First Nations Financial Statement and Audit Research Lead Report

Timely and accurate financial reporting by First Nations governments is crucial for maintaining accountability, transparency, and trust – both within communities and among external partners such as investors, rating agencies, and other levels of government. Despite ongoing efforts by the First Nations Financial Management Board (FMB) and the First Nations Finance Authority (FNFA), a growing number of First Nations face persistent challenges in preparing and then issuing audited annual financial statements in a timely manner. As of May 2025, 37% of First Nations governments had yet to issue their 2022-2023 fiscal year annual audited financial statements, and 56% had yet to issue their 2023-2024 fiscal year annual audited financial statements.

To better understand the factors behind late or incomplete annual financial statements, the FMB conducted a national survey of finance professionals working in First Nations communities and Chartered Professional Accountants (CPAs) providing auditing and consulting services to First Nations. The survey of First Nations yielded 123 responses (representing approximately 25% of the population). The survey data, independently analyzed by Mokwetah Consulting, revealed multiple systemic and resource issues. The survey of CPAs resulted in 36 responses from the online survey and in-person interviews. The FMB also conducted internal research using quantitative analysis from the FMB Statistical Initiative to identify causal factors to the issue of late and missing annual financial statements.

Through this work the FMB identified several key challenges including limited administrative and accounting capacity, fragmented and complex regulatory requirements, and underfunded accounting support and audit services. Based on these findings, targeted recommendations were developed and prioritized to enhance financial management capabilities, such as establishing regional finance hubs, adopting modern cloud-based systems, advocating for multi-year funding arrangements, creating a specialized pool of Indigenous auditors, and streamlining regulatory requirements.

The FMB initiated and is sustaining proactive efforts to overcome identified challenges and foster impactful change. Key priorities include:

• Capacity-building initiatives: expanding training programs tailored to First Nations governance, administrative, and accounting practices; developing a pipeline of uniquely qualified Indigenous CPAs; and expanding on-demand professional support services.
  
• Institution-building: together with our partners, developing institutions to respond to the immediate needs of First Nations governments.
  
• Policy advocacy: advocating for changes to funding structures and regulatory frameworks.
  

Through these coordinated efforts, the FMB aims to support First Nations governments in overcoming systemic challenges and supporting a more reliable, transparent, and streamlined financial reporting environment. The FMB’s goal is to work towards building an environment of success for First Nations across Canada, in partnership with First Nations, the federal government and other key partners.