NNC Compliance Reports for 2016-2017 and 2017-2018
Under the Nutrition North Canada (NNC) program, Crown Indigenous Relations and Northern Affairs Canada (CIRNAC) monitors retailers' and suppliers' compliance of the terms and conditions outlined in the funding agreements between the recipients and the department.
Using a risk-based analysis tool, CIRNAC selected the following retailers and suppliers registered with the NNC program to undergo compliance assessments for the 2016-2017 and 2017-2018 fiscal years:
- Arctic Co-operatives Ltd.
- Ben Deshaies Inc.
- Les Consultants de l'Arctique Inc.
- La Fédération des coopératives du Nouveau-Québec
- Labrador Investments Ltd.
- Marché Daoust
- North West Company
- North West Company LP (Operating as Valu Lots)
- Pratts Wholesale Ltd.
- South Camp Enterprises
- Stanton Group Ltd.
The compliance assessments were conducted by an independent third-party, Ernst & Young LLP. The purpose of the compliance assessments was to provide information on:
- whether the recipient is passing on the full value of the subsidy to consumers
- whether the program visibility requirements are being 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
- whether the recipient respected program rules regarding sales to ineligible clients
More on the purpose and objectives of these assessments can be found under compliance reviews.
Findings
Arctic Co-operatives Ltd.
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for Arctic Co-operatives Ltd. noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in the areas of Processing and Reporting Controls & Profit Margins and Pricing Methodology.
Recommendations
The compliance assessment report has outlined specific recommendations for improvement:
- Implement a process whereby there is an independent review of claims prior to submission to NNC for processing. This has a potential to reduce the number of errors in the claims.
- Update the point of sale system to properly reflect the subsidy rate of sales receipts provided to consumers.
- Provide additional in-store signage, tags or other material to inform consumers of the items subsidized by CIRNAC under the Program.
- Develop a policy, process and procedures for assessing the profit margins on a regular basis for subsidized and unsubsidized food items to verify and support the profit margins are not eroding the subsidy that is to be passed on to consumers, in accordance with the NNC Program Manual Objectives.
- Sign a formal agreement between head office and stores that explicitly outlines the responsibilities of each party in relation to the NNC program and aligns with the terms and conditions of the Agreement signed between CIRNAC and Arctic Co-ops.
- As part of inventory counts, document the best before date of food product beside the quantity, this would allow the store manager to compare the current and previous inventory counts to support that older food is being properly cycled through the sales process.
Status
NNC outlined the auditor's recommendation in a management letter to Arctic Co-operatives Ltd., requesting that they provide an action plan to address the recommendation for improvement.
Ben Deshaies Inc.
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for Ben Deshaies Inc. noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in the areas of Processing and Reporting Controls. They suggest an implementation of a process whereby, an independent review of claims prior to submission to NNC for processing is completed. This has a potential to reduce the number of errors in the claims.
Recommendations
The Compliance Assessment Report has outlined specific recommendations for improvement:
- Monitor deadlines and provide the required information to CIRNAC by required deadlines.
- Develop a policy, process and procedure for assessing profit margins on a regular basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
- Implement a process whereby there is an independent review of claims prior to submission to NNC for processing.
- Approach suppliers to sign, if possible, a formal contract supply arrangement to support the Recipient in providing the best possible price to end consumers.
Status
NNC outlined the auditor's recommendation in a management letter to Ben Deshaies Inc., requesting that they provide an action plan to address the recommendation for improvement.
Les Consultants de l'Arctique Inc.
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for the Consultants de l'Arctique Inc. noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in the areas of policies for assessing profit margins.
Recommendations
- Develop a policy, process and procedure for assessing profit margins on a regular basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
Status
NNC outlined the auditor's recommendations in a management letter to the Consultants de l'Arctique requesting that they provide an action plan to address the recommendations for improvement.
La Fédération des coopératives du Nouveau-Québec
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for the Fédération des coopératives du Nouveau-Québec noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in the areas of policies for assessing profit margins and improved respect of program visibility requirements.
Recommendations
- Implement a process to monitor changes in net weight of product to support accuracy of information provided to customers with respect to program visibility requirements.
- Develop a policy, process and procedure for assessing profit margins on a regular basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
Status
NNC outlined the auditor's recommendations in a management letter to the Fédération des coopératives du Nouveau-Québec requesting that they provide an action plan to address the recommendations for improvement.
Labrador Investments Ltd.
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for Labrador Investments Ltd. noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in the areas of policies for assessing profit margins and improved processes and controls for the verification and accuracy of data.
Recommendations
- Monitor deadlines and provide the required information to CIRNAC by the required deadlines.
- Develop a policy, process and procedure for assessing profit margins on a quarterly basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
- Consider implementing a review control, whereby someone other than the preparer of the claim, is inspecting the information to original supporting documentation and checking accuracy of the final claim form, prior to signing as approver to submit the claim form to CIRNAC. In addition, a control requiring coding information to be reviewed when entered into the system.
Status
NNC outlined the auditor's recommendations in a management letter to Labrador Investments Ltd. requesting that they provide an action plan to address the recommendations for improvement.
Marché Daoust
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for Marché Daoust noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in the areas of policies for assessing profit margins and improved respect of program visibility requirements.Recommendations
- Monitor deadlines and provide the required information to CIRNAC by required deadlines.
- Develop a policy, process and procedure for assessing profit margins on a regular basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
- Implement a process whereby there is an independent review of claims prior to submission to NNC for processing. This has the potential to reduce the number of errors in the claims.
Status
NNC outlined the auditor's recommendations in a management letter to Marché Daoust requesting that they provide an action plan to address the recommendations for improvement.
North West Company
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for the North West Company on both its Nain and Little Grand Rapids stores noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in identifying ineligible customers.
Recommendations
- Implement a process at the store level to ensure that a subsidy is not offered to an ineligible customer and/or establishment.
- That the Recipient retention practice be amended to align with the Funding Agreement, which under section 10 Record-keeping duties, stipulates that the Recipient must store financial and nonfinancial records, including all original supporting documentation, for 7 years.
Status
NNC outlined the auditor's recommendations in a management letter to the North West Company requesting that they provide an action plan to address the recommendations for improvement.
North West Company LP (operating as Valu Lots)
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for Valu Lots noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended stronger monitoring of required deadlines and the independent review of claims submissions. They also recommended the development of policies related to assessing profit margins.
Recommendations
- Monitor deadlines and provide the required information to CIRNAC by required deadlines.
- Develop a policy, process and procedure for assessing profit margins on a regular basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
- Implement a process whereby there is an independent review of claims prior to submission to NNC for processing. This has the potential to reduce the number of errors in the claims.
Status
NNC outlined the auditor's recommendations in a management letter to North West Company LP (operating as Valu Lots), requesting that they provide an action plan to address the recommendations for improvement.Pratts Wholesale Ltd.
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for Pratts Wholesale Ltd. noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements to program deadlines, policies related to assessing profit margins and improvements to processes in claims submission.
Recommendations
- Monitor deadlines and provide the required information to CIRNAC by required deadlines.
- Develop a policy, process and procedure for assessing profit margins on a regular basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
- Implement a process whereby there is an independent review of claims prior to submission to NNC for processing.
Status
NNC outlined the auditor's recommendations in a management letter to Pratts Wholesale Ltd., requesting that they provide an action plan to address the recommendations for improvement.
South Camp Enterprises
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for South Camp Enterprises noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improved claims review processes for both accuracy and timeliness of submissions. They also recommended the development of policies related to assessing profit margins.
Recommendations
- Implement a process whereby there is an independent review of claims prior to submission to NNC for processing. This has the potential to reduce the number of errors in the claims.
- The Recipient should monitor deadlines and provide the required information to CIRNAC by the required deadlines.
- Develop a policy, process and procedure for assessing profit margins on a regular basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed on to customers, in accordance with the NNC Program National Manual objectives.
- Approach suppliers to sign, if possible, a formal contract supply arrangement to support the Recipient in providing the best possible price to end consumers.
Status
NNC outlined the auditor's recommendations in a management letter to South Camp Enterprises, requesting that they provide an action plan to address the recommendations for improvement.
Stanton Group Ltd.
Based on the procedures performed by Ernst & Young LLP, the compliance assessment for the Stanton Group Ltd. [link to new compliance assessment summary page] noted no significant exceptions in the compliance with the program; however, Ernst & Young LLP recommended improvements in the areas of Processing and Reporting Controls. They suggest an implementation of a process whereby, an independent review of claims prior to submission to NNC for processing is completed which has a potential to reduce the number of errors in the claims. They also recommended the development of policies related to assessing profit margins.
Recommendations
- The Recipient management should implement a review control, whereby someone other than the preparer of the claim, is inspecting the information on the compiled subsidy claim to original
- supporting documentation and checking clerical accuracy of the final claim form, prior to signing as approver to submit the claim form to CIRNAC.
- The Recipient should monitor deadlines and provide required information to CIRNAC by the required deadlines. Also, in terms of document retention, the POS system should retain receipts for a period of seven years, as per the funding agreement.
- The Recipient should develop a policy, process and procedure for assessing profit margins on a quarterly basis for subsidized and unsubsidized food items to verify and support that profit margins are not eroding the subsidy that is to be passed to the customers, in accordance with the Program National Manual objectives.
- The Recipient should implement a process at the store level to prevent a subsidy from being offered to an ineligible customer and/or establishment.
- The Recipient should have a signed agreement with the airline company to ensure the negotiated rates are locked in for specified terms, in order to mitigate the risk of any fluctuations charged by the airline.
Status
NNC outlined the auditor's recommendations in a management letter to the Stanton Group, requesting that they provide an action plan to address the recommendations for improvement.