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Agenda - Special General Committee - 20091117
SPECIAL GENERAL COMMITTEE AGENDA AUDIT COMMITTEE N0, 09-28 TUESDAY, NOVEMBER 17, 2009 6:00 P.M. COUNCIL CHAMBERS AURORA TOWN NALL PUBLIC RELEASE November 13, 2009 AUioKA TOWN OF AURORA SPECIAL GENERAL COMMITTEE MEETING AUDIT COMMITTEE AGENDA NO. 09-28 Tuesday, November 17, 2009 6:00 p.m. Council Chambers Mayor Morris in the Chair I DECLARATIONS OF PECUNIARY INTEREST H APPROVAL OF AGENDA RECOMMENDED: THAT the agenda as circulated by the Corporate Services Department be approved. 111 DELEGATIONS a) Representatives from Grant Thornton Auditors Re: 2008 Financial Statements and 2009 Audit Plan IV CONSIDERATION OF ITEMS Special General Committee — Audit Committee - Meeting No. 09-28 Tuesday, November 17, 2009 Page 2 of 3 V CLOSED SESSION There are no scheduled Closed Session agenda items; however, subject to procedural compliance with the Municipal Act, 2001, this Committee may request a Closed Session Meeting with the Auditor, with or without Corporate and Financial Services Staff present, to discuss personal matters about an identifiable individual, including municipal or local board employees, or matters concerning the security of the property of the municipality or local board, including financial assets. VI ADJOURNMENT Special General Committee — Audit Committee - Meeting No. 09-28 Tuesday, November 17, 2009 Page 3 of 3 AGENDA ITEMS 1. AC09-002 —Year End Audited Financial Statements pg. 1 RECOMMENDED: THAT the 2008 Audit Report and Financial Statements for the year -ended December 31, 2008 be received and published on the Town's web site in accordance with Section 295 of the Municipal Act, 2001. 2. AC09-003 — 2009 Audit Plan pg. 46 RECOMMENDED: THAT the 2009 year end Audit Plan as proposed by Grant Thornton be endorsed; and THAT Grant Thornton be engaged to complete the planned audit at a fee not to exceed $60,300 plus disbursements and applicable taxes; and THAT the Treasurer be authorized to approve additional fees up to a further 10% for additional works and efforts required of the audit in the event of adverse findings, or required assistance to staff or similar costs are incurred. Special General Committee - Audit Committee November 17, 2009 ITEM # TOWN OF AURORA ALJIZORA AUDIT. COMMITTEE REPORT No.AC09-002' SUBJECT: Year End Audited Financial Statements FROM: Dan Elliott, Director of Corporate & Financial Services- Treasurer DATE: November 17, 2009 RECOMMENDATIONS THAT the 2008 Audit Report and Financial Statements for the year -ended December 31, 2008 be. received and published on the Town's web site in accordance with Section 285 of the Municipal Act, 2001. PURPOSE To present for approval the audited financial statements for the year ended December 31, 2008, and the auditor's report therefore.' BACKGROUND The presentation of the audited financial statements for 2008 has been delayed for a . number of reasons, primarily related to the transition of Treasurers for the Town. This presentation represents the entire audit for 2008 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. These items were identified during the audit process and discussed with management on an ongoing basis throughout and following the actual field work of the audit. Appendix C on page 12 of the audit report contains the Management Letter. This is the section of the report that brings forward the Auditors' areas of concern identified in the in the course of the audit: The management letter identifies four items in total and the report identifies the Auditors observation and their recommendation followed by Management Status Update. Such report allows Council to understand the issues and how management has dealt with or propose to deal with each. In the prior year, seven items of concern were brought forward. As part of the current year work, the auditors confirm that the prior concerns have been adequately addressed, failing which they would re -report them to Council. . Our Auditors will be in attendance to present their report and findings. -1- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1-2 November 17, 2609 - 2 - Report No. AC09-002 The financial statements are presented as Attachment Q. These statements are the Town's statements prepared by staff and as audited by our Auditors. These statements report the same results as previously reported to you in staff report FS09-010 on March 2, 2009, however the detailed presentation may differ, reflecting the formal accounting presentation requirements and consolidations. COMMENTS We did provide Council with a preliminary estimate on our 2008 operating surplus with Financial Services Repart.No. FS09-010. 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 Library Board did in actual fact have a surplus of $54,256 but it has been the practice in the past for the Library to move any surplus to the Library Capital Reserve fund. Water/Wastewater Department had a deficit and this was explained in Financial Services Department Report FS09-013, 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 $916,961. FINANCIAL IMPLICATIONS Report No. FS0M10 and FS09-013 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 the .audited consolidated financial statements as required by legislation. Given the timing of this report, staff recommend that the reports be published only on the web site, and that notice of their availability be made in the weekly bulletin pages fortwo consecutive weeks. OPTIONS 1. Audit Committee is encouraged to ask .questions of the auditors to .better understand their process and proposed outcomes. 2. Staff are not presently aware, of any such concerns; however the Audit Committee may choose to move into a. closed session to address any questions related to the security of the financial. assets of the Town, including discussion of any specific. concerns related to internal controls, or the professional competence and/or capacity of staff. At. -the discretion of the Chair, the closed session or parts thereof, may specifically exclude any or all staff, save and except the Clerk of the meeting. -2. Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 3 November 17, 2009 - 3 - Report No. AC09-002 CONCLUSIONS Staff continue to monitor the financial processes for areas of efficiency opportunity. Any time. change in a process is considered, staff always give full consideration to the impact any proposed changes would have on existing internal controls, and the adequacy thereof. Any deliberated changes made are approved by the Director, and drawn to the auditors' attention during the next audit. ATTACHMENTS Attachment #1 - 2008 Audit Report Attachment #2 - 2008 Audited Financial Statements PRE -SUBMISSION REVIEW Executive Leadership Team Review-- Wednesday, November 11, 2009 Prepared by. Dan Elliott, Director of Corporate & Financial Services -Treasurer -Ext. #4772 V Dan Director of Corporate & Financial Services - Treasurer ,Z Y Neil Garbe Chief Administrative Officer -3- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1-4 ATTACHMENT #1 0 GrantThornton Report to the Audit Committee - Communication of Audit Results The Corporation of the Town of Aurora For the year ended December 31, 2008 4 Special General Committee - Audit Committee - November, 17, 2009 ITEM # 0 GrantThornton April 16, 2009 Grant Thornton LLP Suite 200 15 Mstate Parkway Markham, ON UR 5B4 T (4%) 366-0f(1) F (905) 476.8006 www.GrantThnnton.ca To the members of the auditconunittee of The Corporation of the Town of Aurora We are 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 December 31, 2008. We have attached our draft auditors' report We will finalize this auditors' report once we have the oppoilunity to discuss the results of our audit with you. The report to the audit cotmnittee, has been prepared in accordance with the assurance recommendations issued by the 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 conunittee various matters including: the overall audit strategy, out responsibility as auditors, any matters arising from the audit, misstatements, significant accounting policies, andany 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 any particular continents or concerns, please do not hesitate to raise them at our scheduled meeting. Yours sincerely Grant Thornton Ld,P Allister Byrne, FCA Partner Audi- Tax•Ad*nry - 5 -_ Grant Thwolm LLP. A emn&on M.bw ul Giant Th.l.InlundlanA Ltd Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 6 Contents Page Status of the audit 1 Audit results 2 Reportable matters 3 Appendix A — Draft auditors' report 5 Appendix B — Draft management representation letter 7 Appendix C — Internal control letter 12 -6. Special General Cy�om#eye-�1uc��t C�pmmit ee - Nc�e�nber17 2009 ITEM # 1 y epor4 to a udtf ommi ee - oinmunlca ion of Audi tra egy and es is The Corporation of the Town of Aurora For the year ended December 31, 2008 Status of the audit We have substantially completed out audit of the consolidated financial statements of The Corporation of the "Town of Aurora (the "Town") for the year ended December 31, 2008 and the results of that audit are included in th s report. As noted in the covering letter, we have attached our draft auditors' reports 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. .7 Special General C�omr4�t�e -Audit Committee - November 17 2009 ITEM # 12 8 p oport a to udif atmn7tLee—Communicat on of Audi Strategy and Resutiis "rho Corporation of the Town of Aurora For late year ended December 31, 2008 IIF 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 tausstatements wltn management ana trey nave conuaucu Aat, individually and in aggregate, these unadjusted misstatements are not material to the consolidated financial statements of the Town. Summary of disclosure matters Out audit did riot identify any misstatements. Additional 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, 2,008 These additional scrwices affected the planned nature and scope of the audit by requiring mote detailed substantive procedures to be performed around the Federal Gas Tax revenues and related expenditures. WM Special General CRomt�o��t9e.-�Aucj t CommRtjee - N?�ye�nber'17 2009 ITEM # 9 sport o e udtt nmmt oe- Commun ca Ion of Aud tra egy and Resujts 3 The Corporation of the Town of Aurora For the year ended December 31, 2008 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 die entity. Through our role as auditors of your consolidated financial statements we possess an understanding of die entity and its environment, including internal control. However, a financial statement audit is not designed to provide assurance on internal control. Professional standards do require us to connmuricite 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: -9- Special General Cog 4 dAl I�CkapRA AVd?fit l � & 7,nf5?-009 ITEM # 1 -410 The Corporation of the Town of Aurora For the year ended December 31, 2008 ' Sensitive accounting estimates and disclosures During the course of our audit, we noted the following sensitive accounting estimates and disclosures: ,Liability for employee benefits: The Town has recognized liabilities for employee benefits as disclosed in Note 5 of the financial statements, the employee benefits include health and denial benefits that are provided to early retirees, future retirees, and employees currently on a long -terra disability. The objective of the accounting policy is to recognize it 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 out 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 January 5, 2009, which confirms our independence with respect to the Town. We re -confirm 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. - Accounting and auditing standards There are no new accounting or auditing standards issued since our last communication with you on January 5, 2009. -10- Special General 4MMWR%ic�o�tM,fiilL ATAP09 . ITEM # 1 -s" The Corporatlon of the Town of Aurora For the year ended December 31, 2008 Appendix A ...., Draftdo' �'�. l Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 12 Or GrantThornton Au&tors' report — Town. Grant Thomtnn LLP Suite 200 15 Allstate Parkway Markham, ON UR 5B4 T (416) 366-o10o F (906) 475.0906 www.GrantThcmton,ca To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Town of Aurora We have audited the consolidated statement of financial position of The Corporation of the Town of Aurora as at December 3'1, 2008 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 assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In out opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Town as at December 31, 2008 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 15, 2009 Chartered Accountants Licensed Public Accountants Audit•Tax-AdNsoq - - 1 2 - GrslThomlon LLP.A Carden btrmbv of Groot Thad.Imanaliond Ltd Special General Cpm MIRit3te�e r, egy`QudtteC�ommitt� epFANo e,Tnbetl 7j�t2009 The Corporation of the Town of Aurom For the year ended December 31, 2008 . ITEM # 1 - 13 Appendix p; r r:manarvement representation letter -13- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 14 DIM April 15, 2009 Grant Thornton T LP 15 Allstate Parkway Suite 200 Markham, ON L31t 5B4 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, 2008, and for the year then ended, for the purpose of expressing an opinion as to whether: die 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. There are no significant deficiencies, including material weaknesses, in the design or operation of internal control over financial reporting of which we are aware that could adversely affect the company's ability to initiate, authorize, record, process, or summarize and report external consolidated financial data. 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 die circhunstances, 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 15, 2009, 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, 2008 and the results of its 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 corntnittees of directors. Sunvnaries of actions of recent meetings -14- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 15 for which minutes have not yet been prepared have been provided to you. and committee actions axe included in the summaries. PW All significant board 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. 5. We are unaware of any violations or possible violations of laws or tegulations the effects of which should be considered for disclosure in the consolidated financial statements or as die 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 I:his 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. Fraud and error 8. We have no knowledge of fraud or suspected fraud affecting the entity involving management; employees who have significant toles in internal control; or others, where the fraud could have a non -trivial effect on die consolidated financial statements. 9. We have no knowledge of any atlegations of fraud or suspected fraud affecting the entity's financial statements communicated 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 instthniients as measured and disclosed in tire consolidated financial statements arc 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 stateancnts. -15- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 16 D°d 13'. All related party transactions have been appropriately treasured and disclosed in die consolidated Financial statements. 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 texir and the effect of the change could be material to the consolidated financial statements. 15. Any business combination that occurred during the yeas has been properly accounted for with appropriate consideration of amounts that should be allocated to goodwill and other intangible assets. 16, Anygoodwill ot.intangibles on the books of the entity are evaluated annually to determinewhethet or not they have been impaired, and an appropriate loss provision is provided in the accounts where there has been a permanent impairment. 17. All outstanding and possible claims, whether or not they have been discussed with legal counsel, have been disclosed to you. 18. All liabilities and contingencies, including those associated with guarawees, whether written or oral, have been disclosed to you and are appropriately reflected in the consolidated financial statements. 1'9. All "ofCbahrice 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 recogtuied, measured and disclosed, as appropriate, in the consolidated financial statements; and c) comnutinents 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 (GST) and Harmonized Sales "fax (HS J) 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: -16- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 17 D°o 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. 26. Any operating segments have been appropriately identified and disclosed in accordance with the standards as set forth in PSAB. Section 2700 - Se went Diselosares of the Canadian Institute of Chartered Accountants. Handbook — Accounting. Refer to Note 16 in the consolidated financial statements. 27. 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 financi,, statements and related notes. Other 2& 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 work papers. Yours very truly, ..................................-............... Chief Adininistrative Officer ..................... I ........... ................. Director of Finance/Treasurer .17- Special General CRoOpor mitlt3te� aii�ou�1¢t©Cormmittee Noion of Audit Stembegy ��l7�it2009 ITEM # I j18 The Corporation of the Town of Aurora For the year ended December 31, 2007 Appendix C - Internal control .'18- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 19 0 GrantThornton Members of the Audit Committee The Corporation of the Town of Aurora 1 Municipal Drive, Box 1000 Grant Thornton LLP Aurora, ON Guile 200 15 Allstate Parkway LAG 6J1 Markham, ON UR 5D4 _ - T (4i6) 3060100 F (905) 475-0006 www.GranlThwnton.ca April 15, 2009 Dear Committee Members: Internal control findings from the 2008 audit 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 LL P 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 an audit opinion on the annual financial statements of the Town. The matters dealt with in this letter came to our attention daring the conduct of our normal examination, and as a result, this letter may not necessarily include all anatters that would be uncovered through a more extensive exanvnation. It is management's responsibility to weirgh 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 15, 2009. We have not updated our procedures regarding these matters subsequent to that date. Avdit•TavAdHsory - 1 9 - GlntThunl.Lul,ACamdenMn.bh al Gram Thwnlm lmr.orand Ud Special Genermmittee - Audit Committee - November 17, 2009 ITEM # 1 - 20 WGranffhornton This communication is prepared solely for the information of management and is not intended for any other purposes; we accept no responsibility to a thud party who uses this communication. Thank you for the opportunity to contribute to the present and future success of the Town. Yours very truly, Grant Thornton T LP � �L/9 7 Allister Byrne, F.C.A. Partner cc Neil Garbe, Chief Administrative Officer Dan Elliot, Director of Corporate & Financial Services - Treasurer -20- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 21 A. Findings Arising From This Year's Audit 1. Water Loss 01i.remation The difference between water supplied by the Region and water billed by the Town ('water loss') is not being reconciled. In current year the water loss has increased by 141,000 cubic meters compared to prior year and the reasons for the increase were not adequately investigated by the Town. Iin dicat' Water loss increases may indicate various issues such as: • the Region's error in measuring of the water actually supplied; • the Town not billing for the water actually consumed due to the measuring errors on the Town side. Without properly reconciling and investigating the reasons in water loss year-to-year variances, the above errors will remain undetected and result in the Town overpaying the Region for the water consumption and/or not collecting all of the Water and Sewer revenue from the residents. Recommendation The Town should compute the water loss on at least the annual basis and determine die reasons for any significant variances. Management Comment "Unaccounted for water" is the difference between the Region's billing to the Town, and the Town's total billings to its clients. Reconciling water loss as the difference between the Region's billings and the Town's retail volumettic billings is a most difficult task due to the differences in timing of the reading of each set of meters. 'The Region's trunk supply meters at the Town's borders are read simultaneously using remote electronic systems, along with all other border meters in die Region's system. These are read every two months for billing purposes. The Town's retail meters are not read simultaneously, rather on a quarterly cycle. Unaccounted for water arises from several sources including use for fire fighting and training, water main breaks, hydrant and main flushing activities Ofrnaintenauee, new development mains charging and sterilization, unnetered parks maintenance activities,.theft of water through hydrants, theft of water through meter bypasses, unmetered water accounts, and.naturally occurring "meter slippage". Meter slippage represents water amounts passing through meters undetected, which increases as a meter ages said wears, giving rise to the need for a formal meter replacement program. Beginning with the 2010 budget, Town staff Will be considering water loss in preparing the budget and user rates fot.waeer and waste water activities. Water loss containment itunatives are currently underway with our capital program, and will continue in future years with mains replacements and condition assessments. Water loss rnorvtoring will be a_ recurring activity for staff of both the Financial Services group, as well as the Water Operations group. -21- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 22 2. Region Invoices Observation Invoices billed to the Region by the Town have not been showing up on Regional Summaries and are not being followed up by the Town. Invoices dated 2003 — 2007 and totalling ..131,318 ate still outstanding at the end of the year 2008. Im dicatian . The receivable from the region may be over stated. Recommendation The Town should investigate, on a regular basis, all reconciling items and take them up with the Region. Management Comment The items noted as outstanding were addressed irrunediately when brought to our attention by the audit team. The particular items were settled with the Region in conjunction with a longstanding item which was payable to the Region from the Town. The net settlement favoured the Town slightly. Town staff regularly follow-up outstanding teceivable: items with reminder notices. Most such items are not of material amounts. It is anticipated that changes proposed in the 2010 budget within the Financial Services group will reallocate and add some additional resources to the capacity of the group, allowing such detailed monitoring to again take place. regularly. B. Status of Findings in Previous Management Letters I. Remote access authentication Observation Remote access to the Town's iT environment still requires only a single level of authentication (i.e. the LAN password). Im licatlnir 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 die corporate systems they are physically present in die organhmEon's premises. This provides a level of verification of the user over the submission of a password, since non -corporate personnel would have to overcome physical safeguards such as locked doors, windows, and open office environment, before they could have physical access to a computer terininal 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 -22- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 23 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 fingetprmt)). Recommendation We recommend that die Town analyze its information security risks related to remote access. Then a decision can be made to either accept the increased risk of weals 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"). Management Raoon e A two factor authentication project was iodated in 2009. Staff have acquired and deployed hardware tokens for remote access users, as well as software based tokens for Blackberry users. 2. IT control actAdhes are not documented Observation 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 'I11e results of operating system and database level patch festing Im�liw ionr . The lack of documented or irnplemuited polices, processes, and evidence of execution of IT control activities, limits the ability ofmanageinent to ensure: • The controls procedures were performed on a timely basis, and by die appropriate individuals • Exceptions were handled appropriately; and, • - Sufficient evidence of the design and operational effectiveness of IT general controls is available for IT Governance Recommendation Management should continue to develop and implement IT general control based policies and processes. Manavement Rei-tonse The recently adopted IT Strategic Plan identified resource constraints within the.IT group. In the 2010 budget, IT Management has recommended the hiring of an additional resource to be responsible fox ongoing network support and maintenance routines, including tasks such as documentation. With budget approval, this position would be in place by Q2, 2010. -23- Special General Committee - Audit Committee - Nov -ember 7 #2009 ITEM # 1 - 24 JACHMEOW Gran Thornton Consolidated Financial Statements The Corporation of the Town of .Aurora December 31, 2008 Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 25 Contents Page Auditors' Report 1 Consolidated Statement of Financial Position 2 Consolidated Statement of Financial Activities 3 Consolidated Statement of Changes in Financial Position 4 Notes to the Consolidated Financial Statements 5 -13 Schedule of Operating Fund Activities — Schedule 1 14 Schedule of Capital Fund Activities — Schedule 2 15 Schedule of Reserves and Reserve Funds Activities — Schedule 3 16 Segment Disclosures —Schedule 4 17 - 20 GranThnrttton - 25 - Special Ge al Committee - Audit Committee - November 17, 2009 ITEM # 1 - 26 ? GrantTharnton: Auditors' report D15AusGrant Thornwn LLP TEN U6 Allstate Parkway Markham, ON UR 5B4 T (416) 366-0100 F (905) 475-0906 www.GrantThornton.ca To the Members of Council, Inhabitants, And Ratepayers of the Corporation of The Town of Aurora We have audited the consolidated statement of financial position of the Corporation of the Town of Aurora as at December 31, 2008 and the consolidated statements of operations, consolidated statement of net financial assets, consolidated statement of cash flows, consolidated operating fund statement, consolidated capital fund statement, and consolidated reserves and reserve funds statement 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 consolidated financial statements are free of material rrsstatement. An audit includes examining, on a test basis, evidence supporting the aenouints and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated 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, 2008 and the results of its operations and its cash flows 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 15, 2009 Chartered Accountants Licensed Public Accountants AAR-Tax -Advisory 1- 26 -, Cont lhwoW LLP.ACanadbn M.W oIGIW T ffinlnler bmi Lld Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 27 THE CORPORATION OF THE TOWN OF AURORA Consolidated Statement of Financial Position December 31, 2008 Assets Cash and cash equivalents (note 1) Temporary Investments (note 2) Taxes receivable User charges receivable Accounts receivable Investment in Borealis (note 3) Liabilities Accounts payable and accrued liabilities Deposits and deferred revenue Deferred revenue - Obligatory reserve funds (note 4) Employee future benefits liabilities (note 5) Long Term Debt (note 6) Net Financial Assets Municipal Position Fund Balances Operating Fund (Page 14) Capital Fund (Page 15) Reserves and Reserve Funds (Page 16) Equity in Borealis To be recovered from future revenues (Note 6) 2008 2007 $ 28,615,199 $ 31,907,130 47,121,706 33,210,366 6,992,902 5,579,100 2,979,627 3,674,091 783,652 1,830,957 1 1 86,493,087 76,201,645 8,901,929 7,442,170 3,184,544 3,895,709 19,039,251 10, 769,471 685,314 649,146 13,193,234 14,483,031 45,004,272 .37,239, 527 $ 41,488,815 $ 38,962,118 $ 301,348 $ 362,217 8,213,030 9,728,285 46,167,670 43,354,646 1 1 54,682,049 53,445,149 (13,193,234) (14,483,031) Municipal position $ 41,488,815 $ 38,962,118 Contingencies (note 11) See accompanying notes to the consolidated financial statements. 2 -27- Special General Committee - Audit Committee.- November 17, 2009 ITEM # 1 - 28 THE CORPORATION OF THE TOWN OF AURORA Consolidated Statement of Financial Activities Year ended December 31, 2008 Budget 2008 Actual 2003 Actual 2007 (unaudited) Revenues Taxation (Note 7) $ 25,126,928 $ 25,699,269 $ 23,503,783 User charges 19,858,826 18,782,544 20,S50,537 Grants 3,116,362 4,674,707 832,427 Other (Note 8) 6,147,262 9,789,735 7,736,034 Expenditures Operating General government Protection to persons and property Transportation services Environmental services Leisure and cultural services Planning and development Capital 54,249,378 58,946,255 52,622,781 5,897,439 5,732,330 5,264,080 8,143,697 8,151,190 7,650,207 3,339,991 3,521,239 3,218341 11,255,127 10,566,278 9,730:413 12, 661,146 12, 446, 741 11, 653, 286 1,331,996 1,275,974 1,201,4.92 42,629,386 41,694,252 38,717,819 .General government 821,845 415,022 218,608 Transportation services 6,461,01.8 7,196,487 5,971,067 Environmental services 3,292,285 1,280,894 1,899,820 Leisure and cultural services 5,126,333 5,664,543 2,518,068 Planning and development 260,000 132,192 83,581 15,961,481 14,689,138 10, 691,084 Total expenditures (note 9) 58,590,867 56,383,390 49,4m,903 Net revenues (expenditures) (4,341,489) 2,562,865 3,213,878 Financing and transfers Principal repayment on longterm debt (1,289,797) (1,289,797) (1,240,500) Changes in employee benefit obligation (36,168) (61,025) Change in fund balance $ . (5,631,286) $ 1,236,900 $ 1,912,353 See accompanying notes to the consolidated financial statements. 7 - 28 - Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 29 THE CORPORATION OF THE TOWN OF AURORA Consolidated Statement of Changes in Financial Position Year ended December 31, 2008 Increase (decrease)in cash and cash equivalents Operating activites Netrevenues Uses: Increase in tax receivable Increase in user charges receivable Increase in temporary investments 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 longterm debt Net decrease in cash during the year Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Fm [I1A $ 2,562,865 $ 3,213,878 (1,413,802) (13,911,340) (711,165) (16,036,307) 694,464 1,047,305 8,269,780 1,454,759 11,471,308 - (2,002,134) (1,283, 663) (16,430,694) (17,714,3S7) 252,061 223,363 4,423,OD7 541,148 419,106 5,858,685 (8,641,794) (1,289,797) (1,240,500) (3,291,931) (9,882,294) 31,907,130 41,789,424 $ .28,615,199 $ 31,907,130 - See accompanying notes to the consolidated financial statements. 4 -29- Special General Committee Audit Committee - November 17, 2009 ITEM # 1 - 30 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 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. 1. 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. -30- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 -31 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 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), a 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 a fixed 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. Deferred revenue 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. -31- Special General Committee - Audit Committee - November 17, 2009 ITEM # I - 32 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 1. Summary of significant accounting policies (continued) Budget figures The approved operating and capital budgets for 2008 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 actual. 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 fund when 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. Borealis Hydro Electric Holdings Inc. is the former owner of Aurora Hydro and has no assets. 7 -32- Special General Committee - Audit Committee- November 17, 2009 ITEM # 1 - 33 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 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: Development charges Park purposes Building Code Act, 1992 Federal Gas Tax Development charges transferred to capital but unexpended at the end of the year 5. Employee future benefit obligations 2008 2007 $ 5,824,416 $ 1,313,147 9,949,761 6,714,692 2,447,138 1,160,042 187,014 181,870 18,408,329 9,369,751 630,922 1,399,720 $ 19,039,251 $ 10,769,471 2008 2007 Employee future benefits $ 522,899 $ 486,731 Accrued sick leave 131,715 131,715 Accrued overtime 30,700 30,700 $ 685,314 $ 649,146 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. 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 2008 2007 $ 522,899 $ 486,731 $ 486,731 $ 425,706. 27,567 45,642 24,724 25,932 (16,123) (10,549) $ 522,899 $ 486,731 . -33- 8 Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 34 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 5. Employee future benefit obligations (continued) Actuarial evaluations for accounting purposes are performed every three years using the projected benefit method prorated on services. The last actuarial valuation carried out was December 31, 2007 and an actuarial update to December 31, 2008 was made. 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 was determined 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 4.0% in 2008 and thereafter. 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. 2008 2007 $ 9,376,000 $ 10,517,000 _3,817,234 3,966,031 $ 13,193,234 $ 14,483,031 The debentures were issued by The Regional Municipality of York, on behalf of the Town, to fund the construction of the Town's new recreation complex. 9 -34- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 35 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 6. Long term debt (continued) Principal repayments for each of the next five years and thereafter are as follows: 2009 $ 1,342,372 2010 ..1,397,237 2011 1,453,406 2012 1,511,891 2013 1,573,708 Thereafter 5,914,620 $ 13,193,234 7. Net taxation charges Total taxes levied by the Town Less: Taxes levied on behalf of the Boards of Education Taxes levied on behalf of the Region of York 8. Other revenue Operating Penalties and interest on taxes Fines Rents and leases Interest income Other Capital Proceeds from other municipalities Proceeds from developers Other Reserves and Reserve Funds Interest income . Other 2008 2007 $ 88,015,583 $ 82,163,712 27,402,307 26,355,890 34,914,007 32,304,039 $ 25,699,269 $ 23,503,783 2008 2007 $ 830,210 $ 782,678 485,710 502,878 2,583,397 1,830,024 1,649,471 1,351,043 519,135 676,502 6,067,923 5143125 (62,158) (93,524) 698,616 634,302 T 698,616 478,620 1,569,633 1,953,279 1,453,563 161,010 3.023,196 2,114289 $ 9,789,735 $ 7,736,034 - 35. 10 Special General Committee - Audit Committee - November 17, 2009 ITEM # 1, - 36 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 9. Classification of expenditures by object 2008 2007 Expenditures by object consist of the following: Salaries, wages and benefits $ 17,178,453 $ 15.512,565 Interest on long term debt 598,638 650,372 Contracted services 20,408,450 17,714,893 Materials and supplies 4,074,062 5,446,224 Capital and other 14,123,787 10,084 849 $ 56,383,390 $ 49,408,903 10. Pension agreements The Town makes contributions to the Ontario Municipal Employees Retirement System j"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 2008 ranged from 6.5% to 10.75% depending on the level of earnings. The 2008 operating expense for OMERS was $821,336 (2007 - $746,847). 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. 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 $6,185,337 (2007 - $5,911,870). -36- 11 Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 37 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 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 $67,576 (2007 - $64,487). 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, 2008, these reserves amounted to $254,736 (2007 - $270,361). The Town was a member of the Ontario Municipal Insurance Exchange which became a licensed group for liability insurance coverage on October 1, 1996. The Town's insurance is now with another carrier. 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 1n June 2006, Public Sector Accounting Board (PSAB) approved the revisions to Section 3150 of the Public Sector Accounting Handbook -Tangible Capital Assets. Section 3150 states that effective January 1, 2009 all municipal governments will be required to capitalize Tangible Capital Assets (TCA) at historic cost and amortize these assets over their useful life. 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 (CICA) with respect to the disclosure of tangible capital assets of municipal 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 2008, the Town continued to work towards compliance with the above new requirement for accounting for tangible capital assets. As of December 31, 2008, the Town has significantly completed the inventory of the assets and their valuation process. Fully completed and audited asset inventory and valuation will be disclosed in 2009 consolidated financial statement. 16. Segmented information In Schedule 4, the Town's services and programs are grouped and reported based on functional classification. Revenues are reported by source such as user charges, government grants and other revenues and they are allocated to the functional area they related to. Expenditures are reported by object. The accounting policies used .in these segments are consistent with those followed in the preparation of the consolidated financial statements as disclosed in Note 1. Governance& Corporate Support This functional segment includes The Mayor office and Council, GAO Office, Corporate Services, Legal, Communication, Information Technology and Financial Services Department and all other support services. 12 - 37 Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 38 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2008 16. Segmented information (continued) Fire & Emergency Services Central York Fire Services provides fire and Emergency services to the residents of Aurora and Newmarket. The cost the Town paid for these services described in Note 12. Bylaw & licensing Services The Town issues a variety of licenses and permits. This segment ensures an acceptable quality of building construction and maintenance of properties though enforcement of construction codes, building standards and by-law for the protection of occupants. It facilitates economic development by providing services for the approval of all land development plans, the application and enforcement of zoning by-laws and the processing of building permit applications. Environmental Services This segment represents the water/sewer services and waste management services provided by the Public Works Department. Roads & Related Services This segment represents the reconstruction, repair, maintenance works and winter control services provided to the Town's roads, sidewalks, walkway and bridges. Planning & Development This functional segment manages the Town's urban development for business interest, environmental concerns, heritage matters and. local neighbourhoods through the Town's Official Plan. Community Programs & Events This segment represents the services the Leisure Department provided through the community programs and special events. Parks & Facilities . This segment maintains numerous recreation facilities, as well as indoor community space for booking and community use. It also maintain parks and playgrounds, open spaces and a vast trail system. Public Library Services The segment of library services covers Library Board and The Town's library expenses. The funding from the Town to the Library Board is eliminated before the segment amount is determined. Taxation Revenue The Town's primary source of funding for its operations is achieved through property taxes levied against property owners. 15. Comparative figures Certain comparative figures in these financial statements have been reclassified to conform with the presentation adopted for the current year. 13 - 38 Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 39 THE CORPORATION OF THE TOWN OF AURORA Schedule of Operating Fund Activities Year ended December 31, 2008 Revenues Taxation (Note 7) User charges Grants Other (Note 9) Expenditures General government Protection to persons and property Transportation services Environmental services Leisure and cultural services Planning and development Netrevenue Financing and transfers Principal payment of longterm debt Changes in employee benefit obligation Transfer to reserves Transfer to capital fund Change in operating fund Operating fund balance, heginning of year Operating fund balance, end of year Schedule 1 Budget 2008 Actual 2008 Actual 2007 (unaudited) $ 25,126,928 $ 25,699,269 $ 23,503,783 17,003, 716 16,544,915 17,026,660 854,495 872,071 795,427 6,038,460 6,067,923 5,143,125 49,023,599 49,184,178 46,469,995 5,897,439 5,732,830 5,264,080 8,143,697 8,151,190 7,650,207 3,339,991 3,521,239 3,218,341 11,255,127 10,566,278 9,730,413 12, 661,146 12,446,741 11, 653, 286 1,331, 986 1,275,974 1,201,492 42,629,386 41,694,252 38,717,919 6,394,213 7,489,926 7,751,176 0. (36,168) (61,025) (4,289,436) (4,589,053) (4,609,255) (2,518,500) (2,926,574) (3,020,396) (6,807,936) (7,550,795) (7,690,676) (413,723) (60,869) 60,500 362,217 362,217 301,717 $ (51,506) $ 301,348 $ 362,217 See accompanying notes to the consolidated financial statements: 14 -39- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 40 THE CORPORATION OF THE TOWN OF AURORA Schedule of Capital Fund Activities Year ended December 31, 2008 Revenues User charges Grants Other (Note 9) Expenditures General government Protection to persons and property Transportation service's Environmental services Leisure and cultural services Planning and development Net revenue Financing and transfers Issuance of longterm debtenture Principal payment of longterm debt Transfer from operating fund Transfer from reserves Transfer from reserve funds Change in capital fund balance Schedule 2 Budget 2008 Actual 2008 Actual 2007 (unaudited) $ 2,855,110 $, 2,845,269 $ 3,721,611 2,261,867 1,439,110 37,000 108,802 698,616 478,620 5,225,779 4,982,995 4,237,231 821,845 415,022 218,608 6,461,018 7,196,487 5,971,067 3,292,285 1,280,894 1,899,820 5,126,333 5,664,543 2,518,008 260,000 132,192 83,581 15,961,481 14, 689,138 10, 691,084 (10,735,702) (9,706,143) (6,453,853) (1,289,797) (1,289,797) (1,240,500) 2,518,500 2,926,574 3,020,396 175;000 1,758,768 3,266,469 55,000 4,795,343 4,608,752 1,458,703 8,190,888 9,655,117 (9,276,999) (1,515,255) 3,201,264 Capital fund balance, beginning of year 9,728,285 9,728,285 6,527,021 Capital fund balance, end of year $ 451,286 $ 8,213,030 $ .9,728,285 See accompanying notes to the consolidated financial statements. -40- Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 41 THE CORPORATION OF THE TOWN OF AURORA Schedule of Reserves and Reserve Funds Activities Year ended December 31, 2008 Revenues User charges Net changes in obligatory reserve funds Grants Other (Note 9) Financing and transfers Transfer from operating fund Transfer to capital Change in reserve balance Reserve balance, beginning of year Reserve 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 Other management Reserve funds, set aside for specific purposes by legislation, regulation or agreement Total reserves and reserve funds Actual 2008 $ 7,662,140 (8,269,780) 2,363,526 3,023,196 4,779,082 4,588,053 (6,554,111) (1,966,058) 2,813,024 Schedule 3 Actual 2007 $ 7,794,924 (7,992,657) 2,114,289 1,916,556 4,609,255 (7,875,221) (3;265,966) (1,349,410) 43,354,646 44,704,056. $ 46,167,670 $ 1,883,088 1,347,801 4,386,883 34,283,517 41,901,290 $ 43,354,646 $ 2,613,992 1,429,759 3,333,805 32,884,021 40,261,577 4,266,380 3,093,069 $ 46,167,670 $ 43,354,646 See accompanying notes to the consolidated financial statements. 16 MINE Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 42 c-I l0 t0 N N lD H N � m h o u_ o ri m ui vi ri o00 �ri ro 'CS Nho mO't O ON N N N Om C U u J 00 O N 4 N ' N W ' ' .-I 00 N O N N V -V' �- y, _N 0�'1 H 00 lND (n l�0 C N N M O O u) Lml1 LLr i - CIl U N o N r' m m rn v° n E m m b N N Ol e-1 O M u C eq - - 00 M M N 00 N N N H rA M _ LL l0 V) UI Y @ O C 0 U H N m d' N rn o m u H oo w m M N N �. o 01 N cl Ma . ' n in � H W iD .� ut ,' co .a ui'�- �' - o M V1 Ol O1 N W CO to DO N m O N O 00 0 D a d a n v o 1 0 0 D a 5� a v ; W- N m m �D m N m o m m - n a U' @ 00 w H LD N N M N M M 00 E. N rn o N M o aoD �- m oo a Ou C: ? O C O' r` N' ei V] tD V'1 z O i7 O N 00 N 00 w lD o0V M N H N rl V N 14 rh N H J @ to L(J x I"- 00 LL O CD N z O a "' L VI N O L CJ v I ro = a kA x °..:� 0 °'- �v x v� c OC L2 v 3 o r 3 0 F m m Q m L) �'o � v +' @ L x > W . u N .Y L a a y L@ = d s_ y r M) @ L 0 @ o @ n f1 U.7i U= L O a a' qoJ. w (7 X 17 I-' Ln >- w w -'42 - Special General Committee - Audit Committee - November 17, 2009 ITEM # 1 - 43 h T O c-I c-I .-I O M N Ot 00 W M 00 h Ol h Qi y Ol ul ul O M ill 00 ' O [Y _ h N O W O Ol M M CO d' w d' Ul CO a -I 11 N O. �= W Q Q LL O z 0 00 LL O O O N z M to O L7 dl EA E O N 0 U Vl � a Q 0: -o O c VLu w Z a 0 C IDt00D ONl lgll ONl N ahl lM0 Ohl '_ M al 00 r1 M r 1 r i C COLn O L Lr ti t11 aN Lnn N eM-1 C 00 N V O VO" lM0 .N-I 0M1 cc CO ai U O ' N ' N M W 00 to tD tD LIt N d� O N N Vl Ol !'�, CO m M 01 N N .-1 Lr to 'O t0 a a 00 N O 0) N lM0 M 0000 to N w h r. 00 a w h - h of 00 n O h q M lA M d' l0 N' N hV � N VN"h W N N r, �q-1 00 0000 h .-1 m vi ri h o vi - Ill .-I lD m CO l0 v1 m 00 0) t 0Q0 Lr Lr' p M .-I r N M' ci rr 1+'i N Ol v 0 `r h DD O c m c by 00 LM al a m o ur NItq CDio ao M o0 q of i-1 m '> q Cs M, 6 1z r- o of ai h' ui C. q M M M O 00 00 N ct cF d' W N H .-I N In N N V w 00 m O 6 ti ti 06 iy N b0 M s U 0l v�Z)c"Do0 a 0 0 O 7 18 -43- Special General Committee - Audit Committee - November 17$ 2009 ITEM # 1 - as V N O n r r H It tq M V vi 0 I, N d' 00 CO CO M CO rl O) 00 ONO lD N ui O tD' O O Q LL O Z O F- LW Z 00 LL O N z _O v M C O O U v U � N fo a o � U � � QI w H N r J N u 0- N M <P H M M N H h .fl CO o in IA lD a m o v m M v w� a N H N o a) M N N I`, 'U It O It 00 0) O O M N O O N H O M d' N O In r, h d' r, N O H N r-- V M M M I`, H 0) 0 N M r M w d o M C) w N N 00 H O M O) M W h U) i+ LL 06 M N 00 h w lD H N 41 01 Ff1 M 00 M M M w 00 M tD 00 M N a Ca M w M MO- W M M r, N O r, M r, 00 q' M M N c}• 'ti v1' V V c-I o7 - h LO 00 Lu O lOD a f` W 'T M ' ti l!1 r lD 0) 00 O n N tT UO n v O o` D E G O N ' N Wh 0 M M tt h ''1 T V a) 00 - O a N Vf M N n 4 ' O 0) M 0 Ot 00 M eM-I CT N M U N tIf Ol Ol Ox. v t 00 � '6 Ol N m 3 ui W N m u a- R W 3'Lna *u ° '� m v x > 01 U c C7 O 0 croi O h 19 E Special General Committee - Audit Committee - November 17, 2009 R ITEM # 1 - 45 00 M N m W lD �j' l0 Ql n O h I� � cp p h v) CO lD W m v1 Ol CO p M O N 6 O V 00 m ' (0 Lr HN Lr� C to ryj . t6 O O d' 1, m n. b O c0 N O Ln (D CF O M M I.11 W M 1l1 M M Ol zN M n n N 'cl' N N E tD w M Co U O Qi N CY (3 t6 00 fry N 06, ce 'z rf N O of Co h co <* 1� N tD O M 'q w �D N ID r^ to r, (3) 14 •-i w 7 M N MLR Vf N m N N t0 14 '�-1 N U ao a co C( o m -V 0 0 - - Lr 7 N N N V, C D LL � N O1 Q1 - N N V z F-_ o of ai Di N lD to iD p N N N W W O O N Z v m v v. v 7 CU A - w N U L Q N C O U V U) - U C u ++. bA Ow O1 C. (A . O.�... QG v c v 3 Q a v c z DA y L IU 4. @ C d' 10 > FN l7 O in croJ M U O p N} �O w W y z 20 -45. Special General Committee - Audit Committee - November 17, 2009 ITEM # 2-1 TOWN OF AURORA. AURORA AUDIT COMMITTEE REPORT No. AC09-003 SUBJECT: 2009 Audit Plan FROM: Dan Elliott, Director of Finance/Treasurer DATE: November 17, 2009 RECOMMENDATIONS THAT the 2009 year end Audit Plan as proposed by Grant Thornton be endorsed; and, THAT Grant Thornton be engaged to complete the planned audit at a fee not to exceed $60,300 plus disbursements and applicable taxes; and, THAT the Treasurer be authorized to approve additional fees up to a further 10% for additional works and efforts required of the audit in the event of adverse findings, or required assistance to staff or similar costs are incurred. BACKGROUND In accordance with the Audit Committee Terms of Reference the audit committee is responsible to: "Review the audit plan and audit fee schedule for the ensuing year end" Attached hereto is the Audit. Plan for the 2009 Year End audit as prepared by the firm of Grant Thornton. Representatives will be making a presentation to Committee to review its details. The fees proposed are as per the tender.they submitted in the following amount: and as outlined on page 9 of their report. 2009 Audit Fees Town annual audit $ 51,300 Library annual audit $ 4,750 Tangible capital asset audit $ 2,250 Segmented reporting $ 2,000 Total before taxes & disbursements $ 60,300. . As part of their tender proposal there will be a 3% surcharge for disbursements. - .46 - Special General Committee - Audit Committee - November 17, 2009 ITEM # 2-2 November 17, 2009 - 2 - Report No. AC09-003 COMMENTS Council will recall that we went to tender for Auditing Services in a joint tender with the Town of Whitchurch-Stouffville on a three year contract for auditing services. 2009 is.the last year of the three year tender. The report attached addresses the audit plan proposed by the auditors, including the scope and approach to their audit. Staff are not in a position to comment or challenge the approach the auditors have chosen to fulfil their professional obligations required when rendering an audit opinion report. From the perspective of the Financial Service Division there are a number of significant changes in our audit documentation requirements for the auditors for this year and we are committed to meeting these challenges and producing results as per the time line outlined on page 8 of their document. We would like to remind Council that there are two additional auditing requirements required as part of the 2009 audit plan to address the.following items: - implementation of tangible capital asset reporting, including the verification of asset values and chosen depreciation timeframes; and - implementation of segment reporting which requires the Town to now prepare their financial statements to include presentation of assets, income and expenses by area of activity. Audit fees are always quoted on the presumption that staff will have completed all requested schedules and support requested in advance of the audit, and that the financial statements and associated notes have been properly and fully prepared by staff. The fees also anticipate not finding any item of substance requiring extensive additional audit effort to resolve or report. Accordingly, the recommendation includes a provision that the Treasurer be authorized to approve excess fee invoices to an amount not to exceed 10% of the quoted fee. Disbursements are billed separately from the quotation. OPTIONS 1. Audit Committee is encouraged to ask questions of the auditors to better understand their process and proposed outcomes. 2. Staff are notpresently aware of any such concerns, however the Audit Committee may choose to move into.a closed session to address any questions related to the security of the financial assets of the Town, including discussion of any specific, concerns related to internal controls, or the professional competence and/or capacity of staff. At the discretion of the Chair, the closed session or parts thereof, may specifically exclude any or all staff, save and except the Clerk of the meeting. -47- Special General Committee - Audit Committee - November 17, 2009 ITEM # 2-3 November 17, 2009 - 3 - Report No. AC09-003 FINANCIAL IMPLICATIONS The cost for the audit is as proposed in the tender submitted by Grant Thornton and has been provided within the 2009 operating budget. CONCLUSIONS That Council approve the request to proceed with the suggested audit plan as presented by Grant Thornton. ATTACHMENTS Attachment #1 — Report to the Audit Committee as prepared by Grant Thornton PRE -SUBMISSION REVIEW Executive Leadership Team — Wednesday, November 11, 2009 Prepared by: Dan Elliott, Director of Corporate & Financial Services -- Treasurer -Ext. #4772 1::�ZuAk Dan Elliott Director of Corporate & Financial Services - Treasurer Neil Garbe Chief Administrative Officer Special General Committee - Audit Committee - November 17, 2009 ITEM # 2-4 01,GrantThornton ATTACHMENT #1 Report to the Audit Committee — Initial Communication on Audit Planning The Corporation of .the Town of Aurora For the year ended December 31, 2009 -49- Special General Committee - Audit Committee - November 17, 2009 ITEM # 2 - 5 0 GrantThornton Grant Thomton LLP 15 Allstate Parkway, Suite 200 Markham, ON t3R594 T (416) 36"100 F (905) 475.8906 www.GrantThcmkm.ca October 9, 2009 To the Members -of the.Audit Committee of The Corporation of the Town of Aurora We axe pleased to enclose a copy of a document tided Report to the Audit Cominittee — Tnitial Communication on Audit Planning. This document covers the terms of our fmancial statement audit engagement of The Corporation of the Town of Aurora (the "Town") for the year ending December 31, 2009. This document will help the cotiunittee understand the audit services we provide to The Corporation of the Town of Aurora and the level of responsibility assumed by Grant Thornton LLP under Canadian generally accepted auditing s tandards. I£ you have any particular comments; concerns or additional expectations that may require us to undertake additional work over and above that which is currently contemplated, please do not hesitate to raise them at our scheduled meeting. Yours sincerely, Grant"Thornton LLP cc: Dan Elliot, Director of Corporate & Financial Services -Treasurer Audk•Tn- Addsory GM lhenlmLLP.Ara::adir,P4e,M14 Ltd. 50 - Special General Committee - Audit Committee - November 17, 2009 ITEM # 2-6 Contents Achieving effective governance Quality assurance, independence and communication Our audit approach Client service team Audit timetable Fee schedule Appendix A - Letter of independence Appendix B — PSAB Accounting and auditing developments Appendix C — Audit requirements letter Page 1 2 3 S 9 10 13 20 Audit-Ta - Msnl G,n,Ifh=(liLLP. AC�donfrlemU^.FdKranManiw WnliwA Ud- 51 - Special General Coma®oeAu Itdi�CoiQeeniel�o oertere17� 2009 ITEM # 2 - 7 The Corporation of the Town of Aurora For the year ended December 31, 2009 The Audit Committee helps set the tone for the organization by emphasizing honesty, ethical behaviour and fraud _ prevention Achieving effective governance There are several fundamental components of effective governance. The Audit Committee plays a key role in achieving strong governance, partrc darly with respect to financial reporting. Roles in ensuring strong financial reporting AUAlbi.-A,Wwy llrml U11ta LLP.A Omind-,n Hembm dfsarJ Thpnla:InlmnsOeaJ Lid -52- Special General Coeem fted,govr7�2009 Aon eter�imise�nnn - The Corporation of the Town of Aurora For the year ended December 31, 2009 ITEM # 2 - § Quality assurance, independence and communication Quality assurance Grant Thornton LLP has a I Grant Thornton LLP has a robust quality control program that forms a core part of our client rohust quality control service. We combine internationally developed audit methodology, advanced technology, rigorous review procedures, mandatciy professional development .requirements, and the use of specialists to program deliver high quality audit services to our clients. In additionl:o our internal processes, we are subject to inspection and oversight by standard setting and regulatory bodies. We are proud of our firm's approach to quality assurance and would be pleased to discuss any aspect with you at your convenience. Independence We have a rigorous process where we continually monitor said maintain our independence. We are required to communicate this annually to the Audit Committee of the Town.in writing and have attached our letter of independence as Appendix A. The process of maintaining our independence includes, but is not limited to confirming the independence of our engagernent team members. Communication with the Audit Committee Throughout the audit Commmii.cation is key to quality service: In conducting our audit we will communicate frequently process we encourage the with the Audit Committee so that issues and conceals are addressed in atimely and productive Audit Committee to contact mariner. us if there are any ' We encourage the members of the Audit Committee to contact us at any time if questions or questions or concerns ' COI10EYnS arise. Audit- Tax - Addsory Gay; �h•mtm LLP. ACarocizn 1.{smber altact Ih:.rlm Ward-io„g Lid -53- Special General C,�m ktleged,F(loiucilt Cad itme,? NovAee��en' 7, 2009 ng The Corporation of the Town of Aurora For the year ended December 31, 2009 _ ITEM # 2.3 9 Our audit approach An understanding of your municipality and your business drives the Grant Thornton UP audit approach. Tailoring is central to our approach and a key aspect in providing the Town with quality service. The objective of our audit is to obtain reasonable assurance that the financial statements are free of material misstatement. The responsibilities of the Audit Comruittee and management are broad and therefore the financial statement audit engagement is not designed to identify all matters which may be of interest to the Audit Cotmruttee or management in the discharge of these responsibilities. However, we will communicate the following should we encounter them during the course of our audit: Audlb Tnx MA sory Gant T'n+nn,.' tP. ACII'5a-tox:v ,{;erg Thollm lonnte�wtaw- 54 Special General Committee - Audit Committee - November 17, 2009 ITEM #.2 -410 Report to the Audit Committee — Initial Communication on Audit Planninr� The Corporation of the Town of Aurora For tine year ended December 31, 2009 . • Misstatements, other than trivial errors • Fraud • Misstatements that may cause future financial statements to be materially misstated • Illegal or possibly illegal acts, other than those considered inconsequential, and • Material weaknesses and significant deficiencies in internal control over financial reporting. Internal control Our audit includes gaining an understanding of the Town's internal control over financial reporting. Our understanding will focus on processes associated with the identified financial statement risk areas (see below). The audit team uses this understanding to determine the nature, extent and timing of our audit procedures. Our understanding may also result in valuable internal control findings for your consideration. Please note that the objectives of a financial statement audit are different from fiduciary control objectives. '11crefore, management and the Audit Conuavttee cannot rely on our findings to discharge. their responsibilities in this area. Risk assessment Our risk assessment process has identified the following areas where we will focus our attention: The following areas have been identified as low risk and our audit approach for these areas will be as follows: Audit- Tom-Addsory 55 - rvAThcyVmLLP.Aesada.P:.�;L 14C1 NTh.t ii iAffiRla tdu Special General �54[1?it�i n�dti u�44�t� eC I ,gcaai 8�A�51� rein 7, 2O09 The Corporation of the Town of Aurora For the year ended December 31, 2005 ITEM # 2 -511 Materiality ...In our opinion, the The purpose of our audit is to provide an opinion as to whether your financial statements present fairly, financial statements in all matexial respects, the financial position, results of operations and cash flows in accordance with present fairly, in all - generally accepted accounting principles as of to date. Therefore, materiality is a critical auditing material aspects, the concept and as such we apply it in all stages of the engagement. r financial position of... Applying the cone t of materiality at the planning and execution stage of the engagement redo 7es P h' P g• g�- that Ilse audit: team cannot verify every balance, transaction or judgment made in the financial reporting process. During audit planning, we make a preliminary assessment of materiality for purposes of developing our audit strategy, including detemvning the extent of our audit procedures. During the completion stage, we consider not only the quantitative assessment of materiality, but also qualitative factors, in assessing the impact on the financial statements, our audit opinion and the matters reported to the Audit Committee. Fraud considerations We are responsible for planning and perforrning the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement caused by error or by fraud. Our audit procedures consider the requirements of CTCA Handbook Section 5135, The Auditor's Responsibility to Consider Fraud and Error. Section 5135 was issued to heighten the awareness of the potential for Fraud can occur in any fraud when planning and executing audits and it emphasizes the need for professional skepticism municipality, at any time, during the audit. _ and can be perpetrated by anyone. The following provides a summary of some of the fraud -related procedures we plan to perform during the audit. • Discuss amongst: the engagement team where the financial statements may be susceptible to material misstatement due to fraud. • Gather information to identify the risks of material misstatement due to fraud, including our understanding of internal control and making detailed inquires to both management and the Audit Committed. • Using tlhe information gathered in out risk assessment process. Use of work of internal audit We will review and consider the internal audit reports issued in the year, and if we intend to rely on all or part of the internal audit work, assess the consequences of their findings on our audit approach. Client assistance and readiness Client assistance and readiness are integral to the successful meeting of our targeted report release date. As presented farther below, it is also critical in meeting our agreed fee. To facilitate the communication process, we have provided management with a letter detailing expected assistance and the critical milestone dates. Audit -Tax • Wsoiy 56 - .um:i1maA:itP.pGz :ianh?seCr--:QS:da Ti:urtcn-t ,W{. 1 a- Special General C�gg4;��j��Pa$il��;n�7, 2009 ITEM # 2 -612 The Corporation of the Town of Aurora For the year ended December 31, 2009 Deliverables We are committed to We are coortnitted to executing out audit in a most effective, efficient and timely manner. We will exeeufina our audit in a provide the following deliverables to the Audit Committee: most effective, efficient and timely manner • Initial communication on audit planning, • Audit report on the financial statements of the Town, • Audit report on the financial statements of the Aurora Publichbrary Board, • Communication of audit results, o Management letter that provides our observations and recommendations regarding.internal controls, based on matters identified during the course of our audit, and • Report on Compliance with the Federal Gas Tax Legislation Avd14T"-Ad*.q per/ G. ThamPa^. UP. AGytadiac Vwr - AG1i A71.,1m bg.,,.rmJ Ltd - 5 - Special General CjgWMkt Apd,FC'71Hftf-'1jerlatioFOtPPIFrca4idi�VA�f�t�a�f�i g7, 2009 ITEM #2-713 The Corporation of the Town of Aurora For the year ended December 31, 2009 Client service team We have assembled a team of outstanding professionals to demonstrate our commitment to quality and service fo die Town. Audit -Tax-AdNwry GrtTlr t,,ILlP.AOmn,tan bunter u!O!ml Ihml, LIWAlltudLtd - pp - Special General tlYli�te�e-AudY�t Caittee -. Novel er 17, 2009 ITEM # 2 - 14 000 Pf [b a udiY nmm� ee— tm as ommumcatton on Au arming 8 The Corporation of the Town of Aurora For the year ended December 31, 2009 .Audit timetable Audlt•To-AdAsory GIsil R.I. W1. AC_n-a6an [AM dGmMTh.ltm ht,m1104 LAd- G� - Special General '4 ��APrditc�4 4�t4 eCtR1'!'�b} i€4�ait yA t� Mtn 7, 2009 ITEM #2 -915 The Corporation of the Town of Aurora For the year ended Decerrtber 31, 2009 Fee schedule —Includes capital assets and audit Fee proposal considerations Upfront and periodic discussions are central to our approach in dealing with fees. Our goal is to avoid surprises by having early and frank communication. We wish to provide the Town with a competitive price and fair value, while also allowing sufficient audit hours to conduct an effective, audit and deliver quality service. The proposed fee for the audit for the year ended December 31, 2009 is based on the level of activity and the anticipated complexity of the audit of the Town and L.ibiary's financial statements. The proposed fee is based on :receiving the following from management: • Draft financial statements including the notes to the financial statements in compliance with PS 1200; • All working papers and schedules as outlined in our requirements letter; • Thal balance together with reconciled control accounts; • All books and records made available to Lis when requested; and • Use of the Town's staff to help us locate information and provide explanations. Our ability to deliver the services outlined in the agreed timetable and our proposed fee will depend upon these schedules being available/tasks being completed by the due dates. If there are any variances to the shove plan, we will discuss them with you and agree to any additional fees before costs are incurred, wherever possible. Any unforeseen work outside the scope of this proposal will be billed separately after discussion with appropriate Town officials. Audit- Tax •AdO. q n,,; 11wrAm i.a1. A C.m,r,z :a„MTwl�c. mW.ali<,d cm_ 60 - Special General C� ��i�,} eC�} r ep; �v �� �7, 2009 . ITEM #2 -10 6 The Corporation of tho Town of Aurora For the year ended December 31, 2009 Appendix A — Letter of independence Audit- Ta%'AdW50ry G,.,i l¢.t.LU%.ACmad!an Mxncs o' Wnl'Ihxnh, 61 - Special General Committee - Audit Committee - November.17, 2009 ITEM # 2 - 17 GrantThornton The Audit Corntnittee The Corporation of the Town of Aurora 1 Municipal Drive, Box No. 1000 Grant Thornton LLP Aurora, Ontario, L4G 6J1 Sule 200 16 Allstate Parkway Markham, ON DR 594 November 6, 2009 T (416) 366-0100 F (9051 475a906 w:vul.GranlThornton.ca Dear. Audit Committee Members: We have been engaged to audit the consolidated financial statements of The Corporation of the Town of Aurora (the "Town") for the year ending December 31, 2009. Canadian generally accepted auditing standards (GAAS) require that we couvnunicate at least armually with you regarding all relationships between the Town, its subsidiary - The Aurora Public Library, and Grant Thornton LLP that, in our professional judgment,, may reasonably be thought to bear on our independence. In determining which relationships to report, these standards require us to consider relevant rules and related interpretations prescribed by the appropriate provincial institute / ordre and applicable legislation, covering such matters as: a holding a financial interest, either directly or indirectly, in a client; b holding a position, either directly or indirectly, that gives the right: or responsibility to exert significant influence over the financial or accounting policies of a client; c personal or business relationships of it nmiediate family, close relatives, partners or retired partners, either directy or indirectly, with a client; d economic dependence on a client; and e provision of services in addition to the audit engagement. We have prepared the following cornments to facilitate our discussion with you regarding independence mat2erS arising since January 5, 2009, the date of ou.t.last letter. We are not aware of any relationships between the Town, its subsidiary - The Aurora Public Library, and Grant Thomton LLP that, in our professional juctgment, may reasonably be thought to beat on our independence, that have occurred from January 5, 2009 to date of this letter. The audit fees charged to the Town for audit services were W,750 during the period from January 5, 2009 to date of this letter. GARS requires that we confirm our independence to the Audit Connnittee in the context of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario. Accordingly, we A011-Tani A.,y Gram Thmnlm1.M ATUmn!cn Its. 62 - Special Gener 1 Committee - Audit Committee - November 17, 2009 ITEM # 2 - 18 GrantThornton hereby confirm that we are independent with respect to the Town within the weaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario as of date of this letter. 'I7us report is intended solely for the use of the Audit Cointnittee, Town Council, management, and others within the Town and should not be used for any other purposes. We look forward to discussing with you the matters addressed in this letter at our upcoming meeting. cc Dan Elliot, Director of Corporate & Financial Services - Treasurer Audit• mILT.1 T.A - 13cudihnnw lLa.h v,ar-h-.miin YtanuPni�t!d- 63- Special General Coon � tee -�Auc t Cad T!ttee -. Nove�n�er.17, 2009 ITEM # 2 - 19 epor o e udit omm ee —In ea arnmun+cation on Au+t Penn 13 The Corporation of the Town of Aurora For the year ended December 31, 2009 Appendix B — PSAB Accounting and auditing developments Audit• T. IAdWoory Grote T11"t LUl A"aWan At er:'xrThanLntniwm�ir of❑d- CA - Special General C1l°iteif o �n,i �t Cioi�x�tteeAi N0�v�e��er 17, 2009 ITEM # 2 ��® The Corporation of the TOM) of Aurora For the year ended December 31, 2009 PSAB Accounting developments -65- Special General CjqMMk#qtg,rAMNMjeqq1M 2009 ITEM # 2 i521 The Corporation of the Town of Aurora _ For the year ended December 31, 2009 . Special General 2009 ITEM # 2 -1F2 The Corporation of the Town of aurora For the year ended Decernber St, 2009 Auditing developments Canadian Auditing Standards (CASs) The .Auditing and Assurance Standard Board (AASB) is adopting the International Standards on Auditing (ISAs) as Canadian Auditing Standards (CASs). When they come into effect, CASs will constitute Canadian Generally Accepted Auditing Standards (G.AAS). The financial statement auditing standards in the current CICA Handbook — Assurance remain in effect until the effective date of the CASs. Although the effective date of these standards is a year away, they are being made available, as they are developed, to provide auditors with adequate time to become familiar with them and implement them efficiently and effectively. Auditors may also choose to implement aspects of the CASs before then effective date as long as they still comply with the current standards. Below is a list of CASs that have been approved to date and may require a change in the nature, Hissing or extent in which we do our audit: -67- Special General Cf�prn, pit teed+`�4u� teCio TitrneeaffNoOn vAe peri17, 2009 ITEM # 2 -1?3 The Corporation of the Tour., of Aurora For the year ended December 31, 2009 IME Special General Ciomitc�neli�Auc�t Copp nn7mtteun a€7oNovefer. g7, 2009 STEM #2 -24 The Corporation of the Town of Aurora For the year ended December31, 2009 -69. Special General Ch9j1Pfl %j9t?djtA, l,�i4�eCi°Fli�f� geaio�o;vA� 0prnj7, 2009 ITEM #2-,?5 The Corporation of the Town of Aurora 1 For the year ended December 11, 20119 -70- Special General , 4 i 4Rt t;t I i;{(1 � , aiFe�e��A� a ng 2009 ITEM # 2 zc26 The Corporation of the Town of Aurora For the year ended December $1, 2009 Appendix C —Audit requirements letter - 71 - Specie ((:�pneQ �om�itJeg Audit �om�n t ee -November 17, 2009 ITEM # 2 - 27 �o"ii �a thL ATf�ii ommi ee— mi al Cornin cat on Rn u t tanning The Corporation of the Town of Aurora 21 For the year ended December 31, 2009 "l;he'T'awn of Aurora And�t Regmrements Lrst � Date To be r December 3�,, 20Q9 I ;.: � re utretl mate PJease prone the reyaestpdmformatton in eleohomc formal wl7erep6stble ' --�` re q)ies3 �eFe1'�ed; Financial Statements and Trial Balance Final trial balance as at December 31, 2009 in Excel format with comparison budget to prior year amounts. ASAP Draft consolidated financial statements as at December 31, 2009 (including At start of notes). Please provide support for amounts in the notes. fieldwork Management Discussion and Analysis of all significant variances between current year actual figures and the prior year results, including explanations. Analysis of significant variances between current year actual results and budget figures. At start of *'"Please perform analysis on a category by category basis (according to fieldwork expenditures as disclosed on the Statement of Financial Activities) Lead sheets/grouping schedules to support financial statement figures and tie back to general ledger accounts (including comparative figures for the prior year At start of actual and current year budget). fieldwork A reconciliation of interfund transfers between Operating, Capital and Reserve At start of Fund Schedules of financial Statements. fieldwork A reconciliation of Council approved/published budget documents to budget At start of. amounts shown on the financial statements. fieldwork Details of any major operational changes and related financial controls At start of fieldwork Copies of any new policies and procedures implemented during the year or amendments trade to existing policies and procedures, including Purchasing . At Start of By-law. Fieldwork Journal entries —electronic file of general ledger general entries for the year At Start of Fieldwork Cash/I3ank Lead sheets as at December 31, 2009 with comparative prior year figures for all bank accounts plus petty cash. Lead sheets should include an explanation of At start of account variances of $30.000 from prior year. fieldwork Bank reconciliation for all bank accounts as at December 31, 2009, with list of outstanding cheques, outstanding deposits and other reconciling items listed in At Start of detail. The outstanding cheque list should detail the cheque number, cheque date, Fieldwork payee and amount. Audit•Tox-Adhmq (lnnt➢wmus,,ACHiddlta Mccry„164 f?iMniki n6uWIIcnA W -72- Special aGrt egeratitCom`mitttee —teei - Audit Communiit cation - November 17, 2009 ng The Corporation of the Town of Aurora For the year ended December 31, 2009 ITEM # 2 - 28 22 She Town of Aurora Audit Regmremenfs L>ct bate : Tube n ;; bake ;tDecember�3I,�009 r0gwred p�repa7;es1 jreceivec� fo{malwheccpossible - '? "3lease prov�le the requested V�formaaori in elechomc At Start of Bank statements for the month of December 2009. Fieldwork At Start of Bank statements for the month of January 2010. Fieldwork A listing of any cheques that were written in December 2008 that were not mailed At Start of until January 2009. (Note that these cheques should be reclassified to A1P for Fieldwork financial statement purposes.) Schedule of transfers between batik accounts for the periods 10 days before and At Start of 10 days after year-end indicating date of transfer, bank account #'s and amount. Fieldwork Appropriate sup orting documentation should also be provided. At Start of Copies of the most recent agreement(s) relating to current banking facilities. Fieldwork Investments and Interest Revenue Lead sheets as at December 31, 2009 with comparative prior year figures. Lead At start of sheets should include an explanation of account variances from prior year of fieldwork $30,000. Investment continuity schedule for all investments held (for both the general and reserve accounts) in the year showing opening balances, purchases, redemptions, At Start of disposals and closing balances. Continuity schedule should include details of Fieldwork terms for each investment (interest rate, repayment terms, due date, market value, etc). At start of Supporting documentation for purchases and disposables (if any). fieldwork Reconcile investmentt interest/income earned- please include a schedule, detailing by month, the amount of interest received on the bank statements and include At Start of interest earned on investments. Tie in the total interest earned to the Fieldwork corresponding general ledger accounts and provide supporting documentation re: accrual at year encl. Taxation- Receivable and Revenue Lead sheets as at December 31, 2009 with comparative prior year figures. Lead At start of Sheets should include an explanation of account variances of $30,000 from prior fieldwork year. Detailed aged taxes receivable listing (e.g. sub ledger) as at December 31, and reconciliation to the general ledger. Also, provide a copy of the Vadim report At Start of that agrees to the general ledger. At a minimum, this report should include, Fieldwork taxpayer name, roll number, assessment value, property location, year end account balance (include aging, if possible). — Audib Tax • Adds q 9ran�TMvntxr i:P. At`,uzdian G4',;nJet r,ICxxdThmola� _�Lraillol Ud -73- Special Gport enerthe ral uditCommitttee —tees c Audit Comtion on mitit tee - November 17, 2009 ng The Corporation of the "town of Aurora For the year ended December 31 , 2009 ITEM # 2 - 29 23 A list of accounts receivable, by type, which are .consider ed to.be uncolleetible and an analysis of all write-offs/refunds during the year. Also provide At Start of supporting documentation from ARB and any council extracts relating to Fieldwork approved write-offs. At Start of List of properties registered for tax sale. Fieldwork Reconcile "due to" and "due from" account pertaining to the Region and the At Start of School Boards and supporting documents I Fieldwork Co of MPAC Assessment Summary At Start of Copy y (both Commercial �C Residential). Fieldwork Prepare the "Reconciliation of Assessment 2008 Final Tax Billings" schedule, At Start of reconciling total taxation revenue as recorded in the general ledger to the Fieldwork assessment roll. Copy of BY-LAW to Set and Levy the Rates of Taxation for the Year 2008. At Start of Fieldwork Summary of 2009 tax write offs and adjustments along with supporting General At Start of Committee Report. Fieldwork Summary of payments in Lieu At Start of Fieldwork Reconciliation of tax write offs and adjustments to the G/L. At Start of Fieldwork Prepare a schedule / analysis of interest arid penalties charged on taxes during the year (i.e. average balance overdue times interest rate � total interest At Start of revenue). The schedule should show the comparative figures for last year. Fieldwork Copy of By-law authorizing tax penalty and interest rates charged during the At Start of year. Fieldwork Copy of York Region Regional tax Levy Bylaw for the applicable year, At Start of including any bylaws relating to capping adjustments. Fieldwork .Record of Omit/Supplementary Taxation Levied in 2009- reconcile between the Town, Region of York and School Board. For the Town, tie amount into the At Start of G/L, and for the Region of York and School Board tie amount into their Fieldwork respective A/P or A/R. Audi✓Tax-AdN,.q r,ol ThvmjiUP. A^xadiP.a Mfc4g( n: Gran inanity a,•.nsiu Lu . 74 Spec a Geee�a�lfGoTmtTit n�.e ieAuditiComn on�itAee. - November 17, 2009 anniniii The Corporation of the Town of Aurara For tire year ended Decoinber 31, 2009 ITEM # 2 - 210 Print out from the OPTA website showing all ARB appeals (including At Start of assessment at risk) at December 31, 2009. Fieldwork Water and Sewer- Receivables and Revenue Lead sheets as at December 31, 2009 with comparative prior year figures. Lead At star'[ of sheets should include an explanation of account variances of $30,006 from prior fieldwork Aged accounts receivable listing in Excel format as at December 31, 2009. Also, At Start of provide reconciliation to the general ledger, as necessary. I Fieldwork Schedule of any accounts considered to be uncollectible. At Start of Fieldwork Please provide the details of water and sewage receivables that are not billed until I At Start of after year-end but pertain to the year under audit, if any. Provide calculations and Fieldwork su000rtin¢ documents. The general ledger account details for water and sewer revenue for December At Start of 2009 and January 2010. Fieldwork Provide the cash receipts journal (i.e. cashiers listing) for water & sewer for three At Start of days prior to year-end. Fieldwork Prepare a schedule of monthly water & sewer revenue by commercial, residential, At Start of metered, flat rate and in monetary amounts, units or both (in cubic meters and $ Fieldwork Provide a schedule of monthly charges for water & sewerage from York Region At Start of with copies of all water bills from York Region. Fieldwork Copy of by-law authorizing water and sewer service rate structure for the 2009 At Start of fiscal year. Please include a copy of the report presented to council. Fieldwork . Leisure Services Receivables Provide a listing of the accounts receivables for leisure services and ensure that it At Start of agrees to the general ledger accounts. Fieldwork Other Receivables Lead sheets as at December 31, 2009 with comparative prior year figures. Lead Sheets should include an explanation of account variances of $30,000 from prior At fieldworstark of Audit• Tax• kfNs.j ',,,A Th,V,,, t'P. A Cd�sdox 0.k;nL;i L441xK l Nardtn hkvwtja,:i Ud -75- SpecieloCpo�epjt�om�nit a �eAudi t� oon m itt eengNovember 77, 2009 The Corporation of the Town of Aurora For the year ended December 31: 2009 ITEM #2=211 Provide a detailed listing of the general accounts receivable, which agrees to the At Start of general ledger. I Fieldwork Prepare an analysis of the "other" accounts receivable accounts indicating the change from the prior year and the status of the larger amounts, i.e. likelihood of At Start of their collectibillty. Fieldwork Schedule of employee loans and advances and reconciliation to the G/L. Fi Start of Feldwork Grants- Receivables and Revenue Lead sheets as at December 31, 2009 with comparative prior year figures. Lead Sheets should include an explanation of account variances of $30,000 from prior At start of vear. fieldwork Letters or agreements from government agencies detailing grants to be provided At Start of and the amount of eligible funding, Fieldwork Grant continuity schedule indicating: general ledger account number, type of At Start of grant, receipt number and date, amount receivable as at December 31. 1 Fieldwork . Grant continuity schedule- please indicate on the continuity schedule which ants. have been a died for but not eta roved vs. rants approved. Include At Start of � Al Y PP g' AP supporting documentation for all anoroved grants_ Fieldwork Other Revenues Lead sheets as at December 31, 2009 with comparative prior year figures. Lead -T-1 sheets should include an explanation of account variances of $30,000 from prior At start of vear.l, fieldwork Analysis of the following fees, relative to their costs: Also provide comparative prior year figures with explanations of account variances of $30,000 from prior At Start of Fieldwork vnor - Planning fees At Start of Fieldwork - Building fees At Start of Fieldwork License fees At Start of Fieldwork AWN -Tax -Mwsary Glr!: TL,11',1 Al P. A.^..axc;:; y;�nd::e o`3rac17hwrtm iiAe n'�imi -76- Spec1,C,?,eV,eX,V,,FOo%jnit&e CoAu;ditiConjn i ge November 17, 2009 ITEM # 2 -2?2 The Corporation of the Town of Aurora ror'the year ended.Decomber 31, 2009 At Start of Listing of any fixed assets or property sold, including sale of land. Fieldwork At Start of Listing of all revenues from developers by sub -division / units / lots etc. Fieldwork At Start of Schedule of rental income and related operating expense recoveries. Fieldwork Prepaids and Other Current Assets Lead sheets as at December 31, 2009 with comparative prior year figures. Lead At start of sheets should include an explanation of account variances of $30,000 from prior fieldwork A continuity schedule for prepaid showing opening balance, additions; amounts, At Start of expenses and closing balance. Expense per the continuity schedule should Fieldwork reconcile to the applicable general ledger account. At start of Details of items comprising balances. fieldwork At Start of Reconciliation of "other" prepaid expenses or deposits. Fieldwork Provide supporting documentation for the changes in `other current asset" At Start of accounts. Fieldwork Details of any land held for resale, including dispositions during the year, if any. At Start of Fieldwork Accounts Payable and Accrued Liabilities Lead sheets as at December 31, 2009 with comparative prior year figurejLeadAt start of sheets should include an explanation of account variances of $30,000 frofieldwork F ccounts payable listing by supplier and invoice number. Reconciliation At Start of s payable listing to general ledger- please provide accounts payable suU Fieldwork lectronic in electronic format, preferably formatted in Excel Supplier statements received indicating the supplier determined balance as at At Start of December 31, reconciled to the accounts payable trial balance Fieldwork At Start of Please make available the cheque register from year end date to date of audit. Fieldwork AWN -Tax•AdNenry 61ni Tho:rto [W. A W .77. Speci else plerAaIit o t letei c Audio tjom jt�ee,�.November 17, 2009 The Corporation of the Town of Aurora For the year ended December 31, 2009 ITEM # 2 - 43 Schedules for all accrued liabilities and miscellaneous accounts payable at December 31 with comparative prior year figures. Also provide explanations of At Start of account variances of $30,000 from prior year (with copies of supporting Fieldwork documentation for significant items, including details of any calculations). Analysis of significant variance of accounts payable amounts from prior year. At Start of Fieldwork Listing of refundable deposits at December 31 with supporting documentation for At Start of significant balances. Analysis of significant variances from prior year. Fieldwork Detailed listing of work performance deposits outstanding at year end. List of At Start of contractor holdbacks by contractor, with supporting documentation. Fieldwork Analysis of short term debt and related interest expense. At Start of Fieldwork Analysis of deferred revenue accounts. At Start of Fieldwork Payroll- Liabilities and Expenses Lead sheets as at December 31, 2009 with comparative prior year figures. Lead -7-1 sheets should include an explanation of account variances of $30,000 from prior At start of vear. I fieldwork Calculation of accrued payroll and accrued benefits as at year end with comparative prior year figures. Also provide explanations of account variances At Start of of $30,000 from prior year (with copies of supporting documentation for Fieldwork significant items, including details of anv calculations). Schedules for all payroll liabilities at December 31 with analysis of balances and At Start of reconciled to payments in 2008 where applicable. I Fieldwork Vacation accrual - electronic spreadsheet in Excel format detailing employee At Startof name, salary, vacation days outstanding Fieldwork Schedule of Lieu Time accrual showing management assumptions and At Start of calculations. Fieldwork List of remuneration for Officers and Council members. Audit• Tax• Ad Nsary Cana Thn:-iai LIP. A Cx,&,, 1A.0,w e: Ural TI'.unku idcnali.A i'-d At Start of Fieldwork lif:m Spec elm pr eta tom nittnet cAudi ttCom in u tt ee.n�November 17, 2009 ITEM # 2 - `� The Corporation of the Town of Aurora For the year ended Deceinber31,2009 of t Start Prepare a reconciliation of salaries and wages per T4 summary to general ledger. Fieldwork Sart Reconciliation of employee benefits to application of benefits. At Start of Fieldwork Copy of the Actuarial valuation for the year ended December 31, 2008, for the At Start of employee future benefits, rolled forward for the 2009 year end. Fieldwork Capital Fund _ Lead sheets as at December 31, 2009 with comparative prior year figures. Lead At Start of sheets should include an explanation of account variances of $30,000 from prior Fieldwork year. Continuity schedule of capital projects for the year, agreed to general ledger At Start of accounts. Fieldwork At Start of f Documentation of significant variances from budget to actual. Fieldwork At Start of Capital carryover schedule, approved by Council Fieldwork Copy of reports to Council for any significant project overruns and availability of At Start of financing, if any. Fieldwork At Start of Reserves / Reserve Funds Fieldwork Lead sheets as at December 31, 2009with comparative prior year figures. Lead At Start of Sheets should include an explanation of account variances of $30,000 from prior Fieldwork At Start of Continuity schedule of reserves and reserve funds. Fieldwork Analysis of significant variances in reserves and reserve funds in comparison to At Start of the prior year and to budget. Fieldwork Copy of Council approval of transfers between reserves / reserve funds. At Start of Fieldwork Provide supporting documentation detailing the activity within the funds. At Start of Fieldwork Alldia Tap • AdNmry Maid ih:arus I1F.A CMia5rnidJ:Jra 4011-_t ThWIII Mtm'tl V.11.' Ud -79- Speci �oC eAe�9tqQ4�n it e�ef An li ttCr%md r �$,eefngNovember 17, 2009 The Corporation of the Town of Aurora For the year ended December 31, 2009 ITEM # 2 - A5 Copies of bylaws establishing new reserves / reserve funds in the year, At Start of Fieldwork Documentation for interest allocations to reserves / reserve funds (working paper of calculations, with support). At Start of Fieldwork Copies of promissory notes and related Council approval for any loans outstanding at year end between the reserve fund and any other fund of the Municipality. At Start of Fieldwork Interfund debt continuity schedule as at December 31 and copies of any new debt bylaws summary amortization schedules. At Start of Fieldwork Debentures / Long term Debt ; Lead sheets as at December 31, 2008 with comparative, prior year figures. Lead Sheets should include an explanation of account variances of $30,000 from prior At Start of year. Fieldwork Debenture continuity schedule as at December 31 and copies of any new debenture bylaws and any new bylaw summary amortization schedules. Also, At Start of include copy of council minutes approving the by-law. Fieldwork Schedule of future principal and interest payments on existing debt. At Start of Fieldwork Documentation on any debt issued during the year and amendments to existing loan agreements, if any. At Start of Fieldwork Copy of by-law authorizing borrowing limit for the current year. At Start of Fieldwork Copy of Annual Debt Repayment Limit At Start of _ Fieldwork Bylaws authorizing any new local improvement charges during the year. At Start of _ Fieldwork Reconciliation of debenture debt charges for the year to the related general ledger At Start of accounts. Explanation of significant variances from budgeted amounts. Fieldwork Calculation of accrued interest charges, reconciled to the general ledger and financial statements. At Start of Fieldwork Mdlt-Tax-WL .ry Q-11 Thcrl.:UP.Ilne r.9 W WPM TT@�onmrfeel—tm iee -November 17, 2009 ITEM # 2 - 6 SpecaoIRVVEgl CAundiota4 fenoomn tanningp The Corporation of the Town of Aurora For the year ended December 34, 2009 Commodity taxes At Start of Provide a copy of all GST returns filed during the year. Fieldwork Prepare an analysis of the balance in the GST accounts reconciled to the amount Start reported on the GST return as at year end � Fieldwork Analysis of the balance in PST accounts reconciled to a copy of the PST tiling I At Strut of as at December 31. Fieldwork Cnt-off information At Start of Cheque number of last cheque issued during fiscal 2009 for all bank accounts Fieldwork At Start of Cheque number of first cheque issued during fiscal 2010 for all bank accounts Fieldwork Other Matters At Start of Access to all executive minutes and bylaws Fieldwork Assistance with the preparation of lawyers letters, including list of all lawyers At Start of utilized during the year. Fieldwork Copy of Council extract for any amendments made to the already approved At Start of Budget, if applicable Fieldwork At Start of Details of Town's insurance coverage (copy of insurance policy). Fieldwork Copy of insurance claims tracking worksheet, detailing list of claims filed, claims At Start of processed through OMBX and status of the claims. Fieldwork Copies of amendments to agreements, if any — ex. Central York Fire Services. At Start of Also, re: CYFS include supporting worksheet on allocation of revenues and Fieldwork expenses between the Town of Aurora and the Town of Newmarket. Schedule of all professional fees paid during the year, including date, vendor, At Start of amounts, and description of services rendered. Please reconcile to accruals where Fieldwork appropriate. Federal Gas Tax At Start of Copy of Expenditure report to the AMO. Fieldwork Audit Tax• Advisory Card Tbiolm OR A Os,: Sian W"bal V U( fl Thvli"Nima3nsl VJ -81- Special General Committee - Audit Committee - November 17, 2009 Report to the Audit Committee — Initial COmmunleatlon on Audit Planning The Corporation of the Town of Aurora For the year ended December 31, 2009 ITEM # 2 - 37 31 Copy of all Schedule C's issued during the year. At Start of Fieldwork Copies of all insurance certificates issued in respect of the projects related to the At Start of Federal Gas Tax. Fieldwork Listing of all expenditures made during the year in respect of Federal Gas Tax At Start of funded projects. Fieldwork Details of all revenue received from the AMO in respect of the Gas Tax, At Start of Fieldwork . Calculation of the interest added to the Gas Tax Reserve fund during the year. At Start of Fieldwork Continuity schedule of the Gas Tax Reserve fund, tied to the expenditures and At Start of revenue provided above. Fieldwork Capital Assets Capital asset continuity schedule for all capital asset accounts: At Start of • opening cost and accumulated amortization agrees to closing balance Fieldwork at December 31., 2008. • detailed calculations supporting depreciation amounts • total depreciation per the schedule agrees to total depreciation expense per the general ledger (provide a schedule reconciling these amounts) • closing cost and accumulated depreciation balances per the schedule agree to the related account balances in the general ledger. Detailed listings of capital asset additions during the year which agree to the At Start of additions per the above schedule and assistance in obtaining documentation Fieldwork for the cost of selected items (i.e. providing supporting invoices). Detailed listings of capital asset disposals during the year that agree to the At Start of disposals per the above schedule. These listings should detail proceeds of Fieldwork disposition, original cost, N8V prior to the disposal, and any resulting gain or loss, Schedule of retentions for significant construction projects in progress; related At Start of contracts and contract progress bills/payment progress certificates Fieldwork Schedule of leases and related lease agreements for significant leases At Start of Fieldwork Audit- Tax• AdNnoiy ..r,�1ThwAan U.Y.h'-14wni kl.%:r:d Grant 1'hantmt aLlutioAd rd - 82 . Spec apnGe eKaj, Pon itt AuCommudi tticot tAeong November 17, 2009 The Corporation of the Town of Aurora For the, year ended December 31, 2009 ITEM # 2 -�8 Schedule of lease covenants (if any) At Start of Fieldwork Inventory _ Listings of costed inventory as at year-end for all inventory (also showing At Start of quantities and unit rates of each inventory item) that reconciles to the general Fieldwork ledger. Provide explanation/supporting documentation for all reconciling items. Audit•T.•MlH d J ➢m!nlm;l LA P. C.aradlrr ALnrhr. n: CirantTbpmmo 4Vom2enU 2iaA _83-