Probe of Assembly of First Nations finances finds no policy breaches, says confidential report

A preliminary probe into Assembly of First Nations finances found no apparent policy breaches but did see instances where internal control policies may not provide staff with enough clarity or guidance, says a confidential report obtained by CBC Indigenous.

The review, done by accounting firm BDO, examined payouts, contracts and credit card use, and was circulated in hard copy to hundreds of AFN delegates at the organization's annual general assembly Tuesday in Montreal.

"We observed that the historical transactions examined in our analysis complied with AFN's corporate policies and practices at the relevant times," wrote two BDO accountants in the June 27 report.

"In our view, a comprehensive, 10-year forensic audit of AFN's historical financial transactions ... is not warranted."

AFN is a national advocacy organization representing chiefs from more than 630 First Nations. The group got $55.9 million in revenue in 2023-24, almost all of it coming from the federal government, according to its routine year-end audit presented Tuesday.

The BDO review was designed separately, to help resolve years of controversy involving allegations of corruption, collusion, conflict of interest, bullying and harassment.

Chief and proxies accepted the accounting firm's recommendations in an emergency resolution on Tuesday, declaring the forensic audit sought by ousted national chief RoseAnne Archibald "should not be undertaken."

Titled "Preliminary Assessment of Allegations" and labelled "private and confidential," the report is addressed to the assembly's chiefs committee on charter renewal, which was tasked with overseeing the process.

The preliminary assessment was phase one of a two-part approach, where the second part, the forensic audit, would only go ahead if deemed necessary.

 In phase one, the firm probed three allegations with specific time frames:

• Excess termination payments AFN made to eight former employees between February 2017 and September 2023.

• Improper vendor contracting, specifically that contracts to eight vendors were not properly approved and/or that contracted deliverables were not received by AFN.

• Unsupported credit card charges, namely that receipts weren't provided to support charges made to the corporate credit card assigned to the office of the national chief during fiscal years 2022 and 2023.

On the first allegation, Archibald raised red flags about allegedly improper payouts to departing staff as far back as 2021, when she was Ontario regional chief.

The report says BDO's review confirmed the existence of termination payments to eight individuals between 2017 and 2023.

Each termination payment exceeded the minimum amount required by the Canada Labour Code, and some payments exceeded severance clauses specified in the employees' contract, the report says.

The report does not raise any concerns with these payouts, however, noting that the provision of severance payments greater than what the labour code requires "is not addressed in AFN's Human Resources policy."

The BDO report addresses but also doesn't raise concerns over two specific payouts from 2019 and 2020, which Archibald claimed were irregular and improper.

BDO says both payments sparked concern and were subjected to internal reviews, but it does not find these payments breached policies.

Contracts and credit cards

On the second allegation, the report says BDO reviewed payments to specific contractors for the fiscal years ending in March 2021 to 2023. 

AFN's 2013 financial policy document stipulates that contracts under $50,000 may be sole-sourced, while anything worth more than that is subject to competitive procurement and approval by the executive committee of chiefs, according to the report.

The firm says it reviewed a total of 12 contracts with seven specified vendors, while one vendor originally identified didn't have any contracts during the review period. All the contracts subject to review were duly approved according to AFN policy, the report says.

Archibald had raised questions about contracts issued to a company owned by then-national chief Perry Bellegarde's spouse and based out of a residence that public records showed the two co-owned in Ottawa.

There are no names in the report, but the report says BDO did identify a vendor who was related to a then-member of the AFN's executive committee, which includes the national and regional chiefs, "placing that member in a conflict of interest."

"It is not clear whether disclosure was formally made to the Executive Committee in accordance with AFN's Code of Conduct," the report says.

"However, the relationship was noted in contracting documents. We have also been advised by current AFN management that the relationship was generally known to the Executive Committee at the time."

Finally, on the last allegation, the report says BDO reviewed transactions charged to a credit card assigned to Archibald's national chief's office. The firm examined four months of transactions in fiscal year 2023 and compared them with corresponding monthly expense reports, the review says.

The firm says it observed "a significant proportion of transactions were not supported by receipts."

Specifically, there were $8,589 in credit charges the firm says were unsupported by receipts, comprising 24 per cent of the $35,777 total expenses reviewed. The majority of the missing receipt transactions appear to be travel-related, the report says.

"We understand the National Chief is required to travel extensively as part of their role. Thus, travel-related spending is not inherently unusual," the report says.

BDO recommended AFN review its policies in these three areas and improve staff training.