The Canadian Taxpayers Federation recently received what appears to be a leaked audit of flood spending on the Peguis Reserve in Manitoba (click here to view.) Unfortunately, the auditor raised some pretty disturbing issues.

Here are some of the highlights include:

Flood money used for chief and council salaries? 

"Based on information in the general ledger, payments were made to Chief and Council for flood-related activities. A year-end entry was made in 2009-10, totalling $142,323 for severance for Chief and Council. A claim made in March 2010 for the 2009 spring flood included payments to Chief and Council. An amount of $80,289 that included payments to Chief and Council was not allowed by EMO pending receipt of a description of the work done. According to the general ledger for 2010-11, the Chief and each band member of Council received a $5,000 payment in July 2010 for flood-related activities. Based on the information reviewed, it was not possible to determine if these costs were submitted to EMO for reimbursement. Payments to Chief and Council were not identified in the 2011-12 general ledgers which were produced in January 2012.

Most elected officials work more than a standard 35 or 40 hour work week without receiving additional compensation. When there is an emergency in their community, the focus of their activities tends to be on the emergency. It is considered part of the expected activities of an elected official." (Page 8)

The flood billing isn't surprising. After all, the Peguis reserve made national headlines in 2009 for having council pay levels that were higher than the Prime Minister of Canada. If the latest audit is true, it's disappointing to say the least. One would think that flooding could bring a community together rather serve as an opportunity for some to dip even further into the cookie jar.

Control of funds

"The description of daily activities were frequently not completed. Many of the descriptions reviewed simply repeated the same thing day after day. One individual reported time spent organizing a specific meeting every other day over a two-week period. It is unlikely that the individual actually did what was reported. (Page 3)

"According to the log, only 15 homes were sandbagged between March 28 and April 5, 2011; yet, staff indicated that 125 homes were sandbagged." (Page 3)

"An adequate separation of duties did not always exist. The Flood Project Manager who is a contract resource, approved his own invoice on multiple occasions. When asked about why he did this, he did not appear to have any understanding as to why this was inappropriate and why there needed to be a better separation of duties." (Page 4)

"In May 2011 the same invoice for sand bags in the amount of $61,681 was included in a claim to both EMO for PFN's flood-related costs and in a claim to Sandy Bay for services provided." (Page 6)

"The level of detail supporting the claim was often such that it was difficult to know what the individual actually did." (Page 6)

"Problems were also found with the hours claimed. In the opinion of the auditors, it is "quite probable" that hours were not accurately reported. The problems identified included:

The handwriting on the individual description of duties undertaken was frequently found to be different from one day to the next." (Page 6)

"Some of the claimed hours appear to be excessive (eg. eight hours to clear snow at the old school for one sand bagging machine in early March 2011)." (Page 7)

Politics in staff hiring

"According to staff, with both AANDC and EMO, PFN historically had a reputation for preparing complete claim submissions on time. Staff who had been involved in the process for many years were let go in 2009. Since then, the quality and timeliness of the submissions has suffered. Claims for 2010 and 2011 were submitted with required invoices missing, and summary sheets lacking a total. In other cases, the same expenditure was claimed more than once on separate claims." (Page 5)

Bureaucracy building 

"Flood response in many First Nations communities is viewed as a short-term employment opportunity. According to Peguis' Project Manager for its flood response, the Chief wanted to build up PFN's capacity to make it a year round position for at least the key resources." (Page 5)

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Some thoughts on the matter

I guess now the only question is - how are the feds going to respond? Are they going to continue strapping money to a football, throwing it in the direction of the reserve and keep hoping that it is used for the intended purpose?

Or are they going to place greater controls on spending in the first place?

Therein lies the delicate balance between the federal government controlling how reserves spend public dollars and facing a backlash from reserve leadership that seeks independence, and on the other hand, appeasing taxpayers and grassroots band members that expect greater accountability.

If you accept the former - that Peguis is an independent nation - one could ask why the federal government is bailing out an independent nation for its flood costs in the first place? After all, the community received a handsome $118 million land claim in 2009.

Perhaps one solution is to distribute the $118 million among band members and let the reserve tax its citizens to pay for flood costs? That way accountability would be driven at the local level as band members might take a greater interest in how their funds are being used.  Those upset with how funds are spent, could take their share of the $118 million and flee for greener pastures.

Regardless, give the results of the leaked audit (assuming it's true), the status quo doesn't make much sense.