Evaluation of Indian Moneys, Estates and Treaty Annuities

2.3.2. Source limitations

The methodologies identified above have limitations that must be noted so that the strength of the findings and recommendations of this report can be properly situated.

Document Review: Data available in the Trust Fund Management System (TFMS) is excellent and allowed for significant quantitative analysis to support findings. However, the national information systems for Living and Decedent Estates (Estates Reporting System) and Treaty Annuities (Treaty Payment System) are outdated, poorly designed and contain gaps in information making them unreliable. As a result, many of the findings related to estates and treaty annuities rely on qualitative lines of evidence or quantitative data from one or two regions. Reliable national-level data and gender-specific data are rare.

Furthermore, current reporting of delivery costs is not separated out by individual program component. The need for this information was identified early in the project, but program representatives reported difficulties obtaining costs by component because budgets are assigned to a cluster of activities and resources are shared. Partial information representing the delivery costs for one year or one region was obtained and is presented in the report, however, partial information must be considered as illustrative of a trend and not definitive.

Key Informant Interviews: For Living and Decedent Estates, interviews with IMETA staff were conducted in all regions in order to understand the impact of different approaches to program delivery. For Band Moneys and Treaty Annuities, the strategy was to conduct interviews with IMETA staff in the regions that have the greatest activity; for Band Moneys this was Alberta and Saskatchewan, and for Treaty Annuities interviews with regional staff were scheduled in Saskatchewan, Manitoba and Ontario. As a result, the findings related to Band Moneys and Treaty Annuities do not represent a national picture.

The limited involvement of First Nations individuals and organizations in the key informant interviews is also viewed as a weakness in this analysis. Two First Nations were interviewed for Band Moneys, but it was deemed inappropriate to contact bereaving heirs to inquire about their experiences with AANDC Decedent Estates programming or dependent adults regarding Living Estates. For Treaty Annuities, the perspectives of Treaty First Nations were not obtained.

Finally, the discussion of alternatives and best practices relating to Estates could have been enhanced by interviews with Provincial Public Trustees.

3.1.1 Background and description

Throughout the 18th and early 19th centuries, the Indian Department was under military control and Indian policy was primarily geared to maintaining Indians as military allies or keeping the peace. Early activities included negotiating treaties, paying annuities and the management of funds from the sale of ceded lands. Band Moneys emerged in the early 1800s from the need for accurate record keeping to manage the money generated from the sale, rent, or lease of Indian lands, property and renewable and non-renewable resources, and the accrual of interest.^{Footnote 8}

In the early 19th century, Indian and Band Moneys were invested in England. These funds were later transferred to Canada and invested in various securities such as Provincial Bonds, Municipal Loan Fund Bonds and Grand River Navigation Company stock. The Government preferred that the principal be invested and the interest earned would provide a source of revenue for bands.^{Footnote 9} By Order in Council passed in 1861, the Province of Upper Canada assumed control over these securities from the Imperial Crown and thereafter Indian and Band Moneys were credited to accounts and held in a "Trust Fund".^{Footnote 10}

The concept of preserving the principal for future generations was introduced in 1839. So important was the preservation of capital that it was also common practice to require the repayment of capital for some expenses with interest. This practice was made official in 1938 – loans could be made to Indian bands for purchase of farm implements, machinery and livestock, fishing and other equipment, grain seed and materials for handicrafts. Sums were paid out of band funds with an interest rate of five percent.^{Footnote 11}

Despite federal interest in protecting capital, by the late 19th century band capital and revenue moneys were being used to support the growing expenses of the Indian Department and the federal government's "civilization program", which can be traced to an 1826 inquiry into the affairs of the Indian Department. This inquiry recommended settling Indians on farms and substituting farming implements and farm stock for the annual presents. Over time, the statutory principles governing the use of capital were frequently amended, continually expanding the list of purposes for which they could be expended.^{Footnote 12} An amendment to the Indian Act in 1918 allowed expenditure of band money without band consent. Over time, moneys were used to support capital projects, education (including residential schools), the purchase of agricultural implements, salaries for Indian Department officials, and the purchase of goods.

Under the 1951 Indian Act, the Minister could no longer authorize capital and revenue expenditures without the consent of Band Council, however, the Minister remained responsible for determining whether proposed expenditures were permitted under the Indian Act and were to the benefit of band members. There has been no evolution to sections of the Indian Act pertaining to Band Moneys since 1951.

The Indian Act defines Indian moneys as "all moneys collected, received or held by Her Majesty for the use and benefit of Indian or Bands". As title to reserve lands rests with the Crown, all moneys derived from reserve land activities must be collected by the Department and deposited 'in trust' for the benefit of the First Nation for which such lands were set aside.

Band Moneys under Section 62 of the Indian Act are referred in two categories as:

1. Capital moneys – derived from the sale of surrendered lands or the sale of the capital assets of a First Nation. These moneys include royalties, bonus payments and other proceeds from the sale of timber, oil, gas, gravel or any other non-renewable resource.
2. Revenue moneys – all Indian moneys other than capital moneys. They are derived from a variety of sources, including, but not limited to, the interest earned on band capital and revenue moneys, fine moneys, proceeds from the sale of renewable resources (e.g., crops), leasing activities (e.g., cottages, agricultural purposes) and other commercial ventures.

Band capital and revenue moneys are considered public moneys, not appropriated by Parliament, and are held by the Crown within the Consolidated Revenue Fund (CRF) on behalf of First Nations. Funds are administered by the Minister of AANDC pursuant to sections 18(2), 28(2), 35(1), 37(1), 38(1), 39, 61 to 69 and 104 of the Indian Act. The CRF is the single fund used to receive all moneys collected by Canada.

Band capital and revenue moneys earn a rate of return (interest rate) set by the Governor in Council through an Order in Council. Interest rates are based on Government of Canada bonds having a maturity of ten years or over, using the weekly yields published by the Bank of Canada. Based on the month-end balances in the First Nation's account, interest is calculated quarterly, compounded semi-annually and deposited every six months (April and October) into the First Nation's revenue account.

It is relatively easy for bands to access revenue moneys compared to capital moneys. Under Section 66 of the Indian Act, subject to consent of the Band Council^{Footnote 13}, revenue moneys may be spent for any purpose that will promote the general progress and welfare of the band or any member of the band (66(1)) or to assist sick, disabled, aged or destitute Indians and for the burial of deceased indigent members of the band (66(2)). Furthermore, revenue moneys may be spent for a number of reasons, without consent of the band council, including the destruction of insects or pests, to address the potential spread of disease, to provide for premise inspections, to prevent overcrowding of housing, to provide sanitary conditions and to construct and maintain boundary fences. However, spending without band council consent is rarely, if ever, exercised.

In addition, under Section 69 of the Indian Act, bands may gain control over the management and expenditure of their revenue moneys. To do this, they must obtain consent from their membership through a Band Council Resolution (BCR) and submit it to AANDC for review. If all conditions are met, and AANDC approves, an Order in Council is prepared for signature by the Governor General.

The expenditure of capital moneys is more strictly controlled under Section 64(1) of the Indian Act. Permitted expenditures of capital moneys as defined in Section 64(1) of the Indian Act includes items such as: per capita distributions, construction and maintenance of roads, bridges, water courses and boundary fences; the purchase of additional reserve land or interest in land on behalf of a band member; purchase of livestock and farm equipment; construction and maintenance of permanent improvements and works; providing loans; land and property management expenses; construction and financing of housing; and any other purpose approved by the Minister.

Approval of expenditures under sections 64, 66 and 69 has been largely delegated to the regions, however, capital expenditures under Section 64 (1) (d) and (k) must be approved by the Minister. There is no provision in the Indian Act that gives First Nations control over their capital revenues similar to those in Section 69, which gives band control over their revenue moneys. First Nations may gain control over their capital moneys through FNOGMMA, however, to date, no First Nation has been successful in the process for reasons explained later in the report.

The process to access capital and revenue moneys held in the CRF is as follows:

1. Formal request: First Nations submit a formal request to spend capital or revenue funds held in the CRF through a BCR.
2. Departmental assessment: An initial review of the BCR examines the benefit to members by looking at: proposed costs, impact on account balance and alternative sources of income; socio-economic impacts such as dependence on existing programs and services such as social assistance; possible environmental impacts; legal and other implications; and the annual operating budget where applicable.
   
   Supporting documentation must be provided for capital expenditures under Section 64 and revenue expenditures under Section 66 to enable departmental officials to make an informed decision on the merits of an expenditure request. Requirements depend on the specific purpose and nature of the request.
   
   If the review and assessment are satisfactory, departmental staff must then prepare the appropriate approval documentation with their recommendation for full, partial or conditional approval.
3. Release of Band Moneys: Once approval has been given, required information is then recorded in the TFMS and made available for the creation of a Payment Obligation Certificate and management approval.

An analysis of the types of expenditures by section of the Indian Act between 2006-07 and 2010-11 reveals that revenue expenditures under Section 66 represent five percent of total expenditures and Section 69 revenue expenditures account for 23 percent of total expenditures. As shown in figure 3.1 below, the majority, or 69 percent, of total expenditures pertain to capital expenditures under Section 64 of the Indian Act.

Text alternative for Figure 3.1 Total amount of payment transactions by section of the Indian Act between 2006-07 and 2010-11

The Total Amount of Payment Transactions by Section of the Indian Act between 2006-07 and 2010-11 figure shows a pie chart, which sections representing each of the following: "capital moneys"; "emergency expenditures"; "revenue moneys"; "management by band"; "revenue moneys or management by band"; and "N/A or no ID". Almost 3/4 of the pie chart consists of "capital moneys", with a total of $831 829 638. The second largest section of the pie chart consists of "management by band" which is almost ¼ of the chart with a total of $280 515 655. The third largest section of the chart consists of "revenue moneys", with $58 238 224. The fourth largest section consists of "revenue moneys or management by band", with 19 191 620. The fifth largest section is the category of "N/A or no ID", with $4 761 605. The last and smallest section of the chart is "emergency expenditures", with $31 685.

3.1.2. Objectives and expected outcomes

The immediate outcome identified through the document review and interviews is that Band Moneys capital and revenue expenditures are approved according to the provisions prescribed in the Indian Act. The intermediate outcome is that Band Moneys expenditures benefit bands and their current and future members.

3.1.3. Program management

The IMETA Directorate of the Individual Affairs Branch of the Resolution and Individual Affairs Sector carries out a number of functions related to Band Moneys, however, other areas of AANDC also support or contribute to moneys management activities.

Most administrative and operational responsibilities for the day to day administration of band and individual moneys under the Indian Act have been assigned to the regional offices. Regional director generals are responsible for approval of requests for revenue expenditures under sections 66 and 69 of the Indian Act and approval of requests for capital expenditures (with the exception of those falling under paragraphs 64(1)(d) and (k) of the Indian Act, which remains exclusive for Ministerial approval)^{Footnote 15}.

Regional Band Moneys officers consult and provide advice to First Nations on varying aspects of the administration of Band Moneys. In addition, they analyse expenditure requests, review annual Band Moneys budgets, make recommendations regarding expenditure requests, prepare submissions for granting Section 69 authority to First Nations and review annual audited financial statements.

HQ develops national directives, policies and procedures and training materials related to the administration of Band Moneys. It provides functional advice and training to regions on the implementation of policies and procedures. IMETA HQ also works with sectoral partners and with regions to review expenditure requests, which fall under sections 64(1)(d) and (k) and on recommendations from regions for a First Nation to obtain Section 69 authority over its revenue moneys.

3.1.4 Key stakeholders and beneficiaries

3.3.1 Effectiveness

The immediate outcome that Band Moneys expenditures are approved according to provisions in the Indian Act has been achieved. AANDC staff interviewed were unanimous in the assertion that the primary purpose of Band Moneys was to execute ministerial responsibilities related to Band Moneys as outlined in the Indian Act. The Manual for the Administration of Band Moneys, which outlines processes and procedures, is updated regularly and half of the IMETA staff interviewed indicated they follow the guide closely.

The 2010 Audit of Trust Accounts found that "controls were in place designed to ensure accurate and timely processing of trust account receipts and disbursements in accordance with all acts and departmental guidelines".^{Footnote 20} The Individual Affairs Branch has addressed all recommendations from this audit in the Management Response and Action Plan. The Audit resulted in modifications to the TFMS to prompt Band Moneys Officers to insert information before being permitted to proceed to the next screen. This is expected to ensure that expenditure data needed for decision making is tracked appropriately.

Interviews and the document review confirm that the departmental assessment of BCRs promotes due diligence in decision making and contributes to good governance. IMETA staff conduct an assessment of the financial, socio-economic, environmental and legal considerations for each BCR; they review account balances to help preserve the capital balance for future generations; they ensure proposed expenditures comply with expenditures deemed beneficial under the Indian Act; and they require reporting back on expenditures to the Department.

The information requirements are reasonable and provide useful information to bands for expenditure decisions. However, the extent to which they contribute to a permanent impact on good governance or the promotion of an understanding of the importance of checks and balances is unknown. Finally, despite the success in achieving this immediate outcome, it is important to note that this outcome is focused more on the needs of the Department (i.e., fulfillment of the Indian Act) than the needs of bands and their membership. A Performance Measurement Strategy would contribute to the identification and articulation of outcomes that are externally focused on the needs of First Nations.

Band Moneys has been successful in preserving some capital moneys for the use of future generations. This is reflected in Figure 3.3 below, which shows positive growth in both capital and revenue balances between 1994-95 and 2010-11.

Text alternative for Figure 3.3 Total amounts in Band Moneys capital accounts, revenue accounts and both accounts together between 1994-95 and 2010-11

The Band Moneys figure denotes three data lines, with data points occurring annually for the time period range of 1994-5 to 2010-11, against a financial capital range of $0 to $1.2 billion, increasing by increments of $200 000 000. The three data lines represent balances for each of the following: "capital accounts total"; "revenue accounts total"; and "capital and revenue accounts total".

Each of the data lines is upward sloping over the time range. The "revenue accounts total" line begins below $200 000 000 in 1994-5 and increases to slightly above $200 000 000 by 2010-11. The "capital accounts total" line increases from slightly above $400 000 000 in 1994-5 to slightly above $800 000 000 in 2010-11, with slight line dips in 1998-99, 2006-07 and 2009-10. The "capital and revenue accounts total" line begins slightly below $600 000 000 in 1994-95 and ends above $1 000 000 000 by 2010-11, with a slight dip in 1998-99, an increase by almost $200 000 000 in 2000-01 and slight dips in 2006-07 and 2009-10.

While capital accounts are growing, Figure 3.4 below shows that most capital moneys are being spent. Between 1994-95 and 2010-11, capital payments amounted to an average of 85 percent of capital receipts.^{Footnote 22} For the duration of the evaluation from 2006-07 to 2010-11, payments accounted for an average of 93 percent of capital revenues.

Text alternative for Figure 3.4 Total receipts and payment amounts in Band Moneys capital accounts between 1994-95 and 2010-11, as well as the average for the time period

The Total Receipts and Payment Amounts in Band Moneys figure uses two separate bar graphs to denote each of the following: "capital receipts"; and "capital payments". On the same set of axes, there are pairs of bar graphs, and within each pair exists a bar graph for "capital receipts" and "capital payments." The pairs of bar graphs occur annually within the time period range of 1994-95 to 2010-11, against a financial capital range of $0 to $350 000 000, increasing by increments of $50 000 000. A set of the graphs are additionally used to display the average for the entire time period.

With the exception of 1997-98, 1998-99, 2006-07 and 2009-10, the "capital receipts" graphs indicate larger financial amounts than the "capital payments" graphs. With the exception of 2000-01, the pairs of bars follow a bell-curve shape over the time period, increasing and then decreasing. In 2000-01, the bar pair is distinct in that "capital receipts" are close to $ 300 000 000 and highest over the time period, while "capital payments" are slightly over $100 000 000. The average for the time period indicates that the "capital receipts" bar graph is of a larger financial amount than the "capital payments" bar graph, with the "capital receipts" graph being over $150 000 000 and the "capital payments" graph being slightly below $150 000 000.

In other words, between 2006-07 and 2010-11, an average of seven percent of total capital payments was saved. The balance are capital expenditures focussed on permanent works or capital projects such as roads, bridges and houses, or business ventures and projects with approximately 40 percent of expenditures directed towards non-permanent works.

Recommendation # 3:

• That AANDC revise the Manual for the Administration of Band Moneys to reflect current policy and modern practices.

Interviews and the document review provide anecdotal evidence that Band Moneys expenditures benefit bands and their members. Band Moneys contributes to the financial health of a First Nation and supplements funding for key community priorities in infrastructure, education, housing and social programs. Some bands with small account balances will spend money to help membership meet minimum living standards such as funerals, wakes and elder expenses for heat and hydro. First Nations interviewed remarked that Band Moneys provides funding for priority projects and services where no other source of funding exists.

IMETA staff interviewed observed that the impacts of some projects on current and future members are often difficult to assess. Three out of six Band Moneys officers interviewed identified two areas that are particularly challenging when determining benefit: administration expenses and Per Capita Distribution (PCDs). They commented that it is difficult to link expenditures on the salary of a band officer or individual payments to community members to measurable benefits in the community.

Some interviewees argued that PCDs should not be permitted at all as they do not benefit the community nor future generations. Two external experts felt PCDs do not have a lasting positive impact on a community and should not be permitted in trust fund agreements or if they are, they should be used in very limited circumstances.

IMETA staff recognises that the moneys belong to the band and it is the duly elected Chief and Band Council that have discretion over how it is spent. As a result, arguments in support of expenditures are rarely challenged. In Saskatchewan, the few expenditure requests that were refused were cases in which the benefit to community members was clearly not shown (i.e., funds being sought for salaries for Chief and Council; proper documentation had not been provided, or the band had withdrawn the request).

The Band Moneys program operates on the principle of shared responsibility with First Nations. The Department's role is to ensure the expenditure request is for an authorized purpose (as per the Indian Act) and after the release of the funds, the First Nation is accountable to their membership for those expenditures.

IMETA regional staff indicate that they review the audited financial statements of First Nations to verify expenditures, but report that the required level of detail in the statements make it difficult to distinguish amongst the expenditures. The annual audited financial statements only show that money was spent and do not provide an accounting of receipts and expenditures related to specific projects. Although training has been provided on how to review the financial statements, officers struggle with this complex task.

Recommendation # 4:

• Facilitate a discussion with First Nations on how to report back to members in a clear and useful manner on Band Moneys expenditures.

3.3.2 Efficiency and economy

An Audit of Trust Accounts, which examined the adequacy and effectiveness of departmental controls over the management of trust accounts was completed in May 2010. The audit recommended improvements in controls for the processing of receipts and disbursements. IMETA has responded to audit recommendations through the Management Action Plan, so this section of the report will focus on additional findings from the evaluation.

Both First Nations interviewed noted delays in accessing their funds. They indicated that current timelines for accessing funds are generally acceptable; however, in certain circumstances delays can have a significant impact on the community. In one instance, funds for a housing construction project were finally approved in September after the construction season had passed. It was also mentioned that normal processing times are also limiting as they do not permit the use of funds in crisis situations, for example, to respond to flooding after a heavy rainfall or to respond quickly to an emerging economic opportunity.

The Document Review revealed that when information needed to complete the departmental assessment was not immediately provided by the First Nation, it can cause significant delays. For example, information collected on completed BCRs for Treaty 6 East in Alberta for 2010-11 showed that 11 BCRs with significant delays from 36-325 days were stalled due to incomplete or incorrect information from the First Nation.

Reasons for the delays identified by program staff through the interviews included a lack of band capacity to provide supporting documents. Weaknesses in First Nation financial management capacity were echoed by external experts.

Section 64(1)(k) expenditures are typically associated with lengthy approval processes within the Department because they require ministerial sign-off. Between 2006-07 and 2010-11, the average completion time for a 64(1)(k) BCR, from receipt of BCR in the region to ministerial approval ranged from 114 working days in 2010-11 to 183 working days in 2006-07; the average was 119 working days. It is worth noting that the higher average completion time in 2006-07 may be associated with a higher volume of BCRs for that year (40) and, conversely, the lower average completion time in 2010-11 may be associated with a smaller number of BCRs (7).

To improve the turn-around times for Section 64(1)(k) expenditures, Indian Moneys, Estates and Treaty Annuities could explore the feasibility and desirability of acceptable thresholds for delegating ministerial approval for 64(1)(k) expenditures based on an assessment of the level of risk.

3.3.3 Alternative delivery models

In terms of expenditures by band, between 2006-07 and 2010-11, four bands account for 40 percent of total expenditures. The top 20 bands in terms of expenditures are responsible for 77 percent of total expenditures and 29 percent of the total number of payment transactions.^{Footnote 24} Transitioning these bands to a workable alternative to Band Moneys could result in significant reductions in the number of transactions, thereby reducing departmental administration costs. In addition, as bands transition to these alternatives, the balance of funds held in the CRF would be reduced and interest payments on the balance would be similarly reduced. Two alternatives identified through key informant interviews are outlined below:

4.1.1 Background and description

Living Estates management is rooted in the historical evolution of relations between Aboriginal people and Europeans. In an attempt to civilize and assimilate Aboriginal people, the colonial power created reserves.

The Indian Act adopted in 1876 comprised all laws and regulations concerning Indians but did not contain any specific clauses on Indian minors or dependent adults. The 1880 amendment of the Indian Act gave the Superintendent General of Indian Affairs the authority to appoint a guardian for minors and an administrator.^{Footnote 27} In 1886, the addition of a new clause enabled the Superintendent General to appoint and remove a guardian for Indian minors.^{Footnote 28} A further amendment adopted in 1924 gave the Superintendent General the authority to appoint administrators for the estates of deceased and "insane" Indians.

In 1951, the Government of Canada overhauled the Indian Act significantly. The key elements of the old laws remained intact, the sections dealing with estates and the transfer of property were simplified to reduce conflicts with provincial legislation. In addition, Section 51 relating to "mentally incompetent Indians" and Section 52 on the guardianship of minors were added to the Indian Act.^{Footnote 29}

Section 51 of the Indian Act^{Footnote 30} provides the Minister of AANDC with the sole authority to manage the property of registered Indians who are deemed to be "mentally incompetent". The Act defines the "mentally incompetent Indian" as an Indian who, pursuant to the laws of the province in which he/she resides, has been found to be "mentally defective or incompetent for the purposes of any laws of that province providing for the administration of estates of mentally defective or incompetent persons." AANDC is not involved in deciding whether or not an adult has become incapable of managing their own financial affairs. Each province/territory has its own method of determining mental incompetence.

When a registered Indian adult who is ordinarily resident on reserve is found, under provincial law, to be incapable of managing his or her own financial affairs by reason of mental incapacity, AANDC becomes responsible for ensuring that the adult's property and financial affairs are managed for his or her benefit. The Minister has the authority to manage all of the dependant adult's property both on and off reserve. In exercising the Minister's authority, the Department is to take an inventory of the property, including cash, bonds, personal effects, vehicles and any interest in land.

The Department's authority with respect to dependant adults is limited to financial and property management only. An administrator appointed pursuant the Indian Act cannot make health care or other non-financial decisions on behalf of the dependant adult. Departmental guidance encourages the identification and appointment of a non-departmental administrator (usually a family member or friend) to manage some or all of the adult's property and financial affairs. Where no such third party can be found, AANDC acts as the administrator of last resort. It is estimated that AANDC administers the financial affairs of approximately 700 persons.

Manitoba, the Northwest Territories and Ontario have agreements with the provincial/territorial governments to manage living estates. The provincial and territorial agreements were the result of an analysis by the regional offices that concluded the public trustee is better suited for managing living estates. In Manitoba and the Northwest Territories, the public trustee is appointed administrator after the AANDC regional office is notified of the incapacity by the province/territory and after the federal government confirms its jurisdiction. Assets are administered in accordance with the provincial and territorial rules in effect. Departmental funds for these agreements come directly from the region.

The Government of Canada's agreement with the Public Trustee of Manitoba (March 31, 2012, to March 31, 2015) provides that $1,200 per year be paid to Manitoba for each dependent adult. The agreement also provides for a maximum of $800 per file to cover travel costs for the protection of assets. However, the evaluation team was unable to separate out payments to the province from other program expenses to determine the total annual costs paid over the past five years. As noted earlier, operating costs are allocated for a cluster of activities and separating them out by program is difficult.

The agreement between the Government of Canada and the Public Trustee of the Northwest Territories provides that $1,500 be paid yearly for each estate under AANDC jurisdiction administered by the territory. The agreement also provides for a maximum of $5,000 per individual to cover assessment costs. Moreover, the Government of Canada pays travel costs and incidentals incurred for the administration of an estate if previously approved by the Department or incurred at the Department's request; costs are based on Treasury Board rates.

About 20 years ago, an informal agreement was reached between the Ontario regional office and Ontario's Public Guardian and Trustee, which administers most of the files. The AANDC regional office follows up only when it receives a complaint. However, in 2010–11, the public trustee informed the regional office that it would not take any new cases and that it wanted to transfer all active files to the AANDC regional office.

In the case where AANDC assumes responsibility for the administration of a living estate, the Department maintains control indefinitely or until it is notified by the province of a change in the status of the individual. The Department deposits payments into the individuals' accounts, authorizes the payment of rent and other bills, arranges for the purchase of personal items and processes income tax returns.

The Department does not have the authority to investigate claims of physical or financial abuse of a vulnerable adult, as such claims are the responsibility of the provinces. If family or friends suspect that there may be physical or financial abuse or neglect of a vulnerable adult, the Public Guardian of the province is contacted, as the Public Guardian has wide-ranging legal authority to investigate possible physical or financial abuse and take action to protect the vulnerable adult. The Department may terminate an administration where abuse has been reported.

4.1.2 Objectives and expected outcomes

Expected outcomes considered in this evaluation were identified by the evaluators based on available program documentation and interviews and were approved by program managers. Immediate outcomes are that dependent adults are identified and assets are protected, administrators are appointed and funds are available for the use and benefit of dependant adults. The intermediate outcome is that appointed administrators fulfill their obligations by managing and protecting the assets of dependent adults for their benefit.

4.1.3. Program management

The Indian Moneys, Estates and Treaty Annuities Directorate, under the Resolution and Individual Affairs Sector, has overall responsibility for Living Estates. The programs are managed jointly by the national and regional offices. The national office plays a supporting role in the development of policies and procedures for the program's implementation in the regions.

Activities conducted at HQ include management and advisory services such as:

• Advise regions on cases that require analysis beyond the standard policy and on litigation with national policy implications.
• Maintain communication with regions to discuss program design, policy and delivery, etc.
• Organize National Workshops for AANDC employees.
• Develop policy and amend and maintain Policy and Procedures Manuals based on evolving policy, legislation, and court decisions.
• Train regional colleagues.
• Review of regional files to ensure capacity and conformity with established policy and procedures.

Further, HQ's role is to exercise and fulfill the Minister's quasi-judicial role in matters of litigation, allegations, and disputes over estates. The Resolution and Individual Sector also provides statistics on the program (although insufficient to conduct an aggregate analysis) as well as the materials (e.g., manuals and development tools) to support the work of the regions and to promote the awareness and abilities of First Nations for estates management, including planning, the preparation of wills and the administration of estates.

The regional offices are responsible for administering the programs and for the following activities:

• Confirm departmental jurisdiction over dependent adults and decedent estates.
• Contact families, loved ones, heirs, beneficiaries and administrators of estates.
• Identify, gather and secure assets of dependent adults and deceased individuals.
• Identify and appoint an administrator for living and decedent estates.
• Act as an administrator of last resort.

4.1.4 Key stakeholders

4.3.1 Effectiveness

Key to the identification of dependent adults within AANDC jurisdiction is the notification of mental incompetence by the province. As a result, good relations with provinces are fundamental. An analysis of the notification process between regional offices and provincial/territorial governments revealed that only four out of nine regional offices have a systematic approach to confirm their jurisdiction: Manitoba, Saskatchewan, British Columbia and the Northwest Territories. Other regions, sometimes due to influences beyond the Department's control, function without a systematic approach in place.

For example, the public trustee in Quebec does not always notify the AANDC regional office of individuals found to be mentally incompetent and is, therefore, often in a reactive position. The Alberta regional office has not been able to confirm AANDC jurisdiction since 2009 when the Alberta government passed the Adult Guardianship and Trusteeship Act, which prohibits the sharing of information related to person's under provincial care. As a result, AANDC jurisdiction can only be confirmed in approximately four percent of all active Living Estates files in Alberta.

Recommendation # 5:

• Develop policies and procedures for Living Estates to identify dependent adults and confirm AANDC jurisdiction.

There is wide regional diversity in appointing an administrator. The case studies revealed that only the Atlantic and Quebec regional offices consistently attempt to appoint a family member or friend with a close trusting relationship with the adult. In Manitoba, Ontario and the Northwest Territories, it is the province or territory that acts as administrators. In Quebec, individuals who hold positions of authority, such as a health director or the head nurse of the institution in which the dependent adult is housed, are often appointed as administrators.^{Footnote 35} Alberta and British Columbia do not appoint non-departmental administrators and choose to directly administer trusteeships of dependent adults.

The case study conducted in Alberta region showed that Alberta is unable to confirm jurisdiction over dependent adults since the adoption of the Adult Guardianship and Trusteeship Act in 2009. Under this legislation, the medical certificate of (physical or mental) incapacity issued by Alberta's Office of the Public Trustee can no longer be shared. As a result, no new files have been opened since 2009, and the Alberta regional office is potentially not fulfilling its responsibilities, either because it is not administering the files that should be under its responsibility or because it is administering files that are no longer its responsibility.

When the appointed administrator is the Department, access to data shows a thorough monitoring of expenses. Paper records created when the files are opened have detailed accounts of expenditures made on behalf of the dependent adults as well as expenditures required for the maintenance of the identified assets. These files were sampled during the evaluation^{Footnote 37}.

When a third party is appointed as administrator, access to data is more complicated. The appointment of an administratorincludes an annual reporting requirement in the form of records of cash receipts, disbursements and cash outflows belonging to the dependent adult. However, it is often difficult to enforce reporting because the appointed representative receives no direct support from the Department. Lack of this reporting often leads to the revocation of the departmental appointment order, however, information on possible revocation of administrators is poorly documented at the national level.

Reporting from provincial and territorial public trustees is also inconsistent. In Manitoba and the Northwest Territories, there is a high degree of confidence in the public trustee's administration of trusteeships. Both agreements provide for a possible audit of the practices and processes put in place by the province and state that the AANDC regional office may request, at any time, to see reports on the income and expenses of the dependent adults. However, sources could not confirm whether audits have actually been carried out since the signing of the agreements.

In Manitoba, although monitoring procedures have not been formally established, the public trustee provides reports on the expenditures of unfit adults and a biannual update on active files. The data is provided at the public trustee's initiative and not at the request of the AANDC regional office. In the Northwest Territories, there is no monitoring mechanism and the regional office was unable to provide information on the number of active files or the actual costs associated with these files. Yet, the appointment of the public trustee is part of a contract.

Consequently, in Manitoba and the Northwest Territories, it is difficult to determine, with the existing supporting evidence, whether AANDC is fulfilling its obligations to protect individuals or whether AANDC's responsibility in its role as trustee could be called into question.

British Columbia, on the other hand, enjoys a continuous exchange of information through working meetings between the public trustee and the AANDC regional office. This relationship is made easier by the legal training of the team's members, who are former employees of the public trustee in some cases.

Acting as the "administrator of last resort" is a common practice in Western countries and in Canadian provinces and territories, however, the "administrator of last resort" policy is not consistently applied at AANDC. The procedures in Alberta and British Columbia conflict with directives appearing in the guides produced by HQ^{Footnote 38}. Essentially, these regions feel that the "administrator of last resort" exposes dependent adults to potential exploitation and abuse that is difficult to detect due to the lack of monitoring of third-party administrators. The Guide on the Administration of Property Belonging to Mentally Incompetent Indians does not suggest methods for systematic monitoring of non-departmental administrators nor do they prescribe recovery methods in case of mismanagement. These regions expressed concern that increased liability to the Minister is introduced by third-party administrators. They also referenced capacity issues of appointees and difficulties with recovery of assets in the past after administration was suspended for mismanagement.

Underlying the concerns above is the belief that a primary objective of Living Estates is to protect dependent adults, a very vulnerable segment of population. As outlined above, the "administrator of last resort" policy and lack of monitoring would seem to work contrary to this objective. The guidelines provide that an investigation may be conducted in response to a complaint by a third party. The issue is that dependent adults may not have the capacity to identify and report abuse to friends or family. As a result, their ability to complain depends on other witnesses to the abuse to report it.

Recommendation # 6:

• Examine the appropriateness of the "administrator of last resort" policy for Living Estates.

4.3.2 Efficiency and Economy

The national office has some knowledge of the problems arising from the administration of trusteeships, but appears to be unaware of the impact of provincial jurisdiction, and cannot always provide real support. For example, although advice can be sought from the national office or the Department of Justice, few regional employees feel that this approach is easy or effective; requests for legal advice give rise to a certain degree of frustration due to delays.

The disconnect between the national office and regional offices can be attributed in large measure to differences in perspective. Although there are national directives (for example, those provided by the manuals), regional offices look for tools and procedures applicable to the regions and prefer to work more on collaboration with the public trustee of the province of residence. It is also very difficult for the national office to obtain data for each region because the administration of trusteeships in regional offices reports back to Regional Operations (HQ). An agreement to share information reported to Regional Operations with the Indian Moneys, Estates and Treaty Annuities Directorate would help bridge the disconnect between the regions and HQ.

The training and professional profiles of the staff responsible for the administration of estates vary considerably from one region to the next. The evaluation found that only one regional team consists primarily of lawyers or legal experts, some of whom are or were members of the bar (British Columbia). In other regions, the staff had neither legal training nor training in the administration of trusteeships. Whatever the profile of estate agents, all share the responsibility of administering trusteeships and are automatically granted full decision making and advisory powers. The interviews confirm that no training is currently being offered on trusteeships

As a result, seeking the opinion and advice of legal experts is sometimes necessary before any decision is made, which leads to delays (some regions mentioned that it can take up to a year from the time an application for legal opinion is made until the opinion is issued) and additional costs (the number of hours necessary to produce a legal opinion charged to the program).

British Columbia has implemented measures that have resulted in greater efficiencies. A study of the management systems and procedures in place in British Columbia and the subsequent reorganization of the work team eliminated the backlog and reduced the number of active files by about half. As a result, when the process was re-engineered, one trusteeship agent position was eliminated and replaced with a clerk position, which handles routine administrative work.

This means that trusteeship agents can focus mainly on managing their files and also on developing workshops or training sessions on estates for the communities. Rotating visits are therefore organized in the communities every year. Due to budgetary constraints, the target communities are subject to a risk analysis based on the needs of members. The document analysis supports these findings, as it provide access to a range of data: unit accountability reports, monthly reports from trusteeship agents, quarterly financial reports that list all the financial transactions carried out and communication and training products.

British Columbia is the only region that has monitoring mechanisms and procedures generating reliable data that can be used in decision making. British Columbia collects information on the number of active files, management fees per file, travel costs per file, operations and maintenance, salary, time spent on trusteeships and actual cost per file.

Recommendation # 7:

• Examine IMETA HQ's relationship with regions in order to provide more consistent and timely support for the administration of Living Estates.

Nationally, the main data collection system for the program is the Estates Reporting System (ERS). Implemented in 2006, the purpose was to modernize and replace an older system containing information on the trusteeships of living persons from Canada's Aboriginal communities. The ERS, which has between 30 and 50 users across Canada, was created to help trusteeship agents administer the assets of Indians who are deemed to be dependent, from the time AANDC receives notification of the incapacity to the time it closes the file.

While the system was designed to address shortcomings in the previous ERS, it is not used extensively by estate agents, and its use varies widely from one region to the next. As a result, the system provides neither credible information nor a general overview of the status of living estates across Canada. For instance, the frequency of data entry varies considerably between the regions: the entry of information is done on a regular basis in some regions and on an as-needed basis in others. In some cases, files for several years might be entered all at once, creating considerable confusion because the file creation date in the system is confused with the date the file was opened. In other cases, files dating back several years, sometimes a couple hundred of them, are entered under the same date. Moreover, the data available is relatively limited and contains only the names and date of notification of dependant status. Hard-copy documentation, often the real source of information, is sometimes scanned and uploaded into the system but this practice is not common.

These problems are neither new nor unknown. On the contrary, they have been raised in many reports or studies commissioned by the program or conducted by the Office of the Auditor General of Canada; the modernization of the ERS was an attempt to remedy this. However, there is no indication that the measures taken have corrected the situation.

Activity monitoring and reporting capacity essentially depends on complementary mechanisms implemented in each region and are influenced by various parameters, such as file volume, staff assigned to the administration of living trusteeships (particularly the existence of a team of trusteeship specialists versus teams of generalists), and the potential federal–provincial/territorial agreements that allow the AANDC regional office to use reporting mechanisms as defined in the agreement.

The profile created from the case studies shows that none of the regions evaluated generates the same data.

Recommendation # 8:

• Ensure a standard approach to data entry into the Estates Reporting System in order to generate more reliable data for program management.

4.3.3. Alternative Delivery Models

Given the Crown's obligations associated with the assets of vulnerable individuals, some options for program delivery were identified and are summarized in Table 4.3. Options 1 and 2 (where exclusive authority for Living Estates rests either with the provinces/territories or with the federal government) might simplify the administration of estates because there would be fewer governments involved. However, these options would require the agreement of provinces and, in the case of the federal government taking sole responsibility, would require a new federal system for caring for both assets and the person. Option 3 is essentially a continuation of the current system for the delivery of Living Estates but with enhanced management and increased monitoring by AANDC. Option 4 reflects increased capacity and involvement of First Nations such that they can capitalize on their social and cultural connections to their members and contribute to their community's autonomy.

There is no single option that stands out as an obvious choice to pursue. Amending legislation or undertaking agreements with provinces would involve a significant commitment of time and resources. The duplication of efforts, which can result in unequal service levels for First Nations and other Canadians is also an important consideration. Since expertise for managing the estates of dependent adults rests with the provinces and territories, only Option 1 would not lead to duplicate systems. In addition, at the surface, it would also seem most logical that Option 1 would be the least costly as the provinces and territories have the skills and infrastructure in place to deliver similar services to the rest of Canadians. In contrast, Option 4 would be the most costly as little capacity currently exists in communities to manage estates. These assumptions, however, have to be confirmed through a more in depth analysis to determine which option would allow the Minister to fulfill responsibilities, provide the best level of service with the least cost to taxpayers.

5.1.1 Background and Description

The Decedent Estates program is designed to ensure that the federal government's legal obligations and responsibilities to First Nations people, pursuant to sections 42 through 50 of the Indian Act are met by providing for the management of Indian estates. Under the Indian Act, the Minister of AANDC has exclusive jurisdiction and authority over the estates of deceased First Nation individuals who were registered, or entitled to be registered, as an Indian and were ordinarily residents on a reserve before their death.

When AANDC is notified of a death, departmental personnel create a file to track all actions taken by the Department with regard to the estate. Subsequently, an investigation is conducted to determine whether the estate falls under the Minister's jurisdiction. The only estates to fall under the Minister's jurisdiction are those of individuals who were registered, or entitled to be registered, as an Indian and were ordinarily resident on reserve before their death. Where estates do not fall under the Minister's jurisdiction, the file is closed. The estates of individuals who did not live on reserve do not fall under the Minister's jurisdiction and the relevant provincial, territorial or foreign laws apply. In these cases, the Minister cannot act in relation to the estate except where the deceased held an interest in reserve land. In such circumstances, the ordinary provisions of the Indian Act apply and all land transfers must be approved by the Minister. The transfer of reserve land is overseen by the Department and it ensures that land interests are not transferred to a party that is not entitled to hold an interest in reserve land.

If the Minister has jurisdiction, then the Department contacts potential heirs and/or beneficiaries or the band office to determine the existence of a will. If the will is in place and it names an executor or non-departmental administrator, and if that person is eligible, willing and able to act, then that person will be appointed and the Department closes the file.

When a third party has been appointed, it is assumed by the Department that the administration of the estate proceeds lawfully and promptly and no further monitoring by the Department occurs. Any land transactions that may be required are processed by the Department. The Department will, however, re-open the file if it becomes aware of a dispute or allegation regarding the estate and/or its administration.

AANDC considers estates administration to be a private family matter and, therefore, the policy is to always ensure that eligible third parties have the opportunity to administer the estate.^{Footnote 40} The "administrator of last resort policy" came in response to the decision of the 1976 case AG of Canada v. Canard. Before the Canard decision, all decedent estates under the jurisdiction of the AANDC Minister were administered by the Department. Thereafter, the departmental policy became to promote and facilitate the administration of estates by eligible third parties (ordinarily family members or their nominees) instead of the Department. As noted, where no eligible non-departmental individual is willing or able to administer the estate, a departmental employee will be appointed instead; in this sense the Department is the "administrator of last resort".

If no such non-departmental administrator can be appointed, the Department will act as "administrator of last resort" and conduct the necessary proceedings to ensure that the estate is processed and distributed in accordance with policy, regulations and law. Tasks related to the administration of estates include:

• Identifying, gathering, and securing assets
• Determining and paying debts from the proceeds of the estate (where necessary, assets will be sold to pay debts)
• Determining the final value of the estate
• Providing final accounting to all beneficiaries
• Distributing estate assets in accordance with the will or, where there isn't one, the Indian Act

When all of the estate assets have been distributed, the file is closed.

5.1.2 Objectives and expected outcomes

The review of Decedent Estates documentation revealed the following immediate outcomes: protection of assets and availability for disbursement; fulfillment of legal and/or policy obligations; and First Nation capacity in estate planning and administration. The intermediate outcome identified was the transfer of assets to the lawful heirs and beneficiaries. These outcomes are based on program documentation and approved by program managers for use in this evaluation.

5.1.3 Program management

The IMETA Directorate under the Resolution and Individual Affairs Sector has overall responsibility for Decedent Estates. The program is managed jointly by the national and regional offices.^{Footnote 41} The national office plays primarily a supporting role in the development of policies and procedures for the program's operation in the regions.

Activities conducted at HQ include management and advisory services such as:

• Develop policy and amend and maintain Policy and Procedures Manuals based on evolving policy, legislation, court cases, litigation, and legal opinions.
• Advise regions on cases that require analysis beyond the standard policy and on litigation with national policy implications.
• Maintain communication with regions to discuss program updates and discuss feedback/concerns from regions.
• Organize National Workshops for AANDC employees.
• Train regional colleagues.
• Review of regional files to ensure conformity with established policy and procedures.

Further, HQ's role supports the fulfillment of the Minister's quasi-judicial role in matters of litigation, allegations, and disputes involving estates. The Resolution and Individual Sector also provides statistics on the program as well as the materials (e.g., manuals and development tools) to support the work of the regions to promote the awareness and abilities of First Nations in the preparation of wills and the administration of estates.

The regional offices are responsible for administering the programs and for the following activities:

• Confirming departmental jurisdiction for the estates of deceased individuals.
• Contacting families, heirs, and beneficiaries, etc.
• Identifying and securing assets of deceased individuals.
• Identifying and appointing administrators.
• Act as administrator of last resort where necessary.
• Support the fulfillment of the Minister's quasi-judicial role.
• Contribute to capacity development in Aboriginal communities.
• Conduct Section 50 sales where necessary and otherwise facilitate strategies to avoid Section 50 sales where feasible.

5.1.4 Key stakeholders and beneficiaries

5.3.1. Effectiveness

To meet the first outcome and to ensure that assets are available for disbursement, the assets of the deceased must be protected. This need figures prominently in program documentation such as the Decedent Estates Procedures Manual and the program's training manual.^{Footnote 50} Between the time when the Department is notified of a death until the appointment of an administrator, the Department is responsible for the protection of assets as of the date of the notification of death. Among the measures that may need to be taken are: consulting with insurance companies regarding insurance for homes and vehicles; arranging for building repairs; feeding livestock; securing valuables; obtaining control over vehicles; and renewing licences or leases. The evaluation found that such oversight by AANDC employees is rarely practical or possible.

Program officials reported that for logistical and financial reasons, it is difficult for AANDC personnel to be directly involved in the securing of assets that program policy requires. For example, the securing of physical assets (e.g., valuables such as jewellery, vehicles, and buildings) would usually require travel and lodgings on short notice, personnel, sufficient time on-site to carry out the necessary tasks, and provisions for travel to and operation in isolated locations. Challenges such as these make it difficult, if not impossible, to consistently secure the assets of the deceased such that they are intact and available for disbursement at the conclusion of the estate proceedings.

The securing of assets is also complicated by delays in the notification of death, incomplete information or lack of disclosure by family and/or community members. Program officials report that gaps can exist between the date of death and the notification of death to the Department, resulting in a period of time when the assets of the deceased are fully outside AANDC influence. The Department is not technically responsible for assets during this period (i.e., before it has been notified of a death), which contributes to a level of uncertainty around the status of the assets.

Importantly, the program's policies and processes relating to the protection of assets may conflict with established cultural practices. For example, some traditions specify that grandchildren should not inherit benefits and others specify that property should be distributed soon after death. According to one program official, possessions may be gifted or distributed according to tradition before the Department has been notified and can secure assets. It has been argued that the distribution of property should be permitted according to local custom.^{Footnote 51} In the end, systematic measures to monitor whether assets are available for disbursement are currently unavailable.

Recommendation # 9:

• Revisit the policy of securing assets in Decedent Estates to identify and mitigate risks such as addressing delays in the notification of death and possible policy conflicts with existing cultural practices.

The ERS was designed to be the program's primary tool for monitoring the processing of individual estates files and for national and regional reporting. Unfortunately, the type of information collected and shortages and/or inconsistencies in the information make it unreliable for reporting purposes. For example, the number of files closed, as recorded in the ERS, does not reliably distinguish between recent files and those that were open for an extended period of time. Similarly, the ERS does not differentiate between "dormant" and "active" files, designating them simply as "open". Shortcomings such as these make it harder to distinguish between those files that may be delayed and those that are progressing at a reasonable pace. The majority of staff interviewed noted limitations in the ERS regarding the type of information housed in it, the reports that it can produce, user-friendliness, and inconsistencies in data entry that undermine its consistency and utility.

As a result of deficiencies with the ERS, regional staff interviewed for the evaluation indicated that they use ERS to report to HQ but use separate region-specific systems of record-keeping involving paper files and spreadsheets in order to monitor progress on individual estates and to support management at the regional level. For example, British Columbia has developed monthly reports by Estate Officers and summary files for information for estates involving Section 50 land sales. Atlantic region maintains a similar system in the form of a spreadsheet that records particulars for individual estates, including pertinent dates (e.g., date of death) and details of file administration. This spreadsheet is complemented by file summaries documenting the file's history; these documents are maintained and organized in the Department's Comprehensive Integrated Document Management. The fact that regions are using their own systems of monitoring estates files indicates that the ERS system has limited functionality and, consequently, does not provide sufficient information for effective program management. As it relates to this evaluation, the lack of useful data from the ERS (the official system of record) has limited the ability of the team to conduct an analysis of the efficiency and economy of the program.

HQ produces and distributes support materials on estate-related topics that are designed to be applicable across the country. Regional staff organize presentations and distribute materials to First Nations to encourage and support their involvement in estate planning (e.g., will preparation and financial management) and administration of the estates of the deceased. However, regionally based capacity building efforts occur without a strategic approach applied across the country. Although providing support for First Nations in estate planning and administration is an important function of the Estates Program, the evaluation found that, while capacity building and support takes place, the program does not have clear and measurable goals for First Nations' capacity around estates.

Interviewees agreed that capacity among First Nations in estate matters is low but these assertions were based on individual opinion and experience rather than assessments against targets. Nonetheless, their assertions are supported by the apparent low number of deceased First Nation people with wills approved by AANDC (i.e., that meet the four requirements under the Indian Act.^{Footnote 52} Over the evaluation period, the mean percentage of deceased First Nation persons under Minister's jurisdiction with AANDC-approved wills as reported in the ERS was calculated to be approximately eight percent (assuming the ERS numbers are reliable). This means that over 90 percent died intestate (i.e., without a will), which, as interviewees reported, usually signals a complicated and lengthy estate process.

Interviewees agreed that capacity building for First Nations in estate-related matters, particularly in planning, could be the single most impactful way to achieve program objectives and support the Minister's obligations and, importantly, to support First Nations in becoming increasingly autonomous in managing their own affairs. It was often noted during interviews, however, that the participation of First Nations individuals is highly variable from one information session to the next. It was also noted that estate planning may not align with traditional First Nations practices and beliefs, which may further limit involvement. Program officials, while recognizing the importance of building capacity, noted that activities for capacity-building and awareness may be limited due to shortages in resources.

Capacity-related Expected Results and performance indicators appearing in the Report on Plans and Priorities include First Nations "managing the estates and the affairs of the deceased" (2007-2008) and "assuming greater control over programs and services" (2008-2009). However, reporting against these Expected Results, as seen in the corresponding Departmental Performance Reports (DPR), was unclear. In the 2007-2008 DPR^{Footnote 53}, the program reported that modernized training, educational and business tools "were helpful" and the 2008-2009 DPR^{Footnote 54} was silent on First Nations' control over programs and services. Although successful support and capacity building are implicit in these goals and achievements, the evaluation did not find effective measures to monitor results.

Recommendation # 10:

• Develop a strategic approach to capacity development to increase effectiveness and efficiency of Decedent Estates with appropriate measurements to monitor success.

A key outcome of the Decedent Estates program is to ensure assets are transferred to lawful heirs and/or beneficiaries. However, when a non-departmental administrator is appointed, as it is in the majority of cases, the Department closes the file and does not systematically monitor the proceedings and settlement of an estate to determine whether assets have been appropriately distributed. The only way the Department can confirm the distribution of assets is when it is the administrator of that estate. This occurs in a minority of cases due to the "administrator of last resort" policy.

In the case of a complaint or allegation, the file is re-opened and the program addresses the issue in question, but it does not necessarily become aware of other particulars of the estate or its overall progress. Although this arm's length approach is in line with the program's "administrator of last resort" policy, it reveals that the program does not know whether non-departmental administrators of estates successfully distribute assets to the lawful heirs and beneficiaries. As a result, the Department does not have sufficient information for monitoring and reporting on the distribution of all of the estates under the Minister's jurisdiction.

Although AANDC does not monitor the progress of estate administration when a non-departmental administrator has been appointed, the Minister remains responsible for estates until their conclusion and liability does not end with the appointment of an administrator.

Recommendation # 11:

• Examine the appropriateness of the "administrator of last resort" policy in the administration of Decedent Estates.

5.3.2 Efficiency and economy

Given the lack of national data over the evaluation period, available regional data was examined for indications of efficiency and economy.

Table 5.2 Regional Estates Workload for 2010-11^{Footnote 55}

The information depicted in Table 5.2 was obtained from program documentation. Of particular note is the relationship between the number of person years dedicated to estates with the number of Section 50 sales (which are typically associated with increased effort and time). British Columbia had the greatest number of person-years dedicated to estates and the greatest number of estates involving Section 50 land sales in 2011-2012.

It is also interesting to note the number of files administered by either the Department or by a non-departmental administrator. Manitoba had a relatively high number of person years and the greatest number of departmental administrators, however, additional information that might explain the relatively high number of estates in Manitoba with departmental administrators was not available.

Table 5.2 also demonstrates that there was great variability in the number of estates files that were open across regions when this information was compiled in March 2011. This variability can occur for many reasons, many of which fall outside the control of AANDC (e.g., normal fluctuations in the number of deaths in a given year, the overall number of estates that fall under the Minister's jurisdiction, disputes among family members and delayed communications from family members to the Department). Furthermore, the information in Table 5.2 is not suitable for a rigorous comparison among regions on the number of open files, particularly whether any could be categorized as "backlog". Nonetheless, there may be cause for concern as a higher number of open files may result in a greater accumulation of expenses such as interest to be paid by the Department.

Overall, although some information on efficiency and economy was available for this evaluation, it is not suitable for a straightforward conclusion. Moreover, the apparent shortage of relevant information suggests that Decedent Estates program management is without comprehensive information for decision making around the processing and associated costs of eligible estates under the Minister's jurisdiction.

5.3.3 Alternative delivery models

The findings in the preceding sections suggest that, overall, the Decedent Estates program will benefit greatly from the implementation of a few "standard" approaches to program management that the Department has implemented elsewhere, such as conducting a risk analysis and improving Performance Measurement. These exercises will clarify the objectives of the program and support the management of the program and support decision making.

Once the program's objectives are clearly defined, effective and efficient options for their achievement should emerge. Furthermore, the evaluation has identified some options for the Decedent Estates program with a view to empowering First Nations in estates matters and optimizing the Department's involvement in the estates of its First Nations clients.

6.1.1 Background and description

The signature of treaties is part of a historical process dating back to the arrival of the first Europeans in North America.^{Footnote 63} The first formal ties between Europeans and First Nations were diplomatic and military alliances. Every year, the alliance was renewed at a ceremony where gifts were exchanged and friendships renewed. The English gained the loyalty of the Indian groups against the French and their Indian allies in exchange for gifts. In 1760, after New France was conquered by England, military alliances gave way to trade alliances to guarantee a supply of fur pelts. Once again, this alliance was renewed every year at ceremonies, during which the English offered gifts and annuities to their Aboriginal allies, who were then in a strong position to negotiate payments and annuities. At the time, according to colony leaders, the land belonged to the Indians and formed the foundation for an economy driven by the fur trade.

At the end of the 18th century, however, pressures mounted to open Indian lands to agricultural settlement and the exploitation of mineral and forest resources. Moreover, the British Treasury imposed budgetary restrictions that led to a gradual decrease in annuities and the value of gifts.

Thus began the period of signing treaties containing annuities with Indians in exchange for their land, which would allow for the settlement and development of resources. The British Crown signed the Robinson–Superior and Robinson–Huron treaties in 1850. It committed to paying an annuity of $4^{Footnote 64} in cash per member in good standing of the band, at the same time every year, "as long as the sun shines, the grass grows and the rivers flow."

The need for expansion on the land and the purchase of lands for settlement in the west led to the negotiation of a new round of treaties. These negotiations spanned the years between 1871 and 1921 and led to the signing of treaties 1 to 11. These treaties stipulate that $5 annuities shall be paid every year to Indians who are members in good standing of these bands. The numbered treaties also stipulate that the chief and headmen (who are included starting in treaty no. 3) shall receive an annuity of $25 and $15, respectively, and a new suit of clothing every three years.

The value of annuity payments was far more significant when the treaties were signed than they are today. For example, when the first numbered treaty was signed in 1871, it included a treaty payment of five dollars. In 2007, that amount equates to approximately 100 dollars. The five dollar annuity included in the final numbered treaty, signed in 1922, was worth about $60.00 dollars at the time.^{Footnote 65}

Since the signing of these treaties, annuities must be paid in cash during a visit to the communities every year. This is how the Treaty Annuities Payment program came to be. The Treaty Annuities Payment is divided into two components: 1) payment of annuities to eligible band members; and 2) Treaty Annuity Payment Experience.^{Footnote 66}

6.1.2 Objectives and expected outcomes

Immediate outcomes identified through the document review and interviews are that Canada honours its obligations stemming from treaties with First Nations and that Canada and First Nations celebrate treaty events. The intermediate outcome is trust and good relations between Canada and First Nations. The TAPE has two complementary goals: 1) provide a unique Aboriginal learning and awareness opportunity; and 2) support the regions in delivering treaty annuities.

6.1.3 Program management

Treaty annuity payments are administered by Regional Directors General with functional guidance from the IMETA Directorate at HQ. This team develops the standards and processes specific to those activities.

The regions follow general procedures contained in the Manual for the Administration of Payments pursuant to Treaties,^{Footnote 76} the most recent version of which is dated March 2002. The standards and procedures provide details on the annuities to be paid, eligible individuals and bands, and the criteria for payment. However, annuity payments and the organization related to their payment are left up to the regions.

6.1.4 Key Stakeholders and Beneficiaries

6.3.1 Effectiveness

As indicated in Section 6.2.1, there is a high demand for treaty events and the majority of annuities are being collected on an annual basis. This indicates a level of success, however, there are some challenges in delivery. According to regional staff interviewed, a variety of internal and external factors pose challenges to the payment of treaty annuities. Internally, these challenges include: travel costs, particularly to remote communities; uncertainty around the number of individuals who will claim their annuity, particularly when they have not collected in previous years and so are entitled to "catch up", makes it difficult to plan the amounts to be distributed; inaccuracies in the lists of eligible individuals; recurring problems with the TPS making it impossible, for example, to print annuity payment lists, and; failure to meet Security Directive requirements.

In spite of these challenges, AANDC staff are delivering and participating in treaty events and payments. All of the individuals interviewed^{Footnote 80} said that delivering treaty annuities helps build trust and promote good relations between the Crown and the First Nations, not only with the signatories to the treaties, but with all of Canada's First Nations. All interviewees also mentioned that failure by the Government of Canada to comply with the terms of the historic treaties would hurt its relationship with all the First Nations in the country and may open the door to legal action. Canada's reputation would also be damaged at home and abroad.

The literature notes^{Footnote 81} that for the First Nations, Treaty Day celebrations mean the renewal of the agreement reached between nations. The payment of annuities is perceived by many First Nations as the renewal of the relationship established during the signing of the historic treaties as well as a relationship that helps define the overall policy environment on Aboriginal issues. However, available information does not permit confirmation that First Nations believe that the treaty annuities payment program establishes trust and contributes to good relations between Canada and First Nations.

As evidenced by comments from past participants, the TAPE program has succeeded in providing opportunities for community visits and cultural exchange. Documentation available on volunteer participation^{Footnote 82} shows that past TAPE participants have enjoyed their learning experience, reporting that it is a very rewarding experience that sheds light on living conditions on reserves and in remote communities; is an honour to represent the Crown and observe respectful relations between the Crown and the First Nations; is an important opportunity to visit communities, interact personally with First Nations people, and discover their cultures, all of which are impossible to do from HQ, and; allows for exchanges with regional colleagues.

Although the program is well received among the volunteers, according to interviewees and a sample of information on staffing for treaty payment events, the ability of the TAPE program to meet staffing needs has fallen short due to low participation rates and the timing of the treaty payment season. Most payment ceremonies (62 percent) are held between April and June, when AANDC Learning Plan budgets are not yet confirmed and, in turn, employees' participation is not confirmed. The remainder of payment ceremonies (38 percent) are held during July and August when many employees are on vacation and the pool of potential volunteers is reduced.

In their efforts to meet the demand for staff in the delivery of annuity payments, most of the regions^{Footnote 83} have developed their own versions of the TAPE program, all based on the same principle and function as the national version.^{Footnote 84}. The basics remain unchanged: participants are recruited from AANDC and other departments in the region, training is offered to participants and the employer pays participant costs. To meet staffing needs, the regional managers interviewed suggested that participation in the payment experience should be mandatory for all new AANDC employees.

Data on workforce needs for treaty payment events is limited and only the Manitoba and Saskatchewan^{Footnote 85} regions provided specific data on the number of people involved in delivering annuity payments. Workforce information for Manitoba and Saskatchewan during the 2010 payment season is presented in Table 6.5, showing that the TAPE program provided relatively few people from HQ compared to regular staff, other regional AANDC sectors and other regional departments.

As of 2011, some regions have stopped participating in the national TAPE program entirely. Besides the problem of too few TAPE volunteers, regions' budgeting can be adversely affected when they accept participants. That is, the costs related to the number of TAPE participants in one year must be subtracted from the regions' budget (staffing) projections in the following year, leading to a budget reduction.^{Footnote 86}

Recommendation # 13:

• Revisit and revise as appropriate the Treaty Annuities Payment Experience to better serve regional needs.

Recommendation # 14:

• Explore options for dealing with resource shortages during the treaty payment season, including making participation in treaty events mandatory to regular duties of all Individual Affairs staff.

6.3.2. Efficiency and economy

The Treaty Payment System exists to support performance management, but due to a lack of data, inaccurate data or incomplete data it does not meet program needs for reporting and, consequently, does not adequately support decision making. Data collection is limited to the annuity amounts paid in each community, the individuals who collected their annuity, and the number and location of the payment ceremonies. While this basic information is necessary, it is insufficient to aid in effective program management.

There is a lack of data on the actual costs of delivering Treaty Annuities and turnout, or degree of demand for treaty annuities^{Footnote 87}. As a result it is difficult for regional staff to plan the budget and allocate resources and to know the precise amount of money to be brought to the communities. The TPS and the Indian Registration System are not adequately synchronised. As a result, deceased people sometimes remain on the treaty pay lists while other members are missing. No information is collected on the social characteristics of the people who collect them (gender, age group), which would be useful for projecting trends in participation.

In addition to a lack of data described above, TPS data is also not always reliable. There are variances depending on the type of report requested. Some data is also difficult to interpret. For example, the difference between "arrears" and "amounts owing" is not defined. Finally, there are issues with TPS functionality. The TPS does not run well in its mobile version. Employees must therefore compile data on paper and then enter the data manually in the system. Reconciliation carried out at the end of every season is also done manually, defeating an important purpose in having the system at all. This lack of functionality contributes to inefficiencies and potential for error during data entry.

Recommendation # 15:

• Refine the Treaty Payment System data collection in order to facilitate more effective program management and synchronize the TPS with the Estates Reporting System in order to improve the reliability of the data overall.

Table 6.4 shows an estimate of expenses incurred by six regions compared to the amount of annuities they paid. According to this data, the British Columbia and Northwest Territories regions spend more to deliver the program than the amount of annuities they pay. Expenses vary from one region to the next; some must pay more than others for security and increased costs associated with travel to isolated and/or distant communities. Based on this data, the average cost per annuity payment ceremony in 2011 ranges from $1,556 in British Columbia to $2,649 in Northwest Territories.

In the case of Saskatchewan, the estimated costs identified above are likely lower than actual costs. The Saskatchewan region conducted a detailed assessment of costs associated with treaty annuity payments for 2007–08 to 2009–10,^{Footnote 90} which estimated the cost of delivery at $252,000. This is $92,000 more than the estimated cost of delivery for Saskatchewan captured in Table 6.4., which indicates that actual costs may be closer to 70 percent of the cost of annuities as opposed to 30 percent as shown in Table 6.4 for 2011.

6.3.3 Alternative delivery models

The central challenge in considering alternatives is the fact that annuities must be paid as per the treaties regardless of associated costs to the Department. Nonetheless, the program should explore ways of reducing and controlling costs associated with making the payments.

Changing the program delivery is no easy task. The regions face a major challenge because travel costs are rising every year while travel budgets have been frozen. Moreover, growth in the Aboriginal population will result in increased numbers of people collecting annuities. As a result, a number of changes to the terms of delivering annuities are being considered. For example, making the payments every two years; sending a cheque for the total amount to the band council for redistribution to the members; or establishing a minimum annuity amount of $20 for payments by cheque. However, change will be difficult as the treaties stipulate that the annuity must be paid in cash to members on an individual and annual basis. Additionally, it may not be possible to put a limit on payments by cheque. According to interviewees, the Department cannot unilaterally change the delivery of treaty annuities.

To meet these challenges, the regions have tried a number of alternatives to improve and save on the delivery of annuity payments. For example, payment ceremonies in urban centres reduce costs associated with the payment of annuities by cheque^{Footnote 91} and summer students have been used to reduce salary costs. As mentioned earlier, most regions have developed their own TAPE program to increase the number of people available to deliver annuities. This initiative reduces pressure on their employees as well as costs incurred, since participant-related costs are covered by the participants' home branches.

Some regions have also organized annuity payment ceremonies for a few communities located in close proximity to one another. When a band has several communities, the teams from regional offices alternate visiting the communities every two or three years. Finally, the coordination of travel with other sectors in the branch has been used to reduce transportation costs. Regional managers indicated that these measures have generated savings in program delivery, but were unable to provide specific figures to support this claim.

Improvements and alternatives are a key element in discussions and initiatives among IMETA management. For example, some regional managers would like to have a forum to discuss the alternatives, challenges and solutions. Managers suggest adopting a national standing offer for security services. The regions could, thus, avoid the long and complex process of negotiating and processing new contracts each year. Headquarters is exploring the possibility of implementing alternatives, such as paying annuities every two years and depositing annuities directly into a bank account.

Recommendation # 16:

• Coordinate regular forums among Indian Moneys, Estates and Treaty Annuities regional and Headquarters staff to provide opportunities for information exchange, sharing of best practices and lessons learned.

Relevance

Indian Moneys, Estates and Treaty Annuities continue to be relevant due to legislation such as the Constitution Act, which establishes federal jurisdiction over First Nations people living on and off reserve and the Indian Act, which defines ministerial obligations related to trusts and estates. In the case of Treaty Annuities, the Government of Canada must continue to honour obligations in early historical treaties or risk conflict with treaty bands and the international community supporting Aboriginal rights. Until such time that the Indian Act is changed, alternative legislation is enacted and/or new delivery models are advanced, the need for these programs will continue.

The relevance of Indian Moneys, Estates and Treaty Annuities is also confirmed by the level of demand for existing programs such as the high number of, and dollar values of, Band Moneys transactions, and high participation rates in treaty payment events. In addition, relevance is driven by the continued need by First Nations to have access to Estates services that are comparable to those provided by provinces to non-Aboriginal Canadians and a lack of alternatives to IMETA programs.

In terms of alignment with federal and departmental priorities, there is a disconnect between Band Moneys and current priorities relating to transparency, self-sufficiency and economic development. It would seem that linkages to the Indian Act has created a situation in which the program has been unable to adapt to changing priorities or meet the changing interests of First Nations.

Performance – Effectiveness

Indian Moneys, Estates and Treaty Annuities programs have been generally successful in meeting program obligations under the Indian Act. For example, the approval process for Band Moneys expenditures ensures proper due diligence and contributes to good governance. In addition, while the Estates programs have encountered some challenges in determining jurisdiction and identifying and securing assets, both Estates programs successfully identified administrators. The Treaty Annuities program enjoys high participation in treaty payment events and distributes the majority of treaty payments as outlined in historical treaties.

The longer-term impact of IMETA programs on communities and individuals could not be determined due to a lack of reliable performance information. Inconsistencies in the type of Estates data being collected, regional data quality and, a lack of monitoring (with the exception of British Columbia) of non-departmental administrators, did not permit a national assessment of performance for Estates. For Treaty Annuities, the evaluation was unable to determine, with available data, the extent to which the Treaty Annuities Payments program contributes to good relations between Canada and First Nations. There is a need for better reporting and/or supporting information systems.

Performance – Efficiency and Economy

There are a number of ways in which the IMETA programs could improve efficiency and economy. The number of trust accounts managed by the Department could be reduced through the implementation of alternatives to Band Moneys such as revised opt-in legislation and/or new policies and procedures to give bands control over funds held in trust. Shifting responsibility for Living Estates to the provinces and territories would take advantage of existing expertise and processes in provinces and territories. It is also clear that program improvements could be achieved through increased information sharing and national implementation of identified best practices.