HomeMy WebLinkAbout06 022 Appoint Auditor
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THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE
BY-LAW
NO. 2006 . 022
BEING A BY-LAW TO APPOINT AUDITOR FOR THE CORPORATION
OF THE MUNICIPALITY OF KINCARDINE
WHEREAS the Municipal Act, 2001, S.O. 2001, c. 25, Sections 8 and 9 (1)
provides municipalities with the powers of a natural person to enable them to
govem their affairs as they consider appropriate and to enhance their ability to
respond to municipal issues;
AND WHEREAS the Municipal Act, 2001, S.D. 2001, c. 25, Section 296 requires
a municipality to appoint an auditor licensed under the Public Accountancy Act,
2004;
NOW THEREFORE the Council for The Corporation of the Municipality of
Kincardine ENACTS as follows:
1. That the firm of BDO Dunwoody llP, Chartered Accountants and Advisors be
appointed as auditor for the 2005 and 2006 fiscal years for The Corporation of
the Municipality of Kincardine, to audit all records of the Corporation of the
Municipality of Kincardine, including the records of Bruce Telecom, the Board
of Management of the Business Improvement Area (BIA), the Police Services
Board for The Municipality of Kincardine, as well as all trust funds
administered by The Municipality of Kincardine.
2. The term of this appointment shall be two (2) years.
3. That the Mayor and CAD be authorized to sign, on behalf of the Municipality
of Kincardine, the Terms of Engagement with BDO Dunwoody llP, which is
attached to this by-law as Schedule "A".
4. That By-law No. 1999-44 is hereby repealed.
5. This By-law shall come into full force and effect upon its final passage.
6. This By-law may be cited as the "BOO Dunwoody as Auditors Appointment
By-law, 2006".
READ a FIRST, SECOND and THIRD time and FINALLY PASSED this 15th day
of February, 2006.
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Mayor
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BDO Dunwoody UP
Chartered Accountants
and Advisors
970 Queen Street
Kincardine, Ontario. Canada N2Z 2Y2
Telephone, (519) 396-3425
Toll Free, (800) 435-8344
Fax, (519) 396-9829
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January 30, 2006
Members of Council
The Corporation of the Municipality of Kincardine
1475 5th Concession
RR5
Kincardine, Ontario
N2Z 2X6
Dear Members of Council:
This letter win confirm our understanding of the terms of our engagement as auditors of The
Corporation of the Municipality of Kincardine for the year ending December 3 1,2005.
Our Role as Auditors
ColIIIMct of the Audit
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As auditors, our objective is to express an opinion on whether the consolidated financial statements
present fairly, in all material respects, the financial position, results of operations and cash flows of
the municipality in accordance with Canadian generally accepted accounting principles.
At the conclusion of our audit, we will submit a report directed to the members of Council,
inhabitants and ratepayers containing our opinion on the consolidated fInancial statements. If it
appears for any reason that we will not be in a position to render an unqualified opinion on the
consolidated financial statements, we will discuss this with you.
It is possible that we may determine that we cannot render a report or complete the engagement. If,
in our professional judgement, the circumstances require, we will notifY you of our resignation ftom
this engagement which shall conform to all applicable laws.
Onr audit will be made in accordance with Canadian generally accepted auditing standards. We win
plan and perform audit procedures to obtain reasonable assurance as to whether the financial
statements are ftee of material misstatement. This will include examining 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.
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We will consider your internal control over financial reporting solely for the purpose of determining
tbe nature, timing and extent of auditing procedures necessary for expressing our opinion on the
financial statements. This consideration will not be sufficient to enable us to render an opinion on the
effectiveness of internal control over financial reporting.
It is important to recognize that an auditor cannot obtain absolute assurance that material
misstatements in the consolidated financial statements will be detected because of:
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BDO Dunwoody LLP is a Limited Liability Partnership registered in Ontario
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· factors such as use of judgment, and the use of testing of the data underlying the consolidated
fmancial statements;
· inherent limitations of internal control; and
· the fact that much of the audit evidence available to the auditor is persuasive rather than
conclusive in nature.
Our audit is conducted primarily to enable us to express an opinion on the consolidated financial
statements rather than to identifY all errors, ftaud and other, illegal or possibly illegal acts,
significant weaknesses in internal control or other irregularities. In addition, because of the nature of
ftaud, including attempts at concealment through collusion and forgery, an audit designed and
executed in accordance with Canadian generally accepted auditing standards may not detect a
material bud. If we identifY non-trivial misstatements in the consolidated fmancial statements, we
win bring them to your attention as proposed adjustments.
During the course of our audit, if we identifY the following matters, we will communicate them to the
appropriate level of management and the members of Council:
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· misstatements, other than trivial errors;
· ftaud;
· misstatements that may cause future financial statements to be materially misstated;
· illegal or possibly illegal acts, other than ones considered inconsequential;
· significant weaknesses in internal control; and
· certain related party transactions.
We wiD also make notes of any other matters that we believe should be brought to your attemion and
will communicate them to you. These might include comments on internal control procedures,
management information systems, accounting policies and other client service matters. Audits do not
usually identifY all matters that may be of interest to management in discharging its responsibilities.
The type and significance of the matter to be communicated will determine the level of management
to which the communication is directed.
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Throughout the audit we will also be communicating with the members of Council on matters that
bear on independence, matters that pertain to planning and executing our audit and any other matters
in addition to those identified in the preceding paragraphs that we feel should be brought to their
attention as required by Canadian generally accepted auditing standards.
The working papers prepared in conjunction with our audit are the property of our Firm, constitute
confidential information and will be retained by us in accordance with our Firm's policies and
procedures.
InlÙl1e1ldence
Professional and certain regulatory standards require us to be independent, in both fact and
appearance, with respect to The Corporation of the Municipality of Kincardine in the performance of
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our services. We will communicate in writing to the members of Council any relationships between
BOO Dunwoody LLP (including its related entities) and The Corporation of the Municipality of
Kincardine (including its related entities) that, in our professional judgement, may reasonably be
thought to bear on our independence. Further, we will confirm our independence in writing.
Co"flict of Interests
We provide a wide range of services for a large number of clients and may be in a position where we
are providing services to clients in the same industry as you who may represent competing
commercial interests to you or whose interests may otherwise conflict with your own. We cannot be
certain that we will identify all such situations that exist or may develop, and it is difficult for us to
anticipate all situations that you might perceive to conflict. We therefore request that you notifY us
promptly of any potential conflict affecting the engagement contract of which you are, or become,
aware.
Where the above circumstances are identified by us or you and we believe that your interests can be
properly safeguarded by appropriate procedures, we will discuss and agree with you the
arrangements that already may exist or that we will put in place to preserve confidentiality and to
ensure that the advice and opinions which you receive ftom us are wholly independent of the advice
and opinions that we provide to other clients.
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Co"fidefltialitv
We will maintain the strictest confidence with respect to any client's or former client's infurmation.
Accordingly, your confidential information will not, without your consent, be disclosed to any
individuals in our Firm beyond those who are in the region through which you engaged our services
and those individuals ftom other offices who are involved in performing services for you. Nor will it
be disclosed without your consent to anyone outside the Firm, with the exception that we proceed on
the basis that we have your consent to disclose information required by judicial, regulatory or
professional authority.
Practice IlISDectioflS
As required by legaL regulatory or professional authorities (both in Canada and abroad) or by Firm
policy, our client files must periodically be reviewed by practice inspectors to ensure that we are
adhering to professional and Firm standards. We will proceed on the basis that we have your consent
to provide our files relating to your engagement to these practice inspectors for the sole purpose of
their inspection.
Role of Manallement and Council
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FÚUlIICial SlIltemeflls
The preparation of the consolidated financial statements in accordance with Canadian generally
accepted accounting principles is the responsibility of management. This responsibility includes but
is not limited to the maintenance of adequate accounting records and internal controls, safeguarding
of assets, selection and application of suitable accounting policies and appropriate disclosure of
financial information in tbe consolidated financial statements.
In response to any non-trivial misstatements identified by us during the audit, management is
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responsible for recording adjustments to the financial statements or otherwise concluding and
confU111ing in a representation letter provided to us at the conclusion of our audit that the effects of
the unrecorded adjustments are, both individually and in the aggregate, immaterial to the fInancial
statements taken as a whole.
It is the responsibility of the Council to ensure that policies are in place for effective corporate
governance, and to ensure that all unusual and material transactions during the year are properly
approved.
COlIVJleteness of Information
Management will provide us with (and make available) the following:
· complete financial records and related data, and copies of all minutes of meetings of council and
committees of council;
· information relating to any known or probable instances of non-compliance with legislative or
regulatory requirements, including financial reporting requirements;
· information relating to any ilIeg¡¡l or possibly illegal acts, and all facts related thereto; and
· information regarding all related parties and related party transactions;
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Fraud and Error
Management is also responsible for the following with respect to ftaud and error:
· the design and implementation of internal controls to prevent and detect ftaud and error;
· an assessment of the risk that the financial statements may be materially misstated as a result of
ftaud;
· providing us with information relating to ftaud or suspected ftaud affecting the entity involving
management, employees who have significant roles in internal control, or others, where the ftaud
could have a material effect on the financial statements;
· providing us with information relating to any allegations of ftaud or suspected ftaud affecting the
entity's financial statements communicated by employees, former employees, analysts, regulators
or others;
· communicating their belief that the effects of any uncorrected financial statement misstatements
aggregated during the audit are inunaterial, both individually and in the aggregate, to the fmancial
statements taken as a whole.
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Other ResDOnsibUlties
Management will also provide us with:
· its assessment of the reasonableness of significant assumptions underlying fair value
measurements and disclosures in the consolidated financial statements;
· any plans or intentions that may affect the carrying value or classifIcation of assets or liabilities;
· information relating to the measurement and disclosure of transactions with related parties;
· an assessment of all areas of measurement uncertainty known to management;
· information relating to claims and possible claims, whether or not they have been discussed with
the entity's legal counsel;
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· information relating to other liabilities and contingent gains or losses, including those associated
with guarantees, whether written or oral, under which the entity is contingently liable;
· information on whether the entity has satisfactory title to assets, liens or encumbrances on assets
exist, or assets are pledged as collateral;
· information relating to compliance with aspects of contractual agreements that may affect the
consolidated financial statements; and
· information concerning subsequent events.
Use and Distribution of Our Reoort
The examination of the financial statements and the issuance of our audit opinion are solely for the
use of The Corporation of the Municipality of Kincardine and those to whom our report is
specifically addressed by us. BOO Dunwoody lLP maIœs no representations of any kind to any third
party in respect of these financial statements and we accept no responsibility for their use by any
third party.
If reproduction or publication of our report is planned in an annual report or other document,
including electronic filings or posting of the report on a web site, a copy of the entire document
should be submitted to us in sufficient time for our review before the publication or posting process
begins.
Should the municipality wisb to include the financial statements referred to above and our report
thereon in a document proposed to be used in connection with a public or private offering of
securities at some future date, please contact us immediately. We will consider our consent to the
inclusion of our report in such a document at that time.
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MØ1IflIZement ReDresentations
At the conclusion of the audit, management will confIrm in writing significant representations
provided to us during the oog¡agement on matters that are:
· directly related to items that are material, either individually or in the aggregate, to the
consolidated financial statements;
· not directly related to items that are material to the consolidated financial statements bnt are
significant, either individually or in the aggregate, to the engagement; and
· relevant to judgments or estimates that are material, either individually or in the aggregate, to the
consolidated financial statements.
Failure to provide such representations in writing will result in a reservation of opinion in our
auditors' report.
Otber Services
Finœu:iaJ Statement Preoaration Services
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As agreed, we wiD provide assistance in the preparation of the financial statements, possibly
including adjusting journal entries.
These services may create a threat to our independence. We, therefore, require that the following
safeguards be put into place:
· That you create the source data for all the accounting entries;
· That you develop any underlying assumptions required with respect to the accounting treatment
and measurement of the entries; and
· That you review and approve all journal entries prepared by us; in addition to the draft financial
statements.
As an additional safeguard, we will ensure that members of the Firm providing bookkeeping services
will not participate on the audit engagement team. In addition, our file review policies require that
someone other than the preparer review the proposed journal entries and financial statements.
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Statutorv Reoortsl Other ReoortslAdditional Services
Normally, our work in the area of GST and other commodity taxes is limited to that appropriate to
ensure that the consolidated financial statements are not materially misstated. Accordingly, the audit
process may not detect situations where you are incornectly collecting GST or incornectly claiming
input tax credits and rebates, unless material. As you are aware, failure to properly account for the
GST could result in your municipality becoming liable for tax, interest or penalties. These situations
may also arise for provincial sales tax, custom duties, and excise taxes.
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Other Matters
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PersonsJ Informotion
It is acknowledged that we will have access to all personal information in your custody that we
require to complete our engagement. Our services are provided on the understanding that:
. you have obtained any required consents for collection, use and disclosure to us of personal
information required under applicable privacy legislation; and
. we will hold all personal information in compliance with our Privacy Statement.
Electronic Communictdions
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During the course of our audit, we may be required to communicate to you electronically by email or
through the Internet. In some instances, electronic copies of your financial statements may be sent to
you electronically or may be required by a regulatory body. As you are aware, there is security risk
attached to these electronic communications (including human error). Please communicate with us
regarding any issues or concerns you may have in this reg¡¡rd.
Fees
Our professional fees will be based on our regular billing rates which depend on the means by which
and by whom our services are provided, plus direct, out-of-pocket, expenses, applicable Goods and
Services Tax and Provincial Sales Tax. and are due when rendered. Fees for additional services will
be established separately.
Interest will be charged on all accounts outstanding for more than 30 days at the rate of 1.00% per
month (12.000,1, per annum).
DisDute Resollltion Procedures
If any dispute, controversy or claim arises in connection with the performance or breach of this
agreement, either party may, upon written notice to the other party, request facilitated negotiations.
Such negotiations shall be assisted by a neutral facilitator acceptable to both parties and shall
require the best efforts of the parties to discuss with each otber in good faith their respective
positions and, respecting their different interests, to finally resolve such dispute.
Limitation of LlabilittJ
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In any dispute, action, claim, demand for losses or damages arising out of the services performed by
BDO Dunwoody LLP pursuant to this engagement, BDO Dunwoody lLP shall only be liable for its
proportionate share of the total liability based on degree of fault as determined by a court of
competent jurisdiction or by an independent arbitrator as a result of the dispute resolution procedures
discussed previously, notwithstanding the provisions of any statute or rule of common law which
create, or purport to create, joint and several liability.
Our liability shall be restricted to damages of a direct and compensatory nature and shall not include
indirect, consequential, aggravated or punitive damages, or damages for loss of profits or expected
tax savings.
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Indemnitv
Your municipality hereby agrees to indemnifY, defend (by counsel retained and instructed by us) and
hold harmless BOO Dunwoody LLP and its partners, agents or employees. ftem and against any and
all losses, costs (including solicitors' fees), damages, expenses, claims, demands or liabilities arising
out of or in consequence of:
. the breach by your municipality, or its directors, officers, agents or employees, of any of the
covenants made by your municipality herein, including, without restricting the generality of the
foregoing, the misuse of, or the unauthorized dissemination of, our audit report or the financial
statements in reference to which the audit report is issued, or any other work product made
available to you by our Firm; and
. the services performed by BOO Dunwoody LLP pursuant to this engagement, unless, and to the
extent that, such losses, costs, damages and expenses are found by a court of competent
jurisdiction to have been due to the negligence of BOO Dunwoody LLP. In the event that the
matter is settled out of court, we win mutuany agree on the extent of the indenmification to be
provided by your municipality, failing which, the matter may be referred to dispute resolution in
accordance with the terms of this Jetter.
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The above terms of our engagement shall remain operative until amended, terminated or superseded
in writing. They shall be interpreted according to the laws of the Province of Ontario and the laws of
Canada applicable therein, and any disputes arising ftom this engagement shall be referred to the
courts of Ontario, which shall have exclusive jurisdiction.
If you have any questions about the terms of this engagement, please do not hesitate to contact us.
For our records, please acknowledge your agreement by signing and returning to us the copy of the
engagement letter enclosed.
It is a pleasure for us to be of service and we look forward to many years of association with you.
Yours truly,
f¿)¿) j)~ ø
Chartered Accountants
Agreemeut of all the above terms, after fun review, consideration and discussion of them, is hereby
acknowledged by:
The Corporation of the Municipality of Kincardine
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Name
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Name
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Position
Chief Administrative Officer
Position
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