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Nutrition North fed bad claims
'We could not fully quantify the amount of the over-claimed subsidy,' auditor

Kassina Ryder
Northern News Services
Monday, November 21, 2016

LLI GOLINE/NORMAN WELLS
The new owners of Rampart Rentals in Norman Wells say the store's subsidy reporting system was improved after an audit revealed former management had been submitting thousands in ineligible subsidy claims.

Deloitte, the firm hired by Aboriginal Affairs and Northern Development Canada, now Indigenous and Northern Affairs Canada, looked at monthly subsidy claims from April 1, 2012 to Sept. 30, 2014.

The firm also visited Rampart Rentals in January, 2015 before compiling a Client Assessment Report, which was published in October 2015.

It found the independent grocery store had been selling items to two mining companies and claiming subsidy through Nutrition North - but the program's rules don't allow retailers to claim subsidy for products sold to mining companies.

The assessment found over-claimed subsidy amounts during the time frame under audit to be about $7,600, but the number is much larger if months outside of the audit's scope are included.

Auditors estimated the store claimed $19,521 in subsidy for goods shipped to the mining camps between July 29, 2014 and January 23, 2015.

Matt Earls, who purchased Rampart Rentals with his brother, Josh Earls, in September, said he believes the issue was an honest mistake made by former management.

"That was a situation that happened prior to us taking over," he said.

"It was just an error."

The company submitted a total of $627,098 in subsidy claims between April 1, 2012 and Sept. 30, 2014.

"The major area of non-compliance relates to sales to ineligible customers, specifically two local mining camps," the report said.

"The general manager noted that this practice would be discontinued going forward.

"We could not fully quantify the amount of the over-claimed subsidy; our best estimate is $7,600 for the period under audit although the amount is larger if later periods are included."

That money was paid back before Earls and his brother took over the business, Earls said.

The store now has a two-tiered verification system before submitting subsidy claims.

"Now, it gets done and it gets reviewed," Earls said. "So it gets done by myself and it gets reviewed by my brother, who is the other owner, and then we send it off."

The assessment report also noted that subsidies were not being applied consistently, with some items receiving a higher or lower subsidy amount.

For example, auditors tested items to determine whether the subsidy was being applied correctly. Twenty-nine items were scanned through the cash register and auditors expected the subsidy amount to be $46.86, but the subsidy was only $41.21.

"Within the thirty-three individual items selected, we identified that the subsidy provided to the customer was 12-per-cent less than the amount claimed by the recipient," the report said.

"Profit margins are not formally documented or assessed."

Doug Whiteman, Norman Wells resident and potato farmer, said he was disappointed to hear the subsidy wasn't being applied correctly at the store.

Whiteman owns Green Enterprises and sells locally grown potatoes in Norman Wells.

This year yielded about 12,000 pounds but his best year yielded about 30,000.

Whiteman isn't able to take advantage of the Nutrition North subsidy because he isn't a registered Northern retailer.

"I've just had to bite the bullet with this Nutrition North subsidy, I'm not eligible for it," he said.

Whiteman's potatoes sell for about $2 a pound and he said local stores sell theirs for about the same - but retailers are able to claim a subsidy of $2.20 per kilogram.

"To me, it is a direct disadvantage that I have," he said. "I'm lucky that I've had a number of clients that continue with potato purchases from me this year."

Earls said after the report was issued, Rampart Rentals talked with Nutrition North officials about ways to remedy reporting issues.

He said the company has addressed problems outlined in the report and is in good standing with the Nutrition North program.

"We haven't had any problems," he said.

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