Auditor General Report Identifies Gaps in Monitoring Canada's New Fiscal Initiatives for First Nations

Canada's Auditor General released a report on Monday finding that Indigenous Services Canada fell short in transforming how it delivered long-term funding to First Nations communities and organizations. The federal government did not effectively implement, monitor or assess the New Fiscal Initiatives for First Nations program, according to the report.

The New Fiscal Initiatives for First Nations was created in 2019 to provide long-term, predictable and flexible funding to First Nations for public health, education and income assistance programs.

It followed a memorandum of understanding signed between the Assembly of First Nations and the federal government in 2016 to reshape funding delivery. 5 billion had been distributed to 160 First Nations through 10-year grants. As of September 2025, 191 First Nations, tribal councils, health and education authorities were receiving funding through these 10-year grants.

However, Indigenous Services Canada did not assess whether the grants were helping to address disparities and inequities between First Nations and other Canadians. The department also did not monitor consistently the continued eligibility of grant recipients.

The First Nations Financial Management Board assesses certain financial performance measures and produces monitoring reports, but the audit found that 39 per cent of the recipients' files reviewed—14 of 36—had the required monitoring reports for all years.

Indigenous Services Canada had not assessed the grants' impacts on closing socio-economic gaps, despite the large amount of data the department already has. The government failed to meet two key responsibilities meant to increase First Nations' financial management capacity and accountability.

These included replacing the Default Prevention and Management Policy and establishing a mutual accountability framework between the government, First Nations, and their citizens.

Indigenous Services Canada Minister Mandy Gull-Masty released a statement on Monday in response, stating that the department has achieved significant progress on these two commitments. Indigenous Services Canada agreed with the two recommendations in the report.

The recommendations call for providing additional support to First Nations and grant recipients to increase their administrative and financial capacity to prepare annual monitoring statements.

They also urge using existing data to measure, assess, and annually report how the grants are closing gaps between First Nations and non-Indigenous people.