December 13, 2013 - Audit Committee Meeting · PDF filePrepared for the December 13, 2013...

Audit Committee Agenda

10:30 AM, Friday, December 13, 2013 – Wapiti Room, 2nd Floor, City Hall

1. CALL TO ORDER

2. ELECTION OF OFFICERS

3. APPROVAL OF AGENDA

3.1. Approval of the December 13, 2013 meeting agenda

4. APPROVAL OF MINUTES

4.1. Approval of the October 15, 2013 meeting minutes

5. IN CAMERA SESSION

6. NEW BUSINESS

6.1. Audit Plan for 2013 (Agenda Pages 1 – 63)

6.2. October 2013 Budget Variance Report (Agenda Pages 64 – 72)

7. NEXT MEETING

7.1. The next meeting of the Audit Committee is scheduled for Thursday, January 16th, 2014 at 1:30 p.m. in the Wapiti Room, 2nd floor, City Hall.

8. ADJOURNMENT

Audit Committee Report Item #4.1 Audit Planning Report for 2013 Date: December 13, 2013 To: City of Red Deer Audit Committee Prepared by: John Stelter,CA, Concurring Partner, KPMG LLP

Robyn Eeson, CA, Engagement Partner, KPMG LLP Sallie Klein, CA, Senior Manager, KPMG LLP Background / Issues: Two reports are attached for the Committee’s reference:

1. The 2013 Audit Planning Report from KPMG, and 2. A copy of the signed Audit Services Contract.

Recommendation: Administration requests this item be forwarded to Council for information.

City of Red Deer Audit Committee, 2013/12/13 - Page 1 Item No. 6.1.

For KPMG’s audit committee resources, please visit kpmg.ca/auditcommittee

AUDIT

City of Red Deer Audit Planning Report

For the year ending December 31, 2013

KPMG LLP, Chartered Accountants

Prepared for the December 13, 2013 Audit Committee

kpmg.ca


For KPMG’s audit committee resources, please visit kpmg.ca/auditcommittee

Contents Executive summary .............................................................................................................................. 2

Considerations in developing our Audit Plan .................................................................................... 3

Our external audit responsibilities ..................................................................................................... 4

Areas of audit emphasis ...................................................................................................................... 5

Overall audit approach ..................................................................................................................... 5

Materiality ......................................................................................................................................... 5

Significant audit areas ..................................................................................................................... 5

Work performed on components of the City ................................................................................. 9

Use of the work of others .............................................................................................................. 10

Fees and timing .................................................................................................................................. 11

Recommended improvements .......................................................................................................... 13

Engagement team .............................................................................................................................. 14

Appendices .......................................................................................................................................... 15

This Audit Planning Report should not be used for any other purpose or by anyone other than the audit committee. KPMG shall have no responsibility or liability for loss or damages or claims, if any, to or by any third party as this Audit Planning Report has not been prepared for, and is not intended for, and should not be used by, any third party or for any other purpose.


Audit planning report to the audit committee P a g e | 2

Executive summary

KPMG LLP (“KPMG”) is pleased to have been appointed as the external auditor for the City of Red Deer (the “City”) for the year ending December 31, 2013. When developing our planned audit approach for the year ending December 31, 2013, we have considered the following:

Overall considerations In determining our audit approach, we have considered City-specific challenges and changes, as well as changes in the regulatory environment and accounting and auditing standard changes.

Our responsibilities We have been appointed auditors for the City of Red Deer for the year ending December 31, 2013, the scope of which is fully described in our external audit services agreement with the City.

Materiality As part of the audit planning process, we consider materiality when determining the nature, timing and extent of our audit procedures as well as to evaluate the effect of misstatements. For the year ending December 31, 2013 materiality has been established at $8,500,000 (3% of budgeted expenses). We will communicate to you corrected and uncorrected audit misstatements identified during the audit that are individually greater than $425,000 as well as those below $425,000 that are qualitatively significant.

Significant audit areas Our audit focuses on key risks and business processes of the City. Our testing will include a combination of detailed testing and review of internal controls. On an overall basis, our audit approach will include a specific focus on:

Recognition of revenue amounts subject to external restrictions

Completeness of accounts payable and accrued liabilities

Accuracy and valuation of contributions of tangible capital assets

Accuracy and valuation of investments

Completeness and accuracy of employee future benefits

Completeness and accuracy of environmental obligations and other contingencies

Completeness and accuracy of commitments

Risk of management override of controls

Timing of the external audit

Our proposed work plan will ensure annual internal and legislative reporting deadlines are met (May 1, 2014).



Considerations in developing our Audit Plan

We have prepared this audit plan to inform you of the planned scope and timing of the audit for the purpose of carrying out and discharging your responsibilities and exercising oversight over our audit of the consolidated financial statements.

We have set out below a summary of changes that have been taken into consideration in planning the audit for the current period:

Regulatory environment

There have been no changes to the Municipal Government Act (MGA) or other legislation in 2013 that we believe will impact the City’s external financial reporting.

During 2013, the provincial government announced that a full review of the MGA would be undertaken. The project is in its early stages and is currently in stakeholder consultation.

Accounting standards

There are two new Public Sector Accounting Standards PS3510 – Tax Revenue and PS3410 – Government Transfers, which were early adopted December 31, 2012 by the City.

In addition, we will work with City management to ensure future approved accounting standard changes related to financial instruments (2016), re-measurement gains and losses (2016), foreign currency translation (2016) and liabilities related to contaminated sites (2015) are being considered and will be implemented as required.

Auditing standards

Canadian public sector accounting standards include a requirement to disclose budget information in the City’s statements of operations and changes in net financial assets (net debt). The Canadian Institute of Chartered Accountants (CICA) Task Force on Audit Reporting Implications of New Canadian Auditing Standards has published new guidance related to budget information in their publication Reporting Implications of New Auditing and Accounting Standards, Issue No. 9 – April 2013 that concludes that because planned results or planned amounts included in financial statements prepared in accordance with Canadian public sector accounting standards are required by the applicable framework, they do not represent supplementary information. Accordingly, the auditor’s opinion would cover the comparison of actual and planned results or planned amounts included in the statement of operations and the statement of changes in net financial assets. It would be inappropriate for planned results or planned amounts to be marked as unaudited. This change is effective for years ending after December 31, 2012.

There are no other significant changes to auditing standards in 2013 that impact the City’s December 31, 2013 year-end audit.



Our external audit responsibilities We have been appointed as external auditors for the City of Red Deer for the year ending December 31, 2013 including the following:

City of Red Deer consolidated financial statements;

We have been separately engaged to report on the following financial information for the year ending December 31, 2013:

City of Red Deer Municipal Financial Information Return (FIR) which is prepared to comply with Section 277 of the Municipal Government Act R.S.A. 2000, c.M-26, as amended;

City of Red Deer Local Authorities Pension Plan (LAPP) compliance with the Management Employees Pension e-guide;

Family and Child Support Services (FCSS) grant schedule;

Homelessness Partnering Strategy (HPS) statement of funding and expenditures as required under the Homeless Partnering Strategy Contribution Agreement – Community Entity Model Amendment; and

Outreach and Support Services (OSS) statement of funding and expenditures as required under the Outreach and Support Services Initiative Conditional Grant Funding Agreement.

The following subsidiaries have independently appointed their external auditors for the year ending December 31, 2013:

Waskasoo Environmental Education Society (WEES);

Red Deer Public Library (RDPL);

Red Deer Museum and Art Gallery (MAG);

Red Deer Downtown Business Association (DBA); and

River Bend Golf and Recreation Society (RB).

Annual inquiries of the Audit Committee

Professional standards require that during the planning of our audit we obtain your views on the risk of fraud. We make similar inquiries to management as part of our planning process; responses to these questions will assist us in planning our overall audit strategy and audit approach accordingly.

Are you aware of, or have you identified any instances of, actual, suspected, possible, or alleged non-compliance of laws and regulations or fraud, including misconduct or unethical behaviour related to financial reporting or misappropriation of assets? If so, have the instances been appropriately addressed and how have they been addressed?

What are your views about fraud risks in the entity?

How do you provide effective oversight of programs and controls to prevent, detect and deter fraud, including oversight over internal controls management has established to mitigate fraud risks?



Areas of audit emphasis

We design an overall audit strategy and an audit approach to address the key business risks identified during the planning process.

Overall audit approach

Given our current understanding of the overall general and information technology control environment of the City, we have concluded that adopting a primarily substantive audit approach will be the most efficient audit strategy for the current year external audit.

Materiality

We determine materiality in order to plan and perform the audit and to evaluate the effects of identified misstatements on the audit and of any uncorrected misstatements on the consolidated financial statements. The determination of materiality requires judgment and is based on a combination of quantitative and qualitative assessments, including the nature of account balances and financial statement disclosures.

We determine performance materiality (from materiality) in order to assess risks of material misstatement and to determine the nature, timing and extent of audit procedures.

We determine an audit misstatement posting threshold (from materiality) in order to accumulate misstatements identified during the audit.

For the current period, the following amounts have been determined:

Materiality Performance Materiality Audit Misstatement Posting Threshold

$8,5000,000 (3% of budgeted expenses)

$6,375,000, which has been set at 75% of materiality

Individually greater than $ 425,000, which has been set at 5% of materiality or those below $425,000 that are qualitatively significant

We will reassess materiality based on period-end results or new information to confirm whether it remains appropriate for evaluating the effects of uncorrected misstatements on the consolidated financial statements.

Significant audit areas

In planning our audit, we have considered the level of audit work required to support our opinion and expect to focus our audit in the following key business areas:

Recognition of revenue amounts subject to external restrictions

There is a risk of inappropriate revenue recognition of amounts received with external restrictions attached to them.

Summary of planned audit approach

We will review the recognition of amount subject to external restrictions to ensure they are recognized appropriately. We will confirm all significant government transfers or other similar inflows and examine related agreements.



Completeness of accounts payable and accrued liabilities

There is a risk that appropriate cut-off of accrued liabilities is not achieved.


We will use our understanding of the City’s operations, our discussions with management and our review of Council meeting minutes to determine if completeness of accruals has been achieved at December 31, 2013.

Our year-end procedures will include performance of a search of unrecorded liabilities (primarily through review of unprocessed transactions and subsequent payments) and detailed analysis of key accruals.

Accuracy and valuation of contributions of tangible capital assets

There is a risk that contributions of tangible capital assets are not appropriately captured in the consolidated financial statements.


We will evaluate controls over how departments capture tangible capital assets which are contributed from developers and other parties.

We will review a sample of developments which have been completed in the City during the year to ensure contributed tangible capital assets have been appropriately recorded.

We will review the value ascribed to assets contributed and donated to the City.

Accuracy and valuation of investments

There is a risk that investments are not appropriately valued; specifically, impairment of investments is not appropriately assessed and valuation adjustments are not recorded where appropriate.


We will verify through confirmation of investment accounts the cost and market value of investments. We will recalculate investment premium/discounts for investments recorded at amortized cost.

We will review management’s assessment of impairment and consider if any potential impairment of the investments exist.

We will review the portfolio of investments to ensure in compliance with the City’s risk management and investment policies.

We will review the valuation of asset backed commercial paper held.



Completeness and accuracy of employee future benefits

There is a risk that City sponsored pension and employee benefit obligations are not appropriately reflected in the consolidated financial statements.


We will ensure data used to formulate key estimates is accurate and complete.

We will review management and actuarial assumptions used to determine estimated obligations.

We will obtain external confirmation from actuaries where appropriate.

Completeness and accuracy of environmental obligations and other contingencies

There is a risk that environmental obligations and other contingent liabilities are not appropriately identified and reasonably estimated.


We will conduct direct communication with the relevant City departments to ensure that all significant contingent liabilities including environmental obligations are appropriately disclosed and/or recorded.

We will review significant findings with management and internal legal counsel.

Completeness and accuracy of commitments

There is a risk that contractual commitments are not appropriately identified and appropriately recorded and disclosed.


We will review a sample of contracts entered during the year and management’s related assessment to ensure appropriately accounted for.



Risk of management override of controls

Although the level of risk for management override of controls will vary from entity to entity, professional standards presume the risk of management override of controls is nevertheless present in all entities and requires the performance of specific procedures to address this presumed risk.

Identified risk

Presumed risk of management override of control – Risk of fraud

Required to be identified as a significant risk per professional standards


Professional standards require certain procedures to be performed to address the presumed risk of management override of controls. We plan on performing these required procedures:

- Review of Journal Entries

- Analysis of Entity Level Controls



Audit work performed in relation to subsidiaries of the City

Professional standards require that we obtain an understanding of the City’s organizational structure, including its subsidiaries and their control environments, that is sufficient to identify those subsidiaries that are financially significant or that contain specific risks that must be addressed during our audit. Where other auditors will perform work on the financial information of such subsidiaries, we are required to evaluate the extent to which we, as the City’s auditors, will be involved in the work of other auditors to the extent necessary to obtain sufficient appropriate audit evidence for our audit opinion on the City’s consolidated financial statements.

We plan to perform the audit procedures are listed below:

Involvement of other auditors

Independent audits of the following subsidiaries will be performed and separate statutory audit opinions will be issued. Collins Barrow LLP:

Red Deer Public Library, Red Deer Museum and Art Gallery, Red Deer Downtown Business Association, and Waskasoo Environmental Education Society.

BDO LLP:

Red Deer River Bend Golf & Recreation Society


We will review the City’s accounting policies related to subsidiary operations and the recording thereof, as well as the subsidiaries accounting policies related to their year-end financial reporting.

We will directly communicate with the other auditors.

We will obtain audited financial statements and communications on any significant issues, unadjusted audit differences, or other matters as necessary from the other auditors.

We will review the City’s consolidation procedures.



Use of the work of others

Our planned audit approach includes the use of the following:

Use of management’s expert – Actuarial Reports – we will complete procedures to establish a basis for reliance on the work of the external actuaries as required under Canadian auditing standards. These procedures include the consideration of the processes and controls in place regarding the evaluation method, the definitions used, the qualifications of the individuals involved, the accuracy of the input data and reasonableness of the results. As part of this process we will also obtain written responses in regards to our reliance on their work for financial statement purposes.



Fees and timing

Fees and assumptions

In determining the fees for our services, we have considered the nature, extent and timing of our planned audit procedures as described above. Our fee analysis has been reviewed with and agreed upon by management.

Our fees are estimated as follows:

Description 2013

Audit of the annual consolidated financial statements 70,000

Municipal Information Return (FIR) 3,500

Local Authorities Pension Plan (LAPP) 3,500

Family and Community Support Services (FCSS) 3,500

Homelessness Partnering Strategy 1,500

Outreach and Support Services 3,000

Total Annual Fees 85,000

Total Expenses 4,250

Total Fee 89,250

These fees are based on the assumptions described in the proposal to serve the City of Red Deer dated August 20, 2013 (attached to the Financial Auditing Services Agreement).



Timing of the audit

We have discussed the key audit deliverables with management and the expected dates indicated below have been agreed upon:

Key deliverables and expected dates

Deliverables Expected dates

Prepare and issue communications to subsidiary auditors By December 6, 2013

Meet and present Audit Planning Report to Audit Committee December 13, 2013

Hold planning meetings with key members of management December 17 – 18, 2013

Perform interim audit procedures and review interim findings with management

December 16 – 20, 2013

Consider impact of any findings identified and review with management in preparation for the year-end

By January 31, 2014

Perform year-end procedures and review financial statements of the City, Pension Funds, Benefit Plans, FIR, and FCSS

March 10 – 28, 2014

Year-end exit meeting with management including final resolution of any accounting, auditing or reporting issues. Review of draft management letter

Early April 2014

Meet and present audited financial statements and the Audit Findings Report, including management letter, to the Audit Committee

By April 30, 2014**

Audited financial statements presented to Council for approval By April 30, 2014**

Issue audit report on financial statements of the City, LAPP, HPS, OSS, FIR, and FCSS

By April 30, 2014**

** Dates pending approval from Council on December 13, 2013.



Recommended improvements

During the course of our audit, we may become aware of opportunities for improvements in financial or operational processes or controls. We will discuss any such opportunities with management and provide our recommendations for performance improvement. We will also include a synopsis of these issues and our recommendations in our discussions with you at the completion of the audit.



Engagement team

Robyn Eeson, CA Lead Engagement Partner

Telephone: 780-429-6074 email: [email protected]

John Stelter, CA Engagement Quality Control Reviewing Partner


Sallie Klein, CA Engagement Senior Manager


Devon Wilson Engagement Senior In-charge



Appendices

KPMG’s Audit Quality Framework


KPMG’s Audit Quality Framework

Audit quality, and the respective roles of the auditor and audit committee, is fundamental to the integrity of financial reporting in our capital markets.

This is why audit quality is at the core of everything we do at KPMG. And we believe that it is not just about reaching the right opinion, but how we reach that opinion.

To help ensure that every partner and employee concentrates on the fundamental skills and behaviours required to deliver an appropriate and independent opinion, we have developed our global Audit Quality Framework.

The framework comprises seven key drivers of audit quality.

The seven key drivers of audit quality

Driver What it does What it means to you

Tone at the top Audit quality is part of our culture and our values and therefore non-negotiable

Allows the right behaviours to permeate across our entire organization and each of our engagements

Assures you that:

Our culture supports our promise to you of excellent service and a high quality audit—consistently

You’re receiving an independent, transparent, audit opinion

You’re receiving an efficient and high quality audit that will help you maintain investor confidence in your financial statements.

Provides you with:

An engagement team handpicked for your business needs – a team with relevant professional and industry experience

An audit engagement team whose qualifications evolve as your business grows and changes

An audit opinion that

Association with the right entities

Ethics above all

Eliminates any potential independence and conflict-of-interest issues

Clear standards and robust audit tools

A solid rule book

Rigorous internal policies and guidance that help ensure our work meets applicable professional standards, regulatory requirements, and KPMG’s standards of quality

Recruitment, development and assignment of appropriately qualified personnel

People who add value

Helps us attract and retain the best people and reinforces the importance of developing their talents

Assigns Partners’ portfolios based on their specific skill sets


Driver What it does What it means to you

Commitment to technical excellence and quality service delivery

The right tools for the right job

Promotes technical excellence and quality service delivery through training and accreditation, developing business understanding and industry knowledge, investment in technical support, development of specialist networks, and effective consultation processes

continues to meet your needs as a participant in the capital markets

Assists you with:

Assessing the effectiveness and efficiency of the audit

Performing your governance role with confidence.

Performance of effective and efficient audits

We understand that how an audit is conducted is as important as the final result.

A code of conduct, audit delivery tools, and internal policies and procedures that help ensure the work performed by engagement personnel meets applicable professional standards, regulatory requirements, and our standards of quality

Commitment to continuous improvement

Comprehensive and effective monitoring

We regularly solicit feedback from the audit committees of the entities we audit. Our robust internal quality review program ensures the work of each partner is reviewed every three years. Additionally, our procedures and a sample of our audits of listed entities are reviewed by the Canadian Public Accountability Board (CPAB), the independent regulator of the accountancy profession in Canada. The Public Company Accounting Oversight Board (PCAOB) in the US also conducts an annual inspection of a sample of our audits of SEC registrants. Finally, a sample of other audits and reviews is undertaken annually by the various provincial institutes in Canada. We consider the recommendations that come from these reviews and implement actions to strengthen our policies and procedures, as appropriate.


The regulatory landscape is changing

Uncertain economic forecasts and a changing regulatory environment define today’s world; reliable financial information and high-quality audits have never been more essential.

We believe that high quality audits contribute directly to market confidence and we share your objectives of credible and transparent financial reporting.

Our Audit Quality Framework is particularly relevant to Audit Committees, and we see our role in being transparent to you as a key mechanism to support you in the execution of your responsibilities.

Our commitment to quality

The independence, judgment and professional skepticism of your auditors add value to your financial statements, and we believe it is important to be transparent about the processes we follow to develop a KPMG audit report. We want you to have absolute confidence in us and in the quality of your audit.

Our own professional standards dictate technical requirements for reaching and communicating an audit opinion. And we live and abide by these requirements. We invest heavily in our quality, and the Audit Quality Framework helps ensure these investments are the right ones—that they help us continuously drive and maximize our quality improvements. But we feel it is also important that we communicate to you how we view and implement audit quality. The seven key drivers outlined here, combined with the commitment of each individual in KPMG, are meant to do just that.

KPMG member firms across the world use this audit quality framework to describe, focus on and enhance audit quality for the benefit of the entities we audit and in support of the efficacy of our capital markets.

It is our hope that sharing our vision of what audit quality means is a significant step in building confidence in the value of our audits.

Audit quality is fundamental to the way we work.


www.kpmg.ca

KPMG LLP, the audit, tax and advisory firm (kpmg.ca), a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.


Audit Committee Report Item #4.3 October 2013 Budget Variance Report Date: December 13, 2013 To: City of Red Deer Audit Committee Prepared by: John Fluney, Financial Analyst Reviewed by: Lorianne Marshall, Corporate Controller

Dean Krejci, Chief Financial Officer Elaine Vincent, Corporate Services Director

Background / Issues: This is a regularly reported item. Recommendation: Administration requests this item be forwarded to Council for information.


Overview The report includes variance explanations for tax supported and utility & self supported operations. Based on year-to-date actual data up to October 31, 2013, departments forecasted their 2013 variances. Tax supported operations We budgeted for an overall surplus of $4.7 Million with $4.7 Million transferred to reserves to balance the budget to $0. The actuals are projected to be in a surplus of $10.3 Million with $10.3 Million transferred to reserves. The projected variance is the difference between the budget and the actuals and is $5.6 Million favourable.

2013

ANNUAL

BUDGET

2013 YEAR

END

PROJECTED

ACTUAL

2013 YEAR

END

PROJECTED

VARIANCE

Tax Supported Total

Operating Variance

(4,732,901) (10,293,286) (5,560,385)

In the report staff vacancies are mentioned in some of the departmental variance explanations. Staff vacancies refer to:

• For new positions, the lag time from when a position is expected to be filled and when it is actually filled

• When turnover occurs the time between when the position is vacated and when a replacement is hired

• Probation pay rate for new employees where budget is based on full rate

• For exempt staff when a senior person is being replaced by a person lower on the salary grid (exempt staff pay grid rates are based on the full year even though the change may occur during the year)

Staff vacancies are projected to total approximately $1.1 Million favourable. What are the components of the $5.6 Million favourable variance?

• Contract settlements, position evaluations, development ladder and exempt step changes, market adjustments - $2.2 Million favourable

• Expenditures for programs/initiatives approved in 2013 and not completed by the end of 2013 (it is anticipated that there will be a request to carry these unspent funds forward to 2014) - $0.7 Million favourable

• Flood costs (it is anticipated the City will receive some Provincial funding) - $0.6 Million unfavourable

• If the variance amount was adjusted for contract settlements, carry forwards, and floods costs, the adjusted variance amount would be $3.3 Million favourable

For the Tax Stabilization Reserve forecast $2.55 Million in year-end undesignated favourable variances is used in order to ensure it is sustainable. Based on the 2013 adjusted variance, $2.55 Million is achievable


Utility & self supported operations We budgeted for an overall surplus of $11.2 Million with $11.2 Million transferred to reserves to balance the budget to $0. The actuals are projected to be in a surplus of $24.1 Million with $24.1 Million transferred to reserves. The projected variance is the difference between the budget and the actuals and is $12.9 Million favourable.

2013

ANNUAL

BUDGET

2013 YEAR

END

PROJECTED

ACTUAL

2013 YEAR

END

PROJECTED

VARIANCE

Utility & Self-Supported

Total

(11,193,695)

(24,083,101) (12,889,406)

Staff vacancies are projected to total approximately $0.6 Million favourable. What are the components of the $12.9 Million favourable variance?

• Land Bank delays in servicing and less revenue in Riverlands and Timberlands commercial and Michener Housing not going forward - $9.1 Million favourable

• EL&P increased tariff revenue due to increased demand and increased administration cost recovery - $3.1 Million favourable

• Remaining variances – 0.7 Million favourable


2013/12/06 9:19 AM

DEPARTMENTGeneral Programs Division (129,235,197) (132,641,213) (3,406,016) Mayor & City Manager Office 7,520,140 7,084,237 (435,903) Community Services Division 63,987,078 62,730,279 (1,256,799) Corporate Services Division 13,944,913 14,315,765 370,852 Planning Services Division 4,945,687 4,345,558 (600,129) Development Services Division 34,104,478 33,872,088 (232,390)

Tax Supported Total Operating Variance (4,732,901) (10,293,286) (5,560,385)

To/From Reserves 4,732,901 10,293,286 5,560,385

Balanced Budget - - -

CITY OF RED DEERTAX SUPPORTED OPERATING VARIANCE ANALYSIS

For the Period Ending, October 31, 2013

2013 YEAR END

PROJECTED ACTUAL

2013 YEAR END

PROJECTED VARIANCE

EXPLANATION <F- favorable; U- unfavorable>

2013 ANNUAL BUDGET

City of R

ed Deer A

udit Com

mittee, 2013/12/13 - P

age 67 Item

No. 6.2.

2013/12/06 9:19 AM

DEPARTMENT

2013 YEAR END

PROJECTED ACTUAL

2013 YEAR END

PROJECTED VARIANCE


2013 ANNUAL BUDGET

GENERAL (129,235,197) (132,641,213) (3,406,016)

F - <$2.2M> Contract settlements, position evaluations, development ladder and exempt step changes, market adjustments F - <$500K> Benefit ratesF - <$261K> Contract SettlementF - <$253K> Penalty, Interest and Service Corridor Revenue, WCB- Alberta Surplus Distribution to EmployersF - <$250K> Municipal supplemental revenue exceeded budget estimateF - <$191K> unbudgeted City Land Sale tax leviesF - <$11K> Miscellaneous savingsU - 160K More debenture payments than anticipatedU - $100K ATCO Gas franchise fees

CITY MANAGER 681,684 600,917 (80,767) F - <$81K> Dialogue and Effectiveness charters

COMM & STRAT PLAN 1,281,728 1,248,000 (33,728) F - <$100K> Identity and Dialogue charters and Staff ForumU - $66K Staffing costs

HUMAN RESOURCES 2,818,388 2,479,050 (339,338)

F - <$177K> WCB PIR (Partnerships in Injury Reduction) RebateF - <$96K> RecruitmentF - <$81K> Leadership/management training and People CharterU - $15K Miscellaneous costs

CORPORATE SRVCS 854,322 1,250,511 396,189

U - $519K External Legal CostsF - <$86K> Staff VacanciesF - <$37K> Miscellaneous savings

FINANCIAL SERVICES 4,008,830 3,903,992 (104,838)

F - <$213K> Staff vacancies U - $78K Audit costsU - $30K Miscellaneous costs

INFORMATION TECH 6,568,088 6,451,781 (116,307) F - <$229K> Staff vacanciesU - $113K Miscellaneous costs

LEGISLATIVE SERVICES 2,738,340 2,756,270 17,930

REVENUE & ASSESSMENT 2,513,673 2,709,481 195,808

U - $337K Write off of Riverbend license fees for 2011/2012 F - <94K> Staff vacancies F - <$47K> Miscellaneous savings

City of R

ed Deer A

udit Com

mittee, 2013/12/13 - P

age 68 Item

No. 6.2.

2013/12/06 9:19 AM

DEPARTMENT

2013 YEAR END

PROJECTED ACTUAL

2013 YEAR END

PROJECTED VARIANCE


2013 ANNUAL BUDGET

DEVELOPMENT SRVCS 592,822 588,628 (4,194) E.L.& P 2,261,546 2,291,546 30,000

EMERGENCY SRVCS 17,962,095 17,325,219 (636,876)

F- <$518K> Ambulance BillingsF - <$136K> Dispatch RevenueF - <$124K> Fleet savingsF - <$95K> Staff vacanciesF - <$62K> Increased number of suppression incidents billedF - <$55K> Miscellaneous savingsU - $239K special assignment positionsU - $114K Equipment servicing and building maintenance

ENGINEERING SRVCS 2,424,941 2,365,271 (59,670)

F - <$142K> Staff vacanciesF - <$58K> RevenueU - $140K Miscellaneous net costs

ENVIRONMENTAL SERVICES 726,667 877,667 151,000 U - $151K Miscellaneous costs

PUBLIC WORKS 10,136,407 10,423,757 287,350

U - $563K Snow & Ice U - $180K Flood F - <$261K> Adjustments to 3rd party workF - <$110K> Miscellaneous net savings F -<$85K> Salaries charged to Capital

PLANNING DIR 755,297 663,348 (91,949) F - <$75K> Economy CharterF - <$17K> Miscellaneous savings

INSP. & LICENSING 2,294,990 1,859,114 (435,876)

F - <$236K> Permit revenueF - <$171K> Staff vacanciesF - <$29K> Miscellaneous savings

LAND & ECONOMIC DEV 915,071 908,018 (7,053) PLANNING SRVCS 980,329 915,078 (65,251) F - $<65K> Miscellaneous savings

COMMUNITY SRVCS 4,807,725 4,495,836 (311,889) F - <$298K> Safety CharterF - <$14K> - Miscellaneous savings

City of R

ed Deer A

udit Com

mittee, 2013/12/13 - P

age 69 Item

No. 6.2.

2013/12/06 9:19 AM

DEPARTMENT

2013 YEAR END

PROJECTED ACTUAL

2013 YEAR END

PROJECTED VARIANCE


2013 ANNUAL BUDGET

POLICE 21,111,388 20,979,487 (131,901)

F - <$1,042K> RCMP contract surplus F - <$34K> Miscellaneous savings U - $944K Fine revenue shortfall

REC. PARKS & CULTURE 24,551,941 24,683,336 131,395

U - $421K Flood costs U - $212K Kinsmen A Arena leakF - <$223K> Registration fees revenueF - <$181K> Infrastructure maintenance repairs budget unspentF - <$100K> Canada Winter Games

SOCIAL PLANNING 1,342,838 1,284,817 (58,021) F - <$64K> Housing Solution unspent fundsU - $6K Miscellaneous costs

TRANSIT 12,173,186 11,286,803 (886,383)

F - <$292K> Salary vacanciesF- <$225K> Fare revenuesF - <$180K> Fleet savingsF - <$126K> Advertising RevenueF - <$63K> Miscellaneous savings

Tax Supported Total (4,732,901) (10,293,286) (5,560,385)

*Note 1 - Transfers to/from reserves are not included in the tax supported total operating variance*Note 2 - Vacant Positions - consists of: for new positions the lag time from when a position is expected to be filled and when it is actually filled; when turnover occurs the time between when they leave and a someone else is hired; probation pay rate for new employees where budget is based on full rate; for exempt staff when a senior person isbeing replaced by a person lower on the salary grid (exempt staff pay grid rates are based on the full year even though the change may occur during the year)

City of R

ed Deer A

udit Com

mittee, 2013/12/13 - P

age 70 Item

No. 6.2.

2013/12/06 9:19 AM

2013 2013 YEAR

END 2013 YEAR

END ANNUAL PROJECTED PROJECTED

DEPARTMENT BUDGET ACTUAL VARIANCEUtility & Self-Supported Total (11,193,695) (24,083,101) (12,889,406)

To/From Reserves 11,193,695 24,083,101 12,889,406

Balanced Budget 0 0 0

CITY OF RED DEERUTILITY & SELF SUPPORTED OPERATING VARIANCE ANALYSIS

For the Period Ending, October 31, 2013

EXPLANATION (F- favorable; U- unfavorable)

City of R

ed Deer A

udit Com

mittee, 2013/12/13 - P

age 71 Item

No. 6.2.

2013/12/06 9:19 AM

EL&P (6,438,865) (10,074,108) (3,635,243)

F - <$3.8M> Rate Rider increase (Q3 & Q4)F - <$2.24M> Tariff revenue due to increased demand F- <$878K> Admin cost recovery IncreaseF - <$291K> Vacant positions F- <$168K> Consulting services F - <$58K> Miscellaneous savingsU - $3.8M Transmission cost increase

Insp & Licensing 207,665 191,683 (15,982)

Land & Econ. Dev. 17,111,207 7,972,942 (9,138,265)F - <$17.7M> servicing delayed in Riverlands and Timberlands commercial, Michener Housing not going forwardU - $8.5M land sales due to delays in Riverlands and Timberlands commercial, Michener Housing not going forward

Equipment Fund (5,749,449) (5,382,865) 366,584

U - $270K Leasing costsU - $210K More parts required U - $171K Overtime to address EPA (US Environmental Protection Agency) 2010 engine issues in buses F - <$163K> Fuel Savings F - <$113K> High parts recovery due to increased volume F - <$9K> Misc Net Savings

Water Utility (6,989,039) (6,489,039) 500,000U - $435K - less revenue than expected $250K; reduced revenue from private hydrant inspections $120K; miscellaneous $65KU - $62K - emergency repairs at pump stations and Water Treatment Plant $223K; miscellaneous savings $(161K)

Wastewater Utility (7,894,654) (8,038,654) (144,000)

U - $1.03M - less revenue from regional customers $350K; change in method of commercial customer billing $380K; less revenue than expected $450K; received ($100K) from Province under Creative Sentencing Program; miscellaneous $(50K)F - <$514K> WWTP (Wastewater Treatment Plant) vacancies ($266K); Wastewater collection vacancies, Source Control section work recovered through 3rd Party, and level of service changes from Wastewater to Storm ($248K)F - <$660K> WWTP contracted services & projects will not be completed ($532K), Wastewater collection level of service change from Wastewater to Storm and late delivery of new vactor unit, reduce fleet by ($155K); miscellaneous cost $27K

Solid Waste Utility (1,440,560) (2,263,060) (822,500)

F - <$275K> increase landfill revenue higher tonnage delivered U - $15K Miscellaneous costF - <$563K> reduced contracted services garbage/reduced commercial costs due to reduced revenue/projects costs came in less than budget ($195K); reduce contracted services landfill Central Waste Management Commission fees not required/Waste Management Master Plan initiatives will not be completed/leachate disposal costs less than expected/less shingles/drywall for recycling ($335K); miscellaneous savings ($33K)

Utility & Self-Supported Total (11,193,695) (24,083,101) (12,889,406)

*Note 1 - Vacant Positions - consists of: for new positions the lag time from when a position is expected to be filled and when it is actually filled; when turnover occurs the time between when they leave and a someone else is hired; probation pay rate for new employees where budget is based on full rate; for exempt staff when a senior person isbeing replaced by a person lower on the salary grid (exempt staff pay grid rates are based on the full year even though the change may occur during the year)

City of R

ed Deer A

udit Com

mittee, 2013/12/13 - P

age 72 Item

No. 6.2.

December 13, 2013 - Audit Committee Meeting · PDF filePrepared for the December 13, 2013...

Documents

Transcript of December 13, 2013 - Audit Committee Meeting · PDF filePrepared for the December 13, 2013...