Federal court documents reveal the FSIN knew how much money it owed the federal government in July, nearly three months before a final warning was given. An application for a judicial review at The Federal Courts filed on Aug. 21 by the FSIN says it was informed of Indigenous Services Canada’s (ISC) final decision on a forensic audit on July 22 finding nearly $12.4 million as “ineligible.” FSIN is calling on the court to overturn the decision, which FSIN said was “unreasonable and was arrived at in a procedurally unfair manner,” in the application. “The applicant says that ISC’s administration of these matters has been unreasonable, procedurally unfair, and inconsistent with the honour of the Crown,” a section of the application reads. In the filing, the FSIN says current restrictions on federal funding have forced it to draw on “finite reserves and lose experienced staff” in its attempts to balance the books. “My review reinforced my confidence in FSIN’s strong financial management practices, accountability measures, and governance processes,” FSIN Vice Chief Fabian Head said in a news release. “Based on the evidence before me, the expenditures that ISC has classified as ineligible are legitimate, reasonable, and consistent with both the funding agreements and the realities of serving First Nations communities.” A forensic audit reviewing spending from 2019 to 2024 by KPMG investigated $47.1 million in transactions, finding roughly $34.2 million were flagged as either ineligible, questionable, or unsupported by documentation last September. A series of recommendations were given to improve FSIN bookkeeping as the two groups periodically met to dispute the findings or prove spending with adequate documentation, leading to the final $12.4 million decision. In a letter to the FSIN executives last Wednesday, ISC referred to the $12.4 million in transactions as “a debt owing to the Crown,” warning ISC will begin withholding any current and future funding to the organization to offset the debt if the FSIN does not pay in full by Nov. 13, 2026. The letter also said ISC would formalize the debt via a statement of claim. Later that day, the FSIN issued a news release rejecting the forensic audit, saying it had begun legal action of its own. “Our staff have cooperated, provided the records requested and defended the decisions made through our own governance processes. We remain confident that when this matter is subjected to a fair and independent review, that all expenditures will be proven eligible and the allegations proven false,” Chief Bobby Cameron said.
