Snowdrift (Feb 27/06) - An audit of Lutsel K'e First Nation clears former chief Archie Catholique of allegations of wrongdoing, but paints a dismal picture of the band's financial management.

The "forensic audit" was ordered after members of the Dene band accused Catholique of stealing money.

They weren't doing their jobs and I got the blame - Chief Archie Catholique

According to a copy of the audit obtained by News/North, "no obvious fraudulent transactions were found." Catholique blamed the band's financial problems on program managers.

"They weren't doing their jobs and I got the blame," he said during a visit to Yellowknife last week.

Covering the fiscal years ending March 31, 2004 and 2005, the $45,000 audit was performed by MacKay and Company Ltd.

"The First Nation's historical files were disorganized and scattered about the First Nation's office," reads the audit.

No "approved budgets" could be found by the auditor, so it warned that the review "should not be considered a comprehensive forensic audit."

In 2005, the band received $5.594 million in revenue, but spent $6.129 million, resulting in a $338,508 deficit. In 2004, revenue was $5.567 million and spending was $5.6645 million, with a $146,643 deficit.

The 2005 deficit was attributed in the audit to the fact the band paid out $332,000 to members as "Impact Benefit Distribution."

There were several areas where spending was questioned.

Travel, accommodations and per diems doubled between 2002 and 2004, to $1.1 million from $586,000.

"It should be noted that there were a very large number of (aircraft) charters," read the audit. "It may be that these were not necessary when scheduled flights could have accommodated travel."

As well, the audit reported that expenses were often authorized without receipts, that "there appeared to be a great deal of shuffling of expenditures between budget categories to use up available funding."

The auditors also noted that the turnover of senior administrative and financial staff during 2004 and 2005 contributed to a lack of financial information provided to the chief and council.

Catholique said he feels vindicated by the audit.

"This whole incident hurts my credibility, saying that I was stealing money," he said. "I hope one day the next leadership will do something about this."

Recommendations in the audit include hiring a trained finance officer, developing clear financial policies, require annual approved budgets, require original receipts for reimbursement of expenses, require changes to chief and council pay to be voted on at the annual general assembly and requiring proof of attendance at functions for reimbursement.