2013-2014 Compliance Review Action Plan - Arctic Co-operatives Ltd.

• We recommend that the Recipient take appropriate action to correct the programming error.

• The issue was uncovered in the fall of 2013, in advance of the audit engagement. At the time, the degree of error was mitigated.
• Upon the discovery of the programming error, and through to its repair, Arctic Co-ops initiated the return of all funds to the NNC program.
• The issue was brought to the management attention and the process was immediately initiated to correct the computer system.
• The successful roll-out of this bug patch was completed in early 2014.

• We recommend that the Recipient take appropriate action to update the Purchase Order (PO) system with the most current Net Freight Cost (NFC). In addition, the Recipient should ensure that the PO system always contains the most current NFC data.

Worthy of note is that, based on the auditor’s sample, the majority of adjustments to the retail prices were in the favour of the consumer in the form of lower suggested retail prices.

We concur with the auditor’s recommendation that additional measures and controls to ensure data accuracy in the calculation of suggested retail prices are appropriate.

• A process has been instituted which will see a dual sign-off instituted for changes to the NFC in the PO System to help reduce the risk of error.
• As a further step, a process of archiving all NFC rate tables will be employed to assist with validation in future audit engagements.

• The Recipient should review the weight included in the PO System to ensure they accurately reflect the Supplier's weight as per their invoice.

• A process has been initiated to have suppliers who do not upload electronically to validate their data records for accuracy on a cyclical basis.
• The nature of some products, such as random weight meat and produce, will see that individual case weights may vary based on water content or other factors. The discrepancies between the two are due to the fact that supplier fill rates are typically <100% due to factors such as product shortages, seasonal availability, etc.

• The Recipient should ensure the supplier submits the waybill with their invoice prior to payment or dialog with AANDC Management to arrive at a practical deliverable with respect to air waybills to meet the expectations of the program.

• In most cases, product suppliers do not tender product directly to airlines, making the submission of an air waybill, along with their product invoice impractical as the two rarely interface. The ability for all road carriers to consistently forward the appropriate information to the various air carriers, and then reliable transference to a series of air waybills has proven a challenge, as many of these businesses face numerous obstacles typical for businesses of all sizes operating in remote markets.

• Communications with the Program Management have been initiated to properly identify their minimum requirements and a plan will be developed to meet this deliverable.