Compliance Assessment Summary Report: EPLS Store Ltd.
For Funding Agreement no. 1617-HQ-000005 and funding agreement no. 1920-HQ-000043 between Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) and EPLS Store Ltd.
Name: EPLS Store Ltd
Location: desk audit
Time period covered by audit: April 1, 2018 until March 31, 2021
Total amount of CIRNAC funding received from 2018 to 2021: $286,578
At the request of the Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC), Spearhead Management Canada Ltd. performed a desk compliance assessment of the Funding Agreement between Nutrition North Canada (NNC or the 'Program') and EPLS Store Ltd. (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 2018/2019 through 2020/2021 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, 2018 until March 31, 2021. 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 restrictions, no on-site was performed and our compliance assessment was performed as a desk audit. As a result, our interviews were performed based on electronic communication 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 restriction we were unable to verify the accuracy of the weighting system used by the Recipient.
We subsequently performed detailed audit 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.
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 the 2018-19 to 2020-21 Funding Agreements signed with the Department.
- The amounts disbursed to the Recipient over three fiscal years (2018/19 – 2020/21) were appropriately claimed in compliance with the terms and conditions of the Recipient's Funding Agreement.
- Appropriate measures are not in place to support the visibility and transparency of the Program in the stores. However, the Recipient does not adhere to the visibility requirements detailed in the National Program Manual for Recipient since the subsidy is not present on the invoice.
- Appropriate measures are in place to ensure that only eligible communities and eligible clients have access to the subsidies.
- The Recipient is using the most effective and cost-effective supply chain arrangements and routes.
- The Recipient has transferred the funds received from NNC to clients in compliance with the terms and conditions of the Agreements.
- Two recommendations were identified to improve the Recipient's management systems, processes and practices that would address the deficiencies noted.
The table below summarizes the recommendations identified by the auditor, the actioned measures required to be undertaken by the retailer/supplier, and their status.
|Auditors Recommendation for LUMB – EPLS Store Ltd.||LUMB – EPLS Store Ltd. Action Plan||Status|
|Incorporate an on-receipt message on the sales receipt as well as provide in-store signage to ensure the subsidy is transparent to the consumer.||After the review of the management letter, the Recipient will continue to research the possibilities of development with their system as it does not have the ability to provide messages on the receipts. The recipient will communicate on a regular basis with NNC to inform them of the possible development for the future in order to respect the visibility requirement of the program.
As for signage the Recipient as added the necessary in-store signage to comply with the program visibility requirements.
|Introduce a verification process prior to submission to confirm accuracy and completeness of the claim.||After the review of the management letter, the Recipient has introduce a second level verification process in order to ensure accuracy of the claims.||Complete|
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