Manitoba chiefs organization lacks paper trail on how it spent federal money: auditor

A Manitoba First Nation organization whose grand chief could face a vote of non-confidence Wednesday has received a second “disclaimer of opinion” from an auditor because the organization lacked a traceable paper trail for its spent dollars, APTN National News has learned.

By Jorge Barrera
APTN National News
A Manitoba First Nation organization whose grand chief survived a non-confidence Wednesday has received a second “disclaimer of opinion” from an auditor because the organization lacked a traceable paper trail for its spent dollars, APTN National News has learned.

This is at least the second time Manitoba Keewatinowi Okimakanak (MKO), which represents 30 northern Manitoba First nation communities, has received a disclaimer of opinion from an auditor.

MKO Grand Chief David Harper survived a non-confidence vote Wednesday morning during the organization’s chiefs meeting in Opaskwayak Cree Nation (OCN). The move for a non-confidence vote was triggered by Harper’s alleged financial mismanagement of the organization. Sixteen MKO chiefs voted against the non-confidence motion, nine supported it and one abstained.

MKO’s books were reviewed by Winnipeg-based accountant Bernie P. Shore who concluded he could not audit the organization’s consolidated financial statement for the 2014 and 2013 fiscal years.

“I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion,” said Shore in an Aug. 24 dated cover letter attached to his review of MKO’s books. “I do not express an opinion on these consolidated statements.”

Shore stated in the letter he could not review MKO’s federally-funded Aboriginal skills and employment training program (ASETS) for the 2013-2014 fiscal year because the money lacked a paper trail.

“I was unable to verify recorded or unrecorded amounts related to assets, liabilities, net debt, accumulated deficit and expenditure,” said Shore’s letter, obtained by APTN National News.

Aboriginal Affairs has already launched a separate probe of MKO’s ASETS program and tapped auditing firm KPMG to review the books.

Shore also stated he could not audit MKO’s economic development company Wabung for the same reasons.

According to MKO’s consolidated financial statement, the organization had accumulated a $1.298 million deficit by the end of the 2014 fiscal year which ended on March 31.

This is the second time Shore has refused to audit MKO’s books over a lack of a paper trail.

Harper was informed via letter last month by Aboriginal Affairs’ assessment and investigation services branch that KPMG would be investigating the organization’s use of Aboriginal Affairs and Employment and Social Development Canada dollars dating back to 2010.

The department’s probe will also include Harper’s own spending, contracts with its former director of finance Glen Buchko and contracts issued by the organization.

Harper faced the non-confidence vote because he refused to step down during a forensic audit launched by MKO-member chiefs. The audit, being conducted by Winnipeg-based Lazer Grant, is separate from Aboriginal Affair’s KPMG probe.

Chiefs passed a resolution during an MKO meeting in July offering Harper a choice of stepping down during the Lazer Grant audit or face a non-confidence vote during this week’s meeting in OCN. Harper chose to hang on and fought to beat the vote.

The first phase of Lazer Grant’s audit was launched in 2013 over the organization’s contracts to Buchko after chiefs discovered the former director of finance was making $250,000 annually.

Harper is facing allegations of financial mismanagement and of using MKO funds for personal purchases like guitars, flights for his girlfriend and car repairs. Harper said he paid back all his personal expenses.

MKO’s finances have plunged deep into red under Harper’s leadership and the organization was warned by a third auditing firm that Aboriginal Affairs could put it under co-management or third-party management if it didn’t get its books in order, especially around travel and consultants.

MKO was also warned to include a paper trail around its credit card use.

MKO’s accumulated deficit for the fiscal year ending on March 31, 2013, hit $976, 025. MKO also accumulated an operating deficit of $609,058 by March 31, 2013, which was a 71 per cent increase over the previous year’s operating deficit of $356,108.

Harper has also been accused of obstructing Lazer Grant’s forensic audit. He denied obstructing the audit. Harper has also faced criticism over his plan to sell clan membership to sponsors as a way to raise money for the AFN election which MKO is hosting in Winnipeg this December.

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@JorgeBarrera