M I N U T E S ASC-2004-1
The Audit Subcommittee met on February 12, 2004, at 8:40 a.m. in the 5th floor Council Chambers, Regional Administrative Headquarters, 10 Peel Centre Dr., Brampton.
|Members Present:||G. Miles, R. Paterak, N. Stewart|
|Members Absent:||E. Kolb, due to other municipal business|
R. Maloney, Chief Administrative Officer; D. Labrecque, Treasurer and Commissioner of Finance; L. Hawes, Director, Internal Audit; I. Murray, Engagement Partner, KPMG; K. Travers, Audit Senior Manager, KPMG; J. Payne, Legislative Co-ordinator
1. ELECTION OF CHAIR AND VICE CHAIR
a) Election of the Audit Subcommittee Chair
That Councillor G. Miles be appointed as Chair of the Audit Subcommittee for a term ending June 30, 2005.
b) Election of the Audit Subcommittee Vice Chair
That Councillor N. Stewart be appointed as Vice Chair of the Audit Subcommittee for a term ending June 30, 2005.
Councillor G. Miles assumed the Chair.
2. DECLARATIONS OF CONFLICTS OF INTEREST
3. APPROVAL OF AGENDA
That the agenda for the February 12, 2004 Audit Subcommittee meeting be approved.
a) Fiscal Responsibility and Accountability of the Region, and the Role of the Internal and External Auditors
Presentation by Roger Maloney, Chief Administrative Officer, Dan Labrecque, Treasurer and Commissioner of Finance, Larry Hawes, Director, Internal Audit and Ian Murray, Engagement Partner, KPMG
Roger Maloney, Chief Administrative Officer, stated that the Audit Subcommittee (ASC) ensures the Region remains fiscally responsible and accountable. He detailed the key Regional principles of operation under the following headings: Sustainability; Accountability; Excellence; and the Regional Values.
Roger Maloney identified the key operational controls in place at the Region of Peel as being the Chief Administrative Officers (CAO) By-law, the Purchasing By-law and the Financial Control By-law.
Dan Labrecque, Treasurer and Commissioner of Finance, reviewed the financial management process and the role the Finance department plays in ensuring all policies and practices are implemented throughout the organization and its various agencies.
Dan Labrecque indicated that the Finance department, on an ongoing basis, monitors fiscal compliance and evaluates the effectiveness of the various policies and procedures. Further, he noted that the Finance department has a regular practice of reporting to the Executive Management Team (EMT) and he intended to bring more of this high level reporting to the Audit Subcommittee. Finally, Dan Labrecque noted that the Finance department works to ensure the policies, practices and financial control by-laws of the Region of Peel are reviewed on a regular basis.
Ian Murray, Engagement Partner, KPMG, identified that the primary role of the External Auditor was to report on the audited financial statement of the Region of Peel annually. He also indicated that KPMG reports on Long Term Care and Health programs as required by the Ministry of Health. Ian Murray added that KPMG further reports to the Region of Peel on the Financial Statements of the Housing Corporation.
Ian Murray outlined the purpose of the Audit Plan that is brought before the ASC annually. He explained that the Audit Plan details what the External Auditors will be doing for the upcoming year. Ian Murray noted that the plan is a Risked Based Work Plan that identifies the risk of misstatement in the Region's financial statement.
Ian Murray stated that the External Auditors work with Internal Audit in an
effort to ensure common audit practices and to share information about audit
findings throughout the organization. Further, he detailed the purpose of the
Annual Management Letter that addresses internal control matters, if identified
through the audit process, to the ASC and EMT.
Ian Murray highlighted the Accounting Policy Report that examines the quality of the Region's accounting policies. He explained that the report ensures that the ASC is aware of significant judgments made by management such as the selection and application of accounting policies, significant disagreements between management and the Auditors and any fraudulent activities.
Larry Hawes, Director, Internal Audit, reviewed the role of Internal Audit. He stated that Internal Audit should assess all Regional operations against criteria such as public sensitivity, financial significance, management environment and other factors to recommend to the CAO the most important places to be audited.
Larry Hawes explained that the Audit Work Plan is developed to look at how well management is caring for resources and following rules and policies of the organization.
Roger Maloney concluded that the Region of Peel has an excellent audit process and the Audit Subcommittee Members can raise issues or concerns for Larry Hawes to review in any aspect of Regional business.
Roger Maloney highlighted the audit process whereby the Internal Audit division reviews a program, a department or an agency, reports on the audit findings to the ASC and makes recommendations in its report to the department or agency. A follow up review is conducted by Audit annually to ensure that recommendations have been addressed and implemented.
Roger Maloney summarized by saying that the goal of the audit processes is to ensure that the Region is fiscally responsible and accountable and that the ASC, Council and staff all have an important role to play in this process.
b) Audit Subcommittee Oversight Manual
Overview by Larry Hawes, Director, Internal Audit
Larry Hawes requested the approval of ASC to provide a presentation to Council in response to Regional Council Resolution 2003-101 which requests that a report be brought forward outlining the fiscal responsibility and accountability of the Region, and the role of the internal and external auditors and measures taken in self-monitoring.
Chair Miles stated this would be discussed after the presentation.
Larry Hawes proceeded with his overview.
Chair Miles confirmed that the manuals circulated to the Members of the ASC had not been circulated to Council. Chair Miles felt it was appropriate for each Councillor to receive a copy of the manual and the presentation suggesting that it be provided to Councillors when the ASC minutes are approved by Council.
Roger Maloney, Chief Administrative Officer noted Chair Miles' instruction
a) Internal Audit
i) Update Terms of Reference for Audit Subcommittee Operations
That the Audit Subcommittee Terms of Reference be approved as outlined in the report of the Chief Administrative Officer, dated January 21, 2004, titled "Update Terms of Reference for Audit Subcommittee Operations".
Roger Maloney, commented that the last update to the ASC Terms of Reference was in 1995. Roger Maloney stated that Internal Audit spoke with the cities of Brampton, Mississauga and Toronto and The Institute of Internal Auditors as well as KPMG in preparing this report. Roger Maloney proposed that future updates would be completed at the end of each term of the ASC.
ii) KPMG Audit Planning Report
Presentation by Ian Murray, Engagement Partner, KPMG
Ian Murray advised the Committee that Kevin Travers, Audit Senior Manager, KPMG, would be providing a presentation with respect to the Audit Planning Report. Ian Murray noted that this presentation would typically be delivered in the fall but because of the 2003 Municipal Election, the presentation was being dealt with at this meeting. He further explained that the report is designed to inform the ASC of the tasks being performed by KPMG and to give the Committee an opportunity to provide KPMG with feedback.
Councillor Paterak questioned the term "materiality".
Kevin Travers explained the term materiality in his presentation as being those qualitative and quantitative factors that are likely to change or influence the decisions of persons relying on the financial statement.
Councillor Paterak questioned the ability of the current ASC to review the Terms of Reference as the Members are new, suggesting that it would be a good practice for future ASC to review the Terms of Reference at the end of its mandate.
Roger Maloney agreed with Councillor Paterak's suggestion of having the outgoing ASC Members review the Terms of Reference and making recommendations to be tabled before the incoming ASC for approval.
Councillor Stewart requested a copy of the previous year's Audited Statements as a reference and a calendar of key events for the Audit Subcommittee.
Roger Maloney informed the Committee that Larry Hawes will be tabling a 3-year work plan at a future meeting that will include the information being requested.
7. SCHEDULE OF FUTURE MEETINGS
a) Internal Audits in Progress (Oral)
Remarks by Larry Hawes, Director, Internal Audit
Councillor Stewart questioned the fact that the Audited Statement is generally taken to Council in April yet the ASC is not scheduled to meet again until May. She questioned the requirement of the Committee to see the Audited Statement before it goes to Council.
Dan Labrecque advised that the formal annual report is not prepared until summer and that an executive summary is generally brought before Council as soon as it is available. He suggested that he could bring the executive summary to the ASC in May and then report back to Council in June.
Chair Miles confirmed that the Committee is flexible and would be willing to call an ASC meeting prior to the scheduled May meeting to review the Auditor's Report.
8. OTHER BUSINESS
The meeting adjourned at 9:20 a.m.