HomeMy WebLinkAboutTR-85-97 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
THE XUJB NXoE4sl=CASI
REPORT
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE File# '—
Date: Res. #G04-522—q7
September 22, 1997 By-Law#
Report#: File#:
Subject: TR-85-97
19 AU IT 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-85-97 be received, and
2. THAT the recommendations and actions identified in the body of Report TR-85-97 be
endorsed.
BACKGROUND AND COMMENT:
The 1996 audit Report and Management letter, received from Deloitte and Touche, contains some
recommendations to improve upon certain internal control areas within the Municipality. A copy of
the Audit Management letter is attached as Schedule "A". The Audit Management letter states the
following:
"We have noted continuing improvement in the records and accounts of the Municipality and
are pleased to see that many of the comments in our prior year's management letter have
been acted upon. We feel the attached suggestions will further enhance the accounting
procedures, internal controls, and operations of the Corporation. However, they should be
considered in context with the Municipality's overall system of internal controls and
accounting procedures which we consider, based on our review, to be good."
1.0 Taxes Receivable
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As indicated in the Management Letter, staff have continued to make concerted efforts in j
1997 to collect outstanding taxes receivable balances especially in the area of property tax
registrations under the Municipal Tax Sales Act. Based on the July 1997 Cash Activity
Report TR-87-97, the outstanding taxes as a percentage of the tax levy is 9.8% compared
to 14.1% at December 31, 1996.
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TR-85-97 Page 2
2.0 Year 2000 Planning
Currently the Municipality of Clarington's financial software is a primary focus for concern.
At the Special Council Meeting of August 18, 1997 Council approved Report TR-75-97
dealing with replacement of the tax component of the financials. The balance of the financial
software will be included for replacement in the 1998 Capital budget process.
A review of other systems will be undertaken early in 1998.
3.0 Prior Years Comments Still Applicable
3.1 Capital Fund Accounting Procedures
As noted above in order to comply with Year 2000,issues, it is anticipated that a complete
replacement of the financial software will take place in 1998. At this time it is more cost
effective to establish new capital fund accounting procedures in conjunction with the
capabilities of any proposed new financial software.
3.2 Development Charges Accounts Receivable System
This system will also be developed in conjunction with the new financial software as well as
the implementation of the Geographic Information system (GIS).
3.3 Information Services Department - System Policies and Procedures
Due to the Municipality's current major conversion to a Windows environment and move to
the Microsoft Office Suite of software products, it is not practical or efficient to document
policies and procedures until the conversion process in complete. This issue will be
addressed by the System's Manager in conjunction with the Year 2000 compliance review
in 1998.
CONCLUSION:
In summary, the audit recommendations made in the 1996 Audit Report and Management Letter
have been received as constructive comments and an effort has been made to implement the
recommendations that are feasible and cost effective at this time.
Respectively Submitted, Reviewed by,
fie A. Marano, H.BSc.,A.M.C.T. W.H. Stockwell,
Treasurer. Chief Administrative Officer
MAM/NT/pp
Attach:
Deloifte & SCHEDULE A
Touche
Deloitte a I ouc e
40 Chartered Accountants
Bank of Commerce Building Telephone:(905)579-8202
2 Simcoe Street South Facsimile: (905)579-3388
P.O. Box 800
Oshawa, ON L1H 7N1
May 27, 1997
Ms. Mary Novak
Chair-Finance Committee
Corporation of the Municipality of Clarington
Municipal Offices
40 Temperance Street
Bowmanville, ON L 1 C 3A6
Dear Ms. Novak:
We have completed our examination of the consolidated financial statements of the Corporation of the
Municipality of Clarington for the year ended December 31, 1996. Our examination included a review of
the system of internal controls, accounting procedures and other matters.
The attached comments should not be construed to represent the result of a detailed systems review but are
observations made during the normal course of our examination.
We have noted continuing improvement in the records and accounts of the Municipality and are pleased to
see that many of the comments in our prior year's management letter have been acted upon. We feel the
attached suggestions will further enhance the accounting procedures, internal controls, and operations of the
Corporation. However, they should be considered in context with the Municipality's overall system of
internal controls and accounting procedures which we consider, based on our review, to be good.
We would be pleased to discuss any of these comments and suggestions further with you. If we can be of
assistance in the implementation of any of these recommendations, please do not hesitate to contact us.
We would like to take this opportunity to thank the staff of the Municipality of Clarington for their excellent
assistance and co-operation during our audit.
Yours very truly,
(Signed) DELOITTE &TOUCHE
cc: Mavor Diane Hamre and Members of Council
Mr. W. Stockwell, Chief Administrative Officer
Mrs. M. Marano, Treasurer
Ministry of Municipal Affairs and Housing
Deloittebuche
Tohmatsu
International
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
Comments and Suggestions on Internal Controls and Accounting Procedures
For the Year Ended December 31, 1996
Taxes Receivable
During the year ended December 31, 1996, taxes receivable balances increased as follows:
1996 1995 %of Increase
Current year's levies $4,234,283 $ 4,059,724 4.3%
Previous year's levies 1,772,151 1,755,974 0.9%
Prior year's levies 1,534,960 1,458,300 5.3%
Penalty and interest 861,846 802.193 7.4%
Total $8,403,240 $ 8,076,191 4.1%
Outstanding taxes as a percentage of tax lees 14.1% 13.9%
We understand the Municipality has made a concerted effort during the year to collect old outstanding
taxes receivable balances and have had an average of approximately fifty properties listed for tax sale at
any one time during the last year.
We commend you on vour efforts, and encourage you to continue to strive to reduce outstanding taxes
receivable further during the expected strong economy in the next few years.
Year 2000 Planning
Observation
We understand that the Municipality is currently in the process of reviewing financial computer
software in order to formulate a plan to ensure all applications are Year 2000 compliant. It is our
understanding that there is no formal high level inventory (i.e. listing)of all application systems and
programs from which to plan a Year 2000 assessment review. Such an inventory should include all
potential systems and hardware(administrative and operational) which may be affected by the "Year
2000 compliance' issue.
Recommendation
Though the Municipality has already started the process of evaluating software for"Year 2000
compliance", we suggest a comprehensive inventory of all systems be completed to help ensure no
potential Year 2000 issues are overlooked(i.e. building operations, phone systems, security systems,
etc.). This issue should be addressed as soon as possible, as we believe it may become more difficult to
obtain the required expertise to complete this conversion as the Year 2000 is approached.
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
Comments and Suggestions on Internal Controls and Accounting Procedures
For the Year Ended December 31, 1996
PRIOR YEAR'S COMMENTS STILL APPLICABLE
CAPITAL FUND ACCOUNTING PROCEDURES
At the present time the Municipality accounts for capital expenditures through the Revenue Fund. A
separate ledger to record the financing and expenditures for the capital projects would be more efficient.
Due to the increasing number and complexity of capital projects undertaken by the Municipality, we
suggest that the Municipality consider establishing a.fnrmal Capital Fund Ledger to.fiirther improve
your financial information system.
Such a ledger would allow for easier monitoring of capital projects, eliminate the need to transfer
unexpended capital financing to reserves1reserve.funds at the end of each year, and provide for more
in f)rmative reporting of unencumbered reserves and reserve fund balances.
DEVELOPMENT CHARGES/LOT LEVIES ACCOUNTS RECEIVABLE SYSTEM
The Municipality has recently started the process of developing a formal accounts receivable system to
better monitor and control the collection of development charges/lot levies. We understand the
development of this accounting system has been delayed in order to incorporate a wider range of
departments and other sources of revenue.
We commend you on the progress made to date on the preliminary development of the new
development charges,11ot levies receivable system and encourage you to complete this project as soon
as passible.
INFORMATION SERVICES DEPARTMENT
System Policies And Procedures
During our review of the current information system we noted certain documented policies and
procedures are out of date and in places refer to software no longer in use. As remote sites continue to
be introduced on the LAN. control over computer operations becomes increasingly difficult. Strong
system policies and procedures with regards to system operations, security and maintenance will
contribute to the consistency and reliability of the information produced by the systems.
We suggest one member of the information systems team he assigned the responsibility of reviewing,
updating and monitoring compliance with current documented policies and procedures.
We understand the above information services department items will be addressed as soon as possible
after the new Svstems Manager position has been filled.
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