Part 1: Big Financial Pressures and What’s Changing - 03/25/2026
- PECConnect
- Mar 25
- 6 min read
The Audit Committee met on March 25, 2026, with Councillor Kate MacNaughton opening the meeting and stepping in as acting chair to start proceedings. The first portion of the meeting focused on setting up leadership for the year, which is a standard but important step that shapes how the committee operates moving forward.
Councillor Corey Engelsdorfer was formally appointed as Chair, with Jane Leslie taking on the role of Vice Chair. With that in place, the meeting moved quickly into its core purpose, which was to review the County’s financial oversight process and take a closer look at where things stand heading into the 2025 audit.
What followed was a detailed walkthrough of both the audit plan and the County’s current financial position, with much of the discussion centered on how the County manages risk, tracks performance, and responds when things do not go as planned.
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Understanding the 2025 Audit Plan
The audit presentation focused on how the County’s financial statements for 2025 will be reviewed and what has changed compared to previous years. While the overall structure of the audit remains consistent, there are a few updates that affect how information is presented and communicated to the committee.
One of the more notable points is that there are no new accounting standards affecting this year’s audit, which helps keep the process relatively stable. At the same time, new audit communication requirements mean that reports are becoming longer and more detailed, particularly around areas like audit quality and engagement terms.
A key concept discussed was materiality, which sets the threshold for what counts as a meaningful financial difference during the audit. For 2025, that level is set at approximately $2.2 million, slightly higher than last year, reflecting the County’s overall growth in financial activity. This does not mean smaller discrepancies are ignored, but it helps auditors focus on what could realistically impact financial decisions or public understanding.
The audit also continues to look across multiple parts of the County’s operations, including the library and housing corporation, while confirming that some entities remain outside the consolidated financial statements. There was also clarification around long-term care operations, which are already embedded within the County’s financial reporting rather than treated as a separate entity.
Risk assessment formed another important part of the discussion. Auditors explained that certain risks, such as the possibility of management overriding financial controls, are always assumed and tested as part of every audit in Canada. These are not unique concerns tied to the County but rather built-in safeguards to ensure consistency and accountability across public sector audits.
Overall, the audit plan did not raise new concerns, but it reinforced the importance of strong internal controls and consistent financial reporting practices as the County continues to grow and manage more complex operations.
A Difficult Financial Year Taking Shape
The conversation shifted noticeably when staff presented the preliminary financial results for 2025. While the audit plan was steady and predictable, the financial update pointed to a more challenging reality.
At this stage, the County is projecting a significant deficit for the year, and staff were clear that this is not the result of a single issue but rather a combination of pressures that built up over time.
One of the contributing factors was a legal matter dating back to 2018 that was settled in 2025, bringing costs into the current year. More significantly, the long-term care home, H.J. McFarland, experienced increased costs related to staffing. Because of shortages, the facility relied heavily on temporary agency workers, which are more expensive than permanent staff.
At the same time, the County faced a provincial funding clawback tied to COVID-era funding. The province reviewed past funding allocations and required some amounts to be returned, which impacted the 2025 financial results even though the funding originally came from earlier years.
Staff also acknowledged that part of the issue came down to budgeting. The cost of purchased services, particularly for staffing, had been set too low at the start of the year. When actual demand increased, the gap between budget and reality widened quickly, creating what was described as a “perfect storm” of financial pressure.
What’s Being Done to Stabilize Things
Rather than focusing only on the deficit itself, much of the discussion turned toward how the County is responding and what changes are already being put in place.
A key step has been shifting toward hiring more permanent staff at H.J. McFarland, which reduces reliance on costly agency workers and creates more predictable expenses. Staff also emphasized stronger coordination between departments and the finance team so that issues can be identified earlier rather than appearing late in the fiscal year.
Another important change is the move toward more frequent financial reporting. Departments will now report to Council twice a year, providing a clearer and more timely picture of how budgets are performing. This is intended to reduce surprises and allow for earlier course correction when needed.
There are also efforts underway to improve procurement practices, strengthen internal controls, and ensure that funding from the province is tracked more closely to avoid future clawbacks. Together, these changes are meant to address both the immediate pressures seen in 2025 and the underlying processes that allowed them to build.
A Larger Conversation About Financial Health
Beyond the immediate deficit, the meeting highlighted a broader concern about the County’s financial position over time.
The Treasurer noted that the County is dealing with an unfunded gap of roughly $3 million while also having very limited contingency reserves. In practical terms, this means there is not enough financial cushion to absorb unexpected costs, which puts additional pressure on future budgets.
The discussion also touched on several financial indicators that help measure long-term stability. These included the level of outstanding property taxes, which remain higher than recommended levels, and the County’s reliance on debt to fund capital projects instead of using reserves.
Compared to similar municipalities, the County is carrying lower reserves and has less flexibility when it comes to managing financial risk. Staff confirmed that this is something they are actively working to address through the development of a formal reserve strategy and a more structured approach to debt.
There was also recognition that financial planning needs to become more coordinated across different areas, including asset management, growth planning, and budgeting. The goal is to ensure that decisions made in one area do not create unintended pressures in another.
Key Takeaways
The meeting made it clear that the County is heading into a period where financial decisions will matter more than ever, as a projected deficit for 2025 highlights how quickly costs can escalate when multiple pressures align and when budgets do not fully capture operational realities.
At the same time, staff and the audit committee are already taking steps to improve how financial information is tracked, reported, and shared, which should lead to fewer surprises and better decision-making in the future.
Looking ahead, the bigger issue is not just this year’s deficit but the County’s overall financial resilience, as low reserves and growing demands mean that rebuilding financial stability will likely become a central focus in upcoming budgets and policy discussions.
Disclaimer: This article is based on a meeting with an approximate duration of 1:50:54. Due to the length of the meeting, our team was not able to independently review the full recording in its entirety. As a result, we relied on software-generated transcription, automated summarization, and automated recognition of speakers and participants, which may not be entirely accurate. All transcriptions, summaries, and related content are prepared by our team in good faith and on a reasonable best-efforts basis. The content is provided for general informational purposes only and is intended to support public understanding of the topics discussed. While reasonable efforts have been made to present the information accurately, automated processes may result in errors, omissions, or unintended misinterpretations. This article does not constitute an official, certified, or verbatim record of the meeting, and it should not be relied upon as such. Readers are encouraged to consult original source materials, official minutes, or recordings where available for confirmation or clarification. Questions, requests for clarification, or suggested corrections may be submitted to hello@pecconnect.ca for review and consideration.
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