HomeMy WebLinkAbout08 178 Auditors Appointment (BDO Dunwoody LLP)
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THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE
BY-LAW
NO. 2008 - 178
BEING A BY-LAW TO APPOINT AN AUDITOR FOR THE
CORPORATION OF THE MUNICIPALITY OF KINCARDINE
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 a municipality 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 of 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 2009 to 2012 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 four (4) years.
3. That the Mayor and CAO be authorized to sign, on behalf of the Municipality
of Kincardine, the Terms of Engagement with BOO Dunwoody LLP, which is
attached to this by-law as Schedule "A".
4. This By-law shall come into full force and effect upon its final passage.
5. This By-law may be cited as the "Auditors Appointment (BOO Dunwoody LLP)
By-Law".
.
READ a FIRST and SECOND time this 5th day of November, 2008.
2Ed'/~
Mayor
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Clerk
READ a THIRD time and FINALLY PASSED this 5th day of November, 2008.
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BOO Dunwoody LLP
Chartered Accountants
and Advisors
P,O, Box 1390,625 Mill Street
Port Elgin, Ontario, Canada NOH 2CO
Telephone. (519) 832-2049
Fax. (519) 832,5659
www.bdo.ca
September 22, 2008
This)s Schedule "..zi. "to By. -Law
o<Doi?-
No, I ":l->: passed the 5!2.. day
, 2008
~~cJe
Clerk
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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 ofthe Municipality of Kincardine for the year ending December 31, 2008,
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 statements 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. Ifwe 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 of the 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.
Confidentia/itv
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 Management 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 offraud;
. 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 effeet 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 thc 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;
. infonnation 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 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 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 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 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.
Manaflement 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 Prevaration Services
As agreed, we will providc 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 tearn. In addition, our file review
policies require that someone other than the preparer review the proposed journal entries and
financial statements.
Statutory Reports/ Other Reports/Additional Services
We will also be pleased to provide other additional services such as GST and PST advice, etc.
upon request. We will complete a special audit report for your compliance with the Federal
Gas Tax.
Normally, our work in the area ofGST 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 lcgislation; 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 human
error). Please communicate with us regarding any issues or concerns you may have in this
regard.
Fees
Our professional fees will be a maximum of $52,000 plus applicable Goods and Services Tax
and Provincial Sales Tax, for the municipality for 2008 including out of pocket expenses and
shall be considered a "local" audit. The fees will cover the general statutory audit of the
municipality for all its funds, financial statement preparation, BIA audit, Trust Funds audit,
Gas Tax Audit as well as some Tangible Capital Asset audit work. We anticipated that the
bulk of the capital asset audit work would be performed in 2009. If that work takes place in
2008 we will bill for that work as it is completed 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. If the capital asset audit work is performed in 2008 then it would reduce the
2009 audit work by a similar amount.
Ifwe encounter difficulties in completing our work due to information not being provided in
accordance with the parameters set out in the request for proposal 2008-1121-0 I we will
discuss any issues with the Treasurer. Prior to the invoicing of that work, we agree to provide
the municipality with an estimate of the change in fees, if any, and to obtain their acceptance
of such additional billings. We will bill for that work in separate billings at our regular billing
rates.
Our professional fees will be a maximum of$67,600, $58,700 and $61,300 plus applicable
Goods and Services Tax and Provincial Sales Tax, for the years 2009, 2010 and 201 I
respectively. These fees are based on the parameters set out in the request for proposal 2008-
121-0 I. Should a significant increase or decrease occur in the scope of work to be conducted
by the auditor during the appointment period, we will discuss all changes with the Treasurer
and provide a firm quote of the impact of such changes on fees, if any, prior to the submission
of the annual audit plan to the Treasurer. We accept that without a firm quote and agreement
by the municipality, additional billings will not be accepted by your organization.
Fees for additional services will be established separately.
All invoices shall show the actual itemized work completed. All payments will be made in
response to invoices itemized in accordance with the scope set out in the request for proposal
2008-121-01, provided the invoices are based on work described in the scope of the project,
consistent with the negotiated deliverables.
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, rcquest 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 othcr in good faith
their respective positions and, respecting their ditferent interests, to tinally rcsolve 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 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.
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 ofthe 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 of the
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 cngagement 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,
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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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BOO Dunwoody LLP
Chartered Accountants
and Advisors
P.O. Box l390, 625 Mill Street
Port Elgin, Ontario, Canada NOH 2eo
Telephone, (519) 832-2049
Fax, (5191 832-5659
www.bdo.CI:l
November 1,2008
Mr Bill Sipprell
Bruce Telecom
(ofthe Municipality of Kincardine)
RR3
Tiverton, Ontario
NOG 2TO
Dear Mr Sipprell:
This letter will confirm our understanding of the terms of our engagement as auditors of Bruce
Telecom for the year ending December 31, 2008.
Our Role as Auditors
Conduct of the Audit
As auditors, our objective is to express an opinion on whether the financial statements present
fairly, in all material respects, the financial position, results of operations and cash flows of the
organization in accordance with Canadian generally accepted accounting principles.
At the conclusion of our audit, we will submit a report directed to the board of directors containing
our opinion on the financial statements. If it appears for any reason that we will not be in a
position to render an unqualified opinion on the 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 judgment, 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 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 financial statements will be detected because of:
. factors such as use of judgment, and the use of testing of the data underlying the financial
statements;
. inherent limitations of internal control; and
BDO Dunwoody LLP is a Limited Liability Partnersliip registered in Ontario
. the fact that much ofthe 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 financial statements
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 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 Board of Directors:
. 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 of the 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 Board of Directors 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.
Indeoendence
Professional and certain regulatory standards require us to be independent, in both fact and
appearance, with respect to Bruce Telecom in the performance of our services. We will
communicate in writing to the Board of Directors any relationships between BDO Dunwoody LLP
(including its related entities) and Bruce Telecom (including its related entities) that, in our
professional judgment, 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.
Confjdentialitv
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 Inspections
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 Mana!!ement and Board of Directors
Financial Statements
The preparation of the 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 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 ofthe Board of Directors 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.
Comoleteness 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
directors and committees of directors;
. 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 ofthe 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 Resoonsibilities
Management will also provide us with:
. its assessment of the reasonableness of significant assumptions underlying fair value
measurements and disclosures in the 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 financial statements; and
. information concerning subsequent events.
Use and Distribution of Our Report
The examination of the financial statements and the issuance of our audit opinion are solely for the
use of Bruce Telecom 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 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 organization 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 Representations
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
financial statements;
. not directly related to items that are material to the 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 financial statements.
Failure to provide such representations in writing will result in a reservation of opinion in our
auditors' report.
Other Services
Additional Services
We will also be pleased to provide other additional services such as:
. Completion of report for National Contribution Fund
. Completion of report for Canadian Numbering Administration Consortium and Schedule of
Contributions Eligible Revenue.
Tax Services
If other tax services, such as tax planning, GST and PST advice, etc. are required, we shall confirm
them with you as they arise.
To the extent that such additional services are not covered by a separate engagement letter, the
terms ofthis engagement letter shall apply to those additional services which you request.
Our work in the area of GST and other commodity taxes is limited to that appropriate to ensure
that the 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,
unless material. As you are aware, failure to properly account for the GST could result in you or
your organization 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 auy 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 human error). Please
communicate with us regarding any issues or concerns you may have in this regard.
Fees
Our professional fees will be a maximum of $14,000 for the 2008 audit including out of pocket
expenses plus applicable Goods and Services Tax and Provincial Sales Tax, and are due when
rendered and shall be considered a "local" audit. The fees will cover the general statutory audit of
the system as well as the special reports necessary for statutory reports listed above.
If we encounter difficulties in completing our work due to information not being provided in
accordance with the parameters set out in the request for proposal 2008-1 121-01 we will discuss
any issues with the Director of Finance of the system. Prior to the invoicing of that work, we
agree to provide the system with an estimate of the change in fees, if any, and to obtain their
acceptance of such additional billings. We will bill for that work in separate billings at our regular
billing rates.
Our professional fees will be a maximum of$14,750, $18,000 and $18,850 for
the years 2009, 2010 and 2011 respectively. These fees are based on the
parameters set out in the request for proposal 2008-121-01. Should a
significant increase or decrease occur in the scope of work to be conducted by
the auditor during the appointment period, we will discuss all changes with the
Director of Finance of the system and provide a firm quote of the impact of
such changes on fees, if any, prior to the submission of the annual audit plan to
the Director of Finance. We accept that without a firm quote and agreement by
the municipality, additional billings will not be accepted by your organization
Fees for additional services will be established separately.
All invoices shall show the actual itemized work completed. All payments will be made in
response to invoices itemized in accordance with the scope set out in the request for proposal
2008-121-01, provided the invoices are based on work described in the scope of the project,
consistent with the negotiated deliverables.
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 ofthe 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 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.
lndemnitv
Your organization hereby agrees to indemnity, 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 organization, or its directors, officers, agents or employees, of any of the
covenants made by your organization 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 of the indemnification
to be provided by your organization, 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,
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Chartered Accountants i
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Agreement of all the above terms, after full review, consideration and discussion of them, is
hereby acknowledged by:
Bruce Telecom
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