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Home My WebLink AboutFIN-07-074 - (1) - 2006 Annual Financial Report j Financial Services Report To: Date of Meeting: Submitted By: Prepared By: Ward(s) Involved: Date of Report: Report No.: Subject: Mayor Carl Zehr, Chair, and Members of the Audit Committee June 11, 2007 Pauline Houston, General Manager of Financial Services & Treasurer Dan Chapman, Director of Financial Planning & Reporting (2347) All May 24, 2006 FIN-06-074 2006 ANNUAL FINANCIAL REPORT RECOMMENDATION: THAT the 2006 Annual Financial Report of the City of Kitchener be received. REPORT: Staff is pleased to submit the 2006 Annual Financial Report of the City of Kitchener. A presentation of financial statement highlights and key financial indicators will be given at the Audit Committee meeting on June 11. Representatives of the City's External Auditors will also be in attendance to discuss the audit findings report. In the meantime, Audit Committee members may wish to refer to the Financial and Statistical Review (section 3) which provides a summary of the financial condition of the City between 2002 and 2006. In addition, Schedules 90 to 95 of the Financial Information Return (section 4) contain performance measures reported in accordance with Provincial requirements. FINANCIAL IMPLICATIONS: None COMMUNICATIONS: Summary financial information will be provided to all residents through the "Your Kitchener" publication in accordance with Section 295(1) of the Municipal Act, 2001. ATTACHMENTS: . 2006 Annual Financial Report . Audit Committee Presentation . Audit Findings Report to the Audit Committee (KPMG) . Independence Letter (KPMG) Pauline Houston, CA General Manager of Financial Services & City Treasurer Dan Chapman, CA Director of Financial Planning & Reporting ANNUAL FINANCIAL REPORT DECEMBER 31, 2006 1 · General Overview · Key Financial Indicators · New Reporting Standards · Audit Findings Report · Questions 2 (2005) Gas 320/0 (36%) Taxes 290/0 (30%) Grants 20/0 (1%) Other 170/0 (12%) User Fees 200/0 (21%) 3 Gasworks 41% (39%) (2005) -:-..:dated Current Other 4% (4%) General Government 11% (11%) Recreation & Culture 20% (21%) Protection to Persons 13% (13%) Transpor- tati 0 n 6% (7%) Environ- mental 5% (5%) 4 .:i:::dated Capital Planning & Development 90/0 (8%) General Government 11 % (8%) Other 70/0 (2%) Gasworks 80/0 (9%) Recreation & Culture 190/0 (19%) (2005) Transpor- tation 130/0 (17%) Environ- mental 330/0 (37%) 5 ($ thousands) 2006 2005 Assets Cash and investments 84,418 79,469 Taxes receivable 17 , 7 46 17,989 Accounts receivable 37,492 39,002 Inventory for resale 19,729 16,775 Equity in Kitchener Power Corp. 158,347 152,976 Other 16,953 13,589 Liabilities AlP and accrued liabilities 62,401 63, 135 Def. rev. - obligatory reserve funds 12,634 8,952 Municipal debt 47,230 40,681 Employee future benefits 18,870 17 , 945 6 · Surplus Balances · Unexpended Capital Balance · Reserves and Discretionary Reserve Funds · Debt Per Capital · Taxes Receivable 7 2006 2005 Gasworks 3,735 6,332 Golf Courses (433) 738 Waterworks (1 , 165) (2,328) Sewer Surcharge (8, 116) (8,231 ) Belmont and KDBA 1 15~9161 {3,350} 8 .- - - .- :E ~ tn c: o "i:" .~nded Capital 64 60 56 52 48 44 40 36 32 28 24 20 16 12 8 4 o 2000 2001 2002 2003 2004 2005 2006 9 "i:"::.:~ Discretionary 2006 2005 For acquisition of equipment For working capital For sick leave For capital works For tax stabilization For Centre in the Square Inc. For other purposes 9,090 4, 705 3,282 8,073 13,470 3,476 22170 442266 8,785 4, 705 2,908 15,867 13,959 3,660 22020 512904 10 "i:"i:e and Reserve · Compare Kitchener to southern Ontario lower-tier non-rural municipalities in Regional structures · 2005 benchmark data Reserves and discretionary reserve funds per household $550 $1 ,032 11 $ 220 200 180 160 140 120 100 80 60 40 20 o 2000 2001 2002 2003 2004 2005 2006 Tax Supported - General Tax Supported - EDIF Non-Tax Supported 12 · Compare Kitchener to southern Ontario lower-tier non-rural municipalities in Regional structures · 2005 benchmark data Total debt burden per household Total debt burden per household, excluding EDIF $587 $445 $271 $445 · Province considers $400 to $1 ,000 per household to be a "moderate" load 13 'i:',.X Arrears 12 9.4 9.6 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 14 'i:' :x Arrears · Compare Kitchener to southern Ontario lower-tier non-rural municipalities in Regional structures · 2005 benchmark data Total taxes receivable as a 010 of total taxes levied 7.0010 7.2010 · Province considers amounts less than 1 OOk to be low 15 'i:' "'\:: Reporti n9 · PS 2700 Segment Disclosures - Effective for 2008 fiscal year - Requires disclosure of disaggregated financial information by functional segment in the consolidated financial statements - Provides relevant information for accountability and decision-making purposes, while ensuring consistency with the summary statements - May replace the unaudited statements for City enterprise units 16 'i:' "'\:: Reporti n9 · PS 3150 Tangible Capital Assets - Approved June, 2006 - Effective for 2009 fiscal year - Requires reporting of capital assets at cost less accumulated depreciation and depreciation expense - Contrasts to the current practice of recording all capital expenditures in year of acquisition - Most significantly, the standard will require a comprehensive inventory and valuation of all capital assets owned by the City - Aligns with PS 1200 (new) which changes financial statements from "fund" basis to "entity" basis 17 'i:' "'\:: Reporti n9 · PS 3150 Tangible Capital Assets - Understanding the costs associated with infrastructure enable a government to: · Assess overall spending priorities · Establish infrastructure spending priorities · Determine the sufficiency of tax and user fee rates · Assess accountability for the resources provided · Make judgments about performance · Assess financial sustainability, flexibility and vulnerability · Make cost comparisons 18 'i:' "'\:: Reporti n9 · PS 3150 Tangible Capital Assets - Progress to date: · Business case and funding approved · Steering committee established · Project manager retained on contract · Functional requirements incorporated into RFP for CIFS/IIMS · Consultant report on capital asset management business processes complete · Initial meeting held with auditor to review issues - Next steps: · Complete detailed project charters and schedule · Complete inventory and valuation (6-8 months) · Bring draft capital asset policies forward to Council for consideration 19 Audit Findings Report 20 Questions? 21 "- 2 ~ Q.) 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QJ "'C .S C-' ~ = .- ....... = = o ~ ~ -< . t- O o C"l ~ ~ a ;::::$ d ro ~ d o bJ) d .~ d d .~ bJ) ~ .,.0 r./J a ~ ~ H ~ ~ d .~ ~ ~ "0 .~ ;::::$ bJ) r./J :.a ~ "0 ~ :> o H ~ ~ r./J ro ~ o ~ <e r./"J ~ V "0 a o ~ ~ ~ .~ ~ ~ ~ d ;::::$ o u u <e H o ~ u ~ r./"J u .~ ~ .,.0 ;::::$ ~ ~ ~ ~ "0 d ro ~ r./J o U ~ "0 ;::::$ ~ u d .~ ~ ~ ~ ro H ~ d ~ bJ) ~ r./J ~ ~ ~ r./J ~ ~ r./J r./J ro ~ ro ~ .~ u ~ ~ .,.0 .~ bJ) d ro ~ o r./J ~ d "0 .9 ~ ~ ~ .~ ro "0 ~ "0 ~ ro r./J ~ ~ ;::::$ "0 ~ ~ U r./J H o r./J ~ ~ o d d .~ d o .~ ~ ro S H ~ d .~ bJ) d .~ ~ d ~ r./J ~ H ~ d o ~ u d ro "0 .~ ;::::$ bJ) r./J ~ "0 .~ :> o H ~ t- 6 r./"J ~ I I ~ ~ .~ H ~ "0 d ro d o .~ ~ .~ u ~ H ~ ~ "0 ~ ~ ~ ~ ~ ~ bJ) d .~ H ;::::$ "0 r./J ~ ro r./J o ~ r./J .~ "0 "0 d ro ~ ~ ~ ~ ~ ~ ~ o "0 d ~ "0 d ro bJ) d .~ d d .~ bJ) ~ .,.0 ~ ~ ~ "0 d ro r./J ~ ~ r./J r./J ro ~ o d o .~ ~ .~ u ~ H ~ ~ "0 "0 ~ ~ ] ;::::$ u u ro d o .~ ~ ro S H ~ d .~ "0 ~ ~ ~ ~ H H ~ ~ ~ o "0 d ro "0 o .~ H ~ ~ ~ ~ ~ bJ) d .~ H ;::::$ "0 r./J d ~ o "0 ~ ~ t'.:l t'.:l ~ ,."""",. -s .~ u ~ ,."""",. ~ .5iJ ::: ~ = II) ~ ~ rJJ. ~ . ~ ro u o ~ ~ o r./J ~ ~ r./J r./J ro ~ ro ~ .~ ~ ro u ~ ~ .,.0 .~ bJ) d ro ~ ~ o bJ) d .~ ~ H o ~ ~ H "0 d ro H ~ bJ) d .~ ~ d ;::::$ o u u ro ~ ~ ~ d o o if) ~ rrl r./"J ~ o ~ r./J ~ d ~ S "0 d ~ S ro "0 ~ :> o H ~ ~ ~ <e r./"J ~ \0 o o C"l H ~ ~ ~ ~ ~ ~ r./"J d ~ r./J ~ d ~ S d H ~ :> o bJ) d .~ "0 d ~ ~ ro ~ .~ ~ ro u ~ ~ ~ ~ bJ) ;::::$ o H ~ ~ r./J ~ H ;::::$ ~ .~ "0 r./J d r./J ~ ~ ~ ~ >< t;; ~ o ~ u ,S ~ .~ ro ~ u ~ ~ ~ "0 d ro d o .~ ~ .~ u ~ H ~ ~ "0 "0 ~ ~ ro ] ;::::$ u u ro r./J ~ ~ r./J r./J ro ~ ro ~ .~ u ~ ~ .,.0 .~ bJ) d ro ~ 0\ o o C"l ~ ~ ro bJ) d .~ "0 H o U ~ H ~ o ~ u .~ ~ u ro H ~ ~ d ~ H H ;::::$ U ]] U ~ d ro d ~ r./J ~ .~ ~ vJ ~ d ~ S ~ ~ ~ r./J ~ a ;::::$ d ro ~ d o bJ) d .~ d d .~ bJ) ~ .,.0 r./J a ~ ~ H ~ ~ :> .~ ~ u ~ ~ ~ ~ .,.0 d .~ .-d H o U ~ H o ~ ~ r./J d ~ ~ >< ~ d o .~ ~ .~ u ~ H ~ ~ ~ ~ .~ "0 bJ) "0 d a ~ "0 d d 0 ro ~ ~ r./J r./J ~ H H o U ~ ~ u ~ ~ ~ ~ H .~ ;::::$ c:r ~ H ~ ~ .~ "0 a "0 d ro ~ r./J ~ ~ ~ ~ ~ ~ o ~ r./J ~ H ro a o u r./J .~ ~ ~ d o .~ ~ .~ r./J .~ ;::::$ c:r u ro ~ o H ro ~ ~ ~ ~ ~ ::: Q .~ -s ::: ~ t'.:l ~ ~ ..... ::: ~ E ~ -s ~ ,."""",. ~ .t ::: ~ ::: ~ = = ~ ~ rJJ. ~ . ~ ro u o ~ ~ o d o .~ ~ d ~ r./J ~ H ~ ~ d ~ S ~ ~ ro ~ r./J ~ ro .~ u d ro d ~ ~ ~ ~ d o o o C"l ~ ~ ~ ~ o ~ ~ .~ u ~ ~ ~ ~ .~ :!2 r./J r./J ;::::$ ~ ~ d ~ ~ H S ;::::$ ~ r./J ~ ~ ro ro ~ ;::::$ r./J d ] ~ u ~ d ~ ro ~ d ~ ~ 0 ~ d ~ 0 ~ .,C ro .~ ~ .~ u d o u ~ H ro ~ ~ r./J . ~ ~ d ~ S ~ ~ ~ r./J ~ ro .~ u d ro d ~ ~ r./J o ~ H ;::::$ ~ ~ bJ) d ro ~ u --d ~ ~ d ~ r./J ~ H ~ ~ a r./"J ~ o ~ r./J ~ d ~ S "0 d ~ S ro "0 ~ :> o H ~ ~ ~ <e r./"J ~ o if) ~ rrl r./"J ~ o ~ r./J ~ d ~ S "0 d ~ S ro ~ ~ ~ ~ ~ .~ bJ) d .~ "0 .~ u d .~ o U ~ ro H ~ d ~ bJ) ~ ro ~ ~ ~ ~ r./J ~ d ~ S d H ~ :> o bJ) ro d o "0 ~ ~ a .~ fr "0 H a ~ "0 gf d .~ ro ~ t;; .,.0 .~ S ~ 0 ~ ~ LD r./J .~ r./J ro .,.0 ~ ~ .~ ~ d ~ ~ o ~ ~ ~ :> H ~ r./J ~ ~ ~ ro ~ .~ ~ ro u ............ bJ) d .~ ~ H ~ ~ o '-" ~ bJ) d ro ~ u o (1) (,) c: (1) J.. (1) ..... ::: "'C ... :c ::3 ns "'C (1) ... (,) (1) J.. J.. o (,) c: :J ~ ~ s ~ ~ ~ ro ~ ..c= ~ .~ ~ o ~ ...r ~ s ~ b1) "0 :::s . l""""") H .~ ~ ..c= ~ ~ .~ ~ .~ "0 :::s ro ~ ~ S ~ ~ ro ~ rJJ ~ a ~ ~ ro b1) ~ H b1) b1) ro ~ ..c= ~ ~ .~ "0 ~ ro ~ ~ ~ ro ..s .~ > ~ ~ .~ ~ ro .~ u ~ ro ~ to H :::s o b1) ~ .~ H :::s "0 "0 ~ ~ u ~ ~ ~ "0 ~ ~ 00 ~ u ~ ~ H ~ ~ ~ ~ ro ..c= ~ rJJ ~ U ~ ~ H ~ ~ .~ "0 ~ .~ "0 ~ ~ rJJ ~ ..c= ~ ~ ..c= ~ "0 ~ ~ ~ ~ rJJ ~ ~ ro H .~ ~ ~ rJJ ~ ro to ..c= ~ ~ ..c= ~ ~ S B ~ ~ b1) .~ ro H ~ ~ ro ~ ~ s ~ ~ ~ "0 ~ ~ u ~ H H o U ~ :::s "0 ~ ~ ~ .~ > ~ H ~ > ro ..c= ~ ~ v5 ~ ~ ~ s ~ ~ ro ~ rJJ ~ ;::::$ o ~ o ~ rJJ. ~ ;::::$ o u ~ ...d ~ ~ .~ ~ .~ ~ ~ ~ '"d .~ ~ o ~ '"d .~ '"d ~ ~ ...r ~ o ~ ~ ~ rJJ. .~ ...d ~ ~ .~ '"d ~ ~ .~ ~ ~ ~ '"d .~ >--. ,...... rJJ. ;::::$ o .~ ;> >--. ~ ~ ~ rJJ. ...r ~ .~ ~ '"d ~ ;::::$ ~ ro S ~ rJJ. o ...d ~ ~ ro ,...... ...d ro ~ .~ ~ u ~ ~ ...d ~ O~ ~ == Q .~ ~ ~ ~ == ~ ~ ~ ~ ::: ~ ::: == ::: ~ == ~ ~ ~ == .~ ~ rJJ. ~ o .~ ~ u ro rJJ. ~ ro ~ ~ ,...... ro ;::::$ rJJ. ;::::$ ~ ;::::$ ~ ~ ro u ~ .~ ~ bI) .~ rJJ. ~ ~ ~ s ~ ~ ro ~ rJJ. +-i ~ o ~ ~ ~ rJJ. .~ ...d ~ ~ .~ ~ ~ .~ ,...... ~ ro ~ rJJ. ~ .~ u .~ ,...... o ~ bI) ~ .~ ~ ~ ;::::$ o u u ro ~ rJJ. ~ ...d ~ ~ o '"d ~ ~ ~ ~ o u ~ ;> ro ...d ~ ~ ,...... ro .~ u ~ ro ~ ~ ~ ;::::$ o ~ o ~ rJJ. ~ rJJ. ;::::$ ~ 8 :9 ~ ,...... ...d 0 ~ ~ ~ bI) .~ ~ .~ ~ ~ ;::::$ o u u ro ~ o ~ o .~ ~ u .~ ,...... ~ ~ ro ~ o ~ o .~ ~ u ~ ,...... ~ rJJ. ~ ~ ~ .~ ~ ~ ~ '"d .~ ~ ~ ...r ~ o ~ ~ ~ rJJ. .~ ...d ~ ~ .~ '"d ~ ~ .~ ~ ~ ~ ~ '"d .~ .~ >--. ,...... rJJ. ;::::$ o .~ ;> ~ ~ ~ rJJ. ~ ~ ~ ~ ro S ~ ...r o .~ ...d '"d ~ ;::::$ ~ ro ro ~ ...d ~ ~ ~ ~ s ~ ~ ...d ~ o ~ ~ == ~ E ~ ::: .~ ~.... ~ .~ . ...... ~ Q ~ ~ QJj~ == ~ .~ E == .~ ::: ~ Q ~ ~ ~ ~ == ~ ~ rJJ. ~ bI) ~ ro ...d u ,...... ro .~ ~ ~ ~ ro S o ~ rJJ. ~ .~ u .~ ,...... o ~ bI) ~ .~ ~ ~ ;::::$ o u u ro ~ ~ ~ ,...... ro .~ ~ ~ ~ ro S o ~ ...r .~ '"d ~ ~ ~ ~ s ~ ~ ~ rJJ. ,...... ro .~ u ~ ro ~ ~ ~ ;::::$ o ~ o ~ rJJ. ~ ;::::$ o u ~ ...d ~ ~ .~ ~ ~ ~ .~ ~ ~ ~ '"d .~ ~ ~ ,...... ro .~ u ~ ro ~ ~ ~ ;::::$ o ~ o ~ rJJ. ~ ;::::$ o u ~ ...d ~ ~ .~ ~ ~ ~ .~ ~ ~ ~ '"d .~ ~ ~ ...r ~ o ~ ~ ~ rJJ. .~ ...d ~ ~ .~ '"d ~ ~ .~ ~ ~ ~ '"d .~ >--. ,...... rJJ. ;::::$ o .~ ;> ~ ~ ~ rJJ. ~ ~ ~ ~ ro S ~ ...r o .~ ...d '"d ~ ;::::$ ~ ro ro ~ ...d ~ ~ ~ ~ s ~ ~ ...d ~ o ~ ('-.... rJJ. ro ~ a bI) ~ .~ bI) ~ ~ s ~ ~ o ,...... ro .~ rJJ. ~ ~ ;> o ~ ~ ~ o u ~ .~ rJJ. ~ ~ ~ s ;::::$ o rB u u ~ ro ~ ~ >--. o 0 5 ]- ..0 ~ ro ~ ~ 0 ro >--. ;> u ~ ~ '"d ;::::$ ;::::$ U ,...... U ~ ro .~ '"d ~ ro rJJ. ~ ~ ~ rJJ. S .~ ~ .~ ~ ,...... ro .~ ~ ..0 rJJ. ro ,...... . ~ ro ,...... .~ '"d U ~ ~ ;::::$ ro ~ ~ U ~ ~ ...d ~ ~ 0 ~ rJJ. .~ ~ ...d ~ ~ ro .~ .s ~ rJJ. ~ rJJ. ~ .~ U .~ ,...... o ~ bI) ~ .~ ~ ~ ;::::$ o U U ro o ~ rJJ. ~ ~ ~ s ~ bI) '"d ;::::$ . ?""""") '"d ~ ~ ro 0 rJJ. ~ ~ 0 ~ .~ ro ~ S ro .~ ;::::$ ~ ,...... rJJ. ro ~ ;> ~ ~ o ~ ~ ~ ;> ~ .~ 'E ~ ~ :g rJJ. ~ > tE .S .~ ~ bI) 8 ~ .~ ~ ~ r:/'J. ~ ..0 ~ '"d .~ rJ'J ~ b/j :::s d o '8 rJ'J ~ d ~ o u .,0 d u 0 ro u rJ'J ~ ~ ~ ~ ~ 8 ~ '"d ~ ~ ro ,...... ~ ~ ~ d ro ~ d ~ S ~ b/j ro d ro S ~ ~ ~ '"d ro S ,...r .~ '"d :::s ro rJ'J ~ d ~ ~ S d ~ ~ b/j S ~ ~ .?""""") ~ ~ ~ d rJ'J ro ,...... u ro ~ .~ .~ U d d b/j ro .~ d rJ'J ~ ~ ~ > :::s ,...... o ~ ~ d o .~ ~ ~ rJ'J ~ ~ ~ :::s rJ'J o rJ'J (l) U ~ ~ ] .S ~ ~ rJ'J 0 d :::s ,...... .~ ~ ~ ~ .~ o '"d ~ '"d rJ'J d a ro o U ~ .~ ~ d ~ '"d .~ ~ ,...... o ro d S '"d ~ .~ 0 '"d d ~ ~ ~ ~ ~ :: Q --t: ~ ~ ~ :: ~ ~ -0 ;.." ~ ~ ~ ~ ..... ,S ~ ~ g ,...... ~ ~ d ~ S ~ ~ :::s rJ'J ro ~ S ~ .~ '"d :::s ro ~ ~ ~ ~ ~ .~ ~ U d ro '"d ~ o U U ro d .~ ~ .~ '"d :::s ro ~ :::s o '"d ~ ~ U :::s '"d d o U ~ ~ :: ,S ~ ..... ~ == ~ ;... == Q -E ~ ~ ~ :: ~ e '"d :::s ro ~ I .~ ~ d ro b/j d .~ '"d rJ'J :::s ~ ,...... rJ'J U rJ'J d ~ .~ Jj ro ~ ~ ci b/j .~ rJ'J ~ '"d ~ ~ ~ d .~ ~ d .~ ~ ~ o ~ ~ ~ ,...... ro .~ ~ ~ ,...... ~ ro ro .~ S g ~ ro d d ro ~ ~ ~ > o ,...... ~ 0 d ~ ~ ~ S 5 ~ U ~ ,...... ~ ro rJ'J d ,...... ~ ro ~ 'u .s d ~ ~ 0 ~ ~ :::s o ~ o ~ rJ'J ~ :::s o U ~ ~ ~ d .~ ,...r .~ '"d :::s ro ~ .~ ~ d ~ '"d .~ ~ o d '"d .~ '"d ~ ~ rJ'J rJ'J ~ d ~ > .~ ~ U ~ ~ ~ b/j d .~ ~ ro ~ ~ ~ o ~ o d o .~ ~ ro ~ d ~ rJ'J S ,...... ~ 8 ~8 .~ U ~ ~ ~ :: ~ --e ~ Q -5 ~ :: ;... . ..... ~ ~ ~ ~ - ..... ~ ~ ~ :: ~ ~ :: :: ~t::; ~ ;... ~ ~ ~ ~ ~ Q - ..... ~ ;... Q ~ -:: ~ ~ OJ ~ c.8 b/j d .~ ~ ~ o ~ ~ ~ ,...... ro .~ U d ro d ~ ~ ~ > o ,...... o ~ ~ d o U ,...... ro d ~ ~ ~ d .~ ~ o ~ U ro & ~ '"d ro ~ ~ ~ ~ d .8 ~ ~ ~ ~ '"d o ~ '"d ~ d b/j .~ rJ'J ~ '"d d ~ ~ ~ ~ o d rJ'J ro ~ rJ'J ~ rJ'J o ~ ~ :::s ~ ~ d ~ S ~ b/j ro d ro S ~ .~ '"d :::s ro ~ :::s o r./'J ~ u ro ,....... ro OJ) ~ ,....... ,....... .~ ~ ,....... ..0 .~ r./'J r./'J o ~ ~ o r./'J ~ U ro ,....... ro OJ) ~ ,....... ,....... .~ ~ ~ ro ~ .~ "'d ;::::$ ro ~ ~ ~ s ~ ~ ~ r./'J ,....... ro .~ u ~ ro ~ to ~ ;::::$ o OJ) ~ .~ ~ ;::::$ "'d ~ .~ ~ ~ ~ "'d .~ ~ o ~ "'d .~ "'d ~ ~ ~ ~ .~ . "-ill ;;.. .~ ~ ~ ..... ::: ~ ;:: ~ ;:: ~ ~ ~ ::: ~ ,...""". ~ ~ ~ ,...""". =::: >-. ~ ro ~ .~ "'d ;::::$ ro ~ ~ ~ s ~ ~ ro ~ r./'J ,....... ro .~ u ~ ro ~ to ~ ;::::$ o OJ) ~ .~ ~ ;::::$ "'d ~ .~ ~ ~ ~ "'d .~ ~ o ~ "'d .~ "'d ~ ~ ~ ~ ~ s ~ OJ) ro ~ ro S ~ o ~ ~ .~ ~ OJ) ~ ~ ~ .~ "'d ~ ro ~ ~ r./'J ~ ~ o ...c:: ~ ...c:: ~ OJ) ~ .~ "'d @ OJ) ~ ~ r./'J ~ o .~ ~ r./'J ~ ;::::$ cr ~ r./'J o ~ ~ ...c:: ~ r./'J ~ ~ ~ ~ ro S ~ ~ ~ s ~ OJ) ro ~ ro S OJ) ~ .~ > ,....... o > ~ .~ "'d ;::::$ ro ~ "'d ~ ~ u ~ ~ r./'J ;::::$ r./'J ~ o "'d ;::::$ ro ~ ,....... o J:j ~ o u ,....... ro ~ ~ ~ ~ ~ .~ ~ .~ r./'J ~ ,....... o ~ ~ ~ ro u to .~ ~ OJ) .~ r./'J ~ > ro ...c:: o ...c:: ~ r./'J ~ ~ ~ o ]- ~ OJ) ~ .~ > ,....... o > ~ .~ "'d ;::::$ ro ~ "'d ~ ~ u ~ ,....... ~ .;S r./'J U ;::::$ ~ r./'J ro ~ ~ o to "'d ~ ;::::$ ~ ro > ~ 0 OJ) ~ .~ ~ ~ o ~ ~ ~ ~ o r./'J ~ ~ r./'J ~ ~ ~ ro ...c:: ~ ~ r./'J ~ ~ ~ o ]- ~ r./'J ~ ~ ~ ~ ...c:: ~ '0 S ~ E o ro ~ ~ r./'J ~ ,....... ~ ro S .~ ~ u OJ) ~ ro ~ ~ to S ] ~~ ..0 ~ "'d 0 ~ ~ r./'J ~ ;::::$ ~ ro S u ~ ~ ~ ~ ,S ...c:: r./'J ~ r./'J ] .s ~ ,....... '-' ro .~ > .~ ~ ~ I ~ o ~ ro ~ .~ ~ ,....... ;::::$ r./'J ~ ~ ~ ro S "'d ;::::$ ro ~ "'d ~ ~ u ~ ~ r./'J ;::::$ r./'J ~ o "'d ;::::$ ro ~ "'d ~ ~ ro ~ r./'J r./'J .s ~ ,....... ,....... ro .~ ~ ~ ~ ro S ~ ..0 o ~ r./'J ~ ~ ~ S ~ ~ ~ r./'J ,....... ro .~ u ~ ro ~ to ~ ~ ;::::$ ~ ~ r./'J ;::::$ ro u ~ ro S ~ ...c:: ~ r./'J ~ ~ ~ ~ ro S ~ ...c:: ~ o ~ r./'J ;::::$ ~ ..0 "'d ~ "'d .~ > o ~ ~ r./'J ~ u . ~ ...c:: e: u ~ ;::::$ r./'J r./'J ~ ~ "'d ~ ,....... ,....... .~ ..0 ,....... ro ~ o .~ r./'J r./'J ~ o ~ r./'J ~ ~ ~ ~ o ~ o ~ ~ ;::::$ ~ S "'d ro ~ ~ u ...c:: ~ ~ . ~ ...c:: ~ .~ ~ r./'J .~ ,....... ro ~ >< .~ "'d ~ ~ ~ ~ <e ~ .~ ~ ~ ~ ~ ~ ,....... ~ u ~ ~ "'d ~ ~ ~ ~ "'d ~ .~ ~ o ~ ~ .~ ;::::$ ~ o ~ ~ ~ ::: ~ ::: ~ ~ ~ ::: . "-ill ..... t: -S ~ ;:: ~ ~ ;::::$ o ~ o a ~ ..0 o ~ ~ r./'J ...c:: ~ OJ) u ;::::$ .~ 0 > ...c:: ~ ~ ~ r./'J ~ ~ ...c:: ~ o ~ ~ ro "'d ~ ro ~ ~ ...c:: ~ ~ OJ) o ~ r./'J ~ .~ ~ .~ ~ ~ ~ "'d ~ ~ ,....... ~ ~ r./'J ~ .~ ~ ..0 ~ ~ ~ o r./'J ro ~ ~ ~ ro S ~ ~ ~ s OJ) "'d ;::::$ .~ ,....... ro ~ o .~ r./'J r./'J ~ o ~ ~ ~ ;::::$ o ~ .~ ~ ro ...c:: ~ r./'J ~ .~ ...c:: r./'J ~ o .~ ~ ro ,....... ~ ~ "'d ~ to .~ ~ ~ ~ "'d .~ ~ u ~ ~ "'d ~ ~ ~ ~ "'d ~ .~ ~ u ~ ~ ~ ~ ...c:: "'d ~ ~ o ~ "'d ~ ~ ~ to "'d .~ ~ ~ .~ ~ ~ "'d .~ ~ ;::::$ o ~ ~ o 0 ~ r./'J @ ~ ~ u ..0 .~ 0 e: ~ ~ ~ r./'J ...c:: OJ) ;::::$ o ...c:: ~ ~ ..0 ~ ,....... ..0 ro ~ o r./'J ro ~ ~ ~ ro r./'J S :E ~ ~ o ~ ~ "'d ~ ...c:: ~ ,....... ro ~ o .~ r./'J r./'J ~ o ~ ~ ,....... ro ~ o .~ ~ .~ "'d "'d ro o ~ "'d ~ "'d .~ > o ~ ~ ~ ~ ~ ~ ~ ,....... ~ ro ~ ...c:: u ~ ~ r./'J .~ ~ r./'J . ~ ...c:: r./'J ~ o .~ ~ ,....... ~ ~ ~ > ro ...c:: ~ ~ 0) ~ ~ ~ "'d ~ ~ ~ ~ "'d ~ .~ ~ .~ ro S ~ ~ ~ ~ ~ ~ ~ ~ ~ ,....... ~ ro ...c:: ~ ~ ,....... OJ) ~ .~ "'d ~ o u u <e '"d ro ..c= H ;:j o ~ ;:j o ~ H a u o ~ H H ;:j ~ o ~ o 0 ~ d .~ '"d ~ '"d ~ ~ d ~ ~ ~ OJ) '"d ~ ~ o fj '""Ci d ro ~ ~ u ~ ..c= ~ ~ &J o ..c= ~ rJJ. ~ d ~ S ;:j u o '"d H ~ ..c= ~ o '"d d ro rJJ. ~ ~ ~ o ]- ~ '"d d ro ~ d ~ S ~ OJ) ro d ro ~ ~ o d o .~ ~ ro H ~ ~ o o u rJJ. '"d H o U ~ H OJ) d .~ ~ d ;:j o u u ro ~ -- ~ :e ~ ..c= ~ '"d ~ > .~ ~ u ~ H ~ ~ o ~ rJJ. rJJ. ~ U U ro ~ ~ ~ ~~ o ;:j u ro ...... == ~ E ~ ~ ~ == ~ '5 .~ ~ == . ..... "."""". ~ ~ ~ '"d d ro OJ) d .~ ~ d ;:j o u u ro ~ d .~ ~ .~ '"d ;:j ro -- -- ro '"d ~ > -- o rJJ. ~ H ~ > ro ..c= ~ ~ '"d d ro ......r d ~ S ~ ~ d d 0 ro ...0 ~ ~ ..c= rJJ. ~ .~ .~ &J rJJ. H ;:j o o ~ rJJ. ~ ;:j rJJ. rJJ. .~ rJJ. ~ d ~ S ~ ~ H OJ) ro rJJ. .~ '"d o d '"d ro ..c= ~ ~ H o OJ) d .~ ~ d ;:j o u u ro OJ) d .~ '"d H ro OJ) ~ H rJJ. ~ d ro ~ d ;:j o u u ro H ~ ..c= ~ o ..c= ~ .~ d o .~ ~ ro ~ d ~ rJJ. ~ H ~ ~ d ~ S ~ OJ) ro d ro ~ ~ ..0 rJJ. d o .~ ~ ro ~ -- ;:j rJJ. d o u ~ d ro ~ o ~ a ~ ro rJJ. H ~ ~ ~ ~ ro o S d OJ) ~ d a :B ~ '"d ~ ~ :.... ~ '5 ~ '5 .~ ~ ~ .-t: == .s .s ~ == ~ ~ ~ ~ == ~ a~ o H ;:j o ..c= ~ .~ d o .~ ~ u ~ d d o u d .~ rJJ. ~ ;:j rJJ. rJJ. .~ H o .~ S ~ d ro ~ ;:j o ~ ~ d ~ S ~ OJ) ro d ro ~ ..c= ~ .~ d o .~ rJJ. rJJ. ;:j U rJJ. . ~ rJJ. '"d H d .8 .~ .~ ~ '"d OJ) ;:j ro ro OJ) rJJ. d ro ~ ~ ~ d o ~ d S ~ .s '"d 0 ~ ~ ~ ~ :.... ~ ~ '5 ~ .~ ~ ~ ~ ~~ ~ . ..... ~ ...... ...... ~ ~ ~ :.e '5 E ...... ~ ~ == == ~ ~ . ..... ~ E ~ .~ ~ ~ :.... ~ ~ ~ ~ .~ .~ .... ~ ~ ~ ~ ,..... . ,..... - KPMG LLP Chartered Accountants 115 King Street South 2nd Floor Waterloo ON N2J 5A3 Telephone (519) 747-8800 Fax (519) 747-8830 Internet www.kpmg.ca The City of Kitchener City Hall 200 King Street West, 3rd Floor PO Box 1118 KITCHENER ON N2G 4G7 May 31, 2007 Dear Audit Committee We have been engaged to audit the consolidated financial statements of the City ofKitchener and its related boards and enterprises ("the City") as at December 31, 2006 and for the year then ended. Professional standards require that we communicate at least annually with you regarding all relationships between the City (and its related entitiesl) and us that, in our professional judgment, may reasonably be thought to bear on our independence. In determining which relationships to report, these standards require us to consider relevant rules and related interpretations prescribed by the Institute of Chartered Accountants of Ontario and applicable legislation, covering such matters as: a) provision of services in addition to the audit engagement b) other relationships such as: · ho lding a financial interest, either directly or indirectly, in a client · holding a position, either directly or indirectly, that gives the right or responsibility to exert significant influence over the financial or accounting policies of a client · personal or business relationships of immediate family, close relatives, partners or retired partners, either directly or indirectly, with a client · economic dependence on a client. 1 As defined "in the independence rules, a related entity includes: a) an affiliate (defined as an entity that has control over a client, or over which the client has control, or which is under common control with a client, including the client's parent company and any subsidiaries); b) an entity over which a client has significant influence, unless the entity is not material to the client; and c) an entity that has significant influence over a client, unless the client is not material to the entity. KPMG LLp, is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Page 2 The City of Kitchener May 31, 2007 We have prepared the following comments to facilitate our discussion with you regarding independence matters arising since the date of our last letter. PROVISION OF SERVICES The following summarizes the professional services rendered by KPMG to the City (and related entities) for the year ended December 31, 2006. Audit Audit of the consolidated financial statements of $65,088 the City of Kitchener and related enterprises Audit of the Trust Funds of the City of Kitchener $ 2,562 Audit of the Centre In the Square Inc. $13,288 Audit of the Kitchener Public Library $ 8,713 Audit of the Kitchener Downtown Business $ 2,562 Association Audit of the Belmont Business Improvement Area $ 1,025 Audit related Compliance audit on the federal gas tax funding $ 4,050 agreement for the years ended December 31, 2005 and 2006 Tax Payroll tax recovery services $ 6,608 Analysis of tax benefits for donations or exchanges $ 9,000 of land and building OTHER RELATIONSHIPS Weare not aware of any relationships between the City (and related entities) and us that, in our professional judgment, may reasonably be thought to bear on our independence that have occurred from January 1,2006 to May 31, 2007. Page 3 The City of Kitchener May 31, 2007 CONFIRMATION OF INDEPENDENCE Professional standards require that we confirm our independence to you in the context of the rules of Professional Conduct/Code of Ethics of the Institute of Chartered Accountants of Ontario. Accordingly, we hereby confirm that we are independent with respect to the City (and related entities) within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario as of May 31, 2007. OTHER MATTERS This letter is confidential and intended solely for your use, that of Council, Management, and others within the City with respect to carrying out and discharging responsibilities to review and approve the consolidated financial statements of the City for the year ended December 31, 2006 and should not be used for any other purposes. No responsibility for loss or damages (if any) to any third party is accepted as this report has not been prepared for, and is not intended for, any other purpose. Yours very truly, Kf?I1GilP Thomas E. Mennill Partner (519) 747-8221