HomeMy WebLinkAboutTR-48-86 TOWN OF NEWCASTLE
REPORT File #
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By-Law #
MEETING: General Purpose and Administration Committee
BATE: JUNE 16, 1986
REPORT #: TR-48-86 FILE #:
WB,ECT: 1985 "COMMENTS ON INTERNAL CONTROL AND
ACCOUNTING PROCEDURES"
RECOMMENDATIONS:
It is respectfully recommended that the General Purpose and Administra-
tive Committee recommend to Council the following:
1 . That report TR-48-86 be received for information.
BACKGROUND & COMMENT
Staff' s responses to the 1985 "Comments on Internal Control and Accounting
Procedures", received from the auditor are provided below for -the
information of Committee.
Financial Statement Preparation
Comment
As in the prior year, the consolidated financial statements of the Town
for the year ended December 31 , 1985 were prepared internally by Treasury
staff. These financial statements were well prepared with minimal
assistance from our staff. In addition, the quality and timeliness
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of reporting financial information continues to improve, and we feel this is
particularly noteworthy considering the turnover and reassignment of duties
which was experienced recently within the Treasury Department.
Response
As Department Head, I commend my staff on the excellent and harmonious
co-operation given by all with respect to meeting our objectives. Staff will
continue the refinement of the financial statement preparation procedures this
year and in the future.
Community & Recreational Boards
Comment
The Ministry of Tourism & Recreation along with the Ministry of Municipal
Affairs are contemplating changes to an administrative policy which would
require al bank accounts of the local boards to be under the direct control
of the municipality.
In Order to alleviate the problems and expenses which would result from this,
we suggest that the Corporation consider dissolving these organizations or
" local boards". Facilities which are owned by the Corporation could be rented
to the various organizations on an annual basis at a minimal charge.
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Response
Members of Committee have already received a verbal report on this
recommendation. In view of the fact, that it is a very sensitive issue, a
joint report from the Director of Community Services and Treasurer will be
presented outlining a number of options. It is anticipated that this report
will be available in late July.
Cash Management
Comment
We noted during our security count that two bonds having a total value of
$5,000, which matured during 1985, were still on hand at December 31 , 1985.
In addition, interest coupons for 1985, as well as some for 1984 had not been
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cashed.
Although the amount of lost revenue resulting from the above is not considered
significant, we suggest that all bonds and interest coupons be cashed on their
due dates and the funds, if not immediatley required, be reinvested.
Response
Because of staff turnover and reassignment of duties during 1985, staff were
remiss in handling the above. All securities are held in a safety deposit box
at the Imperial Bank of Commerce, Bowmanville and proper procedures have now
been established which will correct this area of concern.
Working Capital Reserve
Comment
By-law #81-111 states that the working capital reserve should be allowed to
float within limits of 5% to 10% of the current year's total tax billing. In
1985, as was the case in 1984, the lower limit was not met. Although the
deficiency is not material , we recommend this reserve be monitored to ensure
it meets the limits set out in the related by-law.
Response
The Working Capital Reserve presently stands at $799,000. The target set in
the by-law would set the minimum balance for the reserve at $879,000. As
indicated in the Auditors' comments, the deficiency is not material . The
Ministry of Municipal Affairs has suggested that the Treasurer and Council
periodically review the municipality's policy governing reserves.
A Working Capital Reserve is established primarily to meet the cash
requirements of the municipality prior to the collection of current revenue.
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Through the introduction of realistic installment dates and an interim tax
levy early in the year, which the Town has, the resulting cash flow
improvement may minimize the need for this reserve. This elimination or
reduction would then become a source of revenue in the year in which the
reduction takes place.
Staff do not recommend eliminating this reserve but would support a reduction
which would provide a source of revenue towards capital projects presently
planned.
General Matters
Comment
Subdivision Agreements
In prior years we recommended that an accounting system be established to
monitor timely collection and control over outstanding subdivision levies.
Although management is currently in the process of setting up such a system,
this recommendation has not been fully implemented.
We understand the Corporation is considering the installation of an in-house
electronic data processing system. We suggest that records monitoring the
control and timely collections of lot levies be incorporated within any new
system installed.
Response
With the approval of the purchase of an in-house computer system, the matter
of control over the financial requirements within the subdivision agreements
will be addressed.
Respectfully submitted,
J.R. Blanchard,
Treasurer.
JRB/pp