The Auditor General found that INAC’s funding formula for on-reserve child welfare services was outdated and leads to funding inequities The formula was designed in 1988 and has not been significantly modified since, despite changes in provincial legislation and changes to ways services are provided. The formula is not based on the needs of children and communities. For example, the formula assumes that each First Nations agency has 6-percent of on-reserve children placed in care. This assumption leads to inequities among First Nations agencies because in practice, the percentage of children in care varies widely. 

The Auditor General also found that INAC has insufficient assurance that the funding its provides to First Nations agencies are  meeting provincial legislation and standards. For example, in some provinces, some on-reserve First Nations children were not receiving prevention or in-home services and were instead being placed into care, despite provincial legislative requirements.