Compliance Assessment Summary Report: Pratts Wholesale Ltd.

Background

Crown-Indigenous Relations and Northern Affairs Canada ("CIRNAC") selected Pratts (the "Recipient") for an independent assessment for the funding period April 1, 2015 to March 31, 2017. CIRNAC contracted Ernst & Young LLP to provide an independent report examining certain aspects of the Recipient’s management of the funding received under the program. Specifically, the engagement was planned to:

• Perform an audit of the subsidy claimed for reimbursement as it relates to the type and nature of eligible cost requirements of the program;
• Review compliance with the program visibility requirements and transparency of the subsidy to consumers as it relates to the requirements of the agreement;
• Provide recommendations on the Recipient’s reporting and claiming systems and procedures which support compliance with the terms of the agreement;
• Provide recommendations on management’s processes related to supply chain practices; passing on the full value of the subsidy and related profit margin practices; and sales to ineligible clients.

Ernst & Young LLP, an independent firm, was commissioned to undertake the engagement which took place at the offices of the Recipient.

Recommendations

Based on the procedures performed by Ernst & Young LLP, the following recommendations were provided to the Recipient for consideration:

• 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.

Current status

The final report has been issued.