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Home My WebLink About14 120 Auditors Appointment (KPMG) By-law THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE KBT . te, t �x %O. a E * *okay OF K MGP� \ BY -LAW NO. 2014 -120 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 KPMG LLP be appointed as auditor for the years ending December 31, 2014 to December 31, 2016 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 for years ending December 31, 2014 and December 31, 2016 as outlined in the Terms of Engagement, which is attached to this by -law as Schedule "A ". 3. That the Mayor and CAO be authorized to execute, on behalf of the Municipality of Kincardine, the Terms of Engagement with KPMG 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 (KPMG) By- Law ". READ a FIRST and SECOND TIME this 3 day of September, 2014. READ a THIRD TIME and FINALLY PASSED this 3 day of September, 2014. 1 _ D ivy -D • Mayor Clerk KPMG KPMG LLP Chartered Professional Accountants Telephone (519) 747 - 8800 115 King Street South Fax (519) 747 -8830 2 ^d Floor Internet www.kpmg.ca Waterloo, Ontario N2J 5A3 Ms. Roxana Baumann, CPA, CA The Municipality of Kincardine Municipal Administration Centre 1475 Concession 5 R.R. #5 Kincardine, ON N2Z 2X6 September 18, 2014 Dear Ms Baumann The purpose of this letter is to outline the terms of our engagement to audit the consolidated financial statements of The Municipality of Kincardine ( "the Entity "), commencing for the period ending December 31, 2014. The terms of the engagement outlined in this letter will continue in effect from period to period, unless amended or terminated in writing. The attached Terms and Conditions form an integral part of the terms of this engagement and are incorporated herein by reference (collectively the "Engagement Letter "). FINANCIAL REPORTING FRAMEWORK FOR THE FINANCIAL STATEMENTS The financial statements will be prepared and presented in accordance with Canadian public sector accounting standards (hereinafter referred to as the "financial reporting framework "). The financial statements will include an adequate description of the financial reporting framework. MANAGEMENT'S RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS Management acknowledges and understands that they are responsible for: (a) the preparation and fair presentation of the financial statements in accordance with the financial reporting framework referred to above (b) ensuring that all transactions have been recorded and are reflected in the financial statements (c) such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Management also acknowledges and understands that they are responsible for the design, implementation and maintenance of internal control to prevent and detect fraud (d) providing us with access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters (e) providing us with additional information that we may request from management for the purpose of the audit KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( "KPMG International "), a Swiss entity. KPMG Canada provides services to KPMG LLP. /nIL A.f Page 2 (f) providing us with unrestricted access to persons within the Entity from whom we determine it necessary to obtain audit evidence (g) providing us with written representations required to be obtained under professional standards and written representations that we determine are necessary. Management also acknowledges and understands that professional standards require that we disclaim an audit opinion when management does not provide certain written representations required An audit does not relieve management or those charged with governance of their responsibilities. AUDITORS' RESPONSIBILITIES REGARDING THE AUDIT OF THE FINANCIAL STATEMENTS Our function as auditors of the Entity is: • to express an opinion on whether the Entity's financial statements, prepared by management with the oversight of those charged with governance, are, in all material respects, in accordance with the financial reporting framework referred to above • to report on the financial statements We will conduct the audit of the Entity's financial statements in accordance with Canadian generally accepted auditing standards and relevant ethical requirements, including those pertaining to independence (hereinafter referred to as applicable "professional standards "). We will plan and perform the audit to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Accordingly, we will, among other things: • identify and assess risks of material misstatement, whether due to fraud or error, based on an understanding of the Entity and its environment, including the Entity's internal control. In making those risk assessments, we consider internal control relevant to the Entity's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control • obtain sufficient appropriate audit evidence about whether material misstatements exist, through designing and implementing appropriate responses to the assessed risks • form an opinion on the Entity's financial statements based on conclusions drawn from the audit evidence obtained; • communicate matters required by professional standards, to the extent that such matters come to our attention, to the appropriate level of management, those charged with governance. The form (oral or in writing) and the timing will depend on the importance of the matter and the requirements under professional standards. AUDITORS' DELIVERABLES The expected form and content of our audit report is provided in Appendix — Expected Form of Report. However, there may be circumstances in which a report may differ from its expected form and content. • Page 3 INCOME TAX COMPLIANCE AND ADVISORY SERVICES Tax compliance and advisory services are outside the scope of this letter. These services will be subject to the terms and conditions of a separate engagement letter. FEES Our fees for professional services to be performed under this Engagement Letter will be in accordance with those included in our response to your request for proposal for audit services. * * * * * * * * * ** We are available to provide a wide range of services beyond those outlined above. Additional services are subject to separate terms and arrangements. We are proud to provide you with the services outlined above and we appreciate your confidence in our work. We shall be pleased to discuss this letter with you at any time. If the arrangements and terms are acceptable, please sign the duplicate of this letter in the space provided and return it to us. Yours very truly, «o Matthew Betik, Partner, responsible for the engagement and its performance, and for the report that is issued on behalf of KPMG LLP, and who, where required, has the appropriate authority from a professional, legal or regulatory body 519- 747 -8245 Enclosure * * * * * * * * * ** The terms of the enga ement set o eed: Name and Title Date (dd/mm/yy) Page 4 Appendix — Expected Form of Report INDEPENDENT AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Municipality of Kincardine: We have audited the accompanying consolidated financial statements of The Corporation of the Municipality of Kincardine ( "the Entity "), which comprise the consolidated financial position as at December 31, 2014 and the consolidated statement of operations and accumulated surplus, changes in net financial assets, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility 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 comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of The Corporation of the Municipality of Kincardine as at December 31, 2014, and its consolidated results of operations and the changes in its net debt and its consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants, Licensed Public Accountants Waterloo, Canada KPMG TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS The Terms and Conditions are an integral part of the accompanying information in the course of the engagement, and (ii) it has provided notice engagement letter from KPMG that identifies the engagement to which of the potential processing of such personal information outside of Canada they relate (and collectively form the "Engagement Letter"). The (as described in paragraph 5 above). KPMG's Privacy Officer noted in Engagement Letter supersedes all written or oral representations on this KPMG's Privacy Policy is able to answer any individual's questions about matter. the collection of personal information required for KPMG to deliver 1. SEVERABILITY. services hereunder. The Entity consents to KPMG sending to the Entity, its officers, directors If any of the provisions of this Engagement Letter are determined to be and employees, as applicable, electronic messages (including emails) invalid or unenforceable, the remaining provisions shall remain in effect relating to KPMG products and services and other matters of interest to and be binding on the parties to the fullest extent permitted by law. the Entity. The Entity, its officers, directors or employees may withdraw 2. GOVERNING LAW. such consent by contacting KPMG's National Office located at Bay This Engagement Letter shall be subject to and govemed by the laws of Adelaide Centre, 333 Bay Street, Suite 4600, Toronto, Ontario M5H 2S5, the province where KPMG's principal office performing this engagement is Attention: Unsubscribe; or info( koma.ca. located (without regard to such province's rules on conflicts of law) and all 7. OFFERS OF EMPLOYMENT. disputes arising hereunder or related thereto shall be subject to the In order to allow issues of independence to be addressed, management exclusive jurisdiction of the courts of such province of Canada. agrees that prior to extending an offer of employment to any KPMG 3. LLP STATUS. partner, employee or contractor, the matter is communicated to the KPMG LLP is a registered limited liability Partnership ( "LLP ") established engagement partner or associate partner. under the laws of the Province of Ontario and, where applicable, has been 8. OFFERING DOCUMENTS. registered extra- provincially under provincial legislation. KPMG is a If the Entity wishes to include or incorporate by reference the financial partnership, but its partners have a degree of limited liability. A partner is statements and our report thereon in an offering document, we will not personally liable for any debts, obligations or liabilities of the LLP that consider consenting to the use of our report and the terms thereof at that arise from a negligent act or omission by another partner or by any other time. Nothing in this Engagement Letter shall be construed as consent and person under that other partner's direct supervision or control. The KPMG expressly does not consent to the use of our audit report(s) in legislation relating to limited liability partnerships does not, however, offering documents. If the Entity wishes to obtain KPMG's written consent reduce or limit the liability of the firm. The firm's insurance exceeds the to the use of our audit report(s) in an offering document, or wishes us to mandatory professional indemnity insurance requirements established by provide a comfort or advice letter, we will be required to perform the relevant professional bodies. Subject to the other provisions hereof, all procedures as required by professional standards; any agreement to partners of the LLP remain personally liable for their own actions and /or perform such procedures will be documented in a separate engagement actions of those they directly supervise or control. letter. Management agrees to provide us with adequate notice of the 4. DOCUMENTS AND INFORMATION. preparation of such documents. Management's cooperation in providing us with documents and related 9. FEE AND OTHER ARRANGEMENTS. information and agreed -upon assistance on a timely basis is an important KPMG's estimated fee is based on the quality of the Entity's accounting factor in being able to issue our report. KPMG shall be entitled to share all records, the agreed -upon level of preparation and assistance from the information provided by the Entity with all other member firms of KPMG Entity's personnel, and adherence to the agreed -upon timetable. KPMG's International Cooperative ( "KPMG International ") performing services estimated fee also assumes that the Entity's financial statements are in hereunder. All work papers, files and other internal materials created or accordance with the applicable financial reporting framework and that produced by KPMG during the engagement and all copyright and there are no significant new or changed accounting policies or issues, or intellectual property rights in our work papers are the property of KPMG. financial reporting, internal control over financial reporting or other 5. USE OF MEMBER FIRMS AND THIRD PARTY SERVICE PROVIDERS. reporting issues. KPMG will inform the Entity on a timely basis if these Personal and /or confidential information (e.g. entries into KPMG's time and factors are not in place. billing system and into KPMG's conflicts database) collected by KPMG Additional time may be incurred for such matters as significant issues, during the course of this engagement may be used, processed and stored significant unusual and /or complex transactions, informing management outside of Canada by KPMG, KPMG International member firms about new professional standards, and any related accounting advice. performing services hereunder or third party service providers. KPMG Where these matters arise and require research, consultation and work represents to the Entity that each KPMG International member firm and beyond that included in the estimated fee, the Entity and KPMG agree to third party service provider providing services hereunder has agreed or revise the estimated fee. No significant additional work will proceed shall agree to conditions of confidentiality with respect to the Entity's without management's concurrence, and, if applicable, without the information. Further, KPMG is responsible to the Entity for causing third concurrence of those charged with govemance. Upon completion of these party service providers to comply with such conditions of confidentiality, services KPMG will review with the Entity any fees and expenses incurred and KPMG shall be responsible to the Entity for their failure to comply and in excess of KPMG's estimate, following which KPMG will render the final failure of each KPMG International member firm providing services billing. Routine administrative expenses such as long distance telephone hereunder to comply with its obligations of confidentiality owed to KPMG. calls, photocopies, fax charges, printing of statements and reports, Any services performed by third party service providers shall be performed postage and delivery and secretarial and report department assistance will in accordance with the terms of this Engagement Letter, but KPMG shall be charged on the basis of a percentage of KPMG's professional costs. remain responsible to the Entity for the performance of such services and Other disbursements for items such as travel, accommodation and meals services performed by each KPMG International member firm providing will be charged based on KPMG's actual disbursements. services hereunder. Such personal and /or confidential information may be KPMG's invoices are due and payable upon receipt. Amounts overdue are subject to disclosure in accordance with the laws applicable in the subject to interest. In order to avoid the possible implication that unpaid jurisdiction in which the information is processed or stored, which laws fees might be viewed as creating a threat to KPMG's independence, it is may not provide the same level of protection for such information as will important that KPMG's bills be paid promptly when rendered. If a situation Canadian laws. arises in which it may appear that KPMG's independence is threatened • because of significant unpaid bills, KPMG may be prohibited from signing 6. PERSONAL INFORMATION CONSENTS AND NOTICES. the report and, if applicable, any consent. Any collection, use or disclosure of personal information is subject to Fees for any other services will be billed separately from the services KPMG's Privacy Policy available at www.koma.ca. KPMG may be required described in this engagement letter and may be subject to written terms to collect, use and disclose personal information about individuals during and conditions supplemental to those in this letter. the course of this engagement. Canadian Public Accountability Board (CPAB) participation fees, when The Entity represents and warrants that: (i) it will obtain any consents applicable, are charged to the Entity based on the annual fees levied by reasonably required to allow KPMG to collect, use and disclose personal CPAB. TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS 1 MARCH 2014 KPMG 4 G TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS To the extent that KPMG partners and employees are on the Entity's to resolve the dispute. In the event that the parties are unable to settle or premises, the Entity will take all reasonable precautions for the safety of resolve their dispute through negotiation within 30 days of the dispute first KPMG partners and employees at the Entity's premises. , arising or such longer period as the parties may mutually agree upon, such 10. LEGAL PROCESSES. dispute shall, as promptly as is reasonably practicable, be subject to mediation pursuant to the National Mediation Rules of the ADR Institute of The Entity on its own behalf hereby acknowledges and agrees to cause its Canada, Inc. All disputes remaining unsettled for more than 60 days subsidiaries and affiliates to hereby acknowledge that KPMG may from following the parties first meeting with a mediator or such longer period as time to time receive requests or orders from the Canadian Public the parties may mutually agree upon shall, as promptly as is reasonably Accountability Board or from professional, securities or other regulatory, practicable, be subject to arbitration pursuant to the National Arbitration judicial or governmental authorities (both in Canada and abroad) to Rules of the ADR Institute of Canada, Inc. (the "Arbitration Rules "). Such provide them with information and copies of documents in KPMG's files arbitration shall be final, conclusive and binding upon the parties, and the including working papers and other work- product relating to the affairs of parties shall have no right of appeal or judicial review of the decision. The the Entity, its subsidiaries and affiliates. Except where prohibited by law, if parties hereby waive any such right of appeal which may otherwise be a request or order is directly related to an inspection or investigation of provided for in any provincial arbitration statute made applicable under the KPMG's audit of the Entity, KPMG will advise the Entity of the request or Arbitration Rules. The place of mediation and arbitration shall be the city in order. The Entity hereby acknowledges that KPMG will provide these Canada in which the principal KPMG office that performed the documents and information without further reference to, or authority from, engagement is located. The language of the mediation and arbitration the Entity, its subsidiaries and affiliates. shall be English. When such an authority requests access to KPMG's working papers and other work - product relating to the Entity's affairs, KPMG will, on a reasonable efforts basis, refuse access to any document over which the Entity has expressly informed KPMG at the time of delivery that the Entity asserts privilege, except where disclosure of documents is required by law. The Entity must mark any document over which it asserts privilege as "privileged ". If and only if the authority requires such access to privileged documents pursuant to the laws of a jurisdiction in which express consent is required for such disclosure, then the Entity hereby provides its consent. Where privileged Entity documents are disclosed, KPMG is directed to advise the authority that the Entity is permitting disclosure only to the extent required by law and for the limited purpose of the authority's exercise of statutory authority. KPMG is directed to advise the authority that the Entity does not intend to waive privilege for any other purpose and that the Entity expects its documents to be held by the authority as privileged and confidential material (held securely, limited distribution, etc.). For greater certainty, the Entity and KPMG hereby agree that this acknowledgement (and, if required, consent) does not negate or constitute a waiver of privilege for any purpose and the Entity expressly relies upon the privilege protections afforded under statute and otherwise under law. The Entity agrees to reimburse KPMG, upon request, at standard billing rates for KPMG's professional time and expenses, including reasonable legal fees, incurred in dealing with the matters described above. 11. KPMG INTERNATIONAL MEMBER FIRMS. The Entity agrees that any claims that may arise out of this engagement will be brought solely against KPMG, the contracting party, and not against any other KPMG International Cooperative ( "KPMG International ") member firms participating in this engagement or such third party service providers referred to in Section 5 above. 12. CONNECTING TO THE ENTITY'S IT NETWORK. KPMG personnel are authorized to connect their computers to the Entity's IT Network, subject to any restrictions communicated to KPMG from time to time. Connection to the Entity's IT Network or the Internet via the Network, while at the Entity's premises, will be for the express purpose of conducting normal business activities, primarily relating to facilitating the completion of work referred to in this letter. 13. DELIVERABLES OR COMMUNICATIONS. KPMG may issue other deliverables or communications as part of the services described in this Engagement Letter. Such deliverables or communications may not to be included in, summarized in, quoted from or otherwise used or referred to, in whole or in part, in any documents or public oral statement. KPMG expressly does not consent to the use of any communication, report, statement or opinion prepared by us on the interim financial statements and such communication, report, statement or opinion may not be included in, summarized in, quoted from or otherwise used in any document or public oral statement. 14. ALTERNATIVE DISPUTE RESOLUTION. The parties hereby agree that they will first attempt to settle any dispute arising out of or relating to this Engagement Letter or the services provided hereunder through good faith negotiations in the spirit of mutual cooperation between representatives of each of the parties with authority TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS 2 MARCH 2014 Auditors Appointment (KPMG) By -law By -Law No. 2014 - 120 DOCUMENT: Municipality of Kincardine External Audit Services Proposal AUDITORS APPOINTMENT (KPMG) BY -LAW KPMG Cutting through complexity EXTERNAL AUDIT SERVICESS Our proposal to serve Municipality of Kincardine Filed under separate cover in Administration File — C01 in Central Records: Titled: Municipality of Kincardine By -Law No. 2014 - 120 BEING A BY -LAW TO APPOINT AN AUDITOR FOR THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE Cited as: Auditors Appointment (KPMG) By -law Dated: 3 rd day of September, 2014 e • • ...- , : '• ;., . . . 4- . , • iji41 ____. -4 . 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L ......., 4 • . • ,i• • 1 4 1 4 • Kincardine . . fr. • .4 • i s IP • • 4 0, II, t * . li i l h t iy10 w • p .0 .. p • • * a --- P II 4 , • i 4. 4r 4 0 IP • ' , ., re r ■ • July 25, 2014 t " • 9 1 , ,-, . -.. 4 • • . % , . ... f / 1 • • . 4 ':Z.'4V . lb , - 4 A % ir 4 • kpmg ca f li • ' 3 P ., t - • . el l • • AI 0 11 7 • * 40 0. • ' 4 • •• 1 • P le 0 # 0 • -*s. ..,1 /11.- • ' - -'' i Ilk . • el 41 ... - . _ • * .. • ----- 0 -11 • • t • 7' - . • ---- . = ' 4 - • • • • • • • • • • • • • • • • • • • • • • • At KPMG, we are passionate • about earning your trust. • We take deep personal accountability, • individually and as a team, to deliver • exceptional service and value in all our • interactions with you. • • Ultimately, we measure our • success from the only perspective • that matters - yours. • • • • • • • • ED 0 • • • • KPMG KPMG LLP Telephone (519) 747 -8800 • 115 King Street South Fax (519) 747-8268 2 Floor Internet www.kpmg.ca • Waterloo, ON N2J 5A3 • • • Ms. Roxana Baumann, CPA, CA Director of Finance • Municipality of Kincardine • 1475 Concession 5, RR #5 Kincardine, Ontario N2Z 2X6 July 25, 2014 Dear Ms.Baumann: • • Re: Request for Proposals for External Audit Services • I am delighted to submit our proposal to provide external audit services to the Municipality of Kincardine ( "the • Municipality ") for the fiscal period 2014 to 2016. We are very enthusiastic about the prospect of working with • the Municipality, and thank you for the opportunity to show how KPMG is best suited to meet your external audit needs. The primary advantages that we feel set us apart from other firms are as follows: • • • Advisors to municipal sector: As external auditors and business advisors of choice to several municipalities and local government agencies, we strive to provide a level of service that exceeds • expectations. The members of our team have been selected for their experience in the municipal sector, knowledge of key issues for local governments, and professional know -how. • Experienced team: An accessible, experienced and senior team that will bring you leading industry practices, open communication and proactive advice; you have our firm's industry leaders steering your alb audit and driving the efficiency of your audit. • • Our approach: We employ an audit methodology that is risk -based and tailored to your environment. • Throughout the engagement, we emphasize continuous, proactive communication and from the • experience gained in transitioning other municipalities to KPMG, we will ensure that the change from your current auditors is as smooth as possible. • • Competitive fees: It is important to us that you receive value for money. We want to ensure that we • meet your need for reasonable fees, while maintaining the highest quality standards and deliver on our • client service commitment. We appreciate the insights you have provided in the preparation of our proposal. We very much look forward • to proceeding to the next stage of your selection process. Until then, I remain available to answer any questions you may have. Yours sincerely, • S Matthew Betik • Partner • (519) 747 -8245 S • KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. • KPMG Canada provides services to KPMG LLP. • • • • IIIIII • • Table of contents • • • Executive summary 1 • • • Section A — Company Acceptance 6 • • Section B — Professional services proposed 13 • • Section C — Pricing overview 31 • • Appendix A — Draft Engagement Letter 34 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Executive summary • • Financial reporting for Ontario municipalities has undergone a • number of changes over the past several years. With a greater • focus on transparency and clarity in government reporting by the • Public Sector Accounting Board (PSAB), there have been and will • continue to be research studies, exposure drafts and accounting pronouncements issued for municipalities. • 4 �zoia • You need external auditors who know the Municipal Sector and understand the • challenges you face in planning and financing the Municipality of Kincardine ( "the • • Municipality "). You need a trusted advisor who can support your business agenda. KPMG if 'is il 1 0 1 Canada's Best is that firm. Here's why. • Diversity Employers • The right team with the right approach • �� Q`pYERS F�9 ` We commit to being proactive, as well as offering timely and quality service throughout V • the engagement. We have carefully evaluated the skills and experience you need, and • identified a team we know will deliver — hard working, knowledgeable, client- focused O professionals who understand local governments. We are committed to providing professional services of the highest quality, meeting your deadlines, providing staff 1`2014• p g q Y, 9Y p g • continuity and constantly offering assistance and advice. Our approach focuses on • continuous improvement across all service areas, and we will formally solicit your input. • Our team is led by Matthew Betik, Lead Audit Partner, and Brendan Hall, Manager, both Canada's Top of whom have tremendous municipal experience together. Working closely with your • 1 00 staff to plan the audit, we will examine your key business processes, evaluate controls, • Employers ® and perform substantive tests to get an understanding of your relevant issues. With this �2O14 " knowledge, we are able to form an audit opinion and deliver practical and pragmatic • advice directed towards making optimal use of limited resources, safeguarding key • assets and identifying opportunities to improve controls. Beyond the audit, KPMG can • bring you value through our additional resources and support services. Tarn: gg • CAMPUS A seamless transition RECRUITMENT • EXCELLENCE We will take a structured approach to managing the transition, beginning upon our • KPMG appointment. Our transition plan will build on the knowledge our experienced REST NP CO ROGRA ' M OP professionals have gained from their previous work in the Municipal sector and will focus • on rapid familiarization with your business and issues. In the first year, our staffing will be • weighted to partner and manager time to ensure that we establish and execute an • effective audit plan. The purpose is to minimize the demands on your management team _ in the transition. It is also our experience that our senior professionals are more likely to w 2014 identify value -added ideas while taking a "fresh look" at your operations. We will absorb • CANADA'S the costs associated with the transition to gain the required in -depth understanding of • GREENEST your operations, and are committed to making it as seamless as possible with minimal • EMp disruption to your staff. • • A proposal to serve The Municipality of Kincardine 1 • 410 • • • • • Big four firm, local touch • We realize that KPMG's size and the extent of our client base can be daunting to smaller, • locally -based organizations, particularly those in the public sector. The perception is that • we are not interested in the "small fish" but, the reality is: • 1) We don't view any of our clients as fish. 2) We have a clear focus on smaller public sector organizations. In fact, our public sector • and not - for - profit clients account for a significant portion of our client base in • Southwestern Ontario. • For the Municipality, our size simply means that you will receive the high quality • service and access to a variety of resources that one would expect from a "Big Four" • firm. Our dedication to, and appreciation for, our smaller clients means that you will never • be a "small fish in a big pond ". KPMG is committed to servicing the Municipality as a local audit. Many of our Waterloo • office clients are based outside of the Waterloo Region and each receive the same high • touch, proactive service as Waterloo based clients. For example, we are proud to include • the Town of The Blue Mountains (Thornbury), Westario Power (Kincardine), County of • Dufferin (Orangeville), Long Point Region Conservation Authority (Tillsonburg) and Bruce • Power LP (Kincardine) in our client base. We will fully service your audit needs without carrying over any communication or travel expenses incurred by our staff. You will not be • treated as an out of town engagement as many of our KPMG clients can confirm. • • Adding value from the start KPMG is determined to keep its fees competitive as well as consistent with the high • quality of services we provide. Our success in leveraging this balance from other • engagements demonstrates KPMG's position as a leading auditor and advisor to • municipalities. We aim to deliver an effective and efficient audit and concentrate our audit efforts on your key issues. We will proactively identify opportunities relating to your • operations, business processes and financial reporting, and will provide the best possible • advice. • As a first investment in our relationship with the Municipality, if appointed, we would like • to offer: • • A fraud seminar featuring the Data Analytics services as described on page 23 • of this proposal. This seminar would be hosted by Forensic partner Paul Ross • and would be provided at no cost to the Municipality. • One day of advisory services to you at no cost. The type of advisory support • undertaken by the Municipality would be completely of your choosing. We offer a very wide range of advisory services that could be used within the • Municipality to bring value to you. • • A half -day HST diagnostic review to the Municipality as part of our proposal. • • • • A proposal to serve The Municipality of Kincardine 2 • • • • • • • • Gas Distribution Utility ® We understand that the Municipality is in the investigation and evaluation stages of building a natural gas distribution utility in partnership with neighbouring municipalities. The objective of the utility is to bring the benefits of natural gas as an energy source to an • area of the province that has not been serviced by the two large distribution utilities in Ontario. As the auditors of the only two municipally owned natural gas distribution • utilities in Ontario, KPMG understands this business like no other firm can. At a high level, the business of delivering natural gas to customers may seem simple. However, the underlying business practices are anything but. Gas distribution utilities have to contend with Ontario Energy Board regulatory matters, complex procurement models for fixed or variable costs of the gas commodity, the separation of supply and delivery 0 operations while ensuring no cross subsidization of either, different inventory tracking tJ methods, calculations of unbilled revenue, etc. Your proposed lead engagement partner, Matthew Betik, is the audit partner for both the Kitchener and Kingston natural gas distribution utilities. Through his work with these entities over the past 10 years, and other entities in the natural gas sector, he has helped his clients with process improvement, pricing models, procurement efficiencies, dividend policies, valuations, etc. In taking on this significant investment, Kincardine needs an • auditor that knows this business and can help you navigate through it. It is too important ® to leave to chance. r Dedication to the Public Sector • KPMG's prominence in the Public Sector did not happen by accident. It is the result of • focused, continuous effort and a sincere commitment to serve the Public Sector in Canada. Our firm has put tremendous emphasis on the Public Sector, but more specifically the Municipal Sector, by increasing our involvement through industry activities • and growing our client base. Our clients have told us time and time again that they value our insights as third party objective professionals. The most recent evidence of this is our • insights into the adoption of PSAB 3260, Contaminated Sites. • The key to KPMG's outstanding client service to the Public Sector is our Canadian Public • Sector Practice Network, consisting of KPMG Partners, Managers and other professionals who serve government, not - for - profit organizations and charities. Network members • meet regularly to discuss new reporting, accounting and auditing standards impacting the • Public Sector, new government regulations and requirements, and the opinions and actions of our clients in response to these changes. The Network develops a coordinated ® consistent response and action plan for these items. Often our action plan includes meeting with government officials, on behalf of our collective group of clients, when new • regulations and requirements are needlessly burdensome. Matthew Betik and Brendan IP Hall are active participants in the KPMG Public Sector Practice Network and the di Municipality will benefit directly as we share this "real time" knowledge with you in regular ongoing dialogue between our service team and your management. • • • 41 A proposal to serve The Municipality of Kincardine 3 • • C) U 4) • Deep municipal sector experience • Municipalities are a significant segment of our Public Sector practice. We have extensive • local and national experience in Public Sector Accounting Board (PSAB) Standards and our firm has made a commitment to industry specialization and to keeping informed of the latest techniques, legislation and other service opportunities. • We approach industry issues from your perspective, not ours, and will work with you to • take advantage of emerging opportunities and to create sustainable business • development strategies. For example, a number of municipalities have undertaken a • review of their user fee rates in order to mitigate property tax impacts of providing municipal services, ensure compliance with legislation and ensure rates reflect the "true" • costs of the service. KPMG has provided assistance to a number of municipalities in • conducting such reviews. Our approach ensures any proposed rates are consistent with • benchmarked standards and the expectations of community stakeholders while performing a comprehensive review of current rates, policies and legislation. We would • be pleased to discuss how we can assist the Municipality in conducting such a review of its user fees. • A tailored municipal audit approach • Our proposed audit approach demonstrates our knowledge of the local government • sector. It focuses our work on your key operational cycles: taxation and user charges, • government transfers, budgeting and procurement, tangible capital assets and human ID resources and payroll. We focus on the areas of greatest risk, which means that we are not wasting your time on matters that are not significant. Our experience serving local • governments means we understand the issues you face, including growth opportunities • and challenges, infrastructure renewal, shared service opportunities and full cost recovery • models for rate - setting. Our familiarity with these issues gives us a unique perspective and the ability to provide the Municipality proactive assistance with new initiatives, issues • and opportunities. We understand the impact of the financial reporting changes experienced with the transition to tangible capital asset accounting. We have worked with • our clients to prepare financial statements that present financial information in a manner • that can be understood by the users of the financial statements. We have assisted our clients with developing financial reporting processes that streamline the collection of • financial information and leads to a smoother, less time - consuming financial statement preparation process. Our service approach stresses knowledge sharing, timely • communication, value -added feedback, and no surprises. • Wide range of resources and support services • Beyond the audit, KPMG can bring added value to the Municipality through our additional • resources and support services. Today's competitive and challenging business and • economic environment is forcing municipalities to take a harder look at their support functions with an eye to reducing costs, increasing service efficiency and quality, • overcoming impediments to growth and improving organizational agility. KPMG has the • technical skills, sector - focused teams, and resources to provide the in -depth advice and • insight that today's public sector requires. Additional resources to the team, Jane Adams (commodity tax) and Janet Allan (industry resource partner) have significant • S A proposal to serve The Municipality of Kincardine 4 • • • • • • • • experience in serving municipal clients. Jane has assisted her municipal clients with • obtaining HST /GST refunds and defending their positions with CRA during HST audits. Janet is the leader of the Not - for - Profit and Public Sector accounting technical topic team • for KPMG Canada and her responsibilities include providing and developing technical • guidance for distribution, both internally and externally, and providing input to CPA Canada • on behalf of the firm on new and emerging government issues. • Our team is committed to delivering exceptional service and value to the • Municipality —we want to serve you! • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • A proposal to serve The Municipality of Kincardine 5 • • • • • • • Section A — Company • Acceptance • • A.1 Acceptance statement • • K l 1d • w Commitment to Terms and Conditions • KPMG LLP agrees to be bound by the proposal terms, conditions and • descriptions of services to be provided as stated in the Request for Proposal External Audit Services and as stated herein, upon acceptance of • the proposal by the Municipality of Kincardine, subject to any negotiation, • agreement and signing of specific contracts. • • • • July 25, 2014 • Matthew Betik, CPA, CA • Partner • • • • • • • • • • • • • • • • • • • A proposal to serve The Municipality of Kincardine 6 • • • • • • • • A.2 Firm Profile • KPMG LLP, a Canadian limited liability partnership established under the laws of Ontario, • is the Canadian member firm of KPMG International Cooperative ( "KPMG International "). KPMG LLP has offices in 35 locations across the country comprising about 734 partners • and almost 6,000 employees. KPMG International's member firms together have 155,000 • people, including more than 8,100 partners in 155 countries. • KPMG LLP audits 28.57 percent of the Public Sector (including not - for - profits) and 23.88 • percent of all companies in Canada, according to the Financial Post 800, Report on Business 350 Private and Report on Business 1000 (2013) lists. • The Firm and our proposed team have extensive local and national experience in Public • Sector Accounting Board standards, International Financial Reporting Standards, information risk management, tax and other issues as these relate to municipalities. The • Municipality will receive the benefit of this market leadership: access at all times to • knowledgeable professionals who meet your deadlines; the right answer the first • time on technical matters; and professionals with a wide range of audit, accounting • and specialized expertise — in local government. • Breadth of Other Audit Assignments and Clients The KPMG office in Waterloo is comprised of over 100 professional and support staff • offering a full range of industry focused audit and accounting, corporate and specialty tax, • and consulting advisory services. As auditors to many Public Sector organizations, we have experience auditing special • reports as required by the various funding agencies. Many of these reports are required for funding received by our clients from the Ministry of Children and Youth Services, • Ministry of Health and Long -Term Care, Ministry of Training, Colleges and Universities, • and the Ministry of Community and Social Services. In addition to our experience auditing 11 these reports, we have established relationships with the various departments and • agencies. These relationships have been very important to our clients when there have been issues or concerns regarding a reporting requirement. Many times, we are able to • work with our National Office and directly liaise with the funder in question to quickly • remedy any concerns or issues. • The Waterloo office of KPMG performs over 200 audits annually. Our client portfolio is • testament to the confidence the sector places in KPMG and our professionals. • • • • • • • • • A proposal to serve The Municipality of Kincardine 7 • • e • e • • The following clients are served out of our Waterloo office and many are served directly • by our team for the Municipality: • A Selection of Waterloo Audit Clients • • Agricorp • Greater Kitchener Waterloo Chamber of • • Bird Studies of Canada Commerce • Canadian Council of Christian Charities • Huntington Society of Canada • • Library Services Centre • Kitchener and Waterloo Community • • Canadian Management Centre Foundation • • CanWest DHI • Kitchener - Waterloo Symphony Orchestra • Christian Horizons • Ontario College Application Service, II • Compassion Canada • OntarioLearn • • Concordia Club • Salvation Army – New Directions, and AR • • CWB Group – Industry Services Goudie Eventide Home • United Way of Kitchener Waterloo and Area • • Drayton Theatres Inc. • United Way of Cambridge and North • Family and Children's Services of Waterloo • Region Dumfries • Grand Philharmonic Choir • Wilfrid Laurier University II • Wilfrid Laurier University Students' Union • The YMCA -YWCA of Guelph • • Available Resources and Support Services • To meet the increasingly complex needs of our clients, our office in Waterloo is linked to • other KPMG offices in Southwestern Ontario (Hamilton /Niagara, London and Windsor). The following table shows our staff complement by office. • Waterloo London Hamilton /Niagara Windsor Total • • Audit & • Accounting 42 30 53 22 147 Canadian Tax 14 10 12 7 43 • US Tax 8 2 5 2 17 I Indirect Tax 3 — 2 5 • Scientific • Research & • Experimental 6 2 8 14 30 Development • Advisory Services 20 14 9 6 49 III Support Staff (including I 12 11 11 8 42 Regional Support • Staff) • 59 333 • I 0 I I A proposal to serve The Municipality of Kincardine 8 I I S S S • Particular strengths relevant to the audit At KPMG, we place a high priority on keeping abreast of industry issues and trends so that we can provide our clients with the best possible advice. We therefore offer an 5 extensive portfolio of in -house training programs to our professionals, covering business, • legislative and financial matters unique to the public sector and not - for - profit sector. In • addition, we regularly issue internal publications to keep our people up -to -date on changes in accounting, auditing, tax and other matters of special concern to local governments. We work with organizations representing the interests of financial professionals in the Public Sector, and are active in several trade associations, conferences and events • including: • Public Sector Training — KPMG professionals have developed course materials for • several of the provincial Institutes of Chartered Accountants relating to government financial reporting based on the standards and principals set out in the Public Sector Accounting Board (PSAB) standards. Our professionals also deliver this training on behalf of many of the provincial Institutes, and serve as board members and • participate on various task forces. • • Public Sector Accounting Board (PSAB) — KPMG is represented on the Public Sector Accounting Board and many of its task forces and committees. This allows our • team members to gain access to the views and trends in PSAB accounting standards and bring those views forward to the benefit of our clients, solicit their feedback and • provide early warning for coming changes. • The Government Finance Officers Association (GFOA) — In addition to being • members, KPMG has attended and provided speakers at GFOA's annual conferences. Several KPMG partners act as reviewers for GFOA's Canadian Award • for Financial Reporting (CanFr) program for excellence in financial reporting. As the • leader in auditing and advising large governments in North America, we have been frequent exhibitors of products and services at GFOA events. • • The Municipal Finance Officers Association (MFOA) — KPMG is a founding • member of MFOA and has provided speakers on a variety of subjects such as • Electricity Restructuring and Fraud Awareness. KPMG became the MFOA's external • auditors effective with its 1999 fiscal year. MFOA's annual conference is attended by KPMG members, and we are a sponsor. • • Association of Municipalities of Ontario (AMO) — KPMG has been the external • auditor of AMO for the last several years, and has been a sponsor of its annual conference. • • Association of Municipal Managers, Clerks and Treasurers of Ontario — In • addition to being the external auditors of the Association, KPMG has been involved in many of its programs for more than 15 years and has been a sponsor of recent di conferences and seminars. • • • • • A proposal to serve The Municipality of Kincardine 9 S S • • • • • Professional memberships • The following is a selection of industry organizations with which we hold membership. • • Alternative Investment Management • Commercial Real Estate Women • Association (CREW) • Association of Canadian Pension • Council of Forest Industries • Management • Energy Council of Canada • Automotive Parts Manufacturers' • Financial Executives International • Association • Food Consumer Products • • Business Development Bank of Canada Manufacturers • • BIOTECanada • Government Finance Officers • Canada's Venture Capital & Private Association • Equity Association • Institute of Corporate Directors • • Canadian Association of Defence and • International Technology Association Security Industries of Canada • • Canadian Association of University • Municipal Finance Officers Association • Business Officers • National Packaging Association • Canadian Federation of Independent • Petroleum Services Association of • Business Canada • Canadian Financial Executives • Retail Council of Canada • Research Foundation • Small Explorers and Producers • • Canadian Life and Health Insurance Association of Canada Association • Supply Chain Logistics Association • • Canadian Plastics Industry Association • • Chemistry Industry Association of Canada • A.3 Project Experience • • The table below lists a selection of our Southwestern Ontario municipal clients, the local • office that serves the client, and the services provided. Bolded entities are served by members of the team for the Municipality. • This information is confidential and not to be disclosed without prior written ! consent by an authorized representative of KPMG LLP. • Years Services • Client KPMG Office • Served Performed Blue Mountains, Town of the Waterloo 2 A • Bluewater, Municipality of Waterloo 2 TCA • Brooke - Alvinston, Municipality of London 2 A Centre Wellington, Township of Waterloo 10 A, AD, Indirect • Dufferin, County of Waterloo 3 A • Essex, County of Windsor '12 A, Ad, Indirect • Fort Erie, Town of Niagara 1 TCA • Halton, Region of Hamilton /Niagara 17 A, Ad, Indirect, TCA • Halton Hills, Town of Hamilton /Niagara 2 A, Ad, Indirect, TCA Hamilton, City of Hamilton /Niagara 2 A, Ad • Howick, Township of Waterloo 1 TCA • Huron, County of Waterloo 2 TCA, Ad • • A proposal to serve The Municipality of Kincardine 10 • • • • • • • • • Kitchener, City of Waterloo 10 A, Ad Lakeshore, Town of Windsor 1 A Lasalle, Town of Windsor 50+ A, Ad • Lincoln, Town of Hamilton /Niagara 50+ A, Ad, Indirect, TCA • London, City of London 14 A, Ad, TCA • Middlesex, County of London 5 A, Indirect, TCA Milton, Town of Hamilton /Niagara 6 A, Ad, TCA • Morris - Turnberry, Township of Waterloo 1 TCA • Niagara, Region of Hamilton /Niagara 21 A, Indirect, TCA • Niagara -on- the -Lake Hamilton /Niagara 2 A, AD, Indirect • Oakville, Town of Hamilton /Niagara 6 A, Ad, TCA • Oxford, County of Waterloo 3 TCA Waterloo, City of Waterloo 10 A, Ad, Indirect • Wellington, County of Waterloo 10 A, Ad • Windsor, City of Windsor 50+ A, Ad • Woolwich, Township of Waterloo 10+ A, Ad, Indirect LEGEND • A Audit and Accounting Services • Ad Advisory Services — PSAB 3150, Policy, Strategic Planning, Program Evaluation, Performance Measurement, Operations Review, or other • Indirect Indirect Tax Services — Harmonized Sales Tax, Goods and Services Tax, Provincial Tax, Workplace Safety & Insurance Board (WSIB), etc. TCA Tangible Capital , 4ssets :. , . ..._.. . _. . . �.._ • • Extensive and relevant staff training • At KPMG, we place a high priority on keeping abreast of industry issues and trends so that we can provide our clients with the best possible advice. We believe that the • ongoing development of our people is critical to the quality of our services, and require all partners and staff to attend annual technical and accounting updates. We therefore offer • an extensive portfolio of in -house training programs to our professionals, covering ® business, legislative and financial matters unique to municipalities. In addition, we regularly issue internal publications to keep our people up to date on changes in accounting, auditing, tax and other matters of special concern to local governments. • This commitment to professional development helps us understand the challenges of • your environment, can help you take advantage of new opportunities, and enables us to • deliver the highest quality service. Our dedicated professionals will also share with you • their knowledge on technology and emerging business, legislative and accounting issues that may affect your municipality such as PSAB developments. • C C • • A proposal to serve The Municipality of Kincardine 11 • • () O O • A.4 References • • Name of Client County of Dufferin • Contact Person Alan Selby • Years Service Provided 3 • Phone number 519 - 941 -2816 Ext. 2801 • Name of Client Town of The Blue Mountains • Contact Person Rob Cummings ** • Years Service Provided 2 519- 363 -2014 Ext. 2086 • Name of Client Township of Centre Wellington • Contact Person Mark Bradey — P" x/ Cle r • Years Service Provided 10 • one number 519- 846 -9691 Ext. 223 • • ** Mr. Cummings is no longer employed with the Town of The Blue Mountains. His • current employer is the Bluewater District School Board. We have provided his contact • information for this employer, but his reference would be for our work at the Town of The Blue Mountains. • • • • I • • • • • • • • • • • • • • A proposal to serve The Municipality of Kincardine 12 • • • • • • • • • Section B - Professional services • proposed • • B.1 Understanding • Reductions and unpredictability in government funding, changing regulations, • privatization, and transferring of responsibility for services continue to present significant challenges for the Municipality. As well, municipalities continue to work on solutions for • economic development, infrastructure replacement and renewal, and minimizing tax • increases while maintaining service levels. • Despite the challenges faced by municipalities — or perhaps because of them — it has • never been more important to demonstrate fiscal responsibility and public accountability • than it is today. As the Municipality positions itself for the future, you will need external auditors and business advisors with a thorough understanding of your organization, its • resources, the risks and opportunities it faces, and the accounting standards under which • you operate. • At KPMG, we understand the business relationship this involves, the results you require, • and the importance of being familiar with key municipal and community issues. Our firm • is in an excellent position to deliver added value as an extension of the audit services we provide. We will deliver practical and pragmatic advice directed towards making optimal • use of resources, safeguarding key assets and identifying opportunities to improve • controls. We commit to being proactive, as well as offering timely and quality service • throughout the engagement. • Scope of work and deliverables • We have carefully reviewed your RFP and we understand that our services would be • required for a three year term commencing with the fiscal year 2014. • As part of the engagement, KPMG shall: • Issue its audit opinion for: • • The Corporation of the Municipality of Kincardine consolidated financial • statements • • The Corporation of the Municipality of Kincardine Trust Funds • Discuss with the Director of Finance any information or conditions which would • otherwise lead to the inclusion of a qualified opinion with respect to financial • statements • • Meet with appropriate staff members of the Municipality to discuss and agree upon a • schedule for the completion of the audit on the various financial statements for the current year • • Attend such meetings as are called to discuss our work and provide such information • as requested • • Prepare and deliver to the Director of Finance a draft letter conveying our findings • Review and recommend additional notes or changes to the notes of the Financial • Statements as required. • • • A proposal to serve The Municipality of Kincardine 13 • • C C Your RFP specifies that the engagement also requires the same external auditor to • consolidate the following local boards and municipal enterprises that are owned or • controlled by the Municipality of Kincardine: • Kincardine Police Services Board • • Kincardine Business Improvement Area • • Bruce Telecom • From our experience in the Municipal sector, we are proficient with all of the above and are committed to exceed your expectations. • • Methodology KPMG's commitment to integrity demands that we be vigilant in ensuring our audit • complies with changing regulations and applicable professional standards, and has us in • the forefront of adopting the new rules intended to rebuild confidence in financial • reporting. Our methodology is designed to meet all applicable national and international standards, and guides us in our goal of bringing the Municipality a high quality, • independent and thorough external audit. • We perform our audits in accordance with Canadian generally accepted auditing • standards (GAAS) and other relevant national standards, such as those adopted by • members of CPA Canada and the Canadian Public Accountability Board (CPAB), as • appropriate. Our methodology also emphasizes the critical nature of substantive • procedures and effective risk assessment and control testing activities, with every aspect of the audit focusing on a rigorous examination of your financial statements, namely: • • The risks that can affect financial statement captions • • The audit procedures to address these risks • • The areas of higher risk for misstatement • • The effectiveness of internal controls at mitigating these risks • • How closely the transactions and balances are calculated and recorded. Our external audit takes a multidisciplinary approach, employing professionals • experienced in the Municipal sector and specialists in audit and financial reporting, • corporate reporting and governance, internal control, and internal financial reporting • standards. Members of our team are also required to have a strong understanding of the • Municipality's business processes, accounting policies, internal controls and financial • reporting issues, and each is committed to meeting and even exceeding your expectations. 0 • • • • • • • • • A proposal to serve The Municipality of Kincardine 14 0 0 S S S S Overview of KPMG's audit methodology • • KPMG Audit Methodology • • Perform risk assessment procedures and identify risks 1 O Planning • Determine audit strategy and identify critical accounting matters • • Determine planned audit approach • • Understand accounting and reporting activities 2 Control • Evaluate design and implementation of selected controls Evaluation • Test operating effectiveness of selected controls • Assess control risk and risk of significant misstatement • • Plan substantive procedures • 3 Substantive • Perform substantive procedures • Testing • Consider if audit evidence is sufficient and appropriate • Conclude on critical accounting matters • • Perform completion procedures ; • • Perform overall evaluation of the financial statemen • p `�� and disclosures • .form an dit ion • Preliminary decision on controls or Confirm decision on controls or ® substantive approach for each audit • substantive appr for each • objective audit objective • • B.2 Details Audit planning • Our methodology begins with the development of our audit plan, which is based on obtaining a thorough understanding of your business processes and significant issues and • risks. Based upon discussions with your management and drawing upon our municipal knowledge, we will assess risk at the financial statement level and identify assertion level • risks related to the identified significant accounts. We will evaluate the design and • implementation of entity -level controls for each municipal entity. Each year, this • understanding is updated in light of current developments. Specifically, we may consider • your: . • Financial reporting framework • Accounting policies and practices • • Financial performance • Internal controls. • • • • • • • • • A proposal to serve The Municipality of Kincardine 15 S S w • • • Control evaluation • Using a structured approach, we may evaluate controls in order to assess the risk of • material misstatement for each significant account. Our control evaluation includes: • Evaluating the design and implementation of organization -wide controls, including the • entity -level and general IT controls. The results of this work will determine the nature • and extent of our testing in the substantive testing phase of our audit • • Understanding the relevant accounting and reporting activities for each significant • account. For transactions processing, we look for significant risk points — places • where errors could occur • Evaluating selected controls over the significant risk points where material a misstatements may occur and the safeguarding of municipal assets • • Evaluating and testing selected anti -fraud controls that have been implemented • Testing the operating effectiveness of selected controls • Performing a "walk- through test," tracing a transaction through the accounting • activities and selected controls, to confirm that we understand how your accounting a activities and controls work. . Substantive testing 5 In this phase, we perform substantive audit procedures, both analytical and sampling, around balances and transactions required to supplement our control testing. We assess the information gathered, develop an assessment of residual risks that may affect the financial statements and design additional audit procedures as necessary. We will 5 conclude on critical accounting matters and assess whether the financial statements of the Municipality as a whole reflect our understanding of your operations, and comply with the applicable laws, regulations and standards. Our testing may include: • Using analytical procedures designed to confirm our expectation of an overall balance • Agreeing individual transactions to supporting documentation, such as invoices • Confirming balances and relevant information directly with third parties, such as banks • Physically inspecting assets • Verifying the objectivity of assumptions, the quality of data, and the calculations underlying accounting estimates , • Concluding on critical accounting matters • Checking financial statements back to the underlying accounting records. Completion We review the financial statements and determine whether the audit evidence obtained for each significant account reduces the risk of material misstatements in the financial statements to an acceptably low level. We form conclusions on specific topics, such as litigation and claims, and prepare a final evaluation of fraud - related matters. A summary of our significant findings and matters identified helps us determine trends and potential management bias. Our audit opinion is based on a review of the final financial statements and an evaluation of all audit evidence. The summary addresses matters such as: I A proposal to serve The Municipality of Kincardine 16 I I S S S S • • • The selection, application, and consistency of accounting principles, including related disclosures • • Significant and other deficiencies in internal controls over financial reporting • Material misstatements and omissions in financial statements • • Circumstances that caused significant difficulties in applying audit procedures • • Significant findings and issues, such as those related to critical areas of judgment • Significant changes in the assessed level of audit risk. • Our audit opinion is based on a review of the final financial statements and an evaluation • of all audit evidence in accordance with Canadian auditing standards. Auditing and sampling techniques • We determine the extent of testing based on our professional judgment, our assessment of risk, the effectiveness of controls over business processes, and the dollar materiality of • the transactions or balances subject to testing. Generally, material non - routine and complex balances or transactions are singled out for scrutiny. Statistical sampling • (monetary unit sampling) or other representative sampling techniques are reserved for • material account populations to obtain assurance over the integrity of the systems that • generate the account balance. In our audits of municipalities, we tend to utilize statistical • sampling techniques in the areas of user charges and tangible capital assets. • Audit Tools • At KPMG, our audit approach is documented in a completely digital manner. We obtain the majority of our audit evidence digitally and work through your IT processes and • systems to obtain the support we need to issue our audit opinion. This minimizes the • interruptions to your staff, provides us with the highest quality of data and enables us to • work within your reporting framework. • Our audit is supported by an array of software applications that our professionals use to • enhance their effectiveness and productivity. These include: • • eAudlT — a global electronic audit management tool created by KPMG to provide the methodology, guidance, and industry knowledge needed to perform the most • efficient, highest quality audit possible • IDEA — a powerful, data management tool that allows audit personnel to manipulate • data to extract content with common criteria. • • KPMG Monetary Unit Sampling (KPMG MUS) — an IDEA application that provides a statistically based sampling technique which extracts a statistical sample based on • the attributes of the population. Areas of the audit where we will consider using this sampling technique is our testing of journal entries. Our Information Risk Management professionals also have a powerful set of other • proprietary and vendor -based automated data analysis and IT audit tools to assist in the identification and assessment of controls and data retrieval for a wide variety of systems. S S S S A proposal to serve The Municipality of Kincardine 17 S S \ C � • • Use of computer audit specialists • Increasingly integrated business systems mean that the distinction between an • operational and a financial system is becoming less clear. Business risks associated with information technology (IT), traditionally used in achieving operational objectives, are more ID often affecting financial statements and other issues of concern in the audit. Simply put, • technology risk is a business risk that can increase the overall audit risk. • KPMG's audit approach incorporates computerized audit techniques that are utilized • throughout the various phases of the audit, and leverages the experience of the • information technology professionals (IT Auditors) in our Advisory Services practice. It is essential that IT Advisory professionals be involved in the strategic analysis phase to • identify strategic risk. • Nationally, we have significant experience providing information systems audit and • controls services to the Public Sector, including detailed experience with financial, • timekeeping /payroll, billing, assessing IT general controls that support the key financial • systems, financial system conversion reviews, testing of application controls and /or auditing the IT systems that support the financial reporting process. Additionally, we S routinely evaluate security and privacy controls over these systems, and conduct quality • assurance and risk assessments for significant systems conversion and implementation • projects. Quality control and review procedures KPMG strives to deliver service of the highest quality to all of our clients at all times. This • objective is met in two ways. • • First, we focus on quality during fieldwork stages by requiring our partners and managers to review the work as it is being completed in the field, rather than back in the office. Our • use of eAudlT facilitates this by allowing all members of the team to access the file • simultaneously and remotely, if necessary. This also gives us more flexibility to fine -tune • our fieldwork to adapt to ongoing changes in your operations. Second, our firm's service and technical review policies provide a double check to ensure • • we meet our clients' needs and maintain a high level of technical excellence. KPMG's quality control procedures include: • • Planning and Day -to -Day Execution - Partners and managers are involved in the 5 planning and day -to -day execution of the audits and review of the audit files will be 5 conducted, whenever possible, at your premises; • • Working Paper Review - A professional more senior than the preparer must review each working paper. Certain key working papers, financial statements and reports are • reviewed by the engagement manager and engagement partner; S • Quality Performance Review Program - The quality performance review program • performs a tri- annual review of representative files of each audit partner to monitor • performance. Review teams are comprised of partners from offices other than those under review. The objective is to provide further independent assurance that KPMG's 5 policies and generally accepted auditing standards have been adhered to; • • Client Feedback - We will monitor and measure service excellence from your • perspective and act on that feedback. As an integral part of our processes and • A proposal to serve The Municipality of Kincardine 18 • S ID • • • • • • activities to measure our performance we use a national client feedback program called ViewPoint. ViewPoint is an online survey measurement that monitors and measures our service excellence from your perspective. Your response to the survey will be reviewed and acted upon within KPMG as part of our continuous 41 improvement efforts and our commitment to deliver exceptional service and value to • you. It will be used to assess and benchmark the performance of offices, business units and individual client service teams on client service excellence. Alternate methods which may lessen the demand on internal resources or decrease the fees ® Our clients are continuously seeking efficiencies in their operations and demand the same of their suppliers in order to uphold services and manage costs. We have responded to • this demand. Our audit process is designed to facilitate a decreased demand on our client's staff and to ensure that fees are as low as possible, while still delivering a quality • audit. For example, we always perform our interim and year -end audit procedures at our • client sites. This ensures the most efficient and effective conduct of the audit. Other • ways we provide efficiencies are: • • Digital Approach to the Audit — All of our audit files are completely digital. For the ® Municipality, we will collect as much information as possible electronically. Where not available, we will obtain physical copies from you and scan the data into our file. • This digital approach provides us with an efficient process for compiling and reviewing audit files. It means there is no printing of files and file updates for changes or new information are automatic. Where possible, our audit findings ® reports are also now being distributed electronically. This process is also part of our Environmental Performance Initiative. • KPMG Central — KPMG's proprietary external collaboration tool that enhances • communication, coordination, and collaboration between KPMG and our clients. ® KPMG Central uses Microsoft SharePoint and will enable secure document sharing, controlled document editing and version management, communication features, and calendar and event management between KPMG and the Municipality. We have deployed this tool in our audit process for other municipal audits and the feedback ® from our clients has been very positive. It has significantly decreased the pain points • experienced by teams in sharing documentation between client staff and the KPMG • audit team. • Primary Contact — Matthew Betik is your primary KPMG contact. Having a primary • contact in place allows for the efficient transfer of knowledge as it impacts the • multiple activities within the audit process. • • Staff Continuity — We place a high priority on staff continuity for our audit engagements. With strong continuity, we are better able to maintain an efficient • flow of information between the audit team and Municipality staff, as well as within • the audit team. Where audit team members need to be added or replaced, our extensive municipal and public sector client base permits us to deploy audit staff • with the appropriate experience. • Tailored allocation of work tasks — At KPMG, we don't employ a "one size fits all" approach to the audit. Our audit programs are tailored to the size, complexity, and breadth of the activities of the Municipality. This ensures we don't spend time on • areas of low audit value. • • Strong personal relationships and understanding — As auditors of the Municipality we will work with management to refine the audit process in order to • • A proposal to serve The Municipality of Kincardine 19 • • • • • • S support effective client preparation. We will work with your staff to identify ways to • achieve the audit objectives with the reports and analysis that have already been prepared by your staff rather than requesting working papers solely for audit • purposes. • Management Letter and other deliverables • Our reporting function goes beyond the auditors' report. When we complete the audit, we will hold a closing conference with management to review our draft auditors' report, S the financial statements and management letter, discuss accounting policies, disclosure • items and adjustments, as well as unadjusted and corrected audit differences, and review • the respective performance of the Municipality and KPMG staff during the course of the • audit. We will provide you with deliverables at various stages throughout the audit. The • appropriate timelines will be established in conjunction with your internal reporting • deadlines. Key deliverables will include: 5 • Audit Planning Report — we will present this report to Council during the planning phase of the audit. This report includes an overview of how we will approach the • audit and any key issues we have identified to -date. Should any issues be identified at this stage, they would be communicated to the Municipality formally through the 5 Audit Planning Report or if appropriate, informally through oral or other written • communications. The Audit Planning Report will be provided to the Director of Finance for review prior to its distribution to Council. The presentation of this report is 5 not something that all auditors do, but something that we find extremely beneficial • for Council as it allows them a chance to understand our work and provides them an opportunity to identify any issues they have at the planning stage of the audit. S • Audit Findings Report — we will present this report to Council prior to issuing the • financial statements, which summarizes the key issues encountered and addressed during the audit, as well as any audit differences, control deficiencies, and 5 performance improvement observations that we identified. The Audit Findings Report • will be provided to the Director of Finance for review prior to its distribution to Council. • • Year -End Reporting — our annual audit report on the financial statements of the • Municipality will indicate whether they have been fairly presented in accordance with Canadian Public Sector Accounting Standards. Our year -end reporting will also include 5 the audit reports covering all entities within the reporting structure of the Director of Finance. • Management Letter — our management letter will include our findings relating but 5 not limited to governance, business risk management, internal control, and • information systems. Our letter describes any control deficiencies and performance improvement observations noted during the course of our audit, along with our 5 recommendations for improvement. Where appropriate, the details of our • management letter are included as part of the Audit Findings Report. • B.3 Action Plan Adherence to the critical dates and requirements outlined within your RFP and the annual schedule will be an essential feature of satisfactory performance under the audit contract. Together we will construct a plan to the appropriate level of detail to meet your desired S timetable. • IP A proposal to serve The Municipality of Kincardine 20 0 • • • • • The work plan outlined in our chart is an overview and has been drafted towards meeting • the normal late April /early May completion objective for the Municipality. We find that the initial planning meeting, when we cover more detailed scheduling of the audit, helps synchronize our timing and confirms that it meets the deadline dates as specified • annually. An important element in meeting our deadlines is the support we receive in terms of the • agreed upon audit schedules and draft financial statements. Before October 31 of each • year, we will meet with your management to define a schedule of joint activities. The schedule will set out: • • The important key dates by which necessary information is to be assembled by both • parties • • A list of all the necessary schedules, working papers, analyses and other information • to be prepared by Municipality staff. • Based on our understanding of your financial reporting requirements, the following chart • identifies our preliminary audit timing schedule: • Section Timing • Audit planning October Interim audit work November - December • Year -end audit work March • Reporting of audit results April — early May • • • B.4 Advisory Services At KPMG, our service goal is to be considered your trusted advisor, a valued member of • your team. We want you to pick up the telephone and call us any time, without feeling • that the "meter is running." We will also pick up the phone and bring our ideas to you on • a proactive basis to ensure regular communication. • We outline here a few of the many other no- charge services we offer our clients that we • believe will be of particular interest to the Municipality. Seminars • We organize seminars and webcasts exclusively, and without charge, for our Public • Sector clients to present information and foster discussion on relevant topics, including • PSAB implementation and updates. • • • • • • • • • A proposal to serve The Municipality of Kincardine 21 • • • • • • • Publications , We maintain a mailing list for our clients to receive regularly issued publications and • reports: • TaxNewsFlash focuses on important changes to tax legislation and opportunities. • • Budget Releases are issued following the release of each federal and provincial • budget. • Focus on Financial Reporting is an annual summary of changes and developments in • financial reporting. • • Canadian Audit Committee Update is a semi - annual publication covering issues of corporate governance. Some recent topics include: - IT Governance • - "Expectations gap" regarding fraud detection. • These are just a few examples of the numerous activities that we carry out to ensure our • clients are kept on the leading edge of Public Sector developments. • In addition, we will release thought leadership such as surveys and white papers. KPMG • Canada's Public Sector practice has played a leading role in the development of our • thought leadership publications. We produce documents, reports and other publications to share our ideas and information relating to new developments, regulatory changes, and • industry and technical issues. • Examples are: • Making the Transition— Outcome -Based Budgeting: A Six Nation Study A profile of six governments in different regions and phases of economic • development that have made or are making the transition to OBB, to • understand how the transformation from input to outcome -based budgeting works. S S Is an HST Post - implementation Review for You? –A look at how some • businesses are reviewing and testing the changes made to many of their • systems and processes that accommodate the new Ontario and British • ■ Columbia harmonized sales tax (HST), with HST post - implementation • reviews including checking for potential exposures and compliance issues. • • Public Service Transformed: Harnessing the Power of Behavioural S Insights -This report explores the potential and use of behavioural • insights in public sector cultural transformation initiatives and provides PublkSenioarralconwel actionable recommendations designed to encourage the four positive work behaviours. • • • • A proposal to serve The Municipality of Kincardine 22 5 S S • • • • • rrA, ,i1A Shifting Gears: Fiscal Sustainability and the Transformation of Canada's Healthcare System - This paper explores the application of transformative action and making the shift in how policy makers think about and respond LisehME • to changes in the healthcare system. • • .A Payment for Success —How to Shift Power from Whitehall to Public • Service Customers - An outline of the problems in existing public sector • reform and an integrated approach to solving them through a strategy called "Payment for Success" • • • 'I'm Afraid There's No Money Left': Re- thinking Non -core Back Office • services in the Public Sector - A look at how the public sector in the there's United Kingdom can rethink the way it delivers non -core services. It • introduces a number of ideas —some borrowed from the private sector — • and shows how they can help to ease the UK's budget deficit. • • Integrating Human Services in an Age of Fiscal Restraint - Case Study • on Peel Region - This paper evaluates the ongoing initiative in Ontario's b 1 11 ' 0 • Peel Region - and offers a valuable roadmap to other governments INTEORATIN6 HUMENSwpx,i,s S undertaking large -scale service reform in this age of fiscal restraint. • • • Other services • In the future, you may require other services and resources from KPMG that fall outside the scope of this engagement. When required, we will discuss and agree upon the scope, • timing and related fees associated with any of these engagements with the Municipality • before starting the work. Services that may be of interest to the Municipality include: • Data analytics • Leading organizations are applying proactive data analytics to combat the risks and costs of fraud and misconduct. Proactive data analytics involves taking routinely collected, unrelated data sets and then conducting comparisons, summaries, and aggregations to detect anomalies known to be indicative of potential fraud and misconduct. Leveraging • such technology can help strengthen corporate governance, facilitate the implementation of more effective and focused internal controls, reduce potential future losses, and help identify recoverable actual losses. • Through our engagement experience, we have identified fraud schemes and the red flags that can reveal them. By conducting analytics that search for those red flags in your day- • to -day business transactions, we can help you determine whether your organization may • be at risk of fraud and pinpoint where that risk exists. K- Trace, an integral piece of the proactive forensic data analysis methodology used by KPMG Forensic professionals can • also highlight potential operational inefficiencies, human error, wasteful spending • • A proposal to serve The Municipality of Kincardine 23 • • • • • • behaviors, and company policy violations. It can also help identify control enhancements • needed to prevent fraud, waste, or abuse. • Strategic management improvements • Strategic management improvements are initiatives specifically aimed at setting the strategic direction of the municipality. To do so, a municipality may consult with its • customers to determine how they perceive its performance and where these • improvements could be made (customer satisfaction survey), or the municipality may • endeavour to conduct a strategic planning exercise focused on setting a "vision" for the • municipality at some point in the future. KPMG can assist with the following strategic management initiatives: • • Program review to consider the programs offered by a municipality and, for those • that withstand the test of review, to set goals and outcomes that will ensure the • municipality remains subject to public accountability • Service review to review all of the services offered by a municipality in terms of the continued relevance and contribution to program goals and outcomes, and to achieve specific service objectives • • Performance measurement design and implementation to determine what • program outcomes, outputs and process /activity /task results should be measured to • determine if a municipality is optimizing its service delivery. • Human resource management improvements As municipal councils continue to cut budget allocations, or at a minimum hold back on • budget increases, managers must find creative ways in which to deliver the same • services for less money. In addition, more and more municipalities are facing a tremendous challenge as their work force ages, resulting in a secession planning • challenge. As a result, municipalities are interested in discovering different ways in which to efficiently and effectively deliver their services through better ways of managing their • human resources. KPMG can assist with the following human resource management • initiatives: • • Position /job description definition to clarify the roles employees play in their • positions by developing clear, concise job descriptions based on the processes, • activities and tasks that they carry out in their day -to -day roles within an organization • Employee performance plan development to map out a work plan or set of goals • and objectives for a given position, and how employees can more effectively carry • out their responsibilities relative to an overall program and service plan for a • department • Staff training and development to identify the education and training requirements of one or more employees based on their changing roles within an organization • relative to the service(s) they support, and which may be based on prospective • career path choices • Communication plan development to improve communications among and W between management and employees on a range of topics including their roles • within the organization, how to keep employees aware of change, how to solicit • employee input into change /improvement in service delivery, etc. • • A proposal to serve The Municipality of Kincardine 24 • • • • • • • • • Financial management improvements Similar to the challenges of managing human resources, municipalities face financial • challenges that can be overcome by restructuring their budgeting and accounting • practices. These in turn can be overcome by automation or more closely tracking the • financial costs of programs, services, processes and activities. KPMG can assist with the following financial management initiatives: • • Program and service -based budgeting to provide management and elected officials with improved ways of submitting, reviewing and approving budgets based • on the programs and services offered, rather than on the organizational structures • that deliver the programs and services • • Chart of accounts design to set out an account structure that acknowledges programs, services, processes and activities in support of operationally accounting • for costs, and which can be summarized at an appropriate level for calculating unit • cost measurements • Activity -based costing to introduce improved tracking of activity costs and enable • them to be rolled up or aggregated into process costs, service costs and program • costs for use in identifying improvements to activities or calculating the unit cost of a • service • Management auditing to support the auditing of financial records kept by a • municipality and reviewed annually to determine if the revenue, expenditure, asset • and liability transactions and accounts were in accordance with generally accepted • accounting principles. • B.5 Audit Team Information • We carefully staff our engagements with professionals selected for their relevant • technical qualifications, strong municipal credentials and track record in helping municipalities meet a variety of challenges similar to yours. We are passionate in what we • do and look forward to showing the Municipality of what we can do for you and begin by introducing your KPMG team below. • The Municipality will be served by individuals based in our Waterloo office located in115 • King Street South 2nd Floor Waterloo, Ontario. Matthew Betik will be the primary contact person and will oversee all the requirements related to the Municipality. Matthew Betik, CPA, CA / Lead Engagement Partner Matthew will have overall responsibility for KPMG's services to the • Municipality. He will coordinate all services, ensure your timely access • to resources and will assume responsibility for the quality, timeliness and effectiveness of KPMG's service. Matthew will maintain contact • with management to keep informed of your activities and he will • attend such meetings as required to keep you abreast of our work. • Matthew will work with Brendan to resolve any accounting, reporting and auditing issues that may arise. w Matthew is a partner in our Waterloo audit practice. He has 18 years of auditing and • accounting experience in the municipal and not - for - profit sectors, which is a significant • focus of practice. He also has extensive experience in applying the recommendations of • PSAB. Approximately 50% of Matthew's professional time is devoted to the municipal and public sector. This volume of effort, along with the number of clients serviced, • • A proposal to serve The Municipality of Kincardine 25 • • • S • S S provides an extensive knowledge base, which translates into significant value for his • clients. Matthew is a member of KPMG's National Public Sector Leadership Team — a group of senior level professionals from across Canada who are devoted to the Public • Sector and whose responsibility it is to identify and respond to issues facing our Public • Sector clients. Matthew is the lead engagement partner for the audits of Kitchener Gasworks and • Utilities Kingston, the only two municipally owned gas distribution utilities in the province of Ontario. He is also the lead engagement partner for a gas powered electricity • generator and has lead an Ontario Energy Board project examining natural gas purchasing, • accounting and pricing processes at a privately owned natural gas distribution utility. Through this work and Matthew's involvement in the Power and Utilities sector as the lead engagement partner to many electricity distribution entities, he has developed a 5 deep understanding of energy distribution sectors, including regulatory, process, • reporting, and OEB issues and helps his clients work through these matters. • Matthew was a guest speaker on the topic of Asset Management at the 2012 Ontario West Municipal Conference. In the past year, Matthew has facilitated numerous i presentations and discussions with municipal groups on the upcoming implementation of • PSAB 3260, Contaminated Sites. • Matthew was the leader in our Southwestern Ontario local government group in • developing products and assisting our clients in implementing PSAB 3150, Tangible Capital Assets and a key member of KPMG's special working group on PSAB 3150. • Matthew's municipal audit experience includes the following: • Years Served • • Partner /Senior Manager 5/5 City of Kitchener • County of Wellington Partner /Senior Manager 5/5 • • County of Dufferin Partner 3 Town of The Blue Mountains Partner 2 Partner /Senior Manager 5/9 • Township of Woolwich • Township of Centre Wellington Partner /Senior Manager 5/5 • Grand River Conservation Partner /Senior Manager 5/7 • Authority • Long Point Region Partner /Senior Manager 5/1 r. Conservation Authority • 0 Matthew's experience also includes providing audit and advisory services to other • municipal and not - for - profit organizations, including: Kitchener Housing Inc., the County of Huron, the Municipality of Bluewater, Kitchener - Wilmot Hydro, Waterloo North Hydro, Cambridge and North Dumfries Hydro, Wilfrid Laurier University, and St. Jerome's S • A proposal to serve The Municipality of Kincardine 26 5 • S • • • • • • University. Matthew has also been the project manager for audit assignments for the Province of Ontario in the areas of municipal infrastructure and social housing. • • Matthew has published an article in Municipal World, July 2007 regarding Tangible Capital Assets and has been invited to present as a speaker at municipal and public sector • association meetings. • Education • Honours BBA, Wilfrid Laurier University, 1995 • • Chartered Professional Accountant, Ontario • Brendan Hall, CPA, CA / Audit Manager • Brendan will work closely with Matthew Betik and be responsible for ensuring that the audit strategy and the detailed procedures • developed by the team are properly executed and completed on a • timely basis, as per your requirements. He will be responsible for • meeting with Municipality personnel to assess internal control systems and procedures during the initial phase of our audit. Brendan / will oversee the execution of the audit plan, respond to and resolve • accounting and reporting issues, be a resource for business and other • issues and be the key contact with your senior accounting professionals. He will directly supervise the audit fieldwork. • An audit manager in our Waterloo office, Brendan provides audit services to a wide range • of clients. He has led the fieldwork for a number of our municipal and not - for - profit clients. Brendan's municipal audit experience includes the following: • Client Role Years Served • County of Wellington Manager /In- charge 2/3 County of Dufferin Manager 3 • Town of The Blue Mountains Manager 2 • City of Kitchener Manager 2 • Senior 1 Region of Halton 0 City of London Staff 1 • • His other public sector experience includes The Elliott Community, the Diocese of London, Grand River Hospital, and St. Jerome's University. Brendan was also the audit • senior for the audit of the Canada - Ontario Municipal Rural Infrastructure Fund • ( "COMRIF "). diA Education • Honours BBA, Wilfrid Laurier University, 2008 • • Chartered Professional Accountant, Ontario • A proposal toserve The Municipality of Kincardine 27 S S w • • I r Paola Ferrazzi, CPA, CA / Audit Senior Accountant • Paola will assist Brendan in overseeing our audit fieldwork for the Municipality. She will • work closely with the team to ensure an effective audit is completed on time and on budget. An audit senior accountant in our Waterloo office, Paola provides audit services to a wide • range of clients. She has either led or participated in the fieldwork for a number of our • municipal and not - for - profit clients. • Paola's municipal audit experience includes the following: • Role Years Served . Town of The Blue Mountains Senior Accountant 2 • City of Waterloo Senior Accountant 1 • • County of Wellington Staff Accountant 1 Waterloo Public Library Senior Accountant 2 • • Her other public sector experience includes Cambridge Memorial Hospital, Municipal Information Systems Association, Guelph Family Health Team, East - Wellington Family , Health Team and Family and Child Services of Waterloo Region. Paola was also a , member of the audit team for the audit of the Canada - Ontario Municipal Rural Infrastructure Fund ( "COMRIF "). In addition to the above, Paola was a member of the Honour Roll for the 2013 Uniform Final Exam for Chartered Accountants. Education • Honours BBA, Wilfrid Laurier University, 2011 • Chartered Professional Accountant, Ontario Tom Mennill, FCPA, FCA / Engagement Quality Control Review Partner Tom will provide an independent review of the audit plan, all key auditing and accounting decisions made during the audit, and all 1 reporting to Council. He will play a significant role on this engagement, 1 supporting Matthew to ensure that the best resources are brought to the engagement and that we provide the highest level of client service delivery. Tom has over 25 years experience in public accounting. Tom is the Partner -In- Charge of the Audit practice in Waterloo. Tom has considerable experience presenting to Councils, Boards of Directors and Audit Committees. Tom has been active in assisting our clients with the implementation of PSAB 3150 within the municipal and school board sectors. Tom is also a member of KPMG's National Public Sector Leadership Team. Tom's experience includes providing audit and advisory services to municipal and not-for- profit organizations, including: the Cities of Kitchener and Waterloo, The Elliott Community, the County of Wellington, the Townships of Woolwich and Centre Wellington, Agricorp Inc. (the Ontario Agricultural Insurance Corporation), Upper Grand District School Board, Waterloo Catholic District School Board, Grand River Hospital, St. A proposal to serve The Municipality of Kincardine 28 S S • S S • Mary's General Hospital, St. Joseph's Health Centre Guelph and Homewood Health Centre. Education ID • Honours Economics, University of Western Ontario, 1981 • • Chartered Professional Accountant, Ontario • Additional Resources S • Janet Allan, FCA, FCPA — Industry Resource Partner Janet brings unparalleled experience working with local government and public sector clients. She will proactively provide valuable insight • into technical issues and changes in accounting standards. • Janet has over 30 years experience serving municipal clients. Janet is the leader of the Public Sector GAAP technical topic team for KPMG 5 Canada. In that role, Janet's responsibilities include providing and • developing technical guidance for distribution, both internally and externally, and providing input to the CICA on behalf of the firm on new and emerging accounting issues. Janet's knowledge of the • upcoming changes in Canadian public sector accounting standards is a resource that will serve the Municipality well. • Janet's client experience includes the Region of Niagara, Town of Lincoln, Brock • University, Niagara College of Applied Arts and Technology, District School Board of • Niagara, Halton Catholic District School Board, and Hamilton - Wentworth District School Board. • Janet is a Fellow Chartered Accountant and holds a Bachelor of Math with Honours from IP the University of Waterloo. • Jane Adams, FCMA / Associate Partner, Indirect Tax Jane is an Associate Partner in the Waterloo office and leads the • Indirect Tax practice in the Waterloo, Hamilton /Niagara, London and Windsor Regions. With more than 20 years experience in sales tax • matters, Jane also plays a national lead resource role for payroll tax • with an emphasis on Workplace Safety and Insurance matters. Jane • was an integral member of the KPMG commodity tax group when GST was first introduced and assisted many businesses and organizations in ID preparing and implementing systems to be ready for the tax. Since the • announcement of the Ontario Harmonized Sales Tax (HST), Jane has been working closely with her clients and numerous industry associations in understanding the impact ID and transitioning to the new tax. • Jane's public sector and not - for - profit clients include: the Cities of Waterloo, Cambridge, • and Windsor, the Algoma District Homes for the Aged, the FJ Davey Home, The Elliott • Community, Perimeter Institute, Christian Horizons, Lawson Research Institute, St. Joseph's Health Care, London, Grand River Hospital, and the Windsor Art Gallery. • Jane co- authored Carswell's GST Guide for Business; has been the tutorial leader for the ID CICA In- Residence GST "Essentials" Course for two years; and has spoken at various • seminars, conferences and industry specific workshops. S S A proposal to serve The Municipality of Kincardine 29 S S O () Maintaining continuity of our engagement team • We appreciate the importance you place on staff continuity to your operations. At KPMG, we find it to be a winning condition for efficient and consistent service. It is also the • foundation for a good working relationship with you and your team throughout the • engagement. We do our best to maintain the same team members on the audit from • beginning to end and year over year. If a change is unavoidable, we will draw from our • pool of professionals to bring in a new team member with comparable experience. We will discuss staffing with you during our audit planning meetings each year, with an • objective to satisfy any concerns you might have about the team. We will promptly inform • you of any staffing changes that may arise and will seek your approval where possible. • Commitment to continuous improvement • Our commitment to the Municipality means we are always looking for ways to serve you • better. Each member of our team sets goals and objectives with respect to their performance, and is evaluated at least once a year against our client service standards. • Through ViewPoint, our client feedback program, we also monitor and measure our • service excellence from your perspective. Results are used to assess and benchmark the • performance of offices, business units, and individual client service teams. The goal is to • deliver continuous improvement, and reiterate our commitment to provide quality of service. • • • • • • • • • • • • • • • • • • • • • • A proposal to serve The Municipality of Kincardine 30 • • • • • • • • • Section C — Pricing overview • • We believe our value translates into providing high quality service, • bringing experience directly related to the municipal sector, and assigning the best people for the engagement. At KPMG we are committed to meeting your deadlines and consistently identifying • ways to improve efficiency. We are also aware that as a public • sector entity, cost effectiveness is a greater concern. We will clearly communicate the cost vs. the benefit of our services so you • can best assess where the dollars should be spent. • • C.1 Overview • Price estimate • Our fees are billed as the engagement progresses, starting with the transitional phase. 0 Our fees do not include applicable taxes, but do include out -of- pocket expenses. Our proposed fees assume that we will receive full cooperation from your staff. and that all necessary information will be in order for us to deliver our audit opinion. • We will discuss the impact of any new accounting standards with you prior t6 • commencing the audit engagement for the years affected and agree upon a fair fee for • both parties. We expect to be able to honour our fee commitment to you for the three • year period, except for any changes in the amount of audit work associated with changes to accounting standards and any new requirements to opine on internal controls or any • other significant changes in government policy that expand the scope of our audits. We • will absorb any and all costs associated with the transition of your audit to KPMG. • Estimate of hours • Throughout our involvement, we ensure that the audit work is appropriately planned, • organized, executed, and supervised. With our senior staff involved and aware of important issues, these issues are brought to the Municipality's attention for prompt and • timely resolution, generally decreasing Municipality staff time and effort to resolve them. • The following table shows the estimate of hours for each entity by level of staff. • • Section Field Staff Manager Partner Total • Municipality of Kincardine 200 40 25 265 Consolidated Financial Statement • Audit • Municipality of Kincardine Financial 16 4 - 20 • Statement Preparation • Municipality of Kincardine Trust 8 1 1 10 • Funds • Total .. • • A proposal to serve The Municipality of Kincardine 31 • • • • • S S NOTE: We understand that our proposed hours may appear lower than other firms. We • are confident in our ability to estimate the time required and complete a high quality audit • of the organization. This is based on our performance of audits at other similar sized municipalities, our investment in developing specific municipal audit programs, and the • use of technology in our audit approach. In other words, because we audit so many • municipalities, we have developed highly efficient processes that ensure our time is • spent on key risk areas and minimizes the impact on your staff. • C.2 Reductions • If less time is required to perform the audit, a fee reduction will be given to the • Municipality or any other entity requiring audit services. • C.3 Work outside the scope of the audit 5 The following table shows the hourly rates that are used as a basis for setting fees for S services performed outside the audit including any internal audit, internal controls reviews • or other advisory services that may be required. The level of effort and resulting number • of hours will be dependent upon the scope of the additional services as determined by the Municipality. S Partner Manager Senior & Staff Accountants • • $375 -$425 $220 -$300 $11O-$160 • • C.4 Draft engagement letter Please see Appendix A for a draft engagement letter. S • • • • • S S S S • S S S S • S • A proposal to serve The Municipality of Kincardine 32 5 S S 1 ` J ) PROPOSAL PRICING FORM Proposal Closing: 2:00 p.m., Friday July 25th, 2014 Municipality of Kincardine • 1475 Concession 5, RR #5 Kincardine, Ontario • N2Z 2X6 • • Ladies and Gentlemen: • I/We the undersigned, do hereby submit our proposal to provide external audit services, • in accordance with the attached proposal request as follows: • PRICE PER YEAR • 2014 2015 2016 • Municipality of Kincardine Consolidated Financial $33,500.00 $34,000.00 $34,500.00 • Statement Audit 1 Municipality of Kincardine Financial Statement $1,800.00 $1,850.00 $1,900.00 • Preparation 1 • Municipality of Kincardine Trust Funds $1,000.00 $1,025.00 $1,050.00 • Other Costs Nil Nil Nil • Sub total $36,300.00 $36,875.00 $37,450.00 HST 1 $4,719.00 $4,793.75 $4,868.50 • Total Bid Price (annual cost) $41,019.00 $41,668.75 $42,318.50 • • [ Company Bidding KPMG LLP • Address 115 King Street, 2 " Floor Waterloo, ON N2J 5A3 Telephone 519- 747 -8245 • Contact Name Matthew Betik Title Lead Engagement Partner • Authorized Signature Date 7/25/2014 • • • • • • • • • A proposal to serve The Municipality of Kincardine 33 • • • II/ • • • Appendix A — Draft Engagement • Letter • • • • • • • • • • • • a a a a a a a a a a I a I I 4 4 4 i 4 I I I I A proposal to serve The Municipality of Kincardine 34 1 I I • • • • S • • • • Ms. Roxana Baumann, CPA, CA • The Municipality of Kincardine • Municipal Administration Centre 1475 Concession 5 R.R. #5 • Kincardine, ON • N 2Z 2X6 • ws July 23, 2014 . • � { A � • Dear Madam • The purpose of this letter is to outline the terms of our engagement to audit the consolidated financial statements of The Municipality of Kincardine ( "the Entity"), commencing for the period • ending December 31, 2014. • The terms of the engagement outlined in this letter will continue in effect from period to period, • unless amended or terminated in writing. The attached Terms and Conditions form an integral part • of the terms of this engagement and are incorporated herein by reference (collectively the "Engagement Letter "). 4110 W • FINANCIAL REPORTING FRAMEWORK FOR THE FINANCIAL STATEMENTS • The financial statements will be prepared and presented in accordance with Canadian public sector accounting standards (hereinafter referred to as the "financial reporting framework "). • The financial statements will include an adequate description of the financial reporting framework. • MANAGEMENT'S RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS • Management acknowledges and understands that they are responsible for: • (a) the preparation and fair presentation of the financial statements in accordance with the financial reporting framework referred to above (b) ensuring that all transactions have been recorded and are reflected in the financial r statements • (c) such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. • Management also acknowledges and understands that they are responsible for the design, • implementation and maintenance of internal control to prevent and detect fraud (d) providing us with access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other • matters S S S S S • • • • • • • • (e) providing us with additional information that we may request from management for the • p • urpose of the audit (0 providing us with unrestricted access to persons within the Entity from whom we determine • it necessary to obtain audit evidence 5 (g) providing us with written representations required to be obtained under professional 5 standards and written representations that we determine are necessary. Management also • acknowledges and understands that professional standards require that we disclaim an audit opinion when management does not provide certain written representations required 5 An audit does not relieve management or those charged with governance of their responsibilities. • AUDITORS' RESPONSIBILITIES REGARDING THE AUDIT OF THE FINANCIAL STATEMENTS • • Our function as auditors of the Entity is:' • • to express an opinion on whether the Entity's financial statements, prepared by p: agement with the oversight of those charged with governance, are, in all material respects, in accordance S with the financial reporting framewor4.zeferred to above • kt • to report on the financial statements � • We will conduct the audit of the Entity's financial statements in accordance with Canadian generally • accepted auditing standards and relevant ethical requirements, including those pertaining to • independence (hereinafter referred to as applicable "professional standards "). We will plan and perform the audit to obtain reasonable assurance about whether the financial • statements as a whole are free from material misstatement, whether due to fraud or error. • Accordingly, we will, among other things: • • identify and assess risks of material misstatement, whether due to fraud or error, based on an • understanding of the Entity and its environment, including the Entity's internal control. In • making those risk assessments, we consider internal control relevant to the Entity's preparation • of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the • Entity's internal control • • obtain sufficient appropriate audit evidence about whether material misstatements exist, through • designing and implementing appropriate responses to the assessed risks • form an opinion on the Entity's financial statements based on conclusions drawn from the audit • evidence obtained; • • communicate matters required by professional standards, to the extent that such matters come to 5 our attention, to the appropriate level of management, those charged with governance. The form • (oral or in writing) and the timing will depend on the importance of the matter and the requirements under professional standards. • • • • 2 • S • • • • • • • • • AUDITORS' DELIVERABLES • The expected form and content of our audit report is provided in Appendix — Expected Form of • Report. However, there may be circumstances in which a report may differ from its expected form and content. • INCOME TAX COMPLIANCE AND ADVISORY SERVICES 4004. • Alor /,rraai . Tax compliance and advisory services are outside the scope of this le. r. These services will be • su bject to the terms and conditions of a separate engagement lett , ' .14 • • FEES 44 '• ;frr w Our fees for professional services to be performed under this Engagement Letter Nllc accordance with those included in our response to your request for proposal for auditivices. • We are available to provide a wide range of services beyond those outlined above. Additional services are subject to separate terms and arrangements. *A • We are proud to provide you with the services outlined above and we appreciate your confidence in • our work. We shall be pleased to discuss this letter with you at any time. If the arrangements and terms are acceptable, please sign the duplicate of this letter in the space provided and return it to us. • • tlF; n„ Yours very truly, f r ' • • o lr • Matthew Betik, Partner, responsible for the engagement and its performance, and for the report that • is issued on behalf of KPMG LLP, and who, where required, has the appropriate authority from a • professional, legal or regulatory body 519- 747 -8245 • Enclosure • • • • t • • 3 • • III • • • • • • • • The terms of the engagement set out are as agreed: • Name and Title • • Date (dd /mm/yy) • t 'h fp fr - • + 416 r•r 2F.r. III Xf it Y� • ,, s r -',;,,,,„, J , S FF h:'"'lt �y�'r�ifF r • f' .P'' f r N F • • • • • • 4440 • • • • • • • • • • • • • • • • 4 • • • • • • • • Appendix — Expected Form of Report • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 5 • • • • • • INDEPENDENT AUDITORS' REPORT • • To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Municipality of • Kincardine: • We have audited the accompanying consolidated financial statements of The Corporation of the • • Municipality of Kincardine ( "the Entity "), which comprise the consolidated financial position as at December 31, 2014 and the consolidated statement of operations and accumulated surplus, changes in • net financial assets, and cash flows for the year then ended, and a summary of significant accounting • policies and other explanatory information. • Management's Responsibility for the Financial Statements • Management is responsible for the preparation and fair presentation of these consolidated financial • statements in accordance with Canadian public sector accounting standards, and for such internal control • as management determines is necessary to enable the preparation of consolidated financial statements • that are free from material misstatement, whether due to fraud or error. • Auditors' Responsibility • 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 comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. • An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in • the financial statements. The procedures selected depend on our judgment, including the assessment of • the risks of material misstatement of the financial statements, whether due to fraud or error. In making • those risk assessments, we consider internal control relevant to the Entity's preparation and fair • presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's • internal control. An audit also includes evaluating the appropriateness of accounting policies used and the • reasonableness of accounting estimates made by management, as well as evaluating the overall • presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for • our audit opinion. • Opinion • In our opinion, the consolidated financial statements present fairly, in all material respects, the • consolidated financial position of The Corporation of the Municipality of Kincardine as at December 31, • 2014, and its consolidated results of operations and the changes in its net debt and its consolidated cash • flows for the year then ended in accordance with Canadian public sector accounting standards. • • Chartered Professional Accountants, Licensed Public Accountants • Waterloo, Canada • • • • • • • • • KP TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS • The Terms and Conditions are an integral part of the accompanying information in the course of the engagement, and (ii) it has provided notice • engagement letter from KPMG that identifies the engagement to which of the potential processing of such personal information outside of Canada they relate (and collectively form the "Engagement Letter "). The (as described in paragraph 5 above). KPMG's Privacy Officer noted in • Engagement Letter supersedes all written or oral representations on this KPMG's Privacy Policy is able to answer any individual's questions about • matter. the collection of personal information required for KPMG to deliver 1. SEVERABILITY. services hereunder. The Entity consents to KPMG sending to the Entity, its officers, directors • If any of the provisions of this Engagement Letter are determined to be and employees, as applicable, electronic messages (including emails) invalid or unenforceable, the remaining provisions shall remain in effect relating to KPMG products and services and other matters of interest to • and be binding on the parties to the fullest extent permitted by law. the Entity. The Entity, its officers, directors or employees may withdraw 2. GOVERNING LAW. such consent by contacting KPMG's National Office located at Bay • This Engagement Letter shall be subject to and governed by the laws of Adelaide Centre, 333 Bay Street, Suite 4600, Toronto, Ontario M5H 2S5, • the province where KPMG's principal office performing this engagement is Attention: Unsubscribe; or info(c .kpmq.ca. located (without regard to such province's rules on conflicts of law) and all 7. OFFERS OF EMPLOYMENT. . disputes arising hereunder or related thereto shall be subject to the In order to allow issues of independence to be addressed, management exclusive jurisdiction of the courts of such province of Canada. agrees that prior to extending an offer of employment to any KPMG • 3. LLP STATUS. partner, employee or contractor, the matter is communicated to the • KPMG LLP is a registered limited liability Partnership ( "LLP ") established engagement partner or associate partner. under the laws of the Province of Ontario and, where applicable, has been 8. OFFERING DOCUMENTS. • registered extra - provincially under provincial legislation. KPMG is a If the Entity wishes to include or incorporate by reference the financial partnership, but its partners have a degree of limited liability. A partner is statements and our report thereon in an offering document, we will • not personally liable for any debts, obligations or liabilities of the LLP that consider consenting to the use of our report and the terms thereof at that arise from a negligent act or omission by another partner or by any other time. Nothing in this Engagement Letter shall be construed as consent and • person under that other partner's direct supervision or control. The KPMG expressly does not consent to the use of our audit report(s) in legislation relating to limited liability partnerships does not, however, offering documents. If the Entity wishes to obtain KPMG's written consent • reduce or limit the liability of the firm. The firm's insurance exceeds the to the use of our audit report(s) in an offering document, or wishes us to mandatory professional indemnity insurance requirements established by provide a comfort or advice letter, we will be required to perform . the relevant professional bodies. Subject to the other provisions hereof, all procedures as required by professional standards; any agreement to partners of the LLP remain personally liable for their own actions and /or perform such procedures will be documented in a separate engagement . actions of those they directly supervise or control. letter. Management agrees to provide us with adequate notice of the 4. DOCUMENTS AND INFORMATION. `' ` ,:. preparation of such documents. • Management's cooperation in providing US with documents and related 9. FEE AND OTHER ARRANGEMENTS. • information and agreed -upon assistance on a timely basis is an important KPMG's estimated fee is based on the quality of the Entity's accounting factor in being able to issue our report. KPMG shall be entitled to share all records, the agreed -upon level of preparation and assistance from the • information provided by the Entity with all other member firms of KPMG Entity's personnel, and adherence to the agreed -upon timetable. KPMG's International Cooperative ( "KPMG International ") performing services estimated fee also assumes that the Entity's financial statements are in • hereunder. All work papers, files and other internal materials created or accordance with the applicable financial reporting framework and that produced by KPMG during the engagement and all copyright and there are no significant new or changed accounting policies or issues, or • intellectual property rights in our work papers are the property of KPMG. financial reporting, internal control over financial reporting or other 5. USE OF MEMBER FIRMS AND THIRD PARTY SERVICE PROVIDERS. reporting issues. KPMG will inform the Entity on a timely basis if these • Personal and /or confidential information (e.g. entries into KPMG's time and factors are not in place. billing system and into KPMG's conflicts database) collected by KPMG Additional time may be incurred for such matters as significant issues, • during the course of this engagement may be used, processed and stored significant unusual and /or complex transactions, informing management outside of Canada by KPMG, KPMG International member firms about new professional standards, and any related accounting advice. • performing services hereunder or third party service providers. KPMG Where these matters arise and require research, consultation and work • represents to the Entity that each KPMG International member firm and beyond that included in the estimated fee, the Entity and KPMG agree to third party service provider providing services hereunder has agreed or revise the estimated fee. No significant additional work will proceed • shall agree to conditions of confidentiality with respect to the Entity's without management's concurrence, and, if applicable, without the information. Further, KPMG is responsible to the Entity for causing third concurrence of those charged with governance. Upon completion of these • party service providers to comply with such conditions of confidentiality, services KPMG will review with the Entity any fees and expenses incurred and KPMG shall be responsible to the Entity for their failure to comply and in excess of KPMG's estimate, following which KPMG will render the final • failure of each KPMG International member firm providing services billing. Routine administrative expenses such as long distance telephone hereunder to comply with its obligations of confidentiality owed to KPMG. calls, photocopies, fax charges, printing of statements and reports, • Any services performed by third party service providers shall be performed postage and delivery and secretarial and report department assistance will in accordance with the terms of this Engagement Letter, but KPMG shall be charged on the basis of a percentage of KPMG's professional costs. • remain responsible to the Entity for the performance of such services and Other disbursements for items such as travel, accommodation and meals services performed by each KPMG International member firm providing will be charged based on KPMG's actual disbursements. . services hereunder. Such personal and /or confidential information may be KPMG's invoices are due and payable upon receipt. Amounts overdue are subject to disclosure in accordance with the laws applicable in the subject to interest. In order to avoid the possible implication that unpaid . jurisdiction in which the information is processed or stored, which laws fees might be viewed as creating a threat to KPMG's independence, it is may not provide the same level of protection for such information as will important that KPMG's bills be paid promptly when rendered. If a situation Canadian laws. arises in which it may appear that KPMG's independence is threatened because of significant unpaid bills, KPMG may be prohibited from signing 6. PERSONAL INFORMATION CONSENTS AND NOTICES. the report and, if applicable, any consent. • Any collection, use or disclosure of personal information is subject to Fees for any other services will be billed separately from the services • KPMG's Privacy Policy available at www.kpmq.ca. KPMG may be required described in this engagement letter and may be subject to written terms to collect, use and disclose personal information about individuals during and conditions supplemental to those in this letter. • the course of this engagement. Canadian Public Accountability Board (CPAB) participation fees, when The Entity represents and warrants that: (i) it will obtain any consents applicable, are charged to the Entity based on the annual fees levied by • reasonably required to allow KPMG to collect, use and disclose personal CPAB. • TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS 1 • MARCH 2014 • • • KPMG TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS • Canadian Public Accountability Board (CPAB) participation fees, when 14. ALTERNATIVE DISPUTE RESOLUTION. • applicable, are charged to the Entity based on the annual fees levied by The parties hereby agree that they will first attempt to settle any dispute • CPAB. arising out of or relating to this Engagement Letter or the services provided To the extent that KPMG partners and employees are on the Entity's hereunder through good faith negotiations in the spirit of mutual • premises, the Entity will take all reasonable precautions for the safety of cooperation between representatives of each of the parties with authority KPMG partners and employees at the Entity's premises. to resolve the dispute. In the event that the parties are unable to settle or • 10. LEGAL PROCESSES. resolve their dispute through negotiation within 30 days of the dispute first • The Entity on its own behalf hereby acknowledges and agrees to cause its arising or such longer period as the parties may mutually agree upon, such subsidiaries and affiliates to hereby acknowledge that KPMG may from dispute shall, as promptly as is reasonably practicable, be subject to • time to time receive requests or orders from the Canadian Public mediation pursuant to the National Mediation Rules of the ADR Institute of Accountability Board or from professional, securities or other regulatory, Canada, Inc. All disputes remaining unsettled for more than 60 days • judicial or governmental authorities (both in Canada and abroad) to following the parties first meeting with a mediator or such longer period as provide them with information and copies of documents in KPMG's files the parties may mutually agree upon shall, as promptly as is reasonably • including working papers and other work - product relating to the affairs of practicable, be subject to arbitration pursuant to the National Arbitration the Entity, its subsidiaries and affiliates. Except where prohibited by law, if Rules of the ADR Institute of Canada, Inc. (the "Arbitration Rules "). Such • a request or order is directly related to an inspection or investigation of arbitration shall be final, conclusive and binding upon the parties, and the KPMG's audit of the Entity, KPMG will advise the Entity of the request or parties shall have no right of appeal or judicial review of the decision. The • order. The Entity hereby acknowledges that KPMG will provide these parties hereby waive any such right of appeal which may otherwise be documents and information without further reference to, or authority from, provided for in any provincial arbitration statute made applicable under the • the Entity, its subsidiaries and affiliates. Arbitration Rules. The place of mediation and arbitration shall be the city in When such an authority requests access to KPMG's working papers and Canada in which the principal KPMG office that performed the • other work - product relating to the Entity's affairs, KPMG will, on a engagement is located. The language of the mediation and arbitration reasonable efforts basis, refuse access to any document over which the shall be English. . Entity has expressly informed KPMG at the time of delivery that the Entity , . asserts privilege, except where disclosure of documents is required by E • law. The Entity must mark any document over which it asserts privilege ass "privileged ". If and only if the authority requires such access to privileged ' , • documents pursuant to the laws of a jurisdiction in which express consent is required for such disclosure, then the Entity hereby provides its consent. '' Where privileged Entity documents are disclosed, KPMG is directed to fr advise the authority that the Entity is permitting disclosure only to the • extent required by law and for the limited ' q y purpose of the authority's exercise of statutory authority. KPMG is directed to advise the authority -' • that the Entity does not intend to waive privilege for any other purpose and • that the Entity expects its documents to be held by the authority as privileged and confidential material (held securely, limited distribution, • etc.). For greater certainty, the Entity and KPMG hereby agree that this .0' acknowledgement (and, if required, consent) does not negate or constitute • a waiver of privilege for any purpose and the Entity expressly relies upon : the privilege protections afforded under statute and otherwise under law. • The Entity agrees to reimburse KPMG, upon request, at standard billing rates for KPMG's professional time and expenses, including reasonable • legal fees, incurred in dealing with the matters described above , ,�`` 11. KPMG INTERNATIONAL MEMBER FIRMS. a The Entity agrees that any claims that may arise out of this engagement will be brought solely against KPMG, the contracting party, and not against • any other KPMG International Cooperative ( "KPMG International ") member firms participating in this engagement or such third party service • providers referred to in Section 5 above. • 12. CONNECTING TO THE ENTITY'S IT NETWORK. KPMG personnel are authorized to connect their computers to the Entity's • IT Network, subject to any restrictions communicated to KPMG from time to time. Connection to the Entity's IT Network or the Internet via the • Network, while at the Entity's premises, will be for the express purpose of conducting normal business activities, primarily relating to facilitating the • completion of work referred to in this letter. 13. DELIVERABLES OR COMMUNICATIONS. • KPMG may issue other deliverables or communications as part of the • services described in this Engagement Letter. Such deliverables or communications may not to be included in, summarized in, quoted from or • otherwise used or referred to, in whole or in part, in any documents or public oral statement. • KPMG expressly does not consent to the use of any communication, report, statement or opinion prepared by us on the interim financial • statements and such communication, report, statement or opinion may not be included in, summarized in, quoted from or otherwise used in any • document or public oral statement. II 0 TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS 2 • MARCH 2014 • • • • • • • • At KPMG Our Communities Matter • As one of Canada's leading professional services firms, we have • an incredible opportunity to help our communities thrive by engaging our skills, knowledge, passions and financial resources to make a real difference. • As a firm with locations in more than 35 cities across Canada, • we are actively connected to the communities where we • operate - as a business, as an employer - in every sense. • The issues that impact our communities are the same issues I I that impact our people and their families, our clients and our operations. So making a commitment to having a positive impact • is how we recognize the significance of our relationship with the communities where we operate and live. • • At KPMG, being engaged in the community is part of the _ • job. We are passionate about strengthening our relationships with our communities and we recognize . • that our opportunity to have a positive impact extends beyond our client work. Community Leadership • • provides the mandate, the opportunities and the support for how we will contribute to the • success of our communities as an organization and as individuals. By leveraging our personal expertise we can affect social change. This is core to our • business strategy and drives what we do every day. • • S • • • • • • • 0 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • www.kpmg.ca • This proposal is made by KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent firms affiliated • with KPMG International Cooperative ( "KPMG International "), a Swiss entity, and is in all respects subject to the satisfactory completion of KPMG's • client acceptance procedures, as well as negotiation, agreement, and signing of a specific engagement letter or contract. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis -a -vis third parties, • nor does KPMG International have any such authority to obligate or bind any member firm. • © 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with • KPMG International Cooperative ( "KPMG International "), a Swiss entity. All rights reserved. Printed in Canada. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ( "KPMG • International "). • • • Roxana Baumann /Kincardine To Patty Beckber er /Kincardine Y Kincardine 9 @ 10/10/2014 08:52 AM cc bcc Subject Fw: Municipality of Kincardine External Audit Services Proposal Hi Patty, Is there any way that you can also link the email below to the laserfische files for the external audit services? We received a separate quote for the audit services of Bruce Telecom, however it is not in the official proposal document. The email below from KPMG would be the only reference to the fee quotation for the audit of Bruce Telecom. Thank you, Roxana Baumann, CPA, CA Treasurer /Director of Finance Municipality of Kincardine 519- 396 -3468 www.kincardine.net Forwarded by Roxana Baumann /Kincardine on 10/10/2014 08:50 AM "Bet k, Matthew" <mbetik @kpmg.ca> To "RBaumann @Kincardine.net" <RBaumann @Kincardine.net> 20/08/2014 10:45 AM cc "Hall, Brendan D" <bdhall @kpmg.ca> Subject RE: Municipality of Kincardine External Audit Services Proposal Hi Roxana — I have discussed this with Brendan Hall (the manager in the proposal) and considered our audit approach and effort. Based on this and our reading of the financial statements, we are quoting the following: 2014 - $15,000 2015 - $15,300 2016 - $15,600 The increases represented expected inflation. These quotes are based on the current structure, operations, and accounting framework for Bruce Telecom. If there are significant changes that increase /decrease the audit scope or effort, we agree to negotiate in good faith to revise the fees accordingly. I trust this is sufficient for your purposes. If you need anything further from us, please do not hesitate to ask. As an FYI, I am away from the office on Friday, so if there are questions, it could be challenging to get back to you on that day. Thanks. Matt. /kik v FILE:, P / efi � �� ;z.c- � y '