for JG Grocery
The table below summarizes the recommendations identified by the auditor, the actioned measures required to be undertaken by the retailer/supplier, and their status.
|Auditor’s recommendation(s)||Action Plan||Status|
|1. Ensure that there is a review and approval process in the preparation and submission of monthly claims to ensure the amounts claimed are accurate.||Following the revision of the Compliance Management Letter, the owner will perform a second review of all customer invoices and monthly claims prior to submission to NNC.||Complete|
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