Part 1: Audit Results, Financial Health, and Risk Management Overview — 08/09/2023

The Audit Committee met on August 9, 2023, to review the County’s financial health, audit results, and growing work around risk management. The meeting was held as a hybrid session, with members attending both virtually and in person at Shire Hall, and the open portion was livestreamed for the public.

The meeting was chaired by Albert Paschkowiak, Environmental Services and Sustainability Supervisor, who opened the session, confirmed the agenda, and guided the committee through a full afternoon of financial and governance discussion.

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The meeting began with approval of the agenda and the minutes from the previous Audit Committee meeting. There were no disclosures of pecuniary interest. Early on, the committee formally welcomed a newly appointed citizen member, noting their addition to the committee and acknowledging their attendance.

Audit findings for the 2022 financial year

The main focus of the meeting was a detailed presentation from KPMG on the County’s Audit Findings Report for the year ending December 31, 2022. The presentation walked committee members through the audit process, key financial indicators, and overall results.

The audit was described as clean, with no significant findings or control issues identified. The audit team explained that while the report contained many technical details, the overall takeaway was that the County’s financial statements were reliable and properly prepared.

Several outstanding administrative items were noted, including confirmation letters from the insurance provider and the completion of the affordable housing audit. These were described as timing issues rather than concerns, and no material changes were expected.

Financial position, reserves, and debt

A large portion of the discussion focused on explaining the County’s financial position, including assets, liabilities, reserves, and debt levels.

Cash levels remained strong, and tax receivables were explained as increasing largely due to higher levies rather than collection problems. The County remained within provincial benchmarks for tax collection.

The audit presentation also explained why certain liabilities rose, particularly construction related borrowing and accounts payable, and why some deferred revenues declined due to the use of previously raised funds, including donations tied to the library renovation.

The committee spent time discussing obligatory reserve funds, clarifying that these are restricted funds that must be used for specific purposes or returned to the funding source. Members confirmed these funds were being used within required timelines.

Debt levels were discussed in detail, including how new projects could affect total debt while still remaining compliant with provincial rules.

Operating results and surplus

The audit showed a significant year end surplus, which prompted questions about where that money goes. The explanation focused on how surpluses are allocated to reserves, including water and sewer reserves and infrastructure related accounts, often due to project timing rather than unspent money.

It was clarified that budget surplus and audited surplus are not the same thing, and that the audited surplus reflects accounting rules rather than operational cash sitting unused.

Questions about fraud risk and controls

Committee members asked questions about fraud risk, internal controls, and segregation of duties. The audit team explained that while the audit is not a forensic investigation, it does test controls and includes unpredictable procedures each year.

No fraud risks or control weaknesses were identified during the 2022 audit.

Risk management presentation

The second major topic of the meeting was a presentation on risk management, outlining how the County is moving beyond insurance only approaches toward a broader, organization wide risk framework.

The discussion covered financial risk, cyber risk, human resources risk, reputational risk, health and safety, and infrastructure risk. Members heard about recent steps taken, including staff training, facility risk assessments, internal policy reviews, and early work on a formal risk management plan.

The role of Council and staff in identifying and mitigating risk was emphasized, with examples ranging from snowplow GPS tracking to cyber security upgrades required to maintain insurance coverage.

Claims history and insurance

The committee reviewed an overview of insurance claims history from 2014 to early 2023, including the types of claims the County sees most often and how claims are managed.

It was explained that many claims are reviewed and denied when standards are met, while others are paid when warranted, often under the deductible threshold. The importance of training staff on how to respond to potential claims was also discussed.

Members raised questions about climate related risks, flooding, and insurance trends, noting that these pressures are affecting municipalities across Ontario.

Work plan and future focus

The committee reviewed its work plan and discussed upcoming topics, including cybersecurity, risk management, project management, and financial trend analysis.

There was a longer discussion about whether and how the committee should look at multi year spending trends and comparator municipalities, recognizing the value of long term context while also noting workload and budget process constraints. Staff were directed to bring back further information in future meetings, including a cybersecurity update in closed session.

The meeting ended with motions to receive presentations, forward financial statements to Council for approval, confirm updates to the work plan, and adjourn.

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Disclaimer: This article is based on a meeting with an approximate duration of 1:39:31. 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.