Members of the Roseau River First Nation are demanding a police investigation after a federal audit report raised serious concerns about the southern Manitoba band's finances.

The forensic audit has found that millions of dollars at Roseau River may have been misused or misspent.

Records are missing or destroyed, and there may have been conflicts of interest, according to the audit.

For example, the federal government gave the First Nation $191,000 to repair the local church and cemetery, but the renovations were never done.

Auditors found most of that funding was not spent on repairs, but they couldn't determine where the money went.

"I don't think it's fair to spend it somewhere else," said Martha Larocque, an elder in the community.

The Roseau River First Nation is located 90 kilometres south of Winnipeg.

Money was spent elsewhere, Nelson admits

Many of the concerns raised in the forensic audit stem from Terry Nelson's time as chief.

Nelson freely admitted to CBC News that the church repair money was spent elsewhere, but he insisted that what was done was not illegal.

"It's not fraud. Governments do that all the time — take from one program that they feel may not be as important at that particular point, to put it in something else," he said in an interview.

Nelson has recently left the community and is now selling buildings from an office on Highway 6, on land owned by the First Nation.

Initial findings from the forensic audit were presented to the First Nation in March, but the full report was only released recently.

Some First Nation members are so upset with what the audit uncovered, they have taken the document to police in the hopes that a criminal investigation would be launched.

"I have been telling them and telling them this is wrong. Now this audit tells the people, 'You should've listened to her,'" said Lynda Roberts, who lives in the community.

However, Nelson noted that the audit did not identify any evidence of criminal activity.

The auditors had wanted to inspect all of the First Nation's books but officials refused, allowing access to federally-monitored accounts only.