SUNDRE – Council recently heard as part of an audit report presentation that the municipality remains “in a good financial position.”
Two representatives with KPMG LLP – a multinational firm whose repertoire of expertise includes professional financial services – presented to council on April 24 during a regularly scheduled meeting an auditor’s report as well as ancillary financial statements.
Following a brief public presentation introducing the item, council moved to further discuss the documentation in-camera under Section 24(1)(b) of the Freedom of Information and Protection of Privacy Act, which grants a public governing body authorization to discuss behind closed doors “consultations or deliberations involving” either officers or employees of the public body, a member of the executive council, or staff of a member of the executive council.
“The auditor’s report is discussed in a closed meeting to allow council to have an unfettered discussion,” Chris Albert, told the Albertan by email in response to follow-up questions.
Thus unable to comment specifically on that conversation, Albert recapped highlights from the meeting’s public portion and said the audit process is regulated by accounting standards and involves a risk assessment for the misstatement of the financial documents.
“The process involves examining procedures and individual sample transactions to form an opinion about that risk and the possibility of misstatement,” Albert said.
Based on their analysis of financial documents provided by the municipality, the firm did not identify any red flags or causes for concern.
“The town is currently in a good financial position,” he said. “The auditors were very pleased with how the process progressed this year. They issued an unqualified audit opinion, which states in part that ‘the accompanying financial statements present fairly, in all material respects, the (town’s) financial position.’”
In his presentation summarizing the financial statements to council, Albert said the package is comprised of four primary documents: the statement of financial position, which outlines the assets and liabilities as at the end of the year; the statement of operations and accumulated surplus, which outlines the revenues and expenses for the year; the statement of change in net financial assets; and the statement of cash flows.
Additional schedules and notes included alongside the statements are intended to offer greater context and breakdowns for information contained in the main documents.
The financial statements in this instance are prepared using an accounting method on the basis of accrual; a slightly different approach from the cash basis quarterly reports Albert regularly presents to council.
“Cash basis is very useful for understanding and monitoring the day-to-day financial situations and does not include such non-cash transactions as amortization and deferred revenue or liabilities,” he explained.
“While accrual basis can be useful for analyzing the future prospects of an organization.”
Governed by legislation, municipalities must adhere to a provincially-mandated process that involves submitting a financial information return that “compiles financial statement information into a format that is then consistent across all municipalities in Alberta,” he said.
The government provides municipalities with the required statements in digital format, which administrative staff must then fill out followed by an auditor’s review to ensure the documents were completed correctly, he said.
