Debt recovery: Strict financial control saves Ahousaht from third-party management

Ahousaht, BC

Nine years after Ahousaht hired Certified Financial Accountant Rob Bullock, the nation has greatly improved its financial status.

The financial situation was so bad, that the nation would have faced harsh consequences through Indigenous Services Canada if things were not turned around.

“We could have gone into third-party management,” said Chief Councillor Greg Louie.

That would have meant that control of Ahousaht’s finances would be temporarily transferred to another body.

The Government of Canada delivers funding for programs and services in Indigenous communities through Comprehensive Funding Agreements. In order for First Nations governments to receive timely transfer payments from the federal government it must meet obligations set out in the agreement, including the timely the submission of regular financial records and audit reports to ISC.

When ISC decides that a First Nation is to be placed into Third-Party Funding Agreement Management, the government designates a Third-Party Funding Agreement Manager (TPFAM) to handle the First Nation’s funding agreement.

In addition to managing finances on behalf of the First Nation, the TPFAM works with the Indigenous government to remedy the underlying issues that caused the need for Third-Party Funding Agreement Management. According to ISC, Third-Party Funding Agreement Management is a temporary measure to ensure the continued delivery of programs and services to community members and is applied by the department only as a last resort.

“One of our councillors back then said we are bleeding badly,” said Louie.

He went on tell Ha-Shilth-Sa that they asked Bullock to review their finances and give an honest opinion. Louie said they were told they were in a bad, critical financial state.

“This council inherited $1.3 million in high-interest loans and those have now been cleared,” said Louie.

According to Louie, in order to keep the transfer payments flowing from ISC, Ahousaht had to develop a Management Action Plan (MAP). In addition, they were required to deliver financial reports to the federal government quarterly and monthly to another arm of the government.

With Bullock overseeing Ahousaht’s finances, strict protocols were put in place. Louie said that staff and council members were required to take both governance and financial training courses. Ahousaht has been slowly reducing its debt over the years.

“Debt comes in two forms, amounts that are tied to a house or housing complex that generates rent and debt that is used to pay overdue bills, bad debts and similar,” Bullock stated in an email to Ha-Shilth-Sa.

He went on to say that the second kind of debt is very expensive, as it always has a higher interest rate. According to Bullock, who serves as Ahousaht’s director of finance and their executive director, Ahousaht significantly reduced its debt load in March.

“Ahousaht paid off $1.3 million in debt which would have cost over $55,000 annually in interest alone. That can pay for one full-time employee among other things,” Bullock said. 

Ahousaht’s staff and council now meet monthly to share updated financial reports in accordance with their Financial Administrative Law, which Louie says they follow closely.

“We are 3.5 years out of MAP and are now able to start projects that we couldn’t do before,” said Louie.

Ahousaht can now secure loans at lower interest rates, saving the nation money.

Louie is proud to say that Ahousaht has had five or six years of good audits. Ahousaht has recently had $4 million taken off of its books in treaty debt that has been written off by the federal government.

“The feds made a decision to eliminate treaty debt for all First Nations,” said Louie.

On a better financial standing, Ahousaht has launched $28 million in projects, some of which have been completed under budget.

“Because our finances are good,” said Louie.

Share this: