FIRST NATIONS FINANCIAL MANAGEMENT BOARD “SUPPORTING FIRST NATIONS THROUGH CERTIFICATION” Achieving Financial Management System Certification April 1, 2016
Our first FMS Certificate April 1, 2016 2
Membertou achieves Certification April 1, 2016 3
Agenda Our Certification model explained What can you expect during Certification The Certification journey – Lessons learned Best practices – Tips and Traps VIDEO - Reflections on Membertou Certification 3 things to do next April 1, 2016 4
FMS CERTIFICATION EXPLAINED April 1, 2016 5
Types of Certifications Financial Administration Law Financial Financial Performance Management Certificate System Certificate Financial Design of ratios system Risk Implementation assessment review April 1, 2016 6
Financial Administration Law A FAL is the Governance foundation for an Financial effective Financial Management Management Financial System Administration April 1, 2016 7
Financial Management System Certification • Evaluates compliance with Finance and Financial Expenditure Audit Financial Administration Law Reporting Policy Committee – “ Are we doing what we say we are? ” Risk FAL Budgets and Forecasts • Operational review of the Management design and implementation of policies and procedures Financial Management System April 1, 2016 8
Financial Management System Certification • The FMS Certificate is an opinion whether a first nation is in compliance, in all material respects , with the FMS Standards as at a point in time • Does not provide assurance over the operating effectiveness of a FMS over any period of time • Is a risk based model April 1, 2016 9
FMS Standards and Certification Framework FNFMB 343 FMSS Framework 70 Point of Focus 20 Control Objectives 17 Principles COSO Framework 5 Components April 1, 2016 10
20 Control Objectives The first nation has all provisions of the The duties, reporting lines, All financial institution accounts are Information technology used by the The Council establishes policies and Board approved Financial appointment of the key FMS personnel appropriately safeguarded and first nation in its operations provide a procedures to support that tangible Administration Law (“FAL”) in force on and structures are established, regularly reviewed, reconciled and reliable operating environment and capital assets including capital projects the date the first nation requests the documented and communicated. recorded. support the effective operation of are documented and related contract Board to conduct a formal review of its application controls. and tendering requirements are in FMS. compliance with the requirements of the FAL. The Council defines, limits and Human resource management All key financial processes include All financial reports and other reports The compliance status of all Board monitors the permitted delegation of procedures are established to support appropriate authorization and are prepared, approved and made standards and specific legislations are any functions or duties of the Council all key FMS personnel are qualified. monitoring of control activities to available to appropriate personnel in monitored and tracked, and any non- and officers. accurately record transactions. accordance with requirements of the compliance is rectified in a timely FAL in a timely manner. manner. The first nation’s FMS policies, Conduct expectation for key FMS The council establishes policies and The annual financial statements of the The Council establishes policies and procedures and directions are personnel are established, documented controls to support an integrated risk first nation are audited by a qualified procedures to define, report and established, updated and made and monitored for compliance. management strategy. auditor in compliance with remediate the breach of financial available in accordance with the FAL. requirements of the FAL and approved misconduct. by Council in a timely manner. The Finance and Audit Committee is The integrated strategic plan and The council establishes policies and The Council establishes policies and The FMS is reviewed for continuous established and maintained in budget is prepared, approved and controls to identify, assess and respond procedures to ensure records relating improvement and for resolution of any accordance with the requirements of communicated to members in a timely to the risk of fraud. to the FMS are appropriately and concerns identified in the internal the FAL. manner. securely maintained and made assessments. available to authorized personnel. April 1, 2016 11
FMS Certification Overview 20 Control FAL FMS Objectives Compliance Certification Met April 1, 2016 12
WHAT CAN YOU EXPECT DURING CERTIFICATION? April 1, 2016 13
How the FMB will provide support Capacity Development Standards and Certification April 1, 2016 14
FMB roles in the FMS Certification Process Capacity Development Support communities to identify their needs to Standards and ensure the right supports Certification and tools are in place Provide guidance along the process to and tools and prepare for formal perform technical assessment work and conduct formal assessment April 1, 2016 15
FMS Certification Process Steps STEP 1 STEP 2 STEP 3 STEP 0 Capacity Policy & Formal Initialization Development Implementation Assessment April 1, 2016 16
FMS Certification Process Steps STEP 1 STEP 2 STEP 3 STEP 0 Capacity Policy & Formal Initialization Development Implementation Assessment • • Critical issues • Evaluation against • Confirmation of Review status • • Handover for support control objectives Assessment formal needs requirements • assessment • Gap analysis Review support • • Ongoing client Capacity support development • Continuous changes improvement April 1, 2016 17
What to expect? April 1, 2016 18
The Certification Journey LESSONS LEARNED April 1, 2016 19
Lessons learned • This is uncharted territory for both First Nations and the FMB • A risk based certification approach is appropriate • Clear milestones must be identified in advance and used to measure progress • Progress takes longer than originally expected April 1, 2016 20
Lessons learned (cont’d) • The ‘tone from the top’ will drive commitment, cooperation and desire • Project and change management skills are essential • Be patient – steep learning curve for all involved • Not everything needs to change – build on what you have already April 1, 2016 21
Tips and Traps BEST PRACTICES TO FOLLOW April 1, 2016 22
Know where your First Nation is at today • Conduct a self-assessment in terms of: – Capacity (what is missing?) – Financial performance (historical trends) – Governance (stable / unstable) – Reporting (on time? Reliable?) April 1, 2016 23
Continuous planning Plan Assess Implement Review April 1, 2016 24
Traps to avoid • Underestimating scope (and cost) • A ‘gap’ assessment will help of change define scope of change • Leadership not fully informed or • Establish steering committee and engaged reporting lines • Over-reliance on external • Identify an internal project consultants champion April 1, 2016 25
Traps to avoid (cont’d) • Lack of coordinated approach / • Apply a risk based strategy to not prioritising determine optimum approach • Lack of communication or • Keep staff and leadership miscommunication informed • Assuming it will be too expensive • Identify system elements that already exist April 1, 2016 26
Tips to follow • Apply a risk based approach – Not all system ‘gaps’ are of equal significance • Use limited resources wisely – Clearly define role of any consultants • Specify deliverables and milestones April 1, 2016 27
Tips to follow (cont’d) • Measure, share and celebrate success – Even the small wins • Establish a strong ‘tone from the top’ • Ask for help – FMB, peers April 1, 2016 28
Strategies for success Barriers How to Overcome • Lack of involvement or support by • Steering committee with leadership representation by Council • Lack of project management or change • Engage a qualified consultant, use of management experience work plan • Not knowing where to start • Start with strategic planning and risk assessment • Resistance to change • Employ change management (ADKAR) April 1, 2016 29
ADKAR April 1, 2016 30
Develop realistic timelines • Different elements of change will take different amounts of time to design and implement April 1, 2016 31
Working with a consultant • Define scope and deliverables up front – What are the desired outputs? – What are the phases of the project? – Who is the responsible party? • Use a staged approach to measure progress and to help define deliverables • Beware of ‘scope’ or ‘mission’ creep – have a change order process April 1, 2016 33
Reflections on Membertou Certification April 1, 2016 34
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