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HomeMy WebLinkAboutAudit - 2013-06-24 AUDIT COMMITTEE MINUTES JUNE 24, 2013 CITY OF KITCHENER The Audit Committee met this date commencing at 2:08 p.m. Present: Mayor C. Zehr - Chair Councillors S. Davey, Y. Fernandes, B. Vrbanovic, F. Etherington, P. Singh, Z. Janecki and D. Glenn-Graham. Councillors K. Galloway-Sealock and B. Ioannidis were in attendance for part of the meeting. Councillor J. Gazzola was absent this date. Staff: J. Willmer, Chief Administrative Officer D. Chapman, Deputy CAO/Finance & Corporate Services M. May, Deputy CAO/Community Services P. Houston Deputy CAO/Infrastructure Services L. Johnston, Director of Corporate Communications & Marketing R. Hagey, Director of Financial Planning B. Johnson, Director of Accounting R. Lebrun, Manager of Accounting S. Brisbane, Supervisor of Financial Reporting C. Tasker, Internal Auditor J. Billett, Committee Administrator D. Saunderson, Committee Administrator FCS-13-083 - 2012 AUDITED CONSOLIDATED FINANICAL STATEMENTS 1. The Committee considered Finance and Corporate Services Department report FCS-13-083, dated June 13, 2013, as well as the attached KPMG report titled “City of Kitchener Audit Findings Report for the year ending December 31, 2012”. Ms. S. Brisbane and Mr. R. Hagey presented the findings of the Audited Financial Statements. Mr. M. Betik, KPMG, the City’s external Auditor, was in attendance to present their audit report advising that they have completed the audit of the consolidated financial statements. Mr. Betik noted that their responsibility is to assist in providing an overall review of the year ending December 31, 2012 financial statements. He highlighted matters for discussion that were identified through their audit including: Storm Water Management fee rebate accruals; the Civic Centre parking structure; and, requirements of independent communication/services under which KPMG operates as the City’s external Auditor. Councillor Y. Fernandes requested clarification on the loss of tangible capital assets reported by local boards and business improvement areas. Ms. Brisbane advised that these individual financial statements were not included as part of this report, but staff could follow up with Council to provide further information on the losses identified. In response to questions, Mr. Hagey confirmed that if the Enterprise and Economic Development Investment Fund (EDIF) debt was removed from the debt to reserve ratio, Kitchener’s ratio would be $0.8 for every dollar in reserve. Mr. D. Chapman added that the Debt to Reserve Ratio, with Enterprise debt left in, would be approximately $1.6 for every dollar in reserve. Councillor Y. Fernandes questioned whether there would be any significant benefit to selling the City’s assets in hydro and or the gas utility in relation to the municipal debt. Mr. Hagey advised that there would be some immediate improvement through a potential sale; however, there would be an additional loss of the revenue generated by those assets. Councillor K. Galloway-Sealock entered the meeting at this time. Councillor Z. Janecki requested clarification on the 5-year trend in the overall debt balance for the City and whether the municipal debt was at its fiscal peak. Mr. Hagey advised that debt balances will begin to decrease, noting that the additional debt was accrued due to the Auditorium expansion and the Civic District parking garage. He stated that although the trend is forecast to increase in 2013, with the final EDIF debenture being issued, there should be no other significant increases in the upcoming years and as the debt is paid off, debt balances will decrease. Mr. D. Chapman noted that staff will not be recommending issuing any new debt until the current debt moderates. He added that even though staff had recommended against accruing more debt for the Auditorium expansion, Council chose to approve the expansion following the presentation of the Kitchener Ranger’s business plan. AUDIT COMMITTEE MINUTES JUNE 24, 2013 - 5 - CITY OF KITCHENER FCS-13-083 - 2012 AUDITED CONSOLIDATED FINANICAL STATEMENTS (CONT’D) 1. In response to questions, Mr. Hagey confirmed that hydro assets are included in the Financial Statements, but the City’s Gas Utility is not. He indicated that Hydro is an at-arm’s length organization in which the City has an investment; whereas, Kitchener Utilities is a City-owned enterprise and is therefore accounted for in a different manner. Mr. Chapman further advised that this report would only include the financial assets and liabilities; however, does not reflect capital assets. Councillor B. Vrbanovic questioned whether the values of the capital assets associated with these Enterprises could be reflected in future reports for a clearer representation of the City's financial position. Mr. Chapman indicated that it was something staff could take into consideration for next year’s financial audit reporting. Councillor S. Davey questioned whether staff would be able to provide Council with an absolute return on investment report so they can be better informed as to whether they would consider liquidating an Enterprise. In response to questions, Mr. Chapman advised that although the audit process would not likely be the venue for such a discussion, staff are looking at creating an investment return policy which will be brought forward for Council's consideration later this year. On motion by Councillor S. Davey - it was resolved: “That the 2012 Audited Consolidated Financial Statements of the City of Kitchener be approved.” FCS-12-184 - 2ND QUARTER AUDIT STATUS REPORT 2. The Committee considered Finance and Corporate Services Department report FCS-13-084, dated June 14, 2013 which provides a summary of the internal audit activities completed during the period of March 2013 to June 2013. Ms. C. Tasker presented the report and provided the status of Internal Audits scheduled for the 2nd quarter of 2013. Ms. Tasker advised that the audit of the Emergency Management Program has been completed and work is currently in progress on two additional audits from the 2012 and 2013 work plan, being a review of Operations and audit of the Auditorium and Arenas. With respect to the City’s Emergency Management Program, Ms. Tasker advised the objective was to assess the Program to ensure that it meets the legislative requirements and provides a framework that can be understood by staff, and can easily be put into action should a real emergency occur. She noted that overall the Emergency Program is well managed and many of the recommendations are minor in nature and focus on continuous improvements. She advised that the most critical recommendations focus on improving staff knowledge, level of training and ensuring that there are trained backups for every role. Councillor B. Ioannidis entered the meeting at this time. Mayor C. Zehr noted that the next Emergency Operations training session will be held October 24, 2013 and suggested that all members of Council should be involved in training sessions to become informed should a potential emergency arise during a period of time they may be serving as Acting Mayor. In response to questions, Ms. Tasker stated that City Hall would house the Emergency Operations Centre (EOC) pending a major emergency with the alternate location for the EOC at the Kitchener Operations Facility (KOF). She indicated that in regard to how normal business operations might continue at City Hall is to be determined through the Business Continuity Plan yet to be completed. Councillor B. Vrbanovic questioned whether additional communication measures had been considered if circumstances render technology unusable. Ms. Tasker advised that Information Technology does have a continuity plan that would assist in maintaining communication where possible, adding that there are additional communication measures within the emergency plan, including two-way radios and amateur radio. It was noted that pamphlets are readily available AUDIT COMMITTEE MINUTES JUNE 24, 2013 - 6 - CITY OF KITCHENER FCS-12-184 - 2ND QUARTER AUDIT STATUS REPORT - (CONT'D) 2. to assist citizens on how to return to their homes safely if evacuations occur and materials are also available from Emergency Management Ontario. Councillor Z. Janecki requested clarification on how the City would coordinate with the Region of Waterloo pending an emergency. Ms. Tasker advised that coordination would depend on the type and scale of the emergency. She indicated that if the emergency was within City limits, the EOC would be activated here at City Hall and Regional representatives would make up part of our response team. She noted that if the emergency was on a wider scale, the Regional EOC would be activated and City representatives would form part of their response team. Councillor D. Glenn-Graham questioned whether there is an emergency management component to the new employee orientation program and Mayor C. Zehr advised that, to his knowledge, there is no emergency management component other than the usual instructions such as how to respond to a fire alarm. Councillor Glenn-Graham suggested that staff continue to investigate on best practices used in other municipalities. ADJOURNMENT 3. This meeting adjourned at 4:06 p.m. D. Saunderson Committee Administrator