The NWT Development Corporation Act prescribes that regulations be developed for subsidies paid by the corporation. Despite the Act being in force since 1990 and this issue being presented in the 1996 Auditor General's Report, regulations have not been developed to date. Instead of developing regulations, the Financial Management Board issued a record of decision (ROD), dated November 14, 1989, to set the limits on the subsidies. The use of RODs and directives rather than regulations to govern subsidies is of grave concern to the committee. RODs are not public documents. Despite assurances from the comptroller general that the content of the ROD was made public, it was not done so in the avenue created in the legislation. Regulations are more available to the public thus more open and transparent.

Corporations are intended to operate at "arms length from government"; but there is the potential that they may then feel that they do not have to comply with Financial Management Board RODs and directives. In his appearance before the committee, the president of the NWT Development Corporation indicated that the ROD and directives issued for subsidies were seen as "guidelines". The rules governing NWT Development Corporation subsidies have slipped from a legislated requirement for regulations to a record of decision to mere "guidelines".

There is a difference of opinion between the comptroller general and the president of the NWT Development Corporation. The comptroller general indicated to the committee that the NWT Development Corporation should be following the directives explicitly. Should there be a legitimate reason why the directive would be inappropriate in a particular investment circumstance, the NWT Development Corporation should acquire an exemption from the Financial Management Board Secretariat prior to issuing funds. The comptroller general further stated that to date, the NWT Development Corporation has never sought such an exemption.

As stated earlier, the issue of the using RODs instead of regulations has been raised in previous Auditor General's reports. This causes the committee to question how seriously the government considers the Report of the Auditor General and its review by the committee. The comptroller general has indicated that it would not be difficult to transfer the RODs into regulations and "it should be able to happen before Christmas".