HomeMy WebLinkAbout19 106 Auditors Appointment 2019-2023 (KPMG) By-law THE CORPORATION OF THE MUNNICIPALITY OF KINCARDINE
441-0,127)
BY-LAW
NO. 2019 - 106
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;
AND WHEREAS with the passing of By-law No. 2014 — 120 Council accepted a
proposal for such services from KPMG LLP;
AND WHEREAS Council deems it expedient to extend the services of KPMG
LLP as per Report TRE 2019-58;
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, 2019 to December 31, 2023 for The Corporation of the
• Municipality of Kincardine, to audit all records of the Corporation of the
Municipality of Kincardine, including the records of the Board of Management
of the Business Improvement Area (BIA) and 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, 2019
and December 31, 2023 as outlined in the attached fee proposal with KPMG
LLP, 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 fee proposal, 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 2019 — 2023 (KPMG)
By-Law".
• READ a FIRST and SECOND TIME this 7th day of August, 2019.
READ a THIRD TIME and FINALLY PASSED this 7th day of August, 2019.
Mayor Clerk
This is Schedule"A.""to By-Law
No.4t-io6 passed the_a__ day
of 201cj
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KPMG LLP
115 King Street South
2nd Floor
Waterloo ON N2J 5A3
Canada
Tel 519 747-8800
Fax 519 747-8830
Ms. Roxana Baumann
Treasurer/ Director of Finance
Municipality of Kincardine
1475 5th Concession, RR#5
Kincardine, ON N2Z 2X6
August 9, 2019
Dear Roxana,
The purpose of this letter is to outline the terms of our engagement for the Corporation of
the Municipality of Kincardine ("the Entity"), commencing for the period ending
December 31, 2019. We will issue reports on the financial statements of the Entity as
follows:
Entity Report Basis of Financial
Statements
1 The Corporation of the Municipality of Audit Consolidated
Kincardine
2 The Corporation of the Municipality of Audit
Kincardine Trust Funds
3 Kincardine Business Improvement Area Audit
This letter supersedes our previous letter to the Entity dated November 20, 2018. 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 and any
exhibits, attachments and appendices hereto and subsequent amendments 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 annual financial statements will be prepared and presented in accordance with
Canadian public sector accounting standards (hereinafter referred to as the"financial
reporting framework").
KPMG LLP.s a Canadian meeo lability partnership and a member"um of me KPMG network of soepenoent
member firms affiliated with KPMG International Cooperative 1"KPMG International'1 a Swiss entity.
KPMG Canada provides services to KPMG LLP.
The annual financial statements will include an adequate description of the financial
reporting framework.
Management's Responsibilities
Management responsibilities are described in Appendix— Management's Responsibilities.
An audit does not relieve management or those charged with governance of their
responsibilities.
Auditor's Responsibilities
Our responsibilities are described in Appendix—Auditor's Responsibilities.
If management does not fulfill the responsibilities above, we cannot complete our audit.
Auditor's Deliverables
The expected form and content of our report(s) 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.
In addition, if we become aware of information that relates to the financial statements after
we have issued our audit report , but which was not known to us at the date of our audit
report, and which is of such a nature and from such a source that we would have
investigated that information had it come to our attention during the course of our audit, we
will, as soon as practicable: (1) communicate such an occurrence to those charged with
governance; and (2) undertake an investigation to determine whether the information is
reliable and whether the facts existed at the date of our audit report. Further, management
agrees that in conducting that investigation, we will have the full cooperation of the Entity's
personnel. If the subsequently discovered information is found to be of such a nature that:
(a) our audit report would have been affected if the information had been known as of the
date of our audit report; and (b) we believe that the audit report is currently being relied
upon or is likely to be relied upon by someone who would attach importance to the
information, appropriate steps will be taken by KPMG, and appropriate steps will also be
taken by the Entity, to prevent further reliance on our audit report. Such steps include, but
may not be limited to, appropriate disclosures by the Entity to the users of the financial
statements and audit report thereon of the newly discovered facts and the impact to the
financial statements.
Additional Responsibilities regarding "Other Information"
"Other information" is defined in professional standards to be the financial or non-financial
information (other than the financial statements and the auditors' report thereon) included
in the"annual report". An "annual report" is defined in professional standards to
comprise a document or combination of documents. Professional standards also indicate
that:
• an annual report is prepared typically on an annual basis in accordance with law,
regulation or custom (i.e., is reoccurring)
• an annual report contains or accompanies the financial statements and the auditors'
report thereon
2
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• an annual report's purpose is to provide owners (or similar stakeholders)with
information on the Entity's:
o operations; and/or
o financial results and financial position as set out in the financial statements.
Based on discussions with management, there are no documents, or combination of
documents, expected to meet the definition of an "annual report" under professional
standards.
Fees
Appendix— Fees for Professional Services to this letter lists our fees for professional
services to be performed under this Engagement Letter.
***********
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,
///40:0Ffa % '
Matthew Betik, CPA, CA, CPA(Illinois)
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
/ca
Enclosures
***********
3
The terms of the engagement set out are as agreed:
Anne Eie, Mayo
dr
Sharon Chambers, CAO
Date (dd/mm/yy) bt� U `l QW IV o . - 101
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Appendix- Management's Responsibilities
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) providing us with all information of which management is aware that is relevant to
the preparation of the financial statements such as financial records,
documentation and other matters, including:
— the names of all related parties and information regarding all relationships
and transactions with related parties
— the complete minutes of meetings, or summaries of actions of recent
meetings for which minutes have not yet been prepared, of shareholders,
board of directors, and committees of the board of directors that may affect
the financial statements. All significant actions are to be included in such
summaries.
(c) providing us with unrestricted access to such relevant information.
(d) providing us with complete responses to all enquiries made by us during our
engagement.
(e) providing us with additional information that we may request from management for
the purpose of the engagement.
(f) providing us with unrestricted access to persons within the Entity from whom we
determine it necessary to obtain evidence.
(g) 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.
(h) ensuring that all transactions have been recorded and are reflected in the financial
statements.
(i) ensuring that internal auditors providing direct assistance to us, if any, will be
instructed to follow our instructions and that management, and others within the
entity, will not intervene in the work the internal auditors perform for us.
(j) 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, as required by
professional standards, we may disclaim an audit opinion when management does
not provide certain written representations required.
5
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Appendix-Auditor's Responsibilities
Our function as auditors of the Entity is:
— to express an opinion on whether the Entity's annual 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 annual financial statements
We will conduct the audit of the Entity's annual 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
annual 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 annual 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 annual 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 and/or the board of directors. The form (oral or in writing) and the
timing will depend on the importance of the matter and the requirements under
professional standards.
6
Appendix- Expected Form of Report
INDEPENDENT AUDITORS' REPORT
To the Members of Council, Inhabitants and Ratepayers of The Corporation of the
Municipality of Kincardine:
Opinion
We have audited the consolidated financial statements of The Corporation of
the Municipality of Kincardine (the Entity), which comprise:
• the consolidated statement of financial position as at December 31, 2019
• the consolidated statement of operations for the year then ended
• the consolidated statement of changes in net debt for the year then ended
• the consolidated statement of cash flows for the year then ended
• and notes to the consolidated financial statements, including a summary
of significant accounting policies
(Hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all
material respects, the consolidated financial position of the Entity as at
December 31, 2019, and its consolidated results of operations, its
consolidated changes in net debt and its consolidated cash flows for the year
then ended in accordance with Canadian public sector accounting standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted
auditing standards. Our responsibilities under those standards are further
described in the"Auditors'Responsibilities for the Audit of the Financial
Statements" section of our auditors' report.
We are independent of the Entity in accordance with the ethical requirements
that are relevant to our audit of the financial statements in Canada and we
have fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Responsibilities of Management and Those Charged with
Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the
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 financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for
assessing the Entity's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Entity
or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity's financial
reporting process.
Auditors'Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditors' report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Canadian generally accepted auditing
standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with Canadian generally accepted auditing
standards, we exercise professional judgment and maintain professional
skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
8
The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the audit 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.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
• Conclude on the appropriateness of management's use of the going
concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Entity's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors' report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditors' report. However, future events or conditions may
cause the Entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner
that achieves fair presentation.
• Communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that
we identify during our audit.
Chartered Professional Accountants, Licensed Public Accountants
Waterloo, Canada
DATE
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Appendix- Fees for Professional Services
The Entity and KPMG agree to a fee based on actual hours incurred at mutually agreed-
upon rates for the audits as follows:
2019 2020 2021 2022 2023
Municipality of
Kincardine $36,400 $37,200 $38,000 $38,800 $39,700
Municipality of
Kincardine Trust Funds 1,350 1,380 1,410 1,440 1,470
Kincardine Business
Improvement Area 2,050 2,100 2,150 2,200 2,250
Total $39,800 $40,680 $41,560 $42,440 $43,420
10
TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS
L . r (PRIVATE COMPANY CLIENTS)
These Terms and Conditions are an integral part of the accompanying d. Fees for any other services will be billed separately from the services
engagement letter or proposal from KPMG that identifies the engagement described in this Engagement Letter and may be subject to written terms
to which they relate (and collectively form the "Engagement Letter"). The and conditions supplemental to those in the Engagement Letter.
Engagement Letter supersedes all written or oral representations on this e. Canadian Public Accountability Board("CPAB")participation fees,
matter. The term "Entity" used herein has the meaning set out in the when applicable,are charged to Entity based on the annual fees levied by
accompanying engagement letter or proposal. The term "Management" CPAB.
used herein means the management of Entity. 4. USE OF MEMBER FIRMS AND THIRD PARTY SERVICE PROVIDERS;
1. DOCUMENTS AND LICENSES. STORAGE AND USE OF INFORMATION.
a. All working papers, files and other internal materials created or a. KPMG is a member firm of the KPMG International Cooperative
produced by KPMG in relation to this engagement and all copyright and ("KPMG International"). Entity acknowledges that in connection with the
intellectual property rights therein are the property of KPMG. provision of services hereunder, KPMG may use the services of KPMG
b. Only in connection with the services herein, Entity hereby grants to International member firms,as well as other third party service providers or
KPMG a limited, revocable, non-exclusive, non-transferable, paid up and subcontractors, and KPMG shall be entitled to share with them all
royalty-free license,without right of sublicense,to use all logos,trademarks documentation and information related to the engagement, including
and service marks of Entity solely for presentations or reports to Entity or for Entity's confidential information and personal information ("information").
internal KPMG presentations and intranet sites. Further, Entity agrees that KPMG may also: (i) directly, or using such aforementioned KPMG
KPMG may list Entity as a customer in KPMG's internal and external International member firms,third party service providers or subcontractors,
marketing materials,including KPMG websites and social media, indicating perform data analytics in respect of the information; and (ii) retain and
the general services rendered(e.g.,"Client is an Audit,Advisory,and/or Tax disclose to KPMG International member firms the information to share best
client of KPMG LLP"). practices or for knowledge sharing purposes. In all such cases, such
2. ENTITY'S RESPONSIBILITIES. information may be used,retained,processed,or stored outside of Canada
by such KPMG International member firms, other third party service
a. Entity agrees that all management responsibilities will be performed providers or subcontractors,and may be subject to disclosure in accordance
and all management decisions will be made by Entity,and not by KPMG. with the laws applicable in the jurisdiction in which the information is used,
b. Entity's provision of documents and information to KPMG on a timely retained, processed or stored, which laws may not provide the same level
basis is an important factor in our ability to issue any reports under this of protection for such information as will Canadian laws.KPMG represents
Engagement Letter. KPMG is not responsible for any consequences arising that such KPMG International member firms, other third party service
from Entity's failure to deliver documents and information as required. providers or subcontractors have agreed or shall agree to conditions of
c. To the extent that KPMG personnel are on Entity's premises,Entity will confidentiality with respect to Entity's confidential information, and that
take all reasonable precautions for their safety. KPMG is responsible to ensure their compliance with those conditions. Any
d. Entity understands and acknowledges that KPMG's independence services performed by KPMG International member firms or other third party
may be impaired if any KPMG partner,employee or contractor accepts any service providers or subcontractors shall be performed in accordance with
offer of employment from Entity. the terms of this Engagement Letter,but KPMG remains solely responsible
e. Except as required by applicable law or regulation, Entity shall keep to Entity for the delivery of the services hereunder. Entity agrees that any
confidential the terms of this Engagement Letter, and such confidential claims that may arise out of the engagement will be brought solely against
information shall not be distributed,published or made available to any other KPMG,the contracting party,and not against any other KPMG International
person without KPMG's express written permission. member firms or other third party service providers or subcontractors
f. Management agrees to promptly provide us with a copy of any referred to above.
comment letter or request for information issued by any securities or other b. Certain information (including information relating to time, billing and
regulatory authority in respect of information on which KPMG reported, conflicts)collected by KPMG during the course of the engagement may be
including without limitation any continuous disclosure filings. used,retained,processed and stored outside of Canada by KPMG, KPMG
3. FEE AND OTHER ARRANGEMENTS. International member firms or third party service providers or subcontractors
a. KPMG's estimated fee is based in part on the quality of Entity's records, providing support services to KPMG for administrative, technological and
the agreed-upon level of preparation and assistance from Entity's clericaVorganizational purposes, including in respect of client engagement
personnel,and adherence by Entity to the agreed-upon timetable. KPMG's acceptance procedures and maintaining engagement profiles; and to
estimated fee also assumes that Entity's financial statements and/or other comply with applicable law, regulation or professional standards(including
financial information, as applicable, are prepared in accordance with the for quality performance reviews). Such information may be subject to
relevant financial reporting framework or the relevant criteria,as applicable, disclosure in accordance with the laws applicable in the jurisdiction in which
and that there are no significant changes to the relevant financial reporting the information is used, retained, processed or stored,which laws may not
framework or the relevant criteria, as applicable; no significant new or provide the same level of protection for such information as will Canadian
changed accounting policies;no significant changes to internal control;and laws.KPMG may also share information with its legal advisers and insurers
no other significant issues. for the purposes of obtaining advice.
b. Additional time may be incurred for such matters as significant issues, c. Entity acknowledges that KPMG aggregates anonymous information
significant unusual and/or complex transactions, informing management from sources including the Entity for various purposes, including to monitor
about new professional standards, and any related accounting advice. quality of service, and Entity consents to such use. KPMG may also use
Where these matters arise and require research, consultation and work Entity's information to offer services that may be of interest to Entity.
beyond that included in the estimated fee,Entity and KPMG agree to revise 5. PERSONAL INFORMATION CONSENTS AND NOTICES.
the estimated fee. Our professional fees are also subject to an additional KPMG may be required to collect, use and disclose personal information
charge to cover information technology infrastructure costs and about individuals during the course of the engagement. Any collection,use
administrative support of our client service personnel. Disbursements for or disclosure of personal information is subject to KPMG's Privacy Policy
items such as travel,accommodation and meals will be charged based on available at www.kpmq.ca. Entity represents and warrants that (i) it will
KPMG's actual disbursements. obtain any consents required to allow KPMG to collect, use and disclose
c. KPMG's invoices are due and payable upon receipt.Amounts overdue personal information in the course of the engagement, and (ii) it has
are subject to interest. In order to avoid the possible implication that unpaid provided notice to those individuals whose personal information may be
fees might be viewed as creating a threat to KPMG's independence, it is collected, used and disclosed by KPMG hereunder of the potential
important that KPMG's bills be paid promptly when rendered. If a situation processing of such personal information outside of Canada(as described in
arises in which it may appear that KPMG's independence is threatened Section 4 above). KPMG's Privacy Officer noted in KPMG's privacy policy
because of significant unpaid bills, KPMG may be prohibited from signing is able to answer any individual's questions about the collection of personal
any applicable report and/or consent. information required for KPMG to deliver services hereunder.
TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS-PRIVATE COMPANY CLIENTS
MAY 2018 1
TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS
L A (PRIVATE COMPANY CLIENTS)
demands, suits, proceedings, liabilities, costs, expenses, or losses
6. THIRD PARTY DEMANDS FOR DOCUMENTATION AND INFORMATION/LEGAL (collectively, "Claims") in any way arising out of or relating to the services
AND REGULATORY PROCESSES. performed hereunder for an aggregate amount in excess of the lesser of
one million dollars ($1,000,000) or two times the fees paid by Entity to
a. Entity on its own behalf hereby acknowledges and agrees to cause its KPMG under the engagement; and (ii) on a multi-phase engagement,
subsidiaries and affiliates to acknowledge that KPMG or a foreign KPMG's liability shall be based on the amount actually paid to KPMG for the
component auditor which has been engaged in connection with an particular phase that gives rise to the liability.
assurance engagement("component auditor")may from time to time receive b. Subject to Section 14,in the event of a Claim by any third party against
demands from a third party(each,a"third party demand"),including without KPMG that arises out of or relates to the services performed hereunder,
limitation(i)from CPAB or from professional,securities or other regulatory, Entity will indemnify and hold harmless KPMG from all such Claims,
taxation,judicial or governmental authorities(both in Canada and abroad), including, without limitation, reasonable legal fees, except to the extent
to provide them with information and copies of documents in KPMG's or the finally determined to have resulted from the intentional, deliberate or
component auditor's files including (without limitation)working papers and fraudulent misconduct of KPMG.
other work-product relating to the affairs of Entity, its subsidiaries and c. Subject to Section 14: (i) in no event shall KPMG be liable for
affiliates, and (ii) summons for production of documents or information consequential,special,indirect,incidental,punitive or exemplary damages,
related to the services provided hereunder; which information and liabilities,costs,expenses,or losses(including,without limitation,lost profits
documents may contain confidential information of Entity,its subsidiaries or and opportunity costs);(ii)in any Claim arising out of the engagement,Entity
affiliates. Except where prohibited by law, KPMG or its component auditor, agrees that KPMG's liability will be several and not joint and several; and
as applicable,will advise Entity or its affiliate or subsidiary of the third party (iii) Entity may only claim payment from KPMG of KPMG's proportionate
demand. Entity acknowledges, and agrees to cause its subsidiaries and share of the total liability based on degree of fault.
affiliates to acknowledge, that KPMG or its component auditor, as d. For purposes of this Section 9, the term KPMG shall include its
applicable,will produce documents and provide information in response to subsidiaries,its associated and affiliated entities and their respective current
the third party demand,without further authority from Entity, its subsidiaries and former partners, directors, officers, employees, agents and
or affiliates. representatives. The provisions of this Section 9 shall apply regardless of
b. KPMG will use reasonable efforts to withhold from production any the form of Claim, whether in contract, statute, tort (including, without
documentation or information over which Entity asserts privilege. Entity limitation,negligence)or otherwise.
must identify any such documentation or information at the time of its
provision to KPMG by marking it as "privileged". Notwithstanding the 10. CONSENT TO THE USE OF THE KPMG NAME OR KPMG REPORT.
foregoing,where disclosure of such privileged documents is required by law, Except as otherwise specifically agreed in this Engagement Letter, KPMG
KPMG will disclose such privileged documents. If and only if the authority does not consent to:
requires such access to such privileged documents pursuant to the laws of i. the use of our name or our report in connection with information,other
a jurisdiction in which express consent of Entity is required for such than what we have reported on as part of this Engagement Letter or our
disclosure,then Entity hereby provides its consent. report thereon, that contains, incorporates by reference, or otherwise
c. Entity agrees to reimburse KPMG for its professional time and any accompanies our report or our name;
disbursements, including reasonable legal fees and taxes,in responding to ii. the use of our report in another language, or the use of our report in
third party demands. connection with information that we reported on that has been translated
d. Entity waives and releases KPMG from any and all claims that it may into another language,or the use of our name in connection with information
have against KPMG as a result of any disclosure or production by KPMG of that we reported on that has been translated into another language;
documents or information as contemplated herein. iii. the use of our report in connection with an offering document or other
e. Entity agrees to notify KPMG promptly of any request received by securities filing, including continuous disclosure filings;or
Entity from any third party with respect to the services hereunder, KPMG's iv. the use of our name or our report in connection with the interim
confidential information, KPMG's advice or report or any related document. financial statements(or other interim financial information)or any statement
7. CONNECTING TO THE ENTITY'S IT NETWORK; EMAIL AND ONLINE FILE by the Entity regarding the services that we provided on the interim financial
SHARING AND STORAGE TOOLS. statements or other interim financial information.
Any communication,report,statement or conclusion on the interim financial
a. Entity authorizes KPMG personnel to connect their computers to statements may not be included in, or otherwise referred to in any public
Entity's IT Network and the Internet via the Network while at the Entity's document or public oral statements except when the interim review
premises for the purpose of conducting normal business activities. conclusion contains a modified conclusion,in which case our interim review
b. Entity recognizes and accepts the risks associated with communicating report will accompany the interim financial statements.
electronically,and using online file sharing,storage,collaboration and other If the Entity wishes to obtain KPMG's consent regarding the matters above
similar online tools to transmit information to or sharing information with or other matters not otherwise specifically covered by this Engagement
KPMG, including (but without limitation)the lack of security, unreliability of Letter,we will be required to perform procedures as required by applicable
delivery and possible loss of confidentiality and privilege.Entity assumes all professional standards, and such procedures would be a separate
responsibility or liability in respect of the risk associated with the use of the engagement and subject to separate engagement terms.
foregoing, and agrees that KPMG is not responsible for any issues that
might arise(including loss of data)as a result of Entity using the foregoing 11. ALTERNATIVE DISPUTE RESOLUTION.
to transmit information to or otherwise share information with KPMG and,in Any dispute or claim between the parties arising under or relating to this
the case of online tools other than email,KPMG's access to and use of the Engagement Letter or the services provided hereunder(the"Dispute")shall
same in connection with obtaining Entity information and documents. be submitted to non-binding mediation. If mediation is not successful within
8. LIMITATION ON WARRANTIES. 90 days after the issuance by a party of a request for mediation, then the
Dispute shall be referred to and finally resolved by arbitration under the
THIS IS A SERVICES ENGAGEMENT.KPMG WARRANTS THAT IT WILL Arbitration Rules of the ADR Institute of Canada in force at that time. The
PERFORM SERVICES HEREUNDER IN GOOD FAITH WITH QUALIFIED Seat of Arbitration shall be the province where KPMG's principal office
PERSONNEL IN A COMPETENT AND WORKMANLIKE MANNER IN performing this engagement is located. The language of the arbitration shall
ACCORDANCE WITH APPLICABLE INDUSTRY STANDARDS.SUBJECT be English. The Arbitral Tribunal shall be made up of a single Arbitrator.
TO SECTION 14, KPMG DISCLAIMS ALL OTHER WARRANTIES, The arbitration award shall be final,conclusive and binding upon the parties,
REPRESENTATIONS OR CONDITIONS, EITHER EXPRESS OR and not subject to appeal.
IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES,
REPRESENTATIONS OR CONDITIONS OF MERCHANTABILITY OR 12. POTENTIAL CONFLICTS OF INTEREST.
FITNESS FOR A PARTICULAR PURPOSE. a. KPMG is or may be engaged by entities and individuals who have
9. LIMITATION ON LIABILITY AND INDEMNIFICATION. potentially conflicting legal and business interests to Entity. Entity agrees
that,without further notice or disclosure to Entity, KPMG may: (i)accept or
a. Subject to Section 14: (i) Entity agrees that KPMG shall not be liable continue such engagements on matters unrelated to KPMG's engagement
to Entity for any actions, damages, claims, fines, penalties, complaints, for Entity; and (ii) provide advice or services to any other person or entity
TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS-PRIVATE COMPANY CLIENTS
MAY 2018 2
TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS
LIPLAAJ (PRIVATE COMPANY CLIENTS)
making a competing bid or proposal to that of Entity whether or not KPMG legal counsel shall not affect(and it shall not assert that the same affects)
is providing advice or services to Entity in respect of Entity's competing bid the validity of the provisions of this Engagement Letter.
or proposal. 18. SURVIVAL.
b. In accordance with professional standards, KPMG will not use any
confidential information regarding Entity in connection with its engagements All sections hereof other than Section 7(a) shall survive the expiration or
with other clients, and will establish confidentiality and other safeguards to termination of the engagement.
manage conflicts,which may include, in KPMG's sole discretion,the use of
separate engagement teams and data access controls.
c. In no event shall KPMG be liable to Entity,or shall Entity be entitled to
a return of fees or disbursements, or any other compensation whatsoever
as a result of KPMG accepting or continuing a conflicting engagement in
accordance with the terms of this Engagement Letter.
d. Entity agrees that KPMG may, in its sole discretion, disclose the fact
and nature of its engagement for Entity to(i) KPMG International member
firms to inform conflict searches, and (ii)to the extent reasonably required
in order to obtain the consent of another entity or individual in order to permit
KPMG to act for such entity or individual,or for Entity,in connection with the
engagement or any future engagement.
e. In the event that circumstances arise that place KPMG into a conflict
of interest as between Entity and a pre-existing client,which in KPMG's sole
opinion cannot be adequately addressed through the use of confidentiality
and other safeguards, KPMG shall be entitled to immediately terminate the
engagement with Entity,without liability.
f. Other KPMG International member firms are or may be engaged by
entities and individuals who have potentially conflicting legal and business
interests to Entity. Entity agrees that(i) it will not assert that other KPMG
International member firms are precluded from being engaged by those
other entities or individuals, and (ii) those engagements of other KPMG
International member firms do not conflict with KPMG's engagement for
Entity.
13. LOBBYING.
Unless expressly stated in this Engagement Letter,KPMG will not undertake
any lobbying activity, as that term is defined in all applicable federal,
provincial and municipal lobbyist registration statutes and regulations, in
connection with the engagement. In the event that KPMG and Entity agree
that KPMG will undertake lobbying activity in connection with the
engagement, such agreement shall be set out in an amendment to this
Engagement Letter.
14. SEVERABILITY.
The provisions of these Terms and Conditions and the accompanying
proposal or engagement letter shall only apply to the extent that they are
not prohibited by a mandatory provision of applicable law, regulation or
professional standards. If any of the provisions of these Terms and
Conditions or the accompanying proposal or engagement letter are
determined to be invalid,void or unenforceable,the remaining provisions of
these Terms and Conditions or the accompanying proposal or engagement
letter,as the case may be,shall not be affected,impaired or invalidated,and
each such provision shall remain valid and in effect and be enforceable and
binding on the parties to the fullest extent permitted by law.
15. GOVERNING LAW.
This Engagement Letter shall be subject to and governed by the laws of the
province where KPMG's principal office performing this engagement is
located(without regard to such province's rules on conflicts of law).
16. LLP STATUS.
KPMG is a registered limited liability partnership("LLP")established under
the laws of the Province of Ontario and, where applicable, has been
registered extra-provincially under provincial LLP legislation.
17. INDEPENDENT LEGAL ADVICE.
Entity agrees that it been advised to retain independent legal advice at its
own expense prior to signing this Engagement Letter (including without
limitation with respect to Entity's rights in connection with potential future
conflicts)and agrees that any failure on its part to retain such independent
TERMS AND CONDITIONS FOR ASSURANCE ENGAGEMENTS-PRIVATE COMPANY CLIENTS
MAY 2018 3