HomeMy WebLinkAbout2009-06-29
AUDIT COMMITTEE MINUTES
JUNE 29, 2009
CITY OF KITCHENER
The Audit Committee met this date commencing at 3:51 p.m.
Present:
Mayor C. Zehr - Chair
Councillors J. Smola, J. Gazzola, K. Galloway, G. Lorentz, B. Vrbanovic and C.
Weylie
Staff :
C. Ladd, Chief Administrative Officer
D. Chapman, General Manager, Financial Services
T. Speck, General Manager, Corporate Services
J. Will mer, Acting General Manager, Dev & Tech Services
R. Upfold, Director of Accounting
R. LeBrun, Manager, Financial Planning
R. Goetz, Senior Financial Analyst
L. Alonzo, Performance Measurement & Internal Auditor
C. Goodeve, Committee Administrator
1. FIN-09-079 - 2008 ANNUAL REPORT
The Committee considered Financial Services Department report FIN-09-079, dated June 25,
2009 regarding the 2008 Annual Financial Report.
Mr. R. LeBrun gave a presentation highlighting various aspects of the Financial Report. He
stated that as reported throughout 2008, weather had a large impact on the operating results
of the tax-based and enterprise budgets. In addition, by the fourth quarter the economic
downturn began to negatively impact several operating units; such as, building permit and
planning revenues, program registrations and investment income. He reviewed the
Consolidated Revenue and Current and Capital Expenditures noting the healthy dividend from
hydro and gas utilities. He commented that unlike operating fund expenditures which remain
relatively constant, capital expenditures usually see a much larger swing in the portfolio mix
depending on the activity. He pointed out that two of the largest changes this year were as a
result of a $10M Gasworks expenditure for the Gaukel Street site remediation as well as over
$13M increase in General Government due to the purchase of the Consolidated Maintenance
Facility (CMF) site and the Delta project.
Mr. LeBrun then reviewed the balance sheet items, reserve and discretionary reserve funds,
debt level and tax arrears. He pointed out that some of the larger variances are in
cash/investments which have been reduced by approximately $10M, due to expenditures
incurred in the capital program. He added that A/P & Accrued liabilities are approximately
$26M higher than last year, primarily due to the $16M of grant funding being classified as
deferred revenue. Concerning reserves and reserve funds, he cautioned that balances are
declining and the City is below the median benchmark. Accordingly, the City must ensure that
it continues to maintain adequate funding and minimum balances for reserves, as they are a
key component of the City's long-term financial sustainability.
At the request of Councillor G. Lorentz, Mr. LeBrun agreed to circulate to the Committee
additional information related to the Rockway Golf course deficit.
Mr. LeBrun then briefly reviewed the two new Provincial reporting standards, PS2700 and
PS3150, effective as of 2008 and 2009 fiscal years respectively. Mayor C. Zehr questioned
the impact of PS3150, which requires the City to record assets at cost less accumulated
depreciation, as contrasted to the current practice of expensing all purchases when made. Mr.
LeBrun advised that this standard will result in a fundamental shift in how the City accounts for
and reports its assets. He stated that its implementation will improve staff and Council's ability
to prioritize spending and establish adequate funding plans to ensure sustainability. Further,
the standard will support the evolution of the City's asset management and planning functions;
as it will result in a consolidated inventory of the entire asset base as well as an identification
of the costs of using an asset in the provision of services.
Messrs. Matthew Betik and Tom Mennill, KPMG, attended to present the Audit Findings Report
for the year ending December 31, 2008. Mr. Betik provided an overview of the auditing
process and highlighted the following significant matters: $9.8M grant received through the
Investing in Ontario Act program; conversion of the City's legacy accounting information
system (FAMIS) to SAP; two issues connected with the accounting of inventory of the
AUDIT COMMITTEE MINUTES
JUNE 29, 2009
- 6-
CITY OF KITCHENER
1. FIN-09-079 - 2008 ANNUAL REPORT - (CONT'D)
Gasworks Enterprise; and, federal gas tax revenue. Mr. Mennill reviewed the changes in
accounting policies stemming from PS3150 and PS2700 and requested the Committee to
endorse the Audit Findings Report.
On motion by Councillor K. Galloway -
it was resolved:
"That the 2008 Annual Financial Report of the City of Kitchener be received."
2. REPORT FIN-09-065 - REQUEST FOR PROPOSALS - EXTERNAL AUDITORS
The Committee considered Financial Services Department report FIN-09-065, dated June 17,
2009 regarding the process for appointing a new external auditor of the next five year term.
Ms. R. Upfold reviewed the report.
On motion by Councillor B. Vrbanovic -
it was resolved:
"That staff be directed to report to the August 10, 2009 Finance and Corporate
Services Committee meeting with a recommendation for the appointment of the
Auditor for fiscal years 2009 through 2014."
3. INTERNAL AUDITOR'S WORKPLAN UPDATES
Ms. L. Alonzo provided a brief overview of the performance measurements activities and
internal audit activities that have taken place since March 2009. In addition, she reviewed the
initiatives planned for the remainder of 2009; such as, risk assessments for the King Street
Reconstruction project and the Consolidated Maintenance Facility (CMF).
4. ADJOURNMENT
On motion, this meeting adjourned at 4:30 p.m.
C. Goodeve
Committee Administrator