11/28/2014 06:15 EST | Updated 01/28/2015 05:59 EST

Attawapiskat First Nation Should Repay $1.8M In Housing Money, Government Says

ATTAWAPISKAT, ON - DECEMBER 29: A year has passed since the Star was in Attawapiskat. This view, and many others have not changed. It seems time has stood still for this community while the Band Council and Ottawa battle. Photo by Spencer Wynn*THIS IS A FRAME GRAB (Spencer Wynn/Toronto Star via Getty Images)

OTTAWA - Aboriginal Affairs wants the Attawapiskat First Nation to repay more than $1.8 million in housing funding after an audit could not substantiate the spending.

The audit, finished in April,was a follow to an earlier audit that was ordered after the James Bay community declared a state of emergency in November 2011 over what it said was a housing crisis.

The auditors said the $1.8 million represents housing-related transactions that could not be substantiated in the audits.

The First Nation says most of the money relates to two major contracts and while the documentation related to these contracts may be incomplete, there is no evidence the money wasn't paid out properly.

The audit also says Attawapiskat should strengthen its oversight and monitoring of the third-party accountant that handles the accounting function for its capital projects.

The First Nation agrees with that recommendation.

Aboriginal Affairs has posted the audit findings on its website.

The auditors said 46 per cent of 400 transactions it sampled from the period 2005 to 2011 had supporting documents. The other 54 per cent lacked proper support.

The audit also said Aboriginal Affairs should conduct a financial review for 2012-13 and 2013-14 focused on the highest-risk funding tied to the First Nation, and include a detailed review of the financial statements, co-ordinated with Health Canada.

In reply, the Attawapiskat First Nation said it isn't clear what the auditors mean by "financial review."

"We look forward to clarifying this with you," the reply said.

The First Nation said it has concerns about the demand for repayment of the housing money.

"While the documentation related to these transactions may be incomplete, no findings, documents or evidence suggests that the funds were not disbursed as stated," it said in reply to the audit.

For more than 10 years, Attawapiskat has been under co-management, a form of intervention used by Aboriginal Affairs with the goal of improving a First Nation's financial situation.

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