HomeMy WebLinkAbout2011-06-27AUDIT COMMITTEE MINUTES
JUNE 27, 2011 CITY OF KITCHENER
The Audit Committee met this date commencing at 1:37 p.m.
Present: Mayor C. Zehr - Chair
Councillors S. Davey, F. Etherington, Y. Fernandes, K. Galloway, J. Gazzola, D. Glenn-
Graham, B. Ioannidis, P. Singh, B. Vrbanovic and Z. Janecki
Staff: C. Ladd, Chief Administrative Officer
D. Chapman, Deputy CAO/Finance & Corporate Svcs
J. Willmer, Deputy CAO/Community Svcs
B. Johnson, Director of Accounting
R. Lebrun, Manager of Accounting
S. Brisbane, Supervisor of Financial Reporting
C. Tasker, Internal Auditor
D. Gilchrist, Committee Administrator
2010 AUDITED FINANCIAL STATEMENTS
1.
The Committee considered Finance & Corporate Services Department report FCS-11-141,
dated June 17, 2011, in which staff provides the 2010 Audited Financial Statements for the
City of Kitchener. Ms. Brisbane was in attendance and presented the report and provided the
Committee members with a revised “Consolidated Statement of Financial Position” at this
meeting. Ms. Brisbane introduced Messrs M. Betik and T. Mennill, KPMG, the City’s auditors.
Ms. Brisbane proceeded to review the financial statements noting that the three primary
contributors to the City’s current financial position are: reserves and reserve funds, debt and
investment in Hydro. She noted the purpose of reserves and reserve funds and that staff is
concerned about the current and future depletion of them; especially capital reserves which
are used to reduce reliance on debt and have been reduced by 60%. Mr. Chapman noted that
the City has much less funding available to introduce new projects.
Ms. Brisbane then reviewed the City’s position respecting debt, noting that the City’s debt load
has been increasing, which will continue to 2013 and it will fall thereafter. With respect to a
question about the City’s credit rating, Mr. Chapman advised that the Region, not the City,
issues debt and it has a good credit rating; however, it may become more of an issue,
overtime.
Mr. Chapman advised that he has a serious concern about the increase in the City’s debt and
the decreasing reserve funds. It was noted that the primary reason for the amount of debt is
the Economic Development Investment Fund (EDIF). Mayor Zehr stated that there is a certain
comfort level in that the City has a financial investment of $71M in hydro which is almost equal
to the debt of $81M.
Messrs. Mennill and Betik next presented their audit findings. Referring to page 3 of their
report, Mr. Mennill advised that they have completed the audit except for a few matters and
respecting obtaining updated confirmation of legal claims outstanding, that confirmation was
received this date.
Mr. Betik advised of significant items, there being only 2 identified on page 1-124 of the
agenda package, dealing with tangible capital assets. He advised that finding 2 areas to
improve is not outside of the norm. He referred to page 1-127 which deals with control
deficiencies noting that they did not identify significant deficiencies. The control deficiency that
they did find deals with settlement rules for internal orders which determine whether these
orders settle to a capital account or an expense account. He advised that better management
practices are required and KPMG will help staff develop them.
On motion by Councillor J. Gazzola –
it was resolved:
“That the 2010 Audited Financial Statements of the City of Kitchener be approved.”
AUDIT COMMITTEE MINUTES
JUNE 27, 2011 - 6 - CITY OF KITCHENER
PURCHASING CARD PROGRAM AUDIT
2.
The Committee considered Finance & Corporate Services Department report FCS-11-133,
dated June 13, 2011, providing a summary of the purchasing card audit and the associated
management response.
Ms. C. Tasker presented this report. She advised that there are 286 cardholders and total
purchases on these cards in 2010 totalled $1.7M, with an average purchase being $188 and
average monthly spending of $452.
In summarizing the outcomes of the audit Ms. Tasker advised that the purchasing card
program follows most of the best practices; although there is room for improvement in the
areas of training, auditing and accountability. There is also an opportunity for cost savings and
efficiencies through program expansion.
In discussion about rebates with use of purchasing cards, Mr. Chapman advised that on
average the City receives an annual rebate of $26,000. He advised that staff will investigate
the possibility of expanding this program.
ADJOURNMENT
3.
This meeting adjourned at 3:08 p.m.
D. Gilchrist
Committee Administrator