ACCT $621$

Internal Controls Unit

Teaching Case

RIsk Identification In Wildrose Country

Victor recently relocated to a city in Northern Alberta after accepting a position as a Band Manager for a First Nation $($FN$)$ in the vicinity. Victor's experience is in economic development for a municipality and has not worked directly in a FN organization previously. He is excited about the opportunity to learn more about indigenous culture and to bring his managerial experience to benefit the community.

During his interview process, he was told that there was a recent election for Chief and Council, and there was a full turnover of the governance committee. One of the questions in his interview was about his experience creating policies and procedures so he suspects that will be one of his priorities on the job. During his interview there was also discussion regarding his experience working with different organizational cultures so he suspects he will need to draw into his toolkit of personal skills to adapt his management style in this organization. His research to prepare for the interview taught him that the FN has a $100\%$ owned subsidiary corporation where they engage in their economic development and profitoriented activities. The FN has a membership of approximately $1,200,$ and $40$ percent of the members live on reserve.

When preparing for the interview Victor reviewed the financial statements showed the FN is primarily funded by Indigenous Services Canada, with some provincial funding to support health and childcare initiatives. The annual revenues are approximately $$12$ million and the $FN$ holds approximately $$500,000$ in cash resources. The FN runs as a not$-$for$-$profit organization with the overall goal to spend the funding that was received in the year on approved initiatives and to cover administrative costs. There is some ability to carry over excess funding year$-$to$-$year but there is always the risk that the funder will not approve the carryover and that they will have to return any unspent funds.

The Economic Development arm operates as a for$-$profit corporation. To the extent that there are profits within the Economic Development Corporation, these profits will be retained by the Corporation. As a $100\%$ subsidiary of the FN$,$ the Chief and Council also governs the activities of the Economic Development Corporation. See Appendix $1$ for an organizational chart. The Economic Development Corporation has annual revenues of approximately $$2$ million.

On his first day of work, Victor arrives at the office and the receptionist points out where his office is$.$ He gets himself settled, and about an hour in$,$ starts to wonder if anyone is going to come show him around. Pulling up the company website he sees that his direct reports are a Finance Manager, Health and Social Programs Manager, Economic Development Manager and a Facilities and Housing Manager. Wandering down the hall he locates the Facilities and Housing Manager, Lise, who says she is also new and has only worked there one month.