Tonda MacCharles, The Toronto Star, January 7, 2013

The federal government is concerned a damning independent audit of how federal funds are spent in Attawapiskat will inflame tensions in advance of Friday’s meeting between the prime minister and First Nations leaders, says a source who has seen the report.

The government, however, said it did not deliberately withhold the document. It was posted to the department’s website early Monday afternoon.

According to the audit, a Sept. 20, 2012, letter from the accounting firm Deloitte to Attawapiskat Chief Theresa Spence and copied to the Department of Aboriginal Affairs, says more than 400 of the transactions it reviewed lacked proper documentation.

“An average of 81 per cent of files did not have adequate supporting documents and over 60 per cent had no documentation of the reason for payment,” the letter stated.

As a result, said Deloitte, it could not conclude the spending was done in accordance with government funding agreements, or for its intended purpose.

“There is no evidence of due diligence in the use of public funds, including the use of funds for housing,” wrote Deloitte.

“In our opinion, having over 80 per cent of selected transactions lacking any or proper supporting documentation is inappropriate for any recipient of public funds.”

The Attawapiskat band council has received approximately $104 million from the federal government between April 1, 2005 and Nov. 30, 2011 for housing, infrastructure, education and administration.

“The independent audit from Deloitte and Touche LLP speaks for itself, and we accept its conclusions and recommendations,” said Jan O’Driscoll, spokesperson for Aboriginal Affairs Minister John Duncan.

A source told the Star the federal government was concerned about releasing the audit in the lead-up to Friday’s meeting, but said “there is no good time for this to go out.”

“The situation right now is pretty tense. You saw the shutdowns (Saturday),” said the official, referring to protests that included a blockade of the railway between Toronto and Montreal that stranded more than a thousand VIA Rail travellers on four trains.

“The dilemma now is this is a tense situation, and the government is extremely concerned how this will be perceived because it (the audit) is bad.”

A spokesman for Prime Minister Stephen Harper’s office denied the government was deliberately withholding the audit. Communications director Andrew MacDougall would only reiterate Harper’s comments last week that the federal department of aboriginal affairs has a process to follow when it receives an audit.

MacDougall said Harper will be joined at Friday’s meeting by Aboriginal Affairs Minister John Duncan, parliamentary secretary for aboriginal affairs Greg Rickford, Health Minister Leona Aglukkaq, and Treasury Board President Tony Clement, who is responsible for the government’s spending, as well as economic development in northern Ontario.

It is billed as more of a working meeting, with little of the ceremony that attended last year’s Crown-First Nations summit, with the focus expected to be on economic development, natural resources and treaty issues.

The Assembly of First Nations, led by Grand Chief Shawn Atleo, will lead a delegation expected to number about 30.

For the federal government, the convergence of the rolling First Nations protests, Spence’s hunger strike, and now the audit’s damning findings have created a potentially explosive mix.

Saturday’s blockade was part of the Idle No More protests, which began as a grassroots movement objecting to federal budget measures that First Nations activists say gut aboriginal, environmental and treaty right protections.

Initially launched via social media by a group of four Saskatchewan women, the movement has taken on a life of its own, with support emerging across the country and demonstrations popping up abroad.

On Dec. 11, Chief Spence separately launched her hunger strike, aimed at what she says is federal inaction on her reserve’s concerns. She had demanded a meeting between Harper, the governor-general and First Nations leaders.

Yet after Harper announced Friday he would meet on Jan. 11 with a delegation of the Assembly of First Nations, which Spence said she would attend, she refused to abandon her fast.

Her spokesman Danny Metatawabin could not be reached Sunday.

Regional Grand Chief Stan Louttit of the Mushkegowuk Council, which includes Attawapiskat, said in an email Sunday he was “not at liberty to talk about the audit since the First Nation and AANDC (the department of aboriginal affairs) are in the midst of discussions on the audit findings.”

He added “the focus should be on the Jan. 11 meeting.”

Another First Nations chief told CTV’s Question Period a key problem for the Assembly of First Nations going into the meeting with the prime minister is that not all First Nations agree on what the solutions are.

“I think it certainly is a barrier to progress when we internally struggle the way we are right now, and I think that . . . in order to overcome some of these barriers, we do have to spend a lot of time internally discussing who should be talking about what and what are the real objectives,” said Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs.

“I think funnelling everything into a national process or a national action plan is problematic, particularly when a lot of the issues that we face are on a regional basis.”

Last year at the height of the Attawapiskat housing crisis, when Ottawa agreed to deliver nearly two dozen new modular homes to the northern Ontario reserve, the Conservative government ordered a review of how Spence and the Attawapiskat Band Council had been spending federal dollars that flow to the reserve.

The auditors completed their work in the late fall and it was submitted to the Harper government and shared with Spence and the band council.