Political wrangling over a housing crisis in the remote First Nations community of Attawapiskat continued Thursday, with Opposition MPs demanding to know why federal officials never sounded the alarm.

"People are living in tents, in shacks, in trailers," NDP Leader Nycole Turmel said during question period. "Federal official[s] travelled to Attawapiskat at least 10 times this year. No red flags were raised. Why? We need an answer."

About 1,800 people live in the northern Ontario community, where a severe housing shortage has forced families to live in tents and unheated trailers, some without access to running water and electricity.

An emergency housing crisis was declared about a month ago and the Red Cross arrived in the community on Tuesday to aid some families living in tents as temperatures plummeted to –20 C.

Prime Minister Stephen Harper has said that the community received $90 million in federal money since 2006, and cited poor management by the local band council.

"There's a need, obviously, for more services and infrastructure. There is also clearly a need for better management," Harper said in the House of Commons on Thursday. "The government will ensure both of those things."

On Thursday, Aboriginal Affairs Minister John Duncan said Ottawa had opted to move to third-party management "because that is the only level of intervention where we actually have a government-appointed person that can make things happen."

Federal officials have invoked an emergency management plan for the community, he told CBC News, which will allow the use of a healing centre, sportsplex and other buildings to house people in need.

But the healing centre doesn't have running water and is several kilometres out of town, CBC's Adrienne Arsenault reported.

The government's prior relationship with the community is also raising questions. Ottawa had been co-managing the band for nearly 12 years, and its officials failed to see the growing emergency.

Duncan has admitted that officials in his department were unaware of Attawapiskat's housing problems until Oct. 28, despite having visited the community many times this year.

Attawapiskat will become the 12th First Nations community in Canada to be placed under third-party management. But according to the band council, the other communities are still enduring "similarly dire conditions," Arsenault reported.

"It isn't and it won't be easy to make a difference here," she said from Attawapiskat.

Local reaction

Residents in the community appear to be divided on the federal government's decision to delegate control of the band's finances to an outside manager.

Some, like Lindy Shisheesh, say that scrutinizing how money is being spent is a much needed remedy.

"We want answers, that's what we've been asking for," Shisheesh said from a local cafe. "I don't think they really were using the money in a proper area where the money was supposed to be spent."

A child cleans the floor of an inhabited house that was condemned several years ago in the First Nations community of Attawapiskat, on Thursday Dec. 1, 2011. ((CBC))

Other residents such as Douglas Kebokee, a former band councillor, are suspicious about the timing of Ottawa's announcement.

"Why now?" Kebokee asked. "All of sudden, the government's on the hot seat, and all of a sudden we're going third party [management]."

Opening the books The Attawapiskat First Nation is blaming the federal government for chronic underfunding, while Ottawa is questioning the band's accountability. Experts say the truth likely lies somewhere in between. CBC News asked Marilyn Abate, a forensic accountant with Rosen and Associates in Toronto, to look over the band's audited financial statements. She says the council hasn't produced a budget in years, something she called "very disturbing." She said it's clear that the band is cash-strapped, but it's also a matter of how the money was spent. Abate says the audit raised some red flags, such as a $2.3-million surplus in the band's housing budget, though it's not clear if it's cash that can be spent or tied up in something. The band has maxed out its $2.5-million line of credit, and is paying 10 per cent interest on long-term loans, an amount well above normal. Abate said the band spends too much — at least 10 per cent of its revenues — on administration, money that could be going to programs. And there are questions for the government as well about the $92 million it says it gave to the band over the past five years. "What was granted to them and was it earmarked, and did anyone follow up to ensure those funds actually went to those programs?" she asked. The reserve has been under co-management for a decade, indicating the government should have known it was in trouble long ago. — With files from Karina Roman

But suggestions that the community has mismanaged federal money have provoked anger.

"The rationale is mere political deflection," the chief of Attawapiskat, Theresa Spence, said in a statement. "And this rationale has been used by the department to silence us when we brought these conditions to the attention of Canadian society."

The local MP, New Democrat Charlie Angus, accused the government of attacking the community leadership rather than helping it.

"This community has been crying out for help. The Red Cross are on the ground. People have been basically dying in slow motion," he said.

"When the question was asked, 'Where is the federal government?' they turned around, decided to attack the community leadership and throwing the blame entirely on the community. It’s really a disturbing pattern."

'Misleading' numbers

Interim Liberal Leader Bob Rae has previously said the $90-million figure is misleading, as it includes funding for education, water, sewers and housing infrastructure, services normally covered by the municipalities or the provinces elsewhere in the country.

Assembly of First Nations National Chief Shawn Atleo slammed Ottawa’s response to the housing crisis on Wednesday.

"Ottawa knows best what is for First Nations and imposes its will? That legacy has not worked and that is the status quo we must smash," he said.

Atleo met with the prime minister on Thursday, where Harper said the two discussed a planned meeting of the Crown and First Nations leaders on Jan. 24.

First Nations leaders have been asking for a meeting with the prime minister since the summer of 2010, and Harper had agreed to meet with them last December.

Harper called the upcoming meeting a "historic" opportunity to discuss the challenges and opportunities facing aboriginal peoples.