HomeMy WebLinkAboutTR-97-97 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
REPORT DN:TR-97-97
GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
Meeting: File # D,3° Lf C
October 20, 1997 , ,
Date: Res. #�-,�'�- � �<�--�i�1
Report #: TR-97-97 File #: By-law #
Subject: 1998 AUDIT SERVICES
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report TR-97-97 be received for information;
2. THAT Deloitte and Touche be appointed auditors for the 1998 fiscal year end;
3. THAT a copy of this report be forwarded to David Clark, General Manager,
Clarington Hydro-Electric Commission and Bernie Chandler, Deloitte & Touche.
BACKGROUND AND COMMENTS:
1.0 On September 15, 1997, Council passed the following resolution #C-600-97:
THAT the correspondence dated August 6, 1997 from David Clark, General Manager,
Secretary, Clarington Hydro-Electric Commission requesting the municipality to tender
audit services for the year ending 1998 be received;
THAT the correspondence be forwarded to the Treasurer for review and preparation of a
report to be submitted to the General Purpose and Administration Committee; and
THAT David Clark be advised of Council's decision.
1.1 The correspondence from David Clark is shown in Attachment A.
1.2 Deloitte & Touche were appointed the auditor's for the 1997 fiscal year end for the
Municipality of Clarington through report TR-39-97 (Attachment B).
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REPORT TR-97-97 PAGE 2
1.3 Staff have reviewed the correspondence from Mr. Clark and appreciate the comments
included therein. However, the scope of the audit work provided by Deloitte & Touche
and therefore the reliance upon their familiarity with the Municipality's operations, is
much more significant in the Municipality's circumstances due to the comparative size of
the Municipality's operations in relationship to that of the Hydro-Commission.
1.4 Of much more significant note at this point is the scope of changes as a result of
downloading and legislation passed by the Province due to come in effect in 1998. As a
result of the many comprehensive changes and possible studies and advice that may be
required, it is even more crucial during this time frame to require auditor's that are very
familiar with the Municipality's operations. If there are studies to be commissioned in
order to substantiate the Municipality's position on membership in the GTSB, it would be
to the Municipality's advantage financial and otherwise to have auditors who are familiar
with the Region and the Municipality to conduct the studies.
1.5 Also, as Council is aware from the auditor's 1996 year end management letter, the
Municipality must undertake a review to replace the financial information software in
1998 in order to ensure compliance with Year 2000 issues. This again will require
expert assistance and advice from the Municipality's auditors.
CONCLUSION:
2.0 Due to the factors identified above, especially significant changes being imposed upon the
Municipality by the Province, Staff do not recommend a change in auditors at this time.
The Municipality will require knowledgeable, experienced advice during this time frame
to implement downloading and legislative changes as cost effective as possible.
2.1 The option to consider tender will continue to be monitored by Staff in future years in
conjunction with the annual reporting of financial statements to Council
Respect ly submitted, Reviewed by,
ne A. Marano, H.BSc., A.M.C.T., W.H. Stockwell,
Treasurer. Chief Administrative Officer.
MAM/NT/km
Attachment A - Letter from Clarington Hydro - Re: 1996 Audit Report and Management Letter
Attachment B - 1996 Audit Report and Management Letter
ATTACHMENT A
COUNCIL DIRECTION D- 13
iarington Clarington Hydro-Electric Commission
q Box 130,2849 Hwy.b2 at Lambs Rd,
George Van Dyk,Chair Bowmanville,Ontario
97 9
� Pauline J. Storks,Vice-Chair David Clark,CMA-Manager
Suzanne Elston,Commissioner Telephone(905)623-4625
Paul Reesor,Commissioner Fax(905)623-5915
Diane Hamre,Mayor
August 6, 1997
AUG 2 8 1997 1 WST IBLITION
Ms. Patti Barrie, Clerk ;�—,Cin1Ai. file
MUNICIPALITY OF CLARINGTON
Municipality of Clarington FINANCE
40 Temperance Street 2 1 Deputy
Bowmanville, Ontario 2 Accountant
3)Pur.Mgr.
Ll C 3A6 _. __ _ 4)Payroll Cik
5j lax Coll.
Dear Ms. Barrie: 6)
Re: 1996 Audit Report and Management Letter
The Council report and resolution on the above subject was presented to the Commission
at the meeting on July 18, 1997. The report was reviewed and justification considered;
but the Commission is still of the opinion that the audit services should be tendered. This
is not a result of being dissatisfied with the current audit services. To the contrary, we are
very pleased with the current auditor. However, we do feel that there are other qualified
accountants that can provide equal service who should be given the opportunity to bid.
Being a public organization, the Commission feels it has an obligation to allow vendors
to competitively bid for goods and services required by the Commission. The rationale
for the policy is as follows:
1) Open bidding from qualified bidders obtains the best value for the
Commission. Quite often, tendering services results in the incumbent
receiving the work, but at a reduced price.
2) Open bidding ensures fair access to Commission business. The funds that the
Commission spend belong to our ratepayers. Some of those ratepayers are
qualified vendors that should have the opportunity to bid for the
Commission's work.
The Municipal Treasurer's report was reviewed by the Commission. The Commission
feels that there is not adequate justification presented to bypass the public tender process
for audit services.
823
• 0 ATTACHMENT A
The Commission passed the following resolution:
THAT the Clarington Hydro-Electric Commission respectfully request the Municipality
of Clarington Council to tender audit services for the year ending 1998.
Yo truly
Davi Clark, CMA
Ge ral Manager, Secretary
/dc
DI ST ` ION
CLERK M____.�..�
ACK. BY
ORIGINAL
L' PIES TO:
t3L4
ATTACHMENT B
THE CORPORATION OF THE MUNICIPAI ATY OF CLARINGTON
REPORT
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
File#
Date: June 2, 1997 Res. #
By-Law#
Report#: TR. 39=97 File #:
Subject: 1996 AUDIT REPORT AND MANAGEMENT LETTER
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report TR-39-97 be received;
2. THAT the presentation by Deloitte and Touehe on the 1996 Financial Statements
be acknowledged with thanks;
3. THAT the Financial Statements for the year ended December 31, 1996 (under
separate cover) be adopted;
4. THAT recommendations contained in the management letter (under separate
cover) be reviewed by staff and addressed appropriately and report back on any
necessary changes;
5. THAT the firm of Deloitte and Touehe be appointed as the Municipality's Auditors
for the 1997 year end audit; and
6. THAT a copy of this report be forwarded.to Clarington Hydro-Electric Commission
for their information.
Backwround and Comment:
1.0 The 1996 year end has now been completed and a representative of Deloitte & Touche is
in attendance to present this Report. Any queries with respect to the Audit and the
Management Letter should be directed to his attention at this time.
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2.0 Staff are continuing in their efforts to increase and improve internal controls and the
auditor's comments reflect this. The areas identified as requiring fine tuning are areas
that previously were not able to be focused on from an audit perspective because other
areas lacked the level of expertise that now has been achieved.
m i n n 1
ATTACHMENT B
TR-39-97 page - 2 -
3.0 In 1996, Report TR-44-96 recommended that the firm of Deloitte & Touche be retained
for a five (5) year period. Council passed the applicable By-Law which also directed that
the appointment be reviewed on an annual basis. Staff are recommending that Deloitte
and Touche be appointed as the Municipality's Auditors for the 1997 year end audit.
3.1 The Municipality has requested the opinion of the Ministry of Municipal Affairs and
Housing, who has indicated that the cost of the audit services should not be the
determining factor in a decision to change auditors. The Ministry indicated that other
criteria, such as level of service available, reputation, timing of audit services, etc. should
be considered.
3.2 The knowledge and expertise of Deloitte & Touche with respect to the records and
operations of the Corporation adds to the efficiency of the audit. Maximization of any
available efficiencies will therefore be of benefit to the Municipality. Their extensive
knowledge of the Municipality's operations also allows a greater opportunity for Deloitte
and Touche to provide valuable advice and assistance in other areas.
3.3 In addition, Deloitte & Touche have agreed to keep their fees at the same rate as the
municipal mill rate in each of the years identified. This contribution is in recognition of
the Municipality's focus on the budgetary restrictions during the current economic
climate. They have not increased their fee since 1991.
3.4 On June 14, 1993, Council passed Resolution #C-431-93:
"THAT the correspondence dated May 21, 1993 from David Clark, Manager, Clarington
Hydro-Electric Commission requesting that the municipal audit services be tendered for
the period 1997 through 2001 be received;
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THAT the correspondence be referred to the Treasurer for appropriate action at the
termination of the current contract; and
THAT David Clark be advised of Councils's decision."
A copy of the correspondence is attached.
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3.5 Staff have discussed the issue with Mr. Clark, who feels that the tendering of audit
services may result in a more value added service due to the.new perspective being
applied. He also believes that there is potential that should the incumbent be successful
in being awarded the new tender the price may be reduced. Mr. Clark feels that over the
number of years that Deloitte and Touche have held the contract, his staff have gradually
taken over the preparation of a great deal of the audit working papers with no reduction
in the audit fee. However, he does acknowledge that Deloitte and Touche have effectively
reduced their normal fee by holding the rate stable since 1994, and that increased staff
time would be required to acquaint any new auditors to the records and files.
ATTACHMENT B
TR-39-97
Pa e - 3 -
3.6 Effective September 1, 1997, the Oshawa Office of Deloitte and Touche will be
consolidated with the North York Office in order to create specialty based central offices.
Staff have been assured that this change will have no adverse impact upon the
Municipality.
3.7 As indicated in Report TR-32-97, the auditors concur that the Municipality reflects a
secure financial position as indicated in the financial statements.
Respectfull mitted, Reviewed by,
M ' A. Marano, H.BSc.,A.M.C.T., W.H. Stoc well,
Treasurer. Chief Administrative Officer.
MA WNT/hjl
Attachment