Compliance Assessment Summary Report: Ben Deshaies

Context

At the request of the Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC), Samson & Associés CPA / Consultation Inc. performed a desk compliance assessment of the Funding Agreement between Nutrition North Canada (NNC or the 'Program’) and Ben Deshaies (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 2019/2020 through 2021/2022 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, 2019, until March 31, 2022. We determined our sample size by applying professional judgement based on the frequency of claims and the number of items in each claim.

The 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 interviews performed electronically 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

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 2019-20 to 2021-22 Funding Agreements signed with the Department. However, findings and recommendations under section 1.2 were identified and should be read in conjunction with these conclusions.

• Except for the errors noted under section 5.1.1 we can confirm that the amounts disbursed to the Recipient over three fiscal years (2019/20 – 2021/22) were appropriately claimed, in accordance with the terms of the recipient's funding agreement, and the sample did not reveal any overpayments. Furthermore, we are of the opinion that the contribution for which reimbursement is requested is related to the type and nature of eligible costs required by the NNC program.
• With the exception of the cases noted in section 5.2 and the absence of program posting on the Recipient's website, the Recipient adheres to the visibility requirements detailed in the Recipient's program manual.
  In relation to objective #2a) the requirements are not applicable since the beneficiary is a southern supplier. For objective #2b) see objective #6 under third-party retailers.
• Our discussions with the recipient have shown that he is aware of the requirements preventing the sale of subsidized products to ineligible companies and establishments, and our review found no sales to ineligible companies and establishments.
• The Recipient is using the most effective and cost-effective supply chain arrangements and routes;
• Our review can confirm that the Recipient’s database is appropriately coded.
• Based on our review and discussions with the beneficiary, we can conclude that the contribution is not eroded by the prices set for the beneficiary's customers.
  Third-party retailers:
  Our review showed that for the period audited, the Recipient did business with thirteen third-party retailers (M. Koostachin & Son General Store, Fort Albany Market, Baffin Island Canners, Hudson Bay Petroleum, Bella-Jade's, BPC Goodwin's Store, Claudius and Son's Variety Store, Corny's Variety Store, Flyin Supply,Loone's Variety Gas Bar, Kioke's Convenience, Waboose Toy's and Convenience and finally Tivi Inc). The recipient indicated that he could only find four third-party retailer contracts. Therefore, the recipient provided us with the contracts of the third-party retailers (M. Koostachin & Son General Store, Fort Albany Market, BPC Goodwin'sStore and Corny'sVarietyStore), which we verified. Of the four contracts audited, only one covered the period of our audit, that of Fort Albany Market. The other three contracts (M.Koostachin & Son General Store, BPC Goodwin's Store and Corny's VarietyStore) were signed after March 31, 2022 and were not audited as they were outside the scope of our audit.
  For the third-party retailer audited, we were unable to determine whether the third-party retailer transferred the contribution to the customer, as there is no information on this subject on the sales receipt issued to the customer. In addition, we noted that the recipient's inventory list was incomplete for our verification of the contribution calculation. On the other hand, the third-party retailer provided us with photos showing NNC signs and advertising in the store.
• Eight 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.