Report to/Rapport au :

 

Audit Sub-Committee

Sous-comité de la vérification

 

and / et au

 

Finance and Economic Development Committee

Comité des finances et du développement économique

 

and Council / et au Conseil

 

May 17, 2012

17 mai 2012

 

Submitted by/Soumis par : Marian Simulik, City Treasurer/trésorière municipale

 

Contact Person / Personne ressource:  Mona Monkman, Deputy City Treasurer—Corporate Finance /trésorière municipale adjointe — Finances municipales
Finance Department/Service des finances
 

613-580-2424 ext./poste 41723, Mona.Monkman@ottawa.ca

 

CITY WIDE / À L’ÉCHELLE DE LA VILLE

  Ref N°: ACS2012-CMR-FIN-0020

 

SUBJECT:

 

2011 City of OTTAWA CONSOLIDATED FINANCIAL STATEMENTS

 

OBJET :

 

ÉTATS FINANCIERS CONSOLIDÉS DE 2011 DE LA VILLE D’OTTAWA

 

 

REPORT RECOMMENDATION

That the Audit Sub-Committee recommend that the Finance and Economic Development Committee recommend Council approve the 2011 City of Ottawa Consolidated Financial Statements.

 

 

Recommandation du rapport

Que le Sous-comité de la vérification recommande au Comité des finances et du développement économique de recommander à son tour au Conseil d’approuver les États financiers consolidés de 2011 de la Ville d’Ottawa. 

 

 

Background

The Municipal Act, 2001 requires that the City prepare annual audited financial statements in accordance with accounting policies prescribed by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.  These audited financial statements must be made available to the public. 

 

On November 24, 2011 Ernst &Young LLP provided a planning memo outlining the scope and key issues affecting the 2011 audit for the information of Committee and Council.  The 2011 audit is now complete and Ernst & Young LLP is providing the attached report on their audit of City’s consolidated financial statements. 

 

 

DISCUSSION

The Financial Statements have been prepared by management in accordance with the accounting policies prescribed by the Public Sector Accounting Board (“PSAB”) of the Canadian Institute of Chartered Accountants.  These accounting policies require the reporting of revenues and expenses on the accrual basis of accounting.  The accrual basis of accounting recognizes revenues as they are earned and measurable. Expenses are recognized as they are incurred and measurable, as a result of the receipt of goods and services and the creation of a legal obligation to pay. 

 

These consolidated financial statements include the operations of all local boards and agencies, such as the Police Services Board, Ottawa Public Library Board, the Ottawa Community Housing Corporation and the Business Improvement Areas.  The City’s investment in Hydro Ottawa is recorded in the financial statements on a modified equity basis.

 

The City’s Operating and Capital Budgets are based upon a modified cash basis of accounting.  This results in significant differences between the City’s external financial statements and its Operating and Capital Budgets.  PSAB accounting policies require that the financial statements show a comparison of the actual financial results for the period to those originally planned (budgeted).  These policies also state that those “planned” (budgeted) results should be presented for the same scope of activities and on a basis consistent with that used for actual results.  Since the City prepares it’s Operating and Capital budgets on a different basis from that used to account for transactions in the consolidated financial statements, it is necessary to provide a reconciliation of Council’s approved budgets to the budget figures reported in the financial statements. This reconciliation is provided in note 19 to the financial statements. 

 

The City uses cash accounting for budgeting because it is the most accurate way of determining how much taxation needs to be levied in any one year.  It is the cash requirement that determines what the tax rate is and also what tax rate increase may be  required.  The accrual basis of accounting which is used in the financial statements, includes expenses that do not need to be financed or tax levied for in the immediate or near term.  An example is the future cost of closing landfill sites.   

 

The City’s external auditors have performed an audit of the Draft Consolidated Financial Statements.   Under new accounting standards, the City’s external auditors are required to extend their subsequent events review procedures up until Council approves the Draft Consolidated Statements. These audit procedures include the review of bank statements, payments and receipts in the subsequent period as well as additional standard inquiries.  In order to reduce the amount of post-audit review, this report should rise to Council at the earliest opportunity. Once Council approves the Draft Consolidated Statements, the City will receive the signed audit report at which time the statements will be considered final and be posted on the City’s web site.  The City also prepares a financial information return for submission to the Province, based on the financial results contained in the consolidated financial statements.  That information is also available publicly through the Province of Ontario’s Financial Information web site.

 

RURAL IMPLICATIONS

There are no rural implications associated with this report.

 

 

CONSULTATION

No public consultation was required.

 

 

LEGAL IMPLICATIONS

There are no legal impediments to receiving this report.  Section 294.1 of the Municipal Act, 2001 requires the City to prepare an annual audited financial statement in accordance with generally accepted accounting principles for local governments as recommended from time to time by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.

 

 

RISK MANAGEMENT IMPLICATIONS

There are no risk management implications.

 

 

FINANCIAL IMPLICATIONS

Not applicable.

 

 

ACCESSIBILITY IMPACTS

Not applicable.

 

 

Technology Implications

There are no technology implications associated with this report.

 

 

TERm of council priorities

The financial statements are supporting documents that allow the City to monitor the City’s financial position.

 

 

SUPPORTING DOCUMENTATION

Document 1 – 2011 City of Ottawa Consolidated Financial Statements

Document 2 – Ernst & Young Audit Results, Consolidated Financial Statements

 

 

DISPOSITION

Following consideration by the Audit Sub-Committee, this report will be forwarded to the Finance and Economic Development Committee and Council.