HomeMy WebLinkAbout08 011 BDO Dunwoody as Auditors Appointment
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THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE
BY-LAW
NO. 2008 - 011
BEING A BY-LAW TO APPOINT AUDITOR FOR THE CORPORATION
OF THE MUNICIPALITY OF KINCARDINE
AND WHEREAS pursuant to the said Municipal Act, Section 8 (1) and 9 provide
that the powers of a municipality under this or any other Act shall be interpreted
broadly so as to confer broad authority on the municipality to enable the
municipality to govern its affairs as it considers appropriate and to enhance the
municipality's ability to respond to municipal issues and has the capacity, rights,
powers and privileges of a natural person for the purpose of exercising its
authority under this or any other Act;
AND WHEREAS the Municipal Act, 2001, S.O. 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 BOO Dunwoody LLP, Chartered Accountants and Advisors be
appointed as auditor for the 2007 fiscal year 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 one (1) year.
3. That the Mayor and CAO 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 That By-law No. 2006 - 22 is hereby repealed.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, 2007".
Page 2
BOO Dunwoody as Auditors Appointment By-law, 2007
By-law No. 2008 - 011
e READ a FIRST, and SECOND time this 16th day of January 2008
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READ a THIRD time and FINALLY PASSED this 16th day of January, 2008.
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18DO
BOO Dunwoody LLP
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
www.bdo.ca
January 18, 2008
Members of Council
The Corporation of the Municipality of Kincardine
1475 5th Concession
RR5
Kincardine, Ontario
N2Z 2X6
Dear Members of Council:
This letter will confirm our understanding of the terms of our engagement as auditors of The
Corporation of the Municipality of Kincardine for the year ending December 31,2007.
Our Role as Auditors
Conduct of the Audit
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 from this engagement which shall conform to all applicable laws.
Our audit will be made in accordance with Canadian generally accepted auditing standards.
We will plan and perform audit procedures to obtain reasonable assurance as to whether the
financial statements are free 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.
We will consider your internal control over financial reporting solely for the purpose of
determining the 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
BDO Dunwoody LLP is a Limited Liability Partnership registered in Ontario
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:
. factors such as use of judgment, and the use of testing of the data underlying the
consolidated financial 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 staternents rather than to identifY all errors, fraud and other, illegal or possibly illegal
acts, significant weaknesses in internal control or other irregularities. In addition, because of
the nature of fraud, 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 fraud. If we identifY non-trivial misstatements in the consolidated
financial statements, we will 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:
. misstatements, other than trivial errors;
. fraud;
. 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 will also make notes of any other matters that we believe should be brought to your
attention 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 ofthe matter to be
communicated will determine the level of management to which the communication is
directed.
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.
We plan to place reliance on the work of a specialist who is an external consultant hired by
you. We will communicate with them either verbally or through a separate engagement letter
the nature of our reliance as well as the requirements and responsibilities of both parties.
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.
Indevendence
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 our services. We will communicate in writing to the members of Council any
relationships between BDO 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.
Conflict 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 from us are wholly independent of
the advice and opinions that we provide to other clients.
Confidentialitv
We will maintain the strictest confidence with respect to any client's or former client's
information. 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 from 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 Insvections
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 Manal!ement and Council
Financial Statements
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 the consolidated financial
statements.
In response to any non-trivial misstatements identified by us during the audit, management is
responsible for recording adjustments to the financial statements or otherwise concluding and
confirming 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.
Comvleteness 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 illegal or possibly illegal acts, and all facts related thereto; and
. information regarding all related parties and related party transactions;
Fraud and Error
Management is also responsible for the following with respect to fraud and error:
. the design and implementation of internal controls to prevent and detect fraud and error;
. an assessment of the risk that the financial statements may be materially misstated as a
result of fraud;
. providing us with information relating to fraud or suspected fraud affecting the entity
involving management, employees who have significant roles in internal control, or others,
where the fraud could have a material effect on the financial statements;
. providing us with information relating to any allegations of fraud or suspected fraud
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 immaterial, both individually and in the
aggregate, to the financial statements taken as a whole.
Other Responsibilities
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;
. 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 Revort
The examination ofthe financial statements and the issuance of our audit opinion are solely
for the use of The Corporation ofthe Municipality of Kincardine and those to whom our
report is specifically addressed by us. BDO Dunwoody LLP makes 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 plarmed 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 wish 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.
Manaeement Revresentations
At the conclusion of the audit, management will confirm in writing significant representations
provided to us during the engagement 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 but
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.
Other Services
Financial Statement Preoaration Services
As agreed, we will 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 ofthe 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.
Statutorv Reoorts/ Other Reoorts/Additional 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 incorrectly collecting
GST or incorrectly 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.
Other Matters
Personal Information
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 Communications
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 hurnan
error). Please communicate with us regarding any issues or concems you may have in this
regard.
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 (12.00% per annum).
Dispute Resolution 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 other in good faith
their respective positions and, respecting their different interests, to finally resolve such
dispute.
Limitation of Liabilitv
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 offault 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.
lndemnitv
Your municipality hereby agrees to indemnify, defend (by counsel retained and instructed by
us) and hold harmless BDO Dunwoody LLP and its partners, agents or employees, from 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 BDO 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 ofBDO Dunwoody LLP. In the event that
the matter is settled out of court, we will mutually agree on the extent ofthe
indemnification to be provided by your municipality, failing which, the matter may be
referred to dispute resolution in accordance with the terms of this letter.
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 from 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,
/?lJo
D~~/
Chartered Accountants, Licensed Public Accountants
Agreement of all the above terms, after full review, consideration and discussion of them, is
hereby acknowledged by:
The Corporation of the Municipality of Kincardine
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