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CPAs can provide great support for innovation, says FNFA head

Ernie Daniels, CEO of the First Nations Finance Authority, explains how the organization won a Governor General’s Award—and why CPA skills are so valuable to innovators

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Ernie Daniels accepts  award from Governor General Julie PayetteErnie Daniels accepting a 2018 Innovation Award from Governor General Julie Payette (Sgt Vincent Carbonneau/OSGG, 2018)

As president and CEO of the West Kelowna, B.C.-based First Nations Finance Authority (FNFA), Ernie Daniels, CPA, knows a thing or two about innovation. 

Last year, the FNFA was one of six winners to take home a 2018 Governor General’s Innovation Award. The winners hailed from a number of areas: for example, one developed a program for reducing aggression and bullying among school-aged children, while another created a global early warning system for dangerous infectious diseases. 

For its part, the FNFA developed an innovative funding regime that cuts borrowing costs and provides interest rate certainty for First Nations communities. Given that it was the first financial organization ever to have received such an award, it was “somewhat of an anomaly in this space,” says Daniels. 

PRIMED FOR INNOVATION

FNFA won its award because of the solutions it found for First Nations to get past the longstanding obstacles they faced in gaining long-term financing. And Daniels, who had a big hand in developing the organization to where it stands today, credits his accounting training with guiding him every step of the way. 

By their very training, he says, CPAs are well positioned to promote innovation. 

“When it comes to applying for funding for scientific research, for example, accountants do a lot of the work,” says Daniels, who obtained his accounting designation in Yellowknife. “And every organization needs financing. There are so many research labs and startups doing so many innovative things. CPAs can add value by organizing and costing out elements of projects.” 

He adds that innovation can occur anywhere and at any level. And at the FNFA it took the form of finding a better way to get long-term financing.

“We were facing impediments and needed to develop federal legislation that would bypass the Indian Act,” he says. “As accountants, we played an instrumental role in crafting that legislation. But no matter who you are working for, you can make it easier to report and try to find more consistency.”

AN AWARD-WINNING SYSTEM

Since the FNFA started lending money in 2012, its investor base has grown; as Daniels points out, they started with 13 investors and now have more than 40.

“Before the organization was created in the early 2000s, First Nations had to borrow at retail rates from banks, because the Indian Act did not allow them to leverage property tax and other revenue as security against long-term loans,” he explains. 

“But once the FNFA was in place, it started using leading-edge financial techniques to calculate First Nations’ borrowing capacities based on their existing revenue-generating activities. In this way, FNFA was able to gain access to more favourable lending terms in the capital markets.” 

Daniels points out that there are 634 First Nations in Canada and the FNFA has worked with 87 of them. Obviously, the organization would like to increase that number, because the communities can only benefit from such favourable lending terms. Also, the more the FNFA lends out, the greater the “leakage effect” on the general economy. 

“Each dollar that is invested in First Nations is equal to six dollars in terms of its impact on the general economy,” says Daniels. “For example, if a First Nation is building a school on the reserve, all the materials come from the nearby municipality. So the benefit goes far beyond the community itself.” 

FOCUS ON THE FUTURE

When it comes to future focal points for the accounting profession, Daniels thinks staying on top of technology will be No. 1. “There is such tremendous change going on,” he says. “Because of the nature of our business, information security will be a priority. If we are doing online reporting, we will need to have ways of making sure the information is secure.” 

Daniels also points out that CPA Canada is working with the AFOA Canada (formerly Aboriginal Finance Officers Association) to encourage more Indigenous people to join the profession. “This would really help our Indigenous communities from a financial management point of view,” he says. “Besides, those who join will soon find out that a CPA designation serves them well no matter what role they take on.” 

LEARN ABOUT FINANCE ISSUES RELATED TO INDIGENOUS COMMUNITIES

Tune in to the CPA Canada webinar about financial reporting by First Nations. And find out how Terry Goodtrack, president and CEO of the AFOA Canada, demonstrates the Canadian Ideal of Good Business in his work.