AFOA Canada National Conference Calgary, AB February 27, 2004

1. Session 6 – Improving Financial Management and Accountability with the Financial Management Toolbox AFOA Canada National Conference Calgary, AB February 27, 2004

2. Points to Ponder #1 • Ham and Eggs: Just a day’s work for a chicken but a lifetime commitment for a pig. • Why do toasters always have a setting that burns the toast to a horrible crisp, which no decent human being would eat? • Why is there a light in the fridge and not in the freezer?

3. Presented by ABORIGINAL FINANCIAL OFFICERS ASSOCIATION OF BC

4. Welcome & Overview of Seminar Facilitators Clay Harmon, Director Mike Mearns, General Manager Moderator Susan E. Wood, President – AFOA-BC

5. Welcome & Overview of Seminar This seminar will overview the five toolbox chapters: • First Nations Governance Concepts • Financial Management By-Law • Financial Management Manuals • Strategic Planning • Capacity Building

6. How did the Financial Code Project begin? • In the development of the First Nations Financial Code Toolbox, the Financial Management and Accountability Project committee members realized the importance of “beginning at the beginning”.

7. Who are the Committee Members? AFOABC Board Members Susan E. Wood, President Carol Kelly, Interim Vice-President Chris Bolton, Vice-President Lynn Anderson, Secretary-Treasurer Clay Harmon, Director Mike Mearns, General Manager AFOABC Members Chad Mason, Gitwangak Band Council Jay Norton, DeGruchy, Norton and Company Margaret White, Nanaimo First Nation Myrna Jacobson, Old Massett First Nation Sharlene Wilson, Nil/Tu Child and Family Services Trevor Morrison, Gitksan Watershed Authorities

8. How did the Financial Code Project begin? WHAT DOES EACH TOOL BOX CHAPTER COMPRISE OF? • The committees recommendations of successful applications developed throughout the country. • Most have been developed by the Aboriginal Financial Officers Association of BC • Others have been used by permission by the authors.

9. What is the definition of “CODE”? • A systematic body of laws • A set of rules or conventions (an agreement between nations, a treaty; established usage, social custom)

10. What is AFOABC’s interpretation of a Financial Code? WHAT IS A FINANCIAL CODE? • The first task of the committee was to define what a Financial Code is and what it means. • Through a brainstorming session the committee agreed that the following defined their thoughts of a First Nations Financial Code.

11. What is AFOABC’s interpretation of a Financial Code? A FIRST NATION FINANCIAL CODES IS A SET OF PRINCIPLES THAT: • Respects the culture, traditions and history of a First Nation. • Protects, maintains and increases the resources of a First Nation through effective planning and control. • Defines and implements the “Best Practices” for the preparation and communication of quality reporting. • Provides high standards and ethical leadership for the equal and confidential treatment for all.

12. What is the First Nations Governance Toolbox? WHAT DOES A FINANCIAL CODE TOOLBOX COMPRISE OF? • The second task of the committee was to outline the toolbox “chapters”. • This step was important to the creation of the toolbox since it would eventually lead a First Nation into adapting a governance structure that encompassed the First Nation Financial Code principles. • It was also important that an order of evolution was outlined. This would guarantee the success of the toolbox application for a First Nation.

13. What is the First Nations Governance Toolbox? The committee agreed the following chapters would be: • First Nations Governance Concepts • Financial Management Bylaw • Financial and Human Resource Policy and Procedures Manuals • Strategic Management and Planning • Capacity Building

14. GOVERNANCE MODEL

15. Chapter One: First Nation Governance Concepts A constitution is a solid foundation for First Nation’s with a strong community vision to move ahead in: • Treaty • Self-government • Other Nation building initiatives.

16. First Nation Governance Concepts Part 1 – First Nations Constitution Development This section includes information that relates to importance of having a constitution that provides a solid foundation for: • codes, • by-laws and • policies development.

17. First Nation Governance Concepts Some of the standard components of a First Nations constitution include the following: • Founding Provisions • Rights and Freedoms of Citizens • First Nation Government Structure • Government Officials Roles and Responsibilities • Financial Management and Accountability • Lands and Resources • General Provisions

18. First Nation Governance Concepts The constitution would be specific for their community needs and would serve the purpose of: • who you are • how you are governed • how the membership has input into governance • key positions for governance

19. COMMUNITY MEMBERS CHIEF AND COUNCIL BAND ADMINISTRATOR ADMINISTRATION SOCIALDEVELOPMENT EDUCATION HOUSING RESOURCES HUMAN RESOURCES FINANCE SKILLS TRAINING K - 12 - 12 LANDS FISHERIES FORESTRY SAMPLE ORGANIZATIONAL CHART

20. First Nation Governance Concepts Part 2 – Government Organization This section provides information about First Nation government organizational structure that supports the development of: • various laws • policies • procedures • administration • guidelines necessary for good government

21. First Nation Governance Concepts Government organization in broad terms is a constitution. The structure is developed to create: • structure • departments • committees • reporting and accountability systems

22. First Nation Governance Concepts Financial management systems are an integral part of organization structure and are required for: • budget planning • allocation • audit requirements

23. First Nation Governance Concepts Some examples of government organization components are: • Government Organization • Council size, committee structure • Core Branches or Departments • Administration, Finance and HR • Programs and Services • Health, SA, Education, Resource Mngt

24. First Nation Governance Concepts Financial Accountability Policy Sample • Is a solid basis for developing and adopting a policy to your own First Nation. • The success of any policy is to give “life” to the document by ensuring that all members, staff and council is fully trained and understands the basis of the policy. • As with all other policies that are adopted, it becomes a living document that all abide by.

25. First Nation Governance Concepts The policy provides sample wording for: • Compliance with Policy • Financial Decision-Making Process • Conflict of Interest Guidelines • Procedures for Financial Information Disclosure • Dispute Resolution.

26. First Nation Governance Concepts Appendix A – Building a Community Constitution This Appendix is used by permission by the Institute on Governance. The handbook was developed in collaboration with the Samagok Anishnawbek First Nation and Canadian Executive Services Organization, Aboriginal Services in January 2001.

27. First Nation Governance Concepts The handbook was born out of the Samagok workshop, and is meant as a guide for others First Nations during their constitution-building process. The handbook summarizes both international and Sagamok experiences, and outlines the basic process of developing a constitution.

28. First Nation Governance Concepts It is organized around the four questions that formed the basis of the Sagamok workshop: • What is a constitution? • Why have a constitution? • What should a constitution contain? • How can a community develop its constitution?

29. Points to Ponder #2 • If the professor on Gilligan’s Island could make a radio out of coconut, why can’t he fix a hole in a boat? • Gargling is a good way to see if your throat leaks. • If a thing is worth doing, wouldn’t it have been done already? • Failure is not an option. It’s bundled with your software. • He who dies with the most toys is still dead.

30. Chapter Two: Financial Management By-Law WHAT IS A FINANCIAL MANAGEMENT BYLAW? A key component of the First Nations Financial Code Toolbox is the ability for First Nations to make laws and enforce them.

31. Financial Management By-Law • Section 83 of the Indian Act provides for the development of laws in variety of areas. • Some First Nations have undertaken the development of a financial management by-law, in particular those that entering into the area of taxation, claims management and economic development.

32. Financial Management By-Law Key components of the Financial Management Bylaw includes: 1. Council Responsibilities • planning and budgeting for service and capital • projects • hiring of competent financial management staff • council responsibilities in the areas of annual budgeting, expenditures, information on contracts and tenders, financial statements and audit requirements is covered.

33. Financial Management By-Law 2. Conflict of Interest Guidelines In the development of financial management by-laws conflict of interest guidelines are needed to ensure transparency in financial management procedures.

34. Financial Management By-Law 3. Financial Information Disclosure This relates to the need for accountability to membership and access to financial information. Disclosure also deals with Council member's requirement to provide information about potential financial benefits through Council decisions.

35. Financial Management By-Law 4. Dispute Resolution This section of the by-law ensures there is a process for redress where a band member feels they would be adversely affected by a Council or administrative decision. This area also includes a process for mediation or arbitration.

36. Financial Management By-Law This toolbox chapter includes sample policies that your First Nation can adopt. The policies are: • Conflict of Interest • Disclosure • Contracts and Tenders • Optional Committees and Boards

37. Financial Management By-Law • In conclusion, law making is an important part of First Nations governance and will requires sound judgment in their creation. • Provided laws are based on a shared vision and constitutional provisions that will meet the needs of the community. • This will in turn provide a solid base for health, social and economic development.

38. Chapter Three: Financial and Human Resource Policy and Procedures Manual • The focus of this First Nations Financial Code Toolbox chapter is on policy and procedure development and its role in helping your First Nation achieve its desired administrative goals. • Included are sample policies and procedures for financial management and human resources that your organization may use as a template in the creation of your own.

39. Financial/HR Management Manual WHAT ARE POLICIES? • Policies and procedures help ensure that behaviours in the workplace conform to the expectations of the organization and to legal requirements. • Different policies and procedures relate to general governance, function, strategic decisions or the administration of specific programs or activities.

40. Financial/HR Management Manual The development of your own effective policies should support the vision, mission and values of your organization. It is important to consider these issues in your development: • input from all affected stakeholders • relevant, complete and understandable content • effective communication to all stakeholders

41. Financial/HR Management Manual • all policies documented in a consistent format • appropriate authorization and accountability for administering the policy • a periodic review process to validate appropriateness and completeness

42. Financial/HR Management Manual Policies should contribute to the growth and development of a high performance organization. Key components of effective policies contain: • purpose/objective • scope • authority • policy content They may also contain an effective date and consequences of non-compliance/redress.

43. Financial/HR Management Manual WHAT ARE PROCEDURES? • is a step-by-step list of activities required to conduct a certain task. • ensure that routine tasks are carried out in an effective and efficient fashion, and in accordance with policy. • should contain the following key components: • the purpose of the procedure and the policy to which it relates.

44. Financial/HR Management Manual • step-by-step instruction on performing the given task. • illustrations of any form involved and specific instructions regarding their use. • any requirements related to review, approvals and signatures. • any requirement relates to the communication of information. • the position or person with primary responsibility.

45. Financial/HR Management Manual • In conclusion, it is important to remember that this process is irrelevant if all users do not receive and apply your published policy and procedures to their daily practice. • Your new manual will be well received by all users if they are easy to understand, develops effective solutions and if there is a communication or training plan in place.

46. Financial/HR Management Manual WHAT SAMPLES DOES THIS TOOLBOX CONTAIN? This toolbox chapter contains • a sample Financial Procedures Manual • a sample Human Resource Manual which includes samples of Codes of Conduct. Each sample includes samples of various forms, terms of reference for auditors, performance evaluation charts, grievance steps and oath of confidentiality forms.

47. Financial Procedures Manual SAMPLE FINANCIAL PROCEDURES MANUAL This sample contains procedures for administration staff and council on the correct and approved methods of financial control from • the recording receipts, • depositing funds, • disbursement procedures • capital assets • annual year-end audits.

48. Good or Service Invoiced to First Nation Is the good or service amount exceeding cost limits set by Chief and Council? Yes No Does the invoice reference a purchase order? Is there a BCR approving the expenditure? Yes Yes Notify vendor that invoice is not approved for payment. No No Attach a copy of signed BCR to invoice Attach a copy of purchase order to invoice Forward invoice to department head or purchasing staff for verification and approval. Ensure that expense is brought to Chief and Council for approval No Approval Granted? Yes Forward invoice to accounts payable Release Cheques Yes Yes No Approval Granted? No Are all the cheques signed? Notify vendor that invoice is not approved for payment. Accounts Payable Attach all packing slips, work orders, waybills, purchase orders, etc to invoice On scheduled cheque- run days, process cheques for invoices and forward for bank account signatories Invoices returned to accounts payable for proper documentation or coding Code expense to appropriate department and forward to department head for approval Data enter invoice into computer accounting program Yes Approval Granted? No Financial Procedures Manual Sample Accounts Payable Process

49. Human Resource Manual SAMPLE HUMAN RESOURCE MANUAL This sample contains policies for managing staff. It defines: • the conditions of employment • benefit entitlement • reporting • performance evaluations and redress

50. Human Resource Manual • It complies with the Canadian Labour Code and would work in cooperation with an Operations Manual. • This is the single important document that would provide your First Nation with a healthy workplace. • The First Nation that regularly reviews and amends their Human Resource Manual seldom has recruitment or retention problems.