M I N U T E S ASC-2006-2
The Audit Subcommittee met on April 27, 2006, at 8:45 a.m. in the Council Chamber, Regional Administrative Headquarters, 10 Peel Centre Dr., Brampton.
|Members Present:||E. Kolb, G. Miles, R. Paterak, N. Stewart|
|Members Absent:||N. Iannicca|
|Also Present:||D. Szwarc, Chief Administrative Officer; D. Labrecque, Treasurer and Commissioner of Finance; M. Zamojc, Commissioner of Public Works; B. Wilson, Director, Internal Audit; K. Travers, Associate Partner, KPMG LLP; S. Jurrius, Acting Legislative Co-ordinator, Legislative Services|
Chaired by Councillor N. Stewart
1. DECLARATIONS OF CONFLICTS OF INTEREST
2. APPROVAL OF AGENDA
That the agenda for the April 27, 2006 Audit Subcommittee meeting be approved.
a) Fred Chorley, Executive Director, Victim Services of Peel (VSOP), Presenting a Plaque to Dan Labrecque, Treasurer and Commissioner of Finance; Beate Wilson, Director; Joan Appleton, Manager; Frank Medeiros, Senior Auditor; and Michelle Morris, Senior Auditor, Internal Audit in Recognition of the Recent VSOP Audit Conducted by the Region of Peel Internal Audit Team
Fred Chorley, Executive Director, Victim Services of Peel (VSOP) recognized the professionalism of the Internal Audit team and stated that the Internal Audit report will serve as a guide to VSOP operations.
a) Peel Audited and Consolidated 2005 Financial Statements
b) KPMG 2005 Management Letter and Audit Findings Report
Kevin Travers, Associate Partner, KPMG, noted that this is the first time that the Region of Peel and Peel Housing Corporation audited financial statements, management letters and audit findings reports were submitted to the Audit Subcommittee at the same time. He commented that it is an indication that the importance of financial reporting has been recognized by both entities. Kevin Travers informed the subcommittee that the audit of the two corporations went smoothly and KPMG had full cooperation from Regional staff during the audit period.
Kevin Travers provided an overview of the Region of Peel Audited and Consolidated 2005 Financial Statements and the KPMG 2005 Management Letter and Audit Findings Report. He stated that the 2005 Audit Report was unqualified and had a completion date of March 17, 2006. No uncorrected audit differences were left as of the audit process. Two significant matters in the Region of Peel were noted by KPMG:
- Federal Gas Tax - was an area of focus by KPMG because the funds were scheduled to be received in 2005, these funds were allocated to area municipalities and KPMG is in agreement with the decision adopted by the Region.
- Solid Waste Landfill Closure and Post-Closure Liability - financial statements relates to an estimate made by management with respect to cost required to be incurred in relation to this issue.
Chair Kolb inquired about the breakdown of professional services rendered by KPMG to the Region for the year ended December 31, 2005 detailed in the Independence Letter of KPMG. He noted that there was more money spent on sinking fund, trust funds, Peel Housing Corporation, long-term care facilities and health program audit than on other Regional tax programs. Kevin Travers explained that figures reflect the combined fees of the Region, sinking and trust funds. Of the $89,825 KPMG fee, the majority of the amount was for Regional program reviews with a smaller component of the cost being for sinking and trust fund reviews. Kevin Travers further stated that the fees for the audit of long-term care facilities represent several audit reports and fixed fees were associated with the figure.
Further, Kevin Travers informed the subcommittee that there is a proposal to amend general accounting practices in the public sector to include exposure for tangible capital assets. The proposal will provide recommendations for local governments in reporting tangible capital assets in their financial statements. The draft requires the Region and other municipalities to implement the new standard for the year ending December 31, 2009. Implications for the Region of Peel will include: requirement of retroactive treatment upon adoption; information on cost of tangible capital assets as of December 31, 2007; and, original adoption will require significant estimation techniques for assets acquired/constructed in the past. Dan Labrecque, Treasurer and Commissioner of Finance, informed the members of the subcommittee that a report will be presented to Audit Subcommittee on June 29, 2006 regarding accounting for tangible capital assets and its impact to the Region and the steps management is undertaking in preparation for the proposed changes.
c) Peel Housing Corporation Audited 2005 Financial Statements
d) KPMG 2005 Management Letter and Audit Findings Report for Peel Housing Corporation
Kevin Travers provided a high-level summary of the Peel Housing Corporation (PHC) Audited 2005 Financial Statements and KPMG 2005 Management Letter and Audit Findings Report for Peel Housing Corporation, completed on February 24, 2006. He informed the subcommittee that the PHC financial statements present fairly, in all material respects, the financial position of the Corporation as at December 31, 2005.
6. SCHEDULE OF FUTURE MEETING
May 18, 2006
8:30 a.m. - 9:30 a.m.
Regional Administrative Headquarters
Council Chamber, 5th Floor
10 Peel Centre Dr.
7. OTHER BUSINESS
Additional Item - 7a
a) Audit Subcommittee Oversight Manual - Internal Audit Risk Based Work Plan 2006 - 2008 (Oral)
Regional Chair Kolb requested staff to provide additional information on how Internal Audit determines the factors used in the risk assessment matrix and whether a comparison to actual performance is carried out. Beate Wilson briefly outlined the difference between the "Risk Assessment Matrix" and the "Risk Management" function. The former is used to establish the Internal Audit Work plan by assessing a number of factors for each program within the Region. The level of risk may not be related to program performance; rather it may be inherent in the nature of the program itself. Beate Wilson provided a few examples of risk factors and how they are assessed. The Risk Management function assesses Region of Peel legal liability, mitigates exposure and manages claims.
Regional Chair Kolb requested that a report be brought forward to Audit Subcommittee identifying the insurance/legal liabilities for the Region and actual claims paid by the Region. Dan Labrecque advised that providing Audit Subcommittee with an annual update is something Finance staff are working towards and he undertook to provide the information at a future Audit Subcommittee meeting.
The meeting adjourned at 9:15 a.m.