The Commissioner of the Environment and Sustainable Development, Scott Vaughan, found major shortfalls in the way the department monitors financial accountability and inspects mines.
The Commissioner found that Aboriginal Affairs does not regularly assess whether companies are putting aside enough money during the life of a mine to cover the cost of a clean-up.
For example, three of the 11 mines in Nunavut had shortfalls in the amounts needed to meet the terms and conditions of their licenses.
The report also says Aboriginal Affairs is not completing 70 per cent of required site inspections of resource development projects in the Northwest Territories.
After devolution, which will give the N.W.T. more province-like powers, the responsibility for inspecting mines will fall to the territorial government.