Compliance Assessment Summary Report: Tlicho Investment Corporation
For Funding Agreement no. 1617-HQ-000289, 718-HQ-000050 and 1819-HQ-000021 between Crown-Indigenous Relations and Northern Affairs Canada and Tlicho Investment Corporation
Name: Tlicho Investment Corporation
Location: Yellowknife, Northwest Territories
Time period covered by audit: April 1, 2016 until March 31, 2019
Total amount of CIRNAC funding received for 2016 to 2019: $809,909
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 Tlicho Investment Corporation (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 regards to gaps and controls issues; and
- Whether the Recipient respected program rules in regards to sales to ineligible clients.
The period covered by the compliance assessment is from December 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 restrictions, 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 communications 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 restrictions, 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.
Recommendation #1: The Recipient should ensure that each of their retail stores complies with the NNC program manual as it pertains to visibility and transparency.
Recommendation #2: The Recipient should review its invoicing process to ensure that the subsidy is appropriately claimed and to ensure that the subsidy for which the customer is entitled is passed on.
Recommendation #3: The Recipient should ensure that a second review of the itemized shipment report is performed prior to submitting his claim for payment.
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;
- 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 was no amount of overpayment from the audit sample;
- The Recipient is not adhering to and is not in compliance with the visibility requirements detailed in the Recipient Program Manual (refer to recommendation #1);
- 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 not passed on the full value of the subsidy to consumers (refer to recommendation #2);
- The value of the subsidy is not being eroded by the Recipient’s profit margin practices except for items bought at reduced prices from supplier; and
- We have three recommendations 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 Tlicho Investment Corporation
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 each of their retail stores complies with the NNC program manual as it pertains to visibility and transparency.||Following the revision of the Compliance Management Letter, the recipient will ensure that each Community Operation Manager, in each community will assemble the information for his/her particular store submission.||Complete|
|2. Implement and/or review its invoicing and claiming process to ensure that errors are corrected and that the appropriate subsidy level is claimed prior to the itemized shipment report being sent to NNC for reimbursement.||Following the revision of the Compliance Management Letter, the recipient will ensure the assembly of the claims information as a second set of eyes to avoid errors, etc., for individual stores and the combined submission.||Complete|
|3. Ensure that a second review of the itemized shipment report is performed prior to submitting a claim for payment.||Following the revision of the Compliance Management Letter the recipient will ensure that their finance department completes a final review of the information prior to sending the final report to Nutrition North.||Complete|
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