NNC Compliance Reports for 2014-2015

Under the Nutrition North Canada (NNC) program, Indigenous and Northern Affairs Canada (INAC) monitors recipients’ compliance of the terms and conditions outlined in their funding agreements with the Department.

Using a risk-based analysis, AANDC selected six retailers and suppliers registered with the NNC Program to undergo compliance assessments for the 2014-2015 fiscal year:

The compliance assessments were conducted by an independent third-party, Deloitte LLP. The objective of the compliance assessments for 2014-2015 was to provide information on:

More information on the purpose and objectives of these reviews can be found under Compliance reviews.

Findings

La Fédération des coopératives du Nouveau-Québec (FCNQ)

Based on the procedures performed by Deloitte, the compliance assessment for FCNQ determined that the retailer was in full compliance with the terms and conditions of the Program, but noted that improvements could be made to the recipients claims and reporting process.

Recommendations

The Compliance Assessment Report has outlined one specific recommendation for improvement:

  1. Processing and Reporting Controls: The Recipient should ensure the accuracy and completeness of reports prior to these being submitted to AANDC. Therefore, an independent review of reports should be performed by the Assistant Manager – Store Services prior to submission to AANDC.

Status

NNC outlined the recommendations in a letter to the retailer. Both the FCNQ management letter and FCNQ action plan to address the recommendations are posted online.

Air North Food Distributors (ANFD)

Based on the procedures performed by Deloitte, the compliance assessment for Air North Food Distributors determined that the supplier was in full compliance with the terms and conditions of the Program, but noted that improvements could be made to the recipients processing and reporting controls and process.

Recommendations

The Compliance Assessment Report has outlined specific recommendations for improvement:

  1. Processing and Reporting Controls: We recommend that the Recipient improve its controls over the application of the subsidy in order to ensure the accuracy and validity of claimed subsidies.
  2. Processing and Reporting Controls: We also recommend that the Recipient ensure that an independent review process occurs prior to information being submitted to AANDC, which will increase the quality of the information being provided to AANDC.

Status

NNC outlined the recommendations in a letter to the supplier. Both the Air North Food Distributors management letter and Air North Food Distributors action plan to address the recommendations are posted online.

True North Co-Op (TRUN)

Based on the procedures performed by Deloitte, the compliance assessment for TRUN determined that no significant exceptions were noted in the compliance with the Program; however, they noted a number of areas for the Recipient to improve its overall control environment.

Recommendations

The Compliance Assessment Report has outlined specific recommendations for improvement:

  1. Program Visibility: We recommend that the Recipient implement a process to ensure that the end consumer receives adequate information on the Nutrition North Canada program.
  2. Processing and Reporting Controls: We identified errors in the amounts claimed by the Recipient; we also noted a lack of segregation of duties in the Recipient's reporting process. We recommend that the Recipient improve its controls over the calculation of the subsidy in order to ensure the accuracy and validity of claimed subsidies. An independent review process prior to submitting information to AANDC would increase the quality of the information being submitted.
  3. Ineligible Clients: The Recipient did not provide, for the period under review, a subsidy to ineligible organizations. However, the Recipient has not established a process to ensure that the ultimate consumer is an eligible consumer per the terms and conditions of the Program. We recommend that the Recipient implement a process to ensure that ineligible parties do not have access to goods shipped by the Recipient under the Nutrition North Canada program.

Status

NNC outlined the recommendations in a letter to the supplier. Both the True North Co-Op management letter and True North Co-Op action plan to address the recommendations are posted online.

Rampart Rentals (RAMP)

Based on the procedures performed by Deloitte, the compliance assessment for RAMP noted a number of exceptions relating to program compliance regarding program visibility, claims and reporting controls and sales to ineligible clients; recommendations for improvements were provided.

Recommendations

The Compliance Assessment Report has outlined specific recommendations for improvement:

  1. Subsidy: We recommend that the Recipient establish processes and procedures to ensure the subsidy is fully passed on to the end consumer, and that the profit margin is not eroding the subsidy.
  2. Program Visibility: We recommend that the Recipient continue its current practice of reflecting the subsidy as a discount to the end consumer to ensure that the subsidy is communicated in a transparent process to the end consumer. The Recipient should ensure that the consumer is aware that the 'discount' relates to the NNC Program either through signage or a description on the receipt itself.
  3. Controls: We recommend that the Recipient improve its controls over the application of the subsidy in order to ensure the accuracy and validity of claimed subsidies. This would include implementing controls to ensure claims are filed on a timely basis and that there is an independent review process occurring prior to information being submitted to AANDC, which will increase the quality of the claims being submitted.
  4. Ineligible Clients: We identified sales to ineligible businesses and establishments (mainly mining camps) for which the Recipient claimed a subsidy, although minimal subsidies on the end prices were provided to these organizations (with the exception of some in-store sales which could not be quantified but did not appear significant). We recommend that the items which are then resold to ineligible customers not be claimed as part of the subsidy, and noted that upon observing this practice during our on-site fieldwork, the General Manager acknowledged that this practice would not be continued going forward. Further, we recommend that AANDC consider recovering the overpayment of $7,601, as approximated above, relating to the ineligible subsidy claims. Additionally, we recommend that the Recipient retain the detailed sales records for any transactions relating to the Program for the length of time specified in the Recipient's funding agreement with AANDC in order to substantiate the financial and non-financial reports and facilitate future Program audits.

Status

NNC outlined the recommendations in a letter to the retailer. Both the Rampart Rentals management letter and Rampart Rentals action plan to address the recommendations are posted online.

M&M Yellowknife (Cactus Holding)

Based on the procedures performed by Deloitte, the compliance assessment for M&M Yellowknife (Cactus Holding) determined that there were no exceptions in the compliance with the Program; however recommendations for improvement were provided.

Recommendations

The Compliance Assessment Report has outlined specific recommendations for improvement:

  1. Ineligible Clients: While the Recipient does not maintain a master customer list, we did not observe any instances through our testing that suggests the Recipient is providing and claiming a subsidy on sales to ineligible customers; however, we recommend that the Recipient inform its clients in writing that they cannot sell and/or ship subsidized items to restricted organizations.
  2. Processing and Reporting Controls: We did not identify any errors in the information produced by the Recipient and provided to AANDC; however, we did note that there is a lack of segregation of duties in the Recipient's reporting process as there is no independent review of claims prior to being submitted to AANDC. The Recipient should ensure that an independent review process occurs prior to information being submitted to AANDC, which will increase the quality of the information provided to AANDC.

Status

NNC outlined the recommendations in a letter to the supplier. Both the M&M Yellowknife (Cactus Holding) management letter and M&M Yellowknife (Cactus Holding) action plan to address the recommendations are posted online.

North West Company (NWCO)

Based on the procedures performed by Deloitte, the compliance assessment for North West Company determined that the retailer was in full compliance with the terms and conditions of the Program.

The North West Company follow up management letter and no action plan is required for North West Company.

Status

No action required.

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