Compliance Assessment Summary Report: BBE Expediting LTD.

Context

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 BBE Expediting 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 the 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.

Conclusions

Based on the work performed during the compliance review assessment on the sample of transactions selected and discussions with the Recipient, we conclude the following:

• The Recipient has submitted claims with errors and therefore, has not complied with the financial terms and conditions of the Agreements.
• Claims to NNC are not verified before they are uploaded to the Claims Processor's portal.
• The Recipient has implemented a process to ensure that subsidies are transparent and offered to eligible communities and clients only.
• The Recipient transferred the full subsidies to clients during the period of the compliance assessment review.
• The recipient has submitted a claim passed the required due date.
• The Recipient has not met all the non-financial terms and conditions of the Program by failing to sign an agreement with third party retailers.
• Four recommendations were identified to improve the Recipient's management systems, processes and practices that would address the deficiencies noted.

The table below summarizes the recommendation identified by the auditor, the actioned measures required to be undertaken by the retailer/supplier, and their status.