Compliance Assessment Summary Report: Consultant de l'Arctique

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 Consultant de l’Arctique (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 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

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.

• With the exception of the errors noted in section 5.1.1, the amounts paid to the Recipient over three fiscal years (2019/20 to 2021/22) were properly claimed in accordance with the terms of the Recipient's funding agreement, and the sample revealed no 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.
• The Recipient adheres to the visibility requirements detailed in the recipient's program manual. In addition, for all third-party retailers, a contract is in place with the Recipient, and they have received the full amount of the Recipient's contribution. However, as indicated in section 5.2, in-store visibility requirements have not been met. (See section 5.2 for more details).
• Based on discussions with the Recipient, they are aware of the requirements preventing the sale of subsidized product to ineligible businesses and establishments and the review did not find any sales to ineligible businesses;
• The Recipient is using the most effective and cost-effective supply chain arrangements and routes;
• Our review showed that the database used by the Recipient was appropriate, as was the database used by the verified retailers.
• Recipient: 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:
  In addition, the Recipient was able to provide us with all the contracts of the third-party retailers to whom it transferred the contribution as required under the terms of the Contribution Agreement. We were able to determine that all five third-party retailers selected for our audit (Dépanneur Newviq'vi Inc.; WBEC Store; D.J., Specialities, Bafin Island Canners and Kimiq Coop) transferred the contribution to the customer. We found that two third-party retailers (Bafin Island Canners and Dépanneur Newviq'vi Inc.) did not indicate the NNC contribution on their sales receipt, and the third-party retailer (Dépanneur Newviq'vi Inc.) confirmed that the NNC program was not visible in the store.
• Five recommendations were identified for improving the Recipient's management systems, processes and practices, which would help remedy the shortcomings identified.

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