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HomeMy WebLinkAbout2011-03-07 AUDIT COMMITTEE MINUTES MARCH 7, 2011 CITY OF KITCHENER The Audit Committee met this date commencing at 4:24 p.m. Present: Councillor Z. Janecki - Chair Councillors S. Davey, F. Etherington, Y. Fernandes, K. Galloway, J. Gazzola, D. Glenn- Graham, B. loannidis, P. Singh and B. Vrbanovic. Staff: C. Ladd, Chief Administrative Officer D. Chapman, Deputy CAO/Finance & Corporate Svcs J. Will mer, Deputy CAO/Community Svcs P. Houston, CAO/lnfrastructure Svcs M. May, Interim Director of Human Resources L. MacDonald, Director of Legal Services R. Lebrun, Manager of Accounting S. Brisbane, Supervisor of Financial Reporting D. Gilchrist, Committee Administrator 1. AUDIT COMMITTEE ORIENTATION Mr. D. Chapman gave a brief explanation to the Committee advising that this municipality has both an internal and an external auditor. He advised that the Municipal Act prescribes that municipalities must have an external auditor to audit the municipality's annual financial statements. He then advised that like many municipalities, the City of Kitchener has an internal auditor, who reviews best practices. Ms. Tasker then provided the Committee with an orientation as to their responsibilities, terms of reference as prescribed by Council Policy 1-66 and covered the internal audit function. In that regard the Committee had been provided with Finance and Corporate Services Department report FCS-11-021, dated February 11, 2011. 2. 2011 EXTERNAL AUDIT WORK PLAN The Committee was in receipt of Finance and Corporate Services Department report FCS-11- 048, dated March 2, 2011, recommending approval of the External Audit Planning Report as prepared by KPMG. Ms. Brisbane presented the report advising that 1 of the responsibilities of this Committee is to approve the external audit plans. She also advised that a Request for Proposal was issued by the City in 2009 which resulted in KPMG being appointed as the City's auditor for a 5 year period. She stated that the auditor's opinion adds credibility to the financial statements. Mr. T. Mennill, CA, KPMG, was in attendance and presented their Audit Planning Report for the year ending December 31, 2010. On motion by Councillor B. Vrbanovic- it was resolved: "That the 2011 External Audit Planning Report, prepared by KPMG and attached as Appendix 1 to Finance and Corporate Services Department report FCS-11-048, be approved." 3. FCS-11-022 - 2010 YEAR IN REVIEW - AUDIT STATUS REPORT - and - FCS-11-023 - 2011 INTERNAL AUDIT WORK PLAN Ms. Tasker then reviewed two staff reports: FCS-11-022, dated January 20, 2011, which reviews the work done by the internal auditor in 2010; and, FCS-11-023, dated February 11, 2011 , which presents the internal audit work plan for 2011 . Respecting the Central Maintenance Facility, Councillor Fernandes questioned whether an audit would be completed and was advised by Ms. Tasker that she will only be auditing stores. Ms. Houston advised that efficiencies have been anticipated in the business case and these will be reported to Council later this year. AUDIT COMMITTEE MINUTES MARCH 7, 2011 - 2 - CITY OF KITCHENER 3. FCS-11-022 - 2010 YEAR IN REVIEW - AUDIT STATUS REPORT (CONT'D) - and - FCS-11-023 - 2011 INTERNAL AUDIT WORK PLAN - (CONT'D) Ms. Tasker noted that the work plan contains internal audit work only and she reviewed the type of audit required for each as well as estimated duration and preferred timing, noting that some of the audits are either in process or already complete. Ms. Tasker then advised that some members of Council have made suggestions to her of other audits they would like completed: Revenue cash counter controls audit, extent of nepotism, building permits cash controls audit and Administrative expenses controls/compliance. In response to these requests, Ms. Tasker advised that nepotism can be made part of the hiring transparency audit. As the Revenue cash counter controls audit and the Building permits cash controls audit will each take approximately 1 week, they can be accommodated in the 2011 work plan. However, controls/compliance respecting Administrative expenses could take a considerable amount of time, depending on the scope, and can not be accommodated in the work plan this year. The Committee was provided with a detailed summary of the Administrative expenses for 2010, including enterprises, by Ms. Ladd. Referring to the last page of the summary, Mr. Chapman noted that if the storm water management rebates are included, the increase in 2011, as approved by council, will be 5.20/0 over 2010 and if the storm water management rebates are not included, the increase for 2011 will be 0.60/0. Respecting cash short/over, $899,000 will be included in the budget for the Parking Enterprise; and, referring to page 27 of 57, Mr. Chapman noted that $614,000 for storm water rebates belongs to that utility. The balance of the other budget lines is similar from year to year. Mr. Chapman then advised that the type of audit required for administrative expenses will take 1-2 months, so if it is to be done, something on the work plan will have to be removed. Councillor Vrbanovic advised that he had requested the audit of administrative expenses; however, he is satisfied with the explanation provided. Councillor Singh questioned miscellaneous expenses and Mr. Chapman advised that he is not certain that the figure is final. He stated that Ms. Brisbane will present the final 2010 Budget at the next meeting. Councillor Fernandes questioned conferences and travel expenses and was advised that Finance staff will provide that information. On motion by Councillor P. Singh it was resolved: "That the 2011 work plan for Internal Audit be approved as outlined in Finance and Corporate Services Department report FCS-11-023 and amended to include the following: a) that the extent of nepotism be added to the hiring transparency audit, b) that a cash controls audit of the building permit function be undertaken; and, c) That a controls audit of the Revenue cash counter be undertaken." 4. ADJOURNMENT This meeting adjourned at 2:45 p.m. D. Gilchrist Committee Administrator