A police watchdog will review how Royal Canadian Mounted Police handled the shooting of a young Cree man by a white farmer, enlisting an independent investigator to delve into a case that has ignited racial tensions in the Canadian province of Saskatchewan.

The Civilian Review and Complaints Commission – a federal government agency tasked with examining complaints about the RCMP – announced on Tuesday that it would investigate the 2016 death of Colten Boushie and the events that followed.

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The 22-year-old was shot in the head after he and four friends from Red Pheasant First Nation drove on to a rural property in Saskatchewan. A lawyer for Gerald Stanley, the farmer who was holding the semi-automatic pistol that killed Boushie, described the shooting as a “freak accident”.

Last month Stanley, 56, was acquitted of second-degree murder by a seemingly all-white jury in a verdict that sparked rallies across the country and prompted calls for justice reform.

On Wednesday, Saskatchewan’s public prosecutions office said the Crown would not appeal the verdict, after coming to the conclusion that there was no legal basis to do so.

The 2016 shooting set the province on edge, laying bare the deep fissures that persist between some indigenous and non-indigenous communities.

First Nations leaders criticised the RCMP for fuelling tensions with a press release, sent out after the shooting, that said three occupants of the car had been taken into custody as part of a related theft investigation and another male was being sought. No charges were ever laid.

“The news release provided just enough prejudicial information for the average reader to draw their own conclusions that the shooting was somehow justified,” Chief Bobby Cameron of the Federation of Sovereign Indigenous Nations said in 2016.

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Boushie’s family complained about their treatment by police on the night of the shooting, describing how police surrounded their trailer and searched the home. Boushie’s mother was so overcome with grief she could barely stand, but family members said they were asked by police if they had been drinking.

The RCMP later cleared its own officers of any misconduct in an internal investigation. Boushie’s family responded with a statement that asked: “How are we to trust the RCMP when they treat us like criminals when we are the victims?”

During the trial it emerged that before leaving the scene, the RCMP failed to cover the vehicle in which Boushie was shot and left one of the SUV’s doors open. When the forensic science team arrived two days later, inches of rain had seeped into the vehicle’s interior, potentially washing away valuable evidence.

The court also heard that while Stanley was taken into custody after the shooting, he was released and allowed to return the next day to give his statement.

On Tuesday, the watchdog said its investigation would include looking at how Boushie’s next of kin was notified after his death, the ensuing search of the family’s home and the media releases that the RCMP sent out following the shooting. It would also consider whether race played a role in how police handled the case.

“In the course of our review and our ongoing monitoring of events related to this tragic incident, it has become apparent that additional matters related to the conduct of RCMP members involved need to be examined,” Guy Bujold of the commission said in a statement. “As such, I am satisfied that it is in the public interest to launch an independent investigation into this matter.”

News of the review was welcomed by the Boushie family’s lawyer. “There is a tremendous amount of hope that the family and I have that this is going to be a game-changer,” Chris Murphy told the Canadian Press. “It’s going to change the way policing is done in this country, especially in relation to how indigenous people are policed in this country.”

The RCMP said it would cooperate fully with the investigation. “We look forward to the process of addressing any uncertainty or outstanding questions regarding our role in this matter,” it said in a statement.