AGENDA - Special General Committee - 20080520xCl:.
INix
IL An
SPECIAL GENERAL
COMMITTEE -
AUDIT COMM11TEE
AGENDA
NO.08-23
TUESDAY, MAY 20, 2008
7:00 PM
COUNCIL CHAMBERS
AURORA TOWN HALL
PUBLIC RELEASE
16/05/08
AURORA
TOWN OF AURORA
SPECIAL GENERAL COMMITTEE MEETING
AUDIT COMMITTEE
AGENDA
NO. 08-23
Tuesday, May 20, 2008
7:00 p.m.
Council Chambers
Mayor Morris in the Chair
I DECLARATIONS OF PECUNIARY INTEREST
11 APPROVAL OF AGENDA
RECOMMENDED:
THAT the agenda as circulated by the Corporate Services Department be
approved.
1I/ DELEGATIONS
(a) Mr. John Gutteridge, Director of Financial Services/Treasurer
Re: 2007 Financial Statements
(b) Mr. Alister Byrne, Grant Thornton, Auditors
Re: 2007 Financial Statements
IV ITEM REQUIRING SEPARATE DISCUSSION
V ADJOURNMENT
Special General Committee Meeting No. 08-23 Page 2 of 2
Audit Committee
Tuesday, May 20, 2008
AGENDA ITEMS
1. FS08-026 —Year End Audited Financial Statements pg. 1
RECOMMENDED:
THAT the 2007 Audit Report and Financial Statements for the year 2007
be received and be published in accordance with Section 295 of the
Ontario Municipal Act.
SPECIAL GC - AUDIT - MAY 2% 2008 ITEM #1 - 1
TOWN OF AURORA
AUR RA GENERAL COMMITTEE REPORT No.FS08-026
SUBJECT: Year End Audited Financial Statements
FROM: L. John Gutteridge, Director of Finance / Treasurer
DATE: May 20, 2008
RECOMMENDATIONS
,THAT the 2007 Audit Report and Financial Statements for the year 2007 be
received and be published in accordance with Section 295 of the Ontario
Municipal Act.
BACKGROUND
Once again we have made improvement in our year end reporting for the 2007 Audited
Financial Statements. This presentation represents the entire audit for 2007 including the
management letter.
Attached hereto at Attachment #1 is the entire audit package as presented by our auditors
Grant Thornton. The first portion of the audit report outlines issues that related to the audit
and identifies that four entries have not been booked. These items were identified during
the audit process and discussed, it has been agreed not to book these entries as they do
not have a material impact on the statements as presented.
Appendix C on page 15 of the audit report contains the Management Letter, this is the
section of the report that the Auditor's bring forward areas of concern identified in the audit
engagement. The management letter identified 7 items in total and the report identifies the
Auditors observation and their recommendation followed by Management Status Update,
this allows Council to understand the issue and how management has dealt with or
propose to deal with these.
Our Auditors will be in attendance to present their report and findings.
The financial statements are present as Attachment.#2, these statements are the Town's
statements as audited by our Auditors, your Treasurer will do a review of the significant
changes.
We are very pleased to present this report on time and on budget with most of the
management items from 2006 being eliminated. We are very pleased to have achieved
these results and look forward to improving again next year. We would like to take this
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SPECIAL GC - AUDIT MAY 20, 2008
ITEM #1 - 2
May 20 2008 -2- Report No. FS08-026
opportunity to thank the Auditors and Financial Service Department Staff for their
dedication to make this happen.
COMMENTS
We did provide Council with a preliminary estimate on our2007 surplus with Financial
Services Report No. FS07- 049 now that the audit is complete we can report that our 2007
consolidated surplus is $362,217. Council should be aware that this report is a
consolidated report and includes consolidation of the General Operations of the town, the
Library Board, and the Water/Wastewater Sewer Operations. The following is a roll up of
how the surplus was derived:
2006 Operating Surplus/(Deficit) $ 519,000.
Library Board Surplus/(Deficit) $ 0.
Water/Wastewater Department Surplus/(deficit)$(156,783.)
Town of Aurora Surplus $ 362,217.
The Library Board did in actual fact have a surplus of $37,771. but it has been the practice
in the past to move any surplus. to the Library Capital Discretionary Reserve fund.
WaterM/astewater Department had a deficit and this was explained in Financial Services
Department Report FS08-017. By removing the. consolidation of the other funds and
incorporating the prior years surplus the General Operating fund operated.in a surplus
position for the year of $519,000.
A detailed breakdown of the operating surplus has been reported out in report No. FS08-
015,
OPTIONS
1. As stated in the recommendations of this report.
FINANCIAL IMPLICATIONS
Report No. FS08-015 and F808-017 have dealt with the disposition of surplus and deficit
issues per fund. The purpose of this report is to receive the report of the audit and publish
as prescribed. There will be a cost for the publication of the Financial Statements and
these funds have been included in the budget.
CONCLUSIONS
All in all we are very pleased with the current results and are looking forward to
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SPECIAL GC - AUDIT - MAY 2% 2008
ITEM #1 - 3
May 20, 2008 -3- Report No. FS08-026
continued improvement in the future.
LINK TO STRATEGIC PLAN
Goal D: Ensure transparent, accountable and open governance in concert with informed
and involved citizens
Objective Cl: Maintain, respect, preserve and enhance natural environment, natural
heritage and green spaces .
Objective 1)1: Continue the commitment of fiscal responsibility and accountability
Objective D3: Be accountable and transparent to residents by ensuring open and
accessible information flow and accessible decision -making
Objective D4: Create a respectful environment that fosters team work and open dialogue,
consistent with a Character Community. These Objectives acknowledge the responsibilities
required by governance that contribute to informed and involved citizens.
ATTACHMENTS
Attachment #1 - 2007 Audit Report
Attachment #2 - 2007 Audited Financial Statements
PRE -SUBMISSION REVIEW
Management Team Review — Wednesday, May 14, 2008
Prepared by. L. John Gutteridge, Director of Finance/Treasurer-Ext. #4111
L. John1Gutteridge Y �� ohn S. Rogers
Director of Finance/Treasurer Chief Administrative Officer
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SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 4
ATTACHMENT##
r=
t�GrantThornton
Report to the Audit Committee -
Communication of Audit Results
The Corporation of the Town of Aurora
For the year ended. December 31, 2007
-4.
SPECIAL GC - AUDIT - MAY 209 2008 ITEM #1 - 5
0 GrantThornton
May 2, 2008
Grant Thornton LLP
Suite 200
16Allstale Parkivay
Markham, ON
UR 694
T (416) 3%0100
F(W)4756006
w .GianlTh6mlon.ca
To the members of the audit conunittee of The Corporation of the Town of Aurora
We ate pleased to report that we have now substantially completed our audit of the
consolidated financial statements of The Corporation of the Town of Aurora for the year
ended Deceuther3l, 2007. We have attached our draft auditors' report. We will finalize this
auditors' report once we have the opportunity to discuss the results of our audit with you.
The report to the audit committee has been prepared in accordance with the assurance
recommendations issued bythe Canadian Institute of Chartered Accountants (CICA) entitled
"Communications with Those Having Oversight Responsibility for the Financial Reporting
Process". That standard recommends we communicate with the audit committee various
matters including: the overall audit strategy, our responsibility as auditors, any matters arising
from the audit, misstatements, significant accounting policies, and any other matters that may
be of interest to the audit committee.
We express our appreciation for the cooperation and assistance received from the management
and staff of The Corporation of the Town of Aurora during the course of our audit. -
If you have anyparticular comments or concerns, please do not hesitate to raise them at our
scheduled meeting.
Yours sincerely
Grant Thornton LLP
Allister Byrne, FCA
Partner
cc; John Rogers, CAO
L John Gutteridge, Treasurer /,Director of Finance
-5-
SPECIAL GC - AUDIT - MAY 207 2008 ITEM #1 - 6
e
Contents
Page
Status of the audit - 2
Audit results 3
Reportable matters 5
Appendix A — Draft auditors' report 8
Appendix 8 — Draft management representation letter - - 10
AppendixC— Internaloontrolletter 15
1
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SPECIAL GC - AUDIT - MAY 207 2008
ITEM #1 - 7
Report to the Audit Committee - Communioation of Audit Strategy and Results 2
The Corporation of the Town of Aurora
For the year ended Docem0ar 31, 2007
Status of the audit
We have substantially completed our audit of the consolidated financial statements of The Corporation
of the Town of Aurora (the "Town") for the year ended December 31, 2007 and the results of that
audit are included in this report.
As noted in the covering letter, we have attached our draft auditors'reponts as Appendix A, The
following items need to be addressed/ completed before that report is signed:
• Receipt of signed management representation letter (draft has been attached as Appendix B);
• Approval of the consolidated financial statements by the Audit Committee; and
• Receipt of responses to our legal inquiries.
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SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 8
Report lathe Audit Committee - Communlcation of Audit Strategy and Results
The Corporation of the Town of Aurora
For the year ended December 31, 2007
Audit results
Our audit identified the unadjusted non -trivial misstatements noted below.
Summary of misstatements
Non -trivial misstatements noted during the course of our audit but not adjusted in the consolidated
financial statements were as follows:
We have discussed the unadjusted misstatements withmanagement and they have concluded that,
individually and in aggregate, these unadjusted misstatements are not material to the consolidated
financial statements of the Town.
Summary of disclosure matters
Our audit did not identify any misstatements.
Specific Audit Findings
As apart of our 2007 audit, we examined the following 3 different areas:
Rcviavg°the az h a diejimpdicy—There was no formal cash collection policy in place. However,
the controls that were used for the one event where cash was collected without a cash register
were reasonable and would likely detect misstatements in the cash collected. On a go -forward
basis, Town staff has indicated that the new policy is such that they will not be collecting
monies during events, and all events would have tickets sold in advance through the recreation
complex or the town offices. We recommend this policy be formally documented and
implemented.
. 8
SPECIAL GC - AUDIT - MAY 205 2008 ITEM #1 - 9
Report to the Audit Committee — Communication of Audit Strategy and Results
The Corporation of the Town of Aurora
For the year ended December 31, 2007
RMewefthemsh-in-lie cfpwklan&crpwkingpimm—Again, the process ofcollecthrgcash-in-lieu
is not formally written. However, we found the policy was that a building permit would not be
issued until the cash -in -lieu was received. This is an adequate control, and would prevent any
amounts from going uncollected, as any builder would not allow permits to not be issued, or it
would impair their building/ sales progress. We recommend this policy be formally
documented and implemented.
Reiiavef the OMB liffoingzrsulis — We reviewed with the Town staff how any amounts that were
due to the Town as a result of OMB cases were handled. We found the practice was that the
Legal Department left the responsibility with the Planning Department to follow up on
amounts due, as the Planning Department was responsible for the OMB case, the Legal
Department simply offered assistance. We recommend that, in future, if there are amounts
receivable to the Town as a result of an OMB case, this should also be communicated to the
Finance Department by the Legal and 1 or Planning Department so that Finance Department
can track and collect the receivable.
Addittbnal services
In addition to providing an audit opinion we have been engaged to perform the following additional
services:
Report on compliance with the Federal Gas Tax Legislation for the year ended December 31, 2007
These additional services affected the planned nature and scope of the audit by requiring more detailed
substantive procedures to be performed around the Federal Gas Tax revenues and related expenditures.
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SPECIAL GC - AUDIT - MAY,201 2008 ITEM #1 - 10
Report to the Audit Committee— Communication of Audit Strategy and Results
The Corporation of the Town of Aurora
For the year ended December $1, 2007 -
Reportable matters
Internal control
Management is responsible for the design and operation of an effective system of internal control that
provides reasonable assurance that the accounting system provides timely, accurate and reliable
financial information, and safeguards the assets of the entity. _
Through our role as auditors of your consolidated financial statements we possess an understanding of
the entity and its environment, including internal control. However, a fmaneial statement audit is not
designed to provide assurance on internal control. Professional standards do require us to
tIommunicate to the audit committee significant deficiencies and material weaknesses in internal control
that have come to our attention in the course of performing the audit.
our comments and recommendations on these matters have been provided in an internal control letter
and attached as Appendix C.
Significant new accounting policies
The following significant new accounting policies were implemented by the Town in the year:
Controversial, emerging or unique accounting policy issues
There were no new controversial, emerging or unique accounting policies issues noted.
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SPECIAL GC - AUDIT - MAY 20, 2008 ITEM #1 - 11
Report to the Audit Committee- Communicatlon of Audit Strategy and Results
The Corporation of the Town of Aurora
For the year ended December 31, 2007
Sensitive accounting estimates and disclosures
During the course of our audit, we noted the following sensitive accounting estimates and disclosures:.
Liability for employee benefitsi
The Town has recognized liabilities of over $600,000 in employee benefits. As disclosed in Note 5 of
the financial statements, the employee benefits include health and dental benefits that are provided to
early retirees, future retirees, and employees currently on a long-term disability.
The objective of the accounting policy is to recognize a liability in the reporting period in which
employees have provided the services that gives rise to the benefits. The amounts recorded by the
Town are determined based on an actuarial valuation for post employment benefits utilizing a discount
rate of 5% and an inflation rate of 2%.
Cooperation during the audit
We report that we received cooperation from management and the employees of the Town. To our
knowledge, we were provided access to all necessary records and other documentation and any issues
that arose as a result of our audit were discussed with management and have been resolved to our
satisfaction.
Consultations with other accountants
To our knowledge, management did not seek the advice or opinion of other external accountants on
financial reporting or accounting matters.
Fraud and illegal acts
Our inquiries of management did not reveal any fraud or illegal acts.
Independence
As external auditors of the Town, we are required to be independent in accordance with Canadian
professional standards. These standards require that we disclose to the audit committee all
relationships that, in our professional judgement, may reasonably be thought to bear on our
independence. We have provided a letter to the audit committee, dated November 7, 2007, which
confirms our independence with respect to the Town.
We reconfirm that we are not presently aware of any relationship or non -audit services that would
impair our independence for purposes of expressing an opinion on the consolidated financial
statement.
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SPECIAL GC - AUDIT -.MAY 20, 2008
ITEM #1 - 12
Report to the Audit Committee- Communication of Audit Strategy and Results . 7
The Corporation of the Town of Aurora
For the year ended December 31, 2007
Accounting and auditing standards
There has been no new accounting or auditing standards issued since our last communication with you
on November 7, 2007.
The following summarizes the effect of those accounting and auditing standard changes on the Town:
PSG-7 — Tangible Capital Assets of Local Governments — This has impacted the 2007 financial
statements by adding note disclosure to indicate the progress of the Town towards the compliance
with PS section 3150 — Tangible Capital Assets.
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SPECIAL GC - AUDIT - MAY 2% 2008
ITEM #1 - 13 .
Report to the Audit Committee— Communtoadon of Audit Strategy and Results g
The Corporation of the Town of Aurora
For the year ended 0e00m8er 31, 2007
Appendix A — Draft auditors' report
M K18
SPECIAL GC - AUDIT - MAY 209 2008
ITEM #1 - 14
Auditors' report - Town GrantThomtna LLP
Guile 200
15AIIsParkway
Markham, ON
L3R 564
T)3636G0100
(005
P 7Sa5o0
wrm,Gra.GranlThomlon,ca
To the Members of Council, Inhabitants
and Ratepayers of
The Cotpotation of the Town of An ota
We have audited the consolidated statement of financial position of The Cotpondion of the Town of
Aurom as at December 31, 2007 and the consolidated statements of financial activities and changes in
financial position for the year then ended. These consolidated financial statements are the
responsibility of the Town's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessingthe accounting principles used and significant estimates made.by management, as well as
evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the
financial position of the Town as at December 31, 2007 and the results of its operations and changes in
financial position for the year then ended in accordance with Canadian generally accepted accounting
principles.
Budget figures are provided for comparative purposes and have not been subject to audit procedures.
Accordingly, we do not express any opinion regarding the budget figures.
Markham, Canada
April4, 2008
Aadh•Tar•AJA.y
Ram aumlm LLR Acanmim WMbn of aed ROoft Nhma&v1ul LW
-14-
Chartered Acco4ntruits
Licensed Public Accountants
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 15
Report to the And If Committee- Communication of Audit Strategy and Results 1h
The Corporatton of the Town of Aurora
For the year ended Decombar 31, 2007
Appendix B - Draft management
representation letter
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SPECIAL GC - AUDIT - MAY 20, 2008 ITEM #1 - 16
May 2, 2008 '
Grant Thornton LLF
15 Allstate Parkway
Suite 200
Markham, ON
OR 5E4
Dear Sir
We are providing this letter in connection with your audit of the consolidated financial statements of
The Corporation of the Town of Aurora (the "Town") as of December 31, 2007, and for the year then
ended, for the purpose of expressing an opinion as to whether the consolidated financial statements
present fairly, in all material respects, the financial position, results of operations, and cash flows of the
Town in accordance with Canadian generally accepted accounting principles.
We acknowledge that we are responsible for the fair presentation of the consolidated financial
statements in accordance with Canadian generally accepted accounting principles and for the design
and implementation of internal controls to prevent and detect fraud and error. We have assessed the.
risk that the consolidated financial statements may be materially misstated as a result of fraud, and have
determined such risk to be low. Further, we acknowledge that your examination was planned and
conducted in accordance with Canadian generally accepted auditing standards so as to enable you to
express an opinion on the consolidated financial statements.. We understand that while your work
includes an examination of the accounting system, internal controls and related data to the extent you
considered necessary in the circumstances, it is not designed to identify, nor can it necessarily be
expected to disclose, fraud, shortages, errors and other irregularities, should any exist.
Certain representations in this letter are described as being limited to matters that are material. An item
is considered material, regardless of its monetary value, if it is probable that its omission from or
misstatement in the consolidated financial statements would influence the decision of a reasonable
person relying on the consolidated financial statements.
We confirm, to the best of our knowledge and belief, as of April 4, 2008, the following representations
made to you during your audit:
Financial statements
1. The consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the entity as at December 31, 2007 and the results ofits operations and its
cash flows for the year then ended in accordance with Canadian generally accepted accounting
Principles.
Completeness of information
2. We have made available to you all financial records and related data and all minutes of the meetings
of shareholders, directors, and committees of directors. Sununaries of actions of recent meetings
for which minutes have not yet been prepared have been provided to you. All significant board
and committee actions are included in the summaries.
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SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 17
3. 'There are no material transactions that have not been properly recorded in the accounting records
underlying the consolidated financial statements. The adjusting journal entries which have been
proposed by you, are approved by us and will be recorded on the books of the entity.
4. We are unaware of any known or probable instances of non-compliance with the requirements of
regulatory or governmental authorities, including their financial reporting requirements.
S. We are unaware of any violations or possible violations of laws or regulations the effects of which
should be considered for disclosure in the consolidated financial statements or, as the basis of
recording a contingent loss.
6. We have identified to you all ]mown related parties and related party transactions, including sales,
purchases, loans, transfers of assets, liabilities and services, leasing arrangements guarantees, non -
monetary transactions and transactions for no consideration.
7. You provided a non -attest service by assisting us with drafting the consolidated financial statements
and related notes. In connection with this non -attest service, we confirm that we have made all
management decisions and performed all management functions, have the knowledge to evaluate
the accuracy and completeness of the consolidated financial statements, and accept responsibility
for such consolidated financial statements.
Freud and emir
8. We have no knowledge of fraud or suspected fraud affecting the entity involving management;
employees who have significant roles in internal control; or others, where the fraud could have a
non -trivial effect on the consolidated financial statements.
9. We have no knowledge of any allegations of fraud or suspected fraud affecting the entity's financial
statements conununicated by employees, former employees, analysts, regulators or others.
10. We believe that the effects of the uncorrected financial statement misstatements summarized in the
accompanying schedule are immaterial, both individually and in the aggregate, to the consolidated
financial statements taken as a whole.
Recognition, measurement and disclosure
11. We believe that the significant assumptions used in arriving at the fair values of financial
instruments as measured and disclosed in the consolidated financial statements are reasonable and
appropriate in the circumstances.
12. We have no plans or intentions that may materially affect the carrying value or classification of
assets and liabilities reflected in the consolidated financial statements.
13. All related party transactions have been appropriately measured and disclosed in the consolidated
financial statements.
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SPECIAL GC - AUDIT MAY 20, 2008
ITEM #1 - 18
14. The nature of all material measurement uncertainties has been appropriately disclosed in the
consolidated financial statements, including all estimates where it is reasonably possible that the
estimate will change in the near term and the effect of the change could be material to the
consolidated financial statements.
15. Any business combination that occurred during the year has been properly accounted for with
appropriate consideration of amounts that should be allocated to goodwill and other intangible
assets.
16. Any goodwill or intangibles on the books of the entity are evaluated annually to determine whether
or not they have been impaired, and an appropriate loss provision is provided in'the accounts
where there has been a permanent impairment.
17. We have informed you of all outstanding and possible claims, whether or not they have been
discussed with legal counsel.
18. All liabilities and contingencies, including those associated with guarantees, whether written or oral,
have been disclosed to you and are appropriately reflected in the consolidated financial statements.
19. All "off -balance sheet" financial instruments have been properly recorded or disclosed in the
consolidated financial statements.
20. No derivative financial instruments were purchased during the year
21. With respect to environmental matters:
a) at year end, there were no liabilities or contingencies that have not already been disclosed to
you;
b) liabilities or contingencies have been recognized, measured and disclosed, as appropriate, in the
consolidated financial statements; and
c) commitments have been measured and disclosed, as appropriate, in the consolidated financial.
statements.
22, The entity has satisfactory title to (or lease interest in) all assets, and there are no liens or
encumbrances on the entity's assets nor has any been pledged as collateral.
23. We have disclosed to you, and the entity has complied with, all aspects of contractual agreements
that could have a material effect on the consolidated financial statements in the event of non-
compliance, including all covenants, conditions or other requirements of all outstanding debt.
24. The Goods and Services Tax (CST) and Harmonized Sales Tax (HST) transactions recorded by the
entity are in accordance with the federal and provincial regulations. The GST and HST
liability/ receivable amounts recorded by the entity are considered complete.
25. Employee future benefit costs, assets, and obligations have been determined, accounted for and
disclosed in accordance with the requirements of PSAB Section 3250 Employee Future Benefits of
the Canadian Institute of Chartered Accountants Handbook— Accounting.
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SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 19
26. There have been no events subsequent to the date of the financial statements up to the date hereof
that would require recognition or disclosure in the consolidated financial statements. Further, there
have been no events subsequent to the date of the comparative financial statements that would
require adjustment of those financial statements and related notes.
Other
27. The entity has obtained all consents and authorizations under law in respect of the personal
information, if any, of employees, customers and other individuals provided to you in the course of
your audit, and you are authorized to use such personal information required for your workpapers.
Yours very truly,
...................................................
John S. Rogers
Chief Administrative Officer
John Gutteridge
Director of Finance/ Treasurer
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SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 20
Report to the Audit Committee —Communication of Audit Strategy and Results, 15
The Corporation of the *town of Aurora
For the year ended beaemher 31, 2007
Appendix C - Internal control letter
-20-
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 21
0 GrantThornton
Members of the Audit Committee
The Corporation of the Town of Aurora
1 Municipal Drive, Box 1000
Aurora, ON
LAG 6JI
May 2, 2008
Dear Committee Members:
Internal control findings from the 2007 audit
Grant Thomton LLP
Suite 200
15 Allslale Parkway
Markham, ON
UR 664
T t416)3060100
F t005)4766006
w .GranlThornlonxa
Receiving observations and findings on your financial reporting processes and controls is one benefit of
the annual audit of The Corporation of the Town of Aurora (the "Town"), Grant Thornton LLP has
fully implemented processes and technology to address the changing standards of conducting a
financial statement audit. This includes an increased emphasis on internal control. The standards of the
public accounting profession require us to report annually to you our findings on weaknesses and
deficiencies in your internal controls. In the attached Appendix, we have identified the items that we
wish to bring to your attention.
Our audit is planned and conducted to enable us to express air audit opinion on the annual financial
statements of the Town. The matters dealt with in this letter came to our attention during the conduct
of our normal examination, and as a result, this letter may not necessarily hrclude all matters that would
be uncovered through a more extensive examination.
It is management's responsibility to weigh the costs of implementing controls against the benefits that
the controls will achieve. The purpose of this letter is to provide you with the information related to
the identified risks so that you can make the necessary decisions.
The matters discussed in the attached Appendix are those that have been noted as of the date of our
Auditors' report, April 4, 2008. We have not updated our procedures regarding these matters
subsequent to that date.
Audit 0.-W
cram SM1wmw LLP. AcanadL nkmbr a Wei momwn Imwnali Lid
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SPECIAL GC - AUDIT - MAY 2% 2008
ITEM #1 - 22
Granffhornton
This communication is prepared solely for the information of management and is not intended for any
other purposes; we accept no responsibility to a third party who uses this communication.
Thank you for the opportunity to contribute to the present and future success of the Town.
Yours very truly,
Allister Byrne, F.C.A.
Partner
cc John S. Rogers, Chief Administrative Officer
L. John Gutteridge, Director of Finance/ Treasurer
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SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 23
A. Findings Arising From This Year's Audit
L Old outstanding amounts payable
O&Ol atim
In November 2007, the Town passed a policy to, deal with the unclaimed deposits and refunds. During
the audit, we noted that there remains a number of unclaimed deposits and refund of taxes payable,
some of them dating back to 1987. If these amounts were brought into income, it would bring over
$100,000 into revenue for operational purposes.
Rm»vamrdalim
We recommend that management make use of the policy and perform the steps to bring the unclaimed
deposits into income as described in the policy.
Ma=naat Ccmmeta
As per the policy passed we are preparing a list of all outstanding deposits and refunds to be published
in the local paper with the intent of bringing this matter right up to date to allow us to maintain this in
the future. This will be done before the end of the summer.
2. Periodic?let4ewofAccessPrivlleges
Olumrontrax
Management does not perform a review of access privileges granted to system users. No review is
conducted of access granted to applications, the network and databases.
Im��lint
If user access privileges are not regularly reviewed, there exists a risk that users may have more system
access privileges then they require. This may result in unauthorized access to and exposure of
confidential information.
Rarxam o dutsa s
Establish a process to regularly, review user access privileges, for the network, applications and
databases, to ensure access levels are still suitable. Evidence of these regular reviews should be
e
maintained.
Manama aett R=ase
IT Services is establishing a procedure for conducting regular reviews of the network, application and
database user access privileges to ensure the privileges are accurate and relevant. Reports wil] be
distributed to Senior Management Team semi-annually for the purpose of validating the accuracy of the
access privileges. -
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SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 24
B. Status of Findings in Previous Management Letters
Z. Kir Grant
Obstvtnticn
An unconditional Fine Services Training grant was received on April 1, 2005 for $155,000 to be used
for fire training. To date the funds have not been expended and are recorded as deferrerfrevenue.
Rmxtnnmdat of
The grant should be taken into revenue and put in a Reserve fund.
Maaa�txnt Cannve•�r
A report has been prepared for the establishment of a Reserve Fund as suggested by the Auditors.
2. Remote access autheltti'eation
b omt
Remote access to the Town's IT environment still requires only a single level of authentication (i.e. the
LAN password).
n l¢tliat
Using a single authentication mechanism, such as a password, is generally not considered a sufficient
level of security to protect sensitive corporate systems when providing remote access. The reason is
that, under normal circumstances, when a user accesses the corporate systems they are physically
present in the organization's premises. This provides a level of verification of the user over the
submission of a password, since non-corporatepersonnel would have to overcome physical safeguards
such as locked doors, windows, and open office environment, before they could have physical access to
a computer terminal in order to submit or guess a user ID and password. In order to compensate for
the removal of this physical safeguard it is appropriate to consider using extra forms of authentication
-
for remote access. In general, an authentication mechanism can be something you know (i.e. your
password), something you have (such as a "token") or, something you are (for example, a biometric
(such as a fingerprint)).
R�vranardatldt
We recommend that the Town analyze its information security risks related to remote access. Then a
decision can be made to either accept the increased risk of weak authentication for remote access or
decide to select and implement another, extra form of authentication, such as tokens. Generally
accepted information security practices for remote access to systems is to have two -factor
authentication. Two -factor authentication is described in ISO 17799 ("Information Technology -
Security Techniques - Code of Practice for Information Security Management").
As part of our IT Risk Assessment conducted in late 2006 a suggestion was to utilize tokens as an extra
layer of authentication for our remote access users. This has been identified as a project on the 2008 IT
project list and will be implemented by year end.
-24-
SPECIAL GC - AUDIT MAY 20, 2008 ITEM #1 - 25
3. password Contmis
Obsetalicn
Applications such as Vadim and Class have weak password features i.e. passwords do not expire, have
no maximum age and arenot complex. The Town has been informed by the vendors that there no
plans to enhance the password security features of these applications
I iayt
Weak password security increase the risk that unauthorized users can figure out passwords and gain
unauthorized access to the system and its data. '
ReznvrJatirns
We recommend that the Town should compensate for the weak password security at the applications
level by enhancing the domain level controls by:
• Increasing the change frequency (from the present 60 days to 30 days)
• Increasing password history to 15 passwords remembered
ffimr it Rmpaxre
IT Services has further investigated the password features of the applications in question. We have
reset the Class passwords in an attempt to reduce risk. Vadhn does not and will not revise their
position on password expiration.. The IT Steering Conunittee will review the possibility of changing the
frequency of password changes and will present this to Senior Management Team as a consideration
going forward.
A. Information seemitypollefes and pmeedares
Obr�atiax .
Formal IT Governance policies and procedures do not exist.
Inmlimdia7l
The lack of approved documented policies and procedures increase the risk that IT procedures and
related controls may not be properly understood, executed and evidenced with audit trails and applied
on a consistent basis to the IT operations.
Rmnwmdwim
The following are policies and procedures management should consider creating: .
• - Acquisition and maintenance of hardware, software, and infrastructure
• Security policy, including access Control —new hires, modifications, terminations
• Change management
• Configuration management
• Data management
• Help desk
• Anti -virus management
• IT document management
• Backup tape procedures
• Information security policy
• End -user conduct policy
-25-
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 26
Mruwu t ReWw
There area few policies that are currently in place that are not broad enough to cover various IT related
topics and procedures. Senior IT staff are currently expanding the policies to cover off the range of IT
related topics and technologies identified above and some that are not identified above. Draft samples
have been provided to the auditors as evidence of this work. It is the intention of having a Spring staff
information session to review the policies as well as to conduct a seminar on Information Technology
Security focusing on social engineering. Your weakest link from a security perspective are staff
resources, educating the staff on ways to avoid security pitfalls is very important and needs to be
reviewed.
5. Control setivilies ate not documented
During our audit we observed that a number of control activities and procedures are undocumented,
including:
• The review of firewall logs, security events, and security configurations
• The results of operating system and database level patch testing
in iaatims
The lack of documented or implemented polices, processes, and evidence of execution of IT control
activities, limits the ability of management to ensure:
• The controls procedures were performed on a timely basis, and by the appropriate individuals;
• Exceptions were handled appropriately; and, -
• Sufficient evidence of the design and operational effectiveness of IT general controls is
available for IT Governance
Rm�mna datat
Management should continue to develop and implement IT general control based policies and
processes.
M Reixnre
Log files are automatically generated by various security system elements generated from our firewall,
ISA and Barracuda appliance are reviewed daily. The firewall logs, security event logs and
- configurations are monitored regularly by our Network/Security Administrator. A form for
acknowledging the Network/ Security Administrators review has been created and will be implemented.
-26-
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #9 - 27
ATTACHMENT#2
0 GrantThornton
Consolidated Financial Statements
The Corporation of the Town of Aurora
December 31, 2007
-27-
SPECIAL GC - AUDIT - MAY 207 2008
ITEM #1 - 28
Contents
Auditors' Report
Consolidated Statement of Financial Position
Consolidated Statement of Financial Activities
Consolidated Statement of Changes in Financial Position
Notes to the Consolidated Financial Statements
Schedule of Operating Fund Activities — Schedule 1
Schedule of Capital Fund Activities -- Schedule 2
Schedule of Reserves and Reserve Funds Activities — Schedule 3
Grant7hornton
Page
1
2
3
4
5-12
13
14
15
-28-
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 29
4 GrantThornton
Auditors' report
To the Members of Council, Inhabitants
and Ratepayers of
The Corporation of the Town of Aurora
Granlnomlon LLP
Suile 200
15 Allsiale Parkway
Markham, ON
L3R 684
r (416) 356MOO
F(0O5)47H906
w .Gmnnhornlon.ca
We have audited the consolidated statement of financial position of The Corporation of
the Town of Aurora as at December 31, 2007 and the consolidated statements of
financial activities and changes in financial position for the year then ended. These
consolidated financial statements are the responsibility of the Town's management. Our
responsibility is to express an opinion on these consolidated financial statements based
on our audit.
We conducted our audit in accordance with Canadian genem]ly accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material
respects, the financial position of the Town as at December 31, 2007 and the results of its
operations and changes in financial position for the year then ended in accordance with
Canadian generally accepted accounting principles.
Budget figures are provided for comparative purposes and have not been subject to
audit procedures. Accordingly, we do not express any opinion regarding the budget
figures.
Markham, Canada
April 4, 2008
A dit 4BLAMh.l
WandT Wn LLP. ACaWian Member ul Qenl ilw'man WW,1a0mM LM
-29-
Chattered Accountants
Licensed Public Accountants
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 30
The Corporation of the Town of Aurora
Consolidated Statement of Financial Position
As at December 31 2007
P 9
2006
Assets
Cash and cash equivalents (Note 1) $
31,907,130
$ 41,189,424
Temporary Investments (Note 2)
33,210,366
16,779,072
Taxes receivable -
5,579,100
5,831,161
User charges receivable
3,674,091
2,390,428
Accounts receivable
1,830,957
2,054,320
Investment in Borealis Hydro Electric Holdings Inc. (Note 3)
1
1
76,201,645
68,845,006
Liabilities
Accounts payable and accrued liabilities
7,442,170
6,901,022
Deposits and deferred revenue
3,895,709
3,476,604
Deferred revenue - Obligatory reserve funds (Note 4)
10,769,471
6,346,464
Employee future benefits liabilities (Note 5)
649,146
588,121
Long term debt (Note 6)
14,483,031
15,723,531
-
37.239.527
$3,035,742
Net Financial Assets - $ 38,962,118 $. 35,809,264
MUNICIPAL POSITION
Fund Balances
Operating Fund (Page 13) $ 362,217 $ 301,717
Capital Fund (Page 14) 9,728,285 6,527,021
Reserves and Reserve Funds (Page 15) - 43,354,646 44,704,056
Equity in Borealis 1 1
- 53,445,149 . 51,632,795
To be recovered from future revenues (Note 6) (14,483,031) - (15 723,531)
Municipal position $ . 38,962,118 $ 35,809,264
Contingencies (Note 11)
Approved by:
See accompanying notes to the consolidated financial statements.
GrantThornton
2
-30-
SPECIAL GC - AUDIT - MAY 20, 2008 ITEM #1 - 31
The Corporation of the Town of Aurora U
Consolidated Statement of Financial Activities
Budget Actual Actual
Year Ended December 31 - 2007 2007 2006
(Unaudited)
Revenues
Taxation (Note 7)
- $ 23,508,769
$ 23,503,783
$ 22,084,678
User charges
19,488,495
20,650,537
15,453,337
Grants
748,516
832,427
1,045,802
Other (Note 8)
6,344,037
7,736,034
8,142,160
50,089 807
52,622,781
46,725,977
Expenditures
Operating.
General government
5,731,144
5,264,080
4,978,281
Protection to persons and property
7,861,091
7,650,207
6,145,523
Transportation services -
2,856,364
3,218,341
2,609,604
Environmental services
11,425,421
9,730,413
9,591,956
Leisure and cultural services
11,993,163
11,653,286
11,428,788
Planning and development
1,245,247
1,201,492
1,206,617
41,112,430
38,717,819
25,960,769
Capital
General government .
675,575
218,608
509,642
Protection to persons and property
-
-
329,429
Transportation services
5,766,576
5,971,067
3,839,910
Environmental services
2,182,979
1,899,820
1,146,241
Leisure and cultural services
6,466,137
2,518,008
4,524,704
Planning and development _
170,000
83,581
87,792
15 261 267
10,691,00,
10,437,718
Total expenditures (Note 9)
56,373,697
49,408,903
46,398 487
Net revenues (expenditures)
(6,288,890)
3,213,878
327,490
Financing and transfers
Principal repayment of long term debt
(1,240,500)
(1,240,600)
(1,191,470),
Changes in employee benefit obligation
(61,026)
(36,099)
Change in fund balances $
(7,524,390)
$ 1,912,353
$ (900,079)
See accompanying notes to the consolidated financial statements.
GrantThornton
-31-
c7
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 32
The Corporation of the Town of Aurora
Consolidated Statement of Changes in Financial
Year Ended December 31 2007
Increase (decrease) in cash and cash equivalents
Operating activities
Net revenue
Uses:
Increase in user charges receivable
Increase in temporary investments
Decrease in accounts payable and accrued liabilities
Decrease in deposits and deferred revenues
Sources:
Decrease in taxes receivable
Decrease in user charges receivable
Decrease in temporary investments
Decrease in accounts receivable
Increase in obligatory reserve funds
Increase in accounts payable and accrued liabilities
Increase in deposits and deferred revenues
Net cash from operations
Financing
Principal repayment of long term debt
Net increase in cash during the year
Cash and short term investments, beginning of year
Cash and short term investments, end of year
2006
$, 3,213,878 $ 327,490
(1,283,663)
(16,430,694)
417,714,357)
(4,892,723)
(1,190 933)
(6,083,656)
252,061
858,513
64,181
-
14,575,725
223,363
1,474,003
4,423,007
4,803,712
541,148
-
419.105
5,858,684
21776.1;-'�i4
(8,641,793)
16,019,968
(1,240,500)
(9,882,294)
41,789,424
$ 31,907,130
(1,191 470)
14,828,498
26 960,926
$ 41,789,424
See accompanying notes to the consolidated financial statements.
GrantThornton
4
-32-
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 33
The Corporation of the Town of Aurora Ul1L
Notes to the Consolidated Financial Statements
December 31, 2007
The Corporation of the Town of Aurora (the "Town") is a municipality in the Province of
Ontario. The Town conducts its operations guided by the provisions of provincial statutes
such as the Municipal Act, Municipal Affairs Act and related legislation.
Summary of significant accounting policies
The consolidated financial statements of the Town are the representation of management and
have been prepared in accordance with Canadian generally accepted accounting principles
for local governments as recommended by the Public Sector Accounting Board ("PSAB") of
The Canadian Institute of Chartered Accountants.
Significant accounting policies adopted by the Town are as follows:
Basis of consolidation
The consolidated financial statements reflect the assets, liabilities, revenues, expenditures
and fund balances of the Town, and except for government business enterprise which are
accounted for by the modified equity basis of accounting, comprise all of the, organizations -
that are accountable for the administration of their financial affairs and resources to the Town
and are owned or controlled by the Town. ' .
The Aurora Public Library Board is fully consolidated in these consolidated financial
statements. All inter -organizational and inter -fund transactions and balances are eliminated.
The taxation, other revenues, expenditures, assets and liabilities with respect to the Boards of
Education within the Regional Municipality of York are not reflected in the Town's
consolidated financial statements.
Basis of accounting
Revenues and expenditures are reported on the accrual basis of accounting. The accrual
basis of accounting recognizes revenues as they become available and measurable;
expenditures are recognized as they are incurred and measurable as a result of receipt of
goods or services and the creation of a legal obligation to pay.
Cash Equivalents
Cash equivalents consist of Government of Canada treasury bills, provincial government
treasury bills and promissory notes, bankers' acceptances and bearer deposits that mature
within 90 days. They are recorded at cost, which approximates their quoted market value.
Inventories
Expenditures on materials and supplies are reported as an expenditure on the consolidated
statement of financial activities in the year of acquisition.
Non -financial assets
Non -financial assets are recorded in the period the goods or services are acquired
GrantThornton
I'WIKE
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 34
The Corporation of the Town of Aurora UillYrilu
Notes to the Consolidated Financial Statements
December 31, 2007
1. Summary of significant accounting policies (continued)
Capital assets
The historical cost and accumulated amortization of capital assets are not recorded for Town
purposes. Capital assets acquired are reported as an expenditure on the consolidated
statement of financial activities in the year of acquisition.
Pensions agreements
The Town makes contributions to the Ontario Municipal Employees Retirement Fund
(OMERS), it multi -employer public sector pension fund, based on the principles of a defined
benefit plan, which specifies the amount of the retirement benefit to be received by the
employees on the basis of predefined retirement age, length of eligible service and rates of
remuneration over afixed period of time.
Employee future benefits
Employee future benefits include health and basic dental coverage that the Town pays on
behalf of its current and retired employees. The Town records these future benefits as they
are earned during the employee's tenure of service. The Town also estimates future benefits .
relating to accumulated sick credits and overtime as they are earned.
The present value of the cost of providing employees with future benefit programs is
expensed as employees earn these entitlements through service. The cost of the benefits
earned by employees is actuarially determined using the projected benefit method prorated
on service and management's best estimate of retirement ages of employees and expected
health care and dental costs. Vacation entitlements are accrued for as entitlements are
earned.
Deferredrevenue
Deferred revenues represent user charges and fees which have been collected but for which
the related services have yet to be performed. These accounts will be recognized as
revenues in the fiscal year the services are performed. The Town receives development
charges under the authority of provincial legislation and Town by-laws. These funds, by their
nature, are restricted in their use and, until applied to specific capital works, are recorded as
deferred revenue.
Use of estimates
The preparation of financial statements in conformity with Canadian generally accepted
accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenditures during the period. Actual results could differ
from these estimates.
Grant7hornton
-34-
SPECIAL GC - AUDIT - MAY 207 2008
ITEM #1 - 35
D
The Corporation of the Town of Aurora
Notes to the Consolidated Financial Statements
December 31, 2007
1. Summary of significant accounting policies (continued)
Budget figures
The approved operating and capital budgets for 2007 are reflected on the Consolidated
Statement of Financial Activities. The budgets established for the capital fund operations are
on a project -oriented basis, the costs of which may be carried out over one or more years
and, therefore, may not be comparable with the current year actuals.
Reserves and reserve funds
Certain amounts, as approved by the Town Council, are set aside in reserves and reserve
funds for future operating and capital purposes. Transfer to/from reserves and reserve funds
are an adjustment to the respective fundwhen approved.
Subdivision Infrastructure
Subdivision streets, lighting, sidewalks, drainage and other infrastructure are required to be
provided by subdivision developers. Upon completion they are turned over to the municipality.
The municipality is not involved in the construction and does not budget for either the
contributions from the developer or the capital expenditure. .
Investment income
Investment income earned on surplus operating funds, capital funds, and reserves and
reserve funds are reported as revenue in the period earned. Investment income earned on
development. charges (obligatory reserve funds) is added to the fund balance and forms part
of the deferred revenue balance.
2. Temporary investments
Temporary investments are recorded at cost which approximates their quoted market value.
These investments consist of interest -bearing certificates that are liquid in nature and are
included as part of temporary investments. These investments have a term beyond 90 days
in length.
3. Investment in Borealis Hydro Electric Holdings Inc..
The Town's investment in Borealis Hydro Electric Holdings Inc. is as follows:
2007 2006
Share capital
Borealis Hydro Electric Holdings Inc. - 1,000 common shares $ 1 $ 1
Retained earnings -
Long term debt— unsecured promissory note
Total investment
Grant7hornton
-35-
$ 1 $
7
SPECIAL GC - AUDIT - MAY 2% 2008 ITEM #1 - 36
The Corporation of the Town of Aurora ULI1
Notes to the Consolidated 'Financial Statements
December 31, 2007
3. Investment in Borealis Hydro Electric Holdings Inc.
Details of the continuity of the investment are as follows:
Balance, beginning of year $ 1 $ 1
Net income for the year
Proceeds on sale of Hydro investment
Balance, end of year $ 1 $ 1
4. Deferred revenue — Obligatory reserve funds
A requirement of PSAB is that obligatory reserve funds be reported as deferred revenue.
This requirement is in place as provincial legislation restricts how these funds may be used
and, under certain circumstances, how these funds may be refunded.
Obligatory reserve funds consist of the following:
2007
2006
Development charges
$ 1,313,147
$ (525,183)
Park purposes
6,714,692
4,668,703
Building Code Act, 1992
1,160,042
668,653
Federal Gas Tax
181,870
174,224
9,369,751
4,986,397
Development charges transferred to capital but
- unexpended at the end of the year
1,399.720
1,360.067
$ 10,769,471
$ 6,346,464
5. Employee future benefit obligations
2007
2006
Employee future benefits - $ 486,731 $ 425,706
Accrued sick leave - 131,715 - 131,715
Accrued overtime 30,700 30,700
$ 649,146 $ 588,121
Employee future benefits are health and dental benefits that are provided to early retirees,
future retirees, and employees currently on a long term disability. The Town recognizes these
post -retirement costs as they are earned during the employee's tenure of service. The last
actuarial valuation carried out was December 31, 2007.
GrantThornton
u'
-36-
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 37
The Corporation of the Town of Aurora
Notes to the Consolidated Financial Statements
December 31. 2007
5. Employee future benefit obligations (continued)
Information about the Town's post retirement benefits plan is as follows:
Employee future benefits payable
Employee future benefits, beginning of year
Add: Benefit expense
Interest cost
Less: Expected benefits paid for the period
Employee future benefits, end of year
2007
DIR
2006
$ 486,731 $
425,706
$ 426,706 $
389,607
45,642
22,211
25,932
23,747
(10,549) (9,859
$ 496,731 $ 425,706
The main assumptions employed for the actuarial valuation prepared at December 31, 2007
are as follows:
General Inflation
Future general Inflation levels were assumed to increase at 2.0% per year.
Interest (discount) rate
The present value of the post employment benefit liability wasdetermined using a discount
rate of 5.0%.
Health costs
Health costs were assumed to increase at an average increase of 7.7% per year reducing to
4.0% per year over 11 years.
Dental costs
Dental costs were assumed to Increase at an average increase of 4.06/. in 2008 and
thereafter.
Actuarial evaluations for accounting purposes are performed every three years using the
projected benefit method prorated on services. The most recent, actuarial report was
prepared at December 31, 2007.
GrantThbrnton
-37-
9
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 38
The Corporation of the Town of Aurora
Notes to the Consolidated Financial Statements
December 31, 2007
6. Long term debt
Debenture, bearing interest at rates varying from 3.1%
to 4.1 %, maturing in September 2015. Principal Is
repayable in annual instalments and interest is payable
in half yearly instalments.
Debenture, bearing interest at 4.37%, maturing in
September 2025. Principal and interest is repayable in
half yearly instalments of $160,272. -
aIN
2007 2006
$ 10,517,000 $ 11,615,000
3,966,031 4,108,531
$ 14,483,031 $ 15,723,531
The debentures were issued by The Regional Municipality of York, on behalf of the Town, to
fund the construction of the. Town'$ new recreation complex.
Principal repayments for each of the next five years and thereafter are as follows:
2008
$ 1,289,796
2009
1,342,372
2010
-. 1:397,237
2011
1,453,406
2012
1,511,892
Thereafter
7,488 328
$ 14,483,031
7. Net taxation charges
2007
2006
Total taxes levied by the Town
$ 82,163,712
$ 77,605,488
Less:
Taxes levied on behalf of the Boards of Education
26,355,890
25,372,955
Taxes levied on behalf of the Region of York
32,304,039
30,047,855
$ 23,503,783
$ 22,084,678
8. Other revenue
2207
2006
Operating
Penalties and interest on taxes
$ 782,678
$ 757,463
Pines
602,878
477,233
Rents and leases
1,830,024
1,870,746
Interest income
1,351,043
1,227,649
Other
676,502
593,587
5,143,125
4,926 678
0 GrantThornton
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 39
The Corporation of the Town of Aurora UuL
Notes to the Consolidated Financial Statements
December 31, 2007
8. Other revenue (continued) 2007 2006
Capital
Proceeds from other municipalities
(62,158)
1,064,659
Proceeds from developers
(93,524)
247,000
Other
934302
265,187
478,620
1,576.846
Reserves and Reserve Funds
Interest income
1,953,279
1,614,461
Other -
161,010
24,175
2,114,289
1,638.636
$ 7,736,034 $ 8,142,160
9. Classification of expenditures by object
2007
2006
Expenditures by object consist of the following:
Salaries, wages and benefits
$ 15,512,565
$ 14,626,143.
Interest on long term debt -
650,372
644,970
Contracted services
17,714;893
16,820,753
Materials and supplies
5,446,224
3,968,903
Capital and other
10,084,849 _
10,437,718
$ 49,408,903
$ 46,398,487
10. Pension agreements
The Town makes contributions to the Ontario Municipal Employees Retirement System
("OMERS"], which is a multi -employer plan, on behalf of all full-time members of its staff.
OMERS is a defined benefit plan which specifies the amount of the retirement benefits to be
received by the employees based on the length of service and rates of pay.
Contributions in 2007 ranged from 6.5% to 10.75% depending on the level of earnings. The
2007 operating expense for OMERS was $746,847 (2006 - $705,763).
11. Contingencies
The Town is subject to various legal claims arising in the normal course of its operations. The
ultimate outcome of these claims cannot be determined at this time, therefore, no amounts
have been recorded in these financial statements. The Town's management believe that the
ultimate disposition of these matters will not have a material adverse effect on its financial
position.
GrantThornton
-39-
11
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 40
The Corporation of the Town of Aurora Uul
Notes to the Consolidated Financial Statements
December 31, 2007
12. Central York Fire Services
Effective January 1, 2002, the Town entered into a Joint Venture Agreement with the Town of
Newmarket with respect to the provision of Fire and Emergency services. Under the
Agreement, the Town of Newmarket assumed responsibility for the combined Central York
Fire Services. The cost of these services is shared between the two municipalities on the
basis of a pre -defined cost sharing formula. The Town's share of costs'for the year was
$5,911,870 (2006 - $5,600,878).
13. Insurance coverage
The Town is self insured for insurance claims up to $10,000 for any individual claim and for
any number of claims arising out of a single occurrence.
Claim costs during the year amounted to $64,487 (2006 - $53.614).
The Town has made provisions for reserves for self insurance claims under $10,000 to be
used for those claims that exceed the sum provided for in the annual budget. These reserves
are reported on the Consolidated Statement of Financial Activities under reserves set aside
by Council. As at December 31, 2007, these reserves amounted to $270,361 (2006 -
$261,109).
The Town is a member of the Ontario Municipal Insurance Exchange which became a
licensed group for liability insurance coverage on October 1, 1996. Contributions have been
made to the fund for claims in excess of $10,000 and under $50,000,000. These contributions
have been reported as expenditures on the Consolidated Statement of Financial Activities.
14. Tangible Capital Assets
Effective January 1, 2007, the Town adopted Accounting Guideline 7 (PSG-7) of the Public
Sector Accounting Handbook of the Canadian Institute of Chartered Accountants ("GICA")
with respect to the disclosure of tangible capital assets of local governments. PSG-7 provides
transitional guidance on presenting information related to tangible capital assets until Section
3150 - Tangible Capital Assets of the Public Sector Accounting Handbook comes into effect
on January 1, 2009.
During 2007, the Town continued to work towards compliance with the new recommendations
for accounting for tangible capital assets. As of December 31, 2007, the Town has not yet
completed a listing of assets and their values. The accumulation of data is currently
underway.
15. Comparative figures
Certain comparative figures in these financial statements have been reclassified to conform
with the presentation adopted for the current year.
GrantThornton
12
-40-
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 41
The Corporation of the Town of Aurora
Schedule of Operating
Fund Activities
Schedule 1
Budget
Actual
Year Ended December 31
2007
2007
(Unaudited)
Revenue
Taxation (Note 7)
$ 23,508,769 $
23,503,783
User charges
15,938,475
17,026,660
Grants
723,516
795,427
Other (Note 8)
6,046,537
5,143,125
46,217,297 4%46%995
Actual
$ 22,084,678
13,719,928
997,802
4,926,678
41,729,086
Expenditures
General government
5,731,144
5,264,080
4,978,281
Protection to persons and property
7,861,091
7,650,207
6,145,523
Transportation services
2,856,364
3,218,341
2,609,604
Environmental services
11,425,421
9,730,413
9,691,966
Leisure and cultural services
11,993,163
11,653,286
11,428,788
Planning and development
1,245 247
1,201,492
1,206.617
41,112,430
38,717,819
35,960,769
Net revenue
5,104 867
7,751,176
5,768 317
Financing and transfers
Principal payment of iong term debt (1,191,470)
Change in employee benefit obligations (61,025) (36,099)
Transfer to Reserves and.Reserve Funds (2,408,239) (4,609,255) (4,201,461)
Transfer to Capital Fund (2,696,628) (3,020.396) (1.328,212)
(5,104 867) (7,690,6761 (6,757,242
Change in Operating Fund - 60,500 (988,925)
Operating Fund balance; beginning of year 301,717 301,717 1,290,642
Operating Fund balance, end of year $ 301,717 $ 362,217 $ 301,717
See accompanying notes to the consolidated financial statements.
GrantThornton
-41-
13
SPECIAL GC - AUDIT - MAY 20, 2008
ITEM #1 - 42
The Corporation of the Town of Aurora
Schedule of Capital Fund Activities
Schedule 2
aIN
Year Ended December 31
Budget
2007
Actual
2007
Actual
2006
(Unaudited)
Revenue
User charges
$ 3,550,010
$ 3,721,611
$ 2,186,258
Grants
25,000
37,000
48,000
Other (Note 8)
297,500
478,620
1,576,846
3,872,510
4,237,231
3,811,10
Expenditures
General government
675,575
218,608
509,642
Protection to persons and property
-
329,429
Transportation services
5,766,576
5,971,067
3,839,910
Environmental services
2,182,979
1,999,820
1,146,241
Leisure and cultural services
6,466,1$7
2,518,008
4,524,704
Planning and development
170,000
83,581
87,792
15,261,267
10,691,084
10,437,718
Net expenditure
(11,388 757)
(6,453,853)
_S6 626 6141
Financing and transfers
Principal payment of long term debt
(1,240,500)
(1,240,500)
Transfer from Operating Fund
2,696,628
3,020,396
1,328,212
Transfer from Reserves
5,094,538
3,266,469
2,081,712
Transfer from Reserve Funds
4,838,091
4,608,752. _
1,322,839
-
11,388,757
9,655,117
4,732,763
Change in Capital Fund balance
-
3,201,264
(1,893,851)
Capital Fund balance, beginning of year
6,527,021
6,527,021
8.42Q 872
Capital Fund balance, end of year
$ 6,527,021
$ 9,728,285 $
6,527,021
See accompanying notes to the consolidated financial statements.
GrantThornton
14
-42-
SPECIAL GC - AUDIT - MAY 20, 2008 ITEM #1 - 43
The Corporation of the Town of Aurora Uill
Schedule of Reserves and Reserve Funds Activities
Schedule 3
Actual Actual
Year Ended December31 2007 2006
Revenue
User charges $ 7,794,924 $ 6,394,704
Nei change in obligatory Reserve Funds (7,992,657) (6,847,553)
Other (Note 8) 2,114289 1,638,636
1,916,556 1,185,787
Financing and transfers
Transfer from Operating Fund
Transfer to Capital Fund
Change in Reserve and Reserve Fund balance
Reserve and Reserve Fund balance, beginning of year
Reserve and Reserve Fund balance, end of year
Reserves and Reserve Funds are comprised of:
Reserves, set aside by Council for specific purposes
Acquisition of capital assets
Contingencies
Engineering
Discretionary
Reserve funds set aside for specific purposes by
legislation, regulation or agreement
4,609,255
4,201,461
(7,875,221)
(3,404.551)
_(3,265,966)
796,910
(1,349,410)
1,982,697
_44,704 056
42,721,359
$ 43,354,646
$ 44,704,056
$ 2,613,992 -$ 1,334,444
1,429,759
2,008,640
3,333,805
2,075,563
32,884,021
33,734,398
40,261,577
39,153,046
3A93,069 5,551,011
$ 43,354,646 $ 44,704,056
See accompanying notes to the consolidated financial statements.
GrantThornton
-43-
15