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The federal government is placing the northern Ontario First Nations community of Attawapiskat under third-party management in an attempt to get to the bottom of what happened to millions of dollars in funding, and to ensure future funds go to those in need.

The isolated community near James Bay has declared a state of emergency as many families in the community prepare for winter with little more than un-insulated shacks, tents or mould-infested houses to keep out the cold.

Under fiery criticism from NDP interim leader Nycole Turmel in question period in the House of Commons, Aboriginal Affairs Minister John Duncan said Wednesday the federal government is appointing someone to take charge.

"The on-the-ground assessment has determined that urgent health and safety issue demand immediate action. Therefore we have informed Chief Spence we are placing the first nation in third-party management," Duncan said.

Prime Minister Stephen Harper responded to several rounds of criticism from Turmel, NDP MP Charlie Angus, whose riding includes Attawapiskat, and Liberal interim leader Bob Rae.

Each time he reiterated the fact the government has spent more than $90 million in the community since 2006, and the results have been unacceptable

"The results are not satisfactory Mr. Speaker, that's why the government has people on the ground taking additional emergency action and why we will be announcing additional steps to deal with management problems in this community."

Angus said later Wednesday that the federal government has had a "co-manager in the community every single day, dealing with the books."

"He's appointed by the federal government," Angus told CTV's Power Play. "If they were concerned about the money they would have called him and I think he would have given them a pretty straightforward answer about what they're doing with debt and how they are dealing with their finances."

Angus said with the move, the government essentially "decapitated" the community and has taken away its ability to address its own problems.

"They're sending a message to other First Nations: if you've got problems, keep your mouth shut," Angus said. "And I think that's a really unfortunate position to take at this point."

Angus said while $90 million sounds like a lot of money, but 80 per cent of the community's budget goes to education and another 10 per cent to social services, leaving little left for infrastructure.

Funds questioned

Mary Helen Kebokee is one of the Attawapiskat residents waiting for a proper home. She has a tiny room in a trailer that is home to 90 residents, space that must also house her three children.

"They're very impatient," Kebokee told Â鶹´«Ã½ through tears. "I keep telling them, I'm going to get a home."

Some residents fear that housing is not a priority for the local council because some projects have received questionable funding, including a new zamboni at the hockey arena paid for out of an education fund.

A 2010 audit of the local council's finances reveal some discrepancies, including un-compiled budgets and undocumented salaries.

We're not hiding nothing. If we were hiding something, it'd be in the audit," Chief Theresa Spence told CTV.

"The government says we're mismanaging money, we're not."

Documents obtained by CTV indicated that Spence travelled on an $8,400 chartered plane to the Toronto Islands, which she at first denied.

She later acknowledged that she travelled on the flight with other council members and her daughters.

Harper challenged to visit community

During question period, Turmel delivered an impassioned speech in the House of Commons, demanding that the prime minister see for himself the conditions she witnessed in Attawapiskat this week.

"The prime minister has to take responsibility, he has to take charge, it is his duty to help the people of an entire community of people living in Third World conditions," Turmel said.

"You should sleep in a shack with a sleeping bag, you will see the sleeping bags provided by the Red Cross are not enough. We need better, we need action. Where is the leadership?"

Turmel said earlier that the community needs more money as a short-term solution to the housing crisis as winter arrives, but also said a long-term plan is needed.

"The point is this is an emergency situation. These people don't have a place to live, they're living in tents, they're living in sheds with their kids around them without heat, today it was -20 degrees," she told reporters.

The decision by community leaders to declare a state of emergency last month has put a media and government spotlight on the community. The Red Cross delivered emergency blankets and heaters on Tuesday.

CTV's Daniele Hamamdjian, reporting from Attawapiskat, said the situation is desperate.

"The issue here is not that this community doesn't have running water or a decent plumbing system, that's a problem generally in many northern communities," Hamamdjian reported.

"The issue here goes beyond that, it's the housing program -- mould-infested homes, people living in tents and shacks. And when I say shacks, imagine the size of an average patio deck and you've got entire families living in these shacks."

Hamamdjian said overwhelmingly, the residents of the community simply want a better quality of life.

"They want a home that they don't have to share with 20 other people, a home that is insulated that has heat where their children can sleep at night," she said.

Angus toured Attawapiskat with Turmel on Tuesday. He said the calamity could represent a historic milestone if the federal government is motivated to enact change.

"This is a catastrophe and it doesn't have to be," Angus told Power Play. "So this is the moment when the prime minister says enough is enough, let's bring everyone, let's bring the national chief, let's sit down and say how did we get here, and how do we get out of here, and that's not what's happening."

He said the standard of living in Attawapiskat is simply not acceptable, and the government must do something to correct the situation.

"If a country like Canada can't make that commitment to its people then Canada has failed," Angus said earlier.

Assembly of First Nations Chief Shawn Atleo said while grim, the situation in Attawapiskat isn't surprising.

He said that there are at least 100 communities facing similar circumstances across the country.

"What we need to do is empower and support communities to take responsibility for their own future and for their own lives," Atleo said, calling for a major summit between First Nations representatives and the federal government.

Some progress has occurred since the band first declared a state of emergency.

Regional Grand Chief Stan Louttit says five families living in tents on the reserve should be able to move into homes as soon as before Christmas.

New federal funding has allowed the band to begin repairs on several abandoned houses, and Ottawa has pledged up to $2 million if the band comes up with a detailed, feasible plan to build more homes.

With a report from CTV's Daniele Hamamdjian and files from Andy Johnson