Compliance Assessment Summary Report: Shaw Family Bakery
For Funding Agreement no. 1819-HQ-000038 and 1516-HQ-000020 between Crown-Indigenous Relations and Northern Affairs Canada and Shaw Family Bakery
Name: Shaw Family Bakery
Location: Thunder Bay, Ontario
Time period covered by audit: April 1, 2016 until March 31, 2019
Total amount of CIRNAC funding received from 2012 to 2019: $444,098
At the request of the Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC), Samson performed a desk compliance assessment of the funding agreement between Nutrition North Canada (NNC or the 'Program’) and Shaw Family Bakery (Recipient). Nutrition North Canada is a Government of Canada Program that helps make nutritious food and some essential items more affordable and more accessible to northern communities. The purpose of the assessment, in accordance with our engagement with NNC, was to provide information on:
- Whether the Recipient is passing on the full value of the subsidy to consumers;
- Whether the amounts disbursed to the Recipient through the fiscal years 2016/2017, 2017/2018 and 2018/2019 were appropriately claimed in compliance with the Terms and Conditions of the Recipient’s Funding Agreement;
- Whether program visibility requirements are met and that the subsidy is transparent to consumers;
- The Recipient’s reporting and claiming systems and procedures with regard to gaps and controls issues; and
- Whether the Recipient respected program rules in regard to sales to ineligible clients.
The period covered by the compliance assessment is from April 1, 2016 until March 31, 2019. We determined our sample size by applying professional judgement based on the frequency of claims and the number of items in each claim.
Due to the Covid-19 travel restriction, no on-site was performed and our compliance assessment was performed as a desk assessment. As a result, our interviews were performed based on electronic communications with the Recipient to identify and document their key control activities, their procedures and processes related to the claim of funds to NNC, program delivery and reporting. In addition, due to the travel restrictions, we were unable to verify the accuracy of the weighting system used by the Recipient.
We subsequently performed detailed assessment procedures on the accuracy and validity of the Recipient’s claims and on the margin earned by the Recipient on the subsidized products.
Based on the procedures performed and as more fully described in our report, we did not find any significant deviations in the samples we selected; however, we identified improvements in the form of recommendations to improve the Recipient’s control environment in relation to the Program.
Recommendation #1: The Recipient should ensure it complies with the NNC National Manual for Program Recipients, which requires that: The Recipient sign a contract with each of its third-party retailers, which specifies:
- the obligation to pass on the full subsidy to the consumer;
- the obligation to post Nutrition North Canada signage in the store;
- that they will be listed as a third party on the Nutrition North Canada website; and
- that Nutrition North Canada may audit the third parties upon request.
Recommendation #2: The audit revealed that the Recipient was providing the Bill of Lading instead of the Waybills with his claim. The Bill of Lading did not identify the weight. Furthermore, the NNC National Manual for Program Recipients requires that the waybills be provided with the Recipient’s claim. Consequently, we recommend that the Recipient provide the waybills with his claim.
Recommendation #3: The Recipient should ensure that a second review of the itemized shipment report is performed prior to submitting his claim for payment.
Based on the sample tests, discussions with the Recipient and the other procedures performed, we can conclude the following:
- The management practices in place to support the delivery of the program are, for the most part, adequate;
- With the exception of recommendation #2, the amounts disbursed to the Recipient over three fiscal years (2016/17 – 2018/19) were appropriately claimed in compliance with the Terms and Conditions of the Recipient’s Funding Agreement and there was no amount of overpayment from the audit sample;
- Subject to the limitations of performing a desk audit and with the exception of recommendation #1, the Recipient is adhering to and is in compliance with the visibility requirements detailed in the Recipient Program Manual, and the subsidy is presented on invoices;
- With the exception of two invoices out of 393 invoices, the Recipient passed on the subsidy to eligible clients;
- The Recipient is using the most effective and cost-effective supply chain arrangements and routes;
- Except for the fact that we cannot confirm that the Northern retailer’s subsidy is not eroded through prices set to the end consumers, the Recipient has passed on the full value of the subsidy to individual consumers and to its third-party retailers. In addition, the value of the subsidy is not being eroded by the Recipient’s profit margin practices;
- With the exception of recommendation #3, we do not have any recommendations to improve the Recipient’s management systems, processes and practices that would address the deficiencies noted.
Overall, we are of the opinion that the funding provided to the Recipient was spent for the intended purposes and in compliance with the terms and conditions for 2016-2017 to 2018-2019 funding agreements signed with the department.
Action Plan for Shaw Family Bakery
The table below summarizes the recommendations identified by the auditor, the actioned measures required to be undertaken by the retailer/supplier, and their status.
|Auditor’s recommendation(s)||Action Plan||Status|
|1. Ensure that a contract is in place with each third-party retailer in order for the program requirements to be respected.||Following the revision of the Compliance Management Letter the recipient will ensure that a contract is in place for all third-party retailers in order to comply with the Program requirements.||Complete|
|2. Ensure that all appropriate shipping documents are submitted with claims.
3. Ensure that a second review of the itemized shipment report is performed prior to submitting his claim for payment.
|Following the revision of the Compliance Management Letter the recipient will ensure that a second review of the claim submission is performed and create a checklist to ensure that all required documents are submitted.||Complete|
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