Long Point Region Conservation Authority

Transcription

1 Long Point Region Conservation Authority LPRCA 2019 ANNUAL GENERAL MEETING Friday, February 22, 1:30 PM 4 Elm Street, Tillsonburg, Ontario AGENDA 1. Welcome Michael Columbus, Chair 2. Disclosures of Interest 3. Additional Agenda Items 4. Minutes of the Previous Meeting: a) Regular meeting February 6, 2019 Pg Introduction of the Board of Directors (M. Columbus) 6. Introduction and greetings from special guests (M. Columbus) 7. Service Awards Presentation (M. Columbus) 8. New Business a) UTV Side by Side Tender (J. Maxwell) Pg 6-7 b) Lawnmower Tender (J. Maxwell) Pg 8-9 c) WNCA Hydro Tender (B. Colman) To Follow d) Notice of Formal Motions (M. Columbus) Pg Audit & Finance Committee (D. Beres) Committee Reports: a) Minutes of Draft Minutes of February 14, 2019 Pg b) 2018 Audited Financial Statements Pg c) Audit Findings Report Pg d) Approval of Auditors for 2019 a) 2018 Annual Report (J. Maxwell) b) Lee Brown Marsh Management Committee (T. Haskett)

2 Introduction of Lara Ellis, Vice-President of Policy and Partnerships, ALUS Canada, Keynote Speaker (M. Columbus) Keynote Presentation - ALUS and Natural Infrastructure: Working with Farmers to Rebuild Natural Capital 11. Adjournment. PLEASE CALL , ext. 221 OR IF YOU CANNOT ATTEND

3 LONG POINT REGION CONSERVATION AUTHORITY BOARD OF DIRECTORS MINUTES February 6, 2019 Members in attendance: Dave Beres, Robert Chambers, Kristal Chopp, Michael Columbus, Valerie Donnell, Roger Geysens, Ken Hewitt, Tom Masschaele, John Scholten and Peter Ypma Staff in attendance: J. Maxwell, A. LeDuc, B. Colman, B. Hodi, P. Gagnon and D. McLachlan Regrets: Stewart Patterson The meeting was called to order at 6:30 pm Wednesday, February 6, 2019 in the Tillsonburg Administration Office Boardroom. ADDITIONAL AGENDA ITEMS None DISCLOSURES OF INTEREST None MINUTES OF PREVIOUS MEETINGS MOTION A-16/19 moved: R. Chambers seconded: R. Geysens THAT the minutes of the Board of Directors Meeting held January 9, 2019 be adopted as circulated. CARRIED BUSINESS ARISING None REVIEW OF COMMITTEE MINUTES a) Lee Brown Marsh Management Committee MOTION A-17/19 moved: V. Donnell seconded: D. Beres THAT the minutes of the Lee Brown Marsh Management Committee meeting of December 14, 2018 be received as information. CARRIED FULL AUTHORITY COMMITTEE MEMBERS Dave Beres, Robert Chambers, Kristal Chopp, Michael Columbus, Valerie Donnell, Roger Geysens, Ken Hewitt, Tom Masschaele, Stewart Patterson, John Scholten, Peter Ypma - 1 -

4 CORRESPONDENCE none DEVELOPMENT APPLICATIONS a) Staff Approved applications Staff approved nine applications since the last meeting. LPRCA-239/18, LPRCA- 240/18, LPRCA-3/19, LPRCA-4/19, LPRCA-5/19, LPRCA-7/19, LPRCA-8/19, LPRCA- 10/19 and LPRCA-11/19. MOTION A-18/19 moved: R. Geysens seconded: R. Chambers That the Board of Directors receives the Staff Approved Section 28 Regulation Applications report dated February 6, 2019 as information. CARRIED b) New applications The Planning Department recommended approval for three applications. All applications are for the construction of a single family dwelling or a vacation home in Norfolk County. MOTION A-19/19 moved: D. Beres seconded: T. Masschaele THAT the LPRCA Board of Directors approves the following Development Applications contained within the background section of the report: A. For Work under Section 28 Regulations, Development, Interference with Wetlands & Alterations to Shorelines and Watercourses Regulations (R.R.O Reg. 178/06),. LPRCA-1/19 LPRCA-9/19 LPRCA-12/19 B. That the designated officers of LPRCA be authorized to complete the approval process for this Development Application, as far as it relates to LPRCA s mandate and related Regulations. CARRIED FULL AUTHORITY COMMITTEE MEMBERS Dave Beres, Robert Chambers, Kristal Chopp, Michael Columbus, Valerie Donnell, Roger Geysens, Ken Hewitt, Tom Masschaele, Stewart Patterson, John Scholten, Peter Ypma - 2 -

5 NEW BUSINESS a) TREE ORDER 2019 The trees ordered in 2019 are destined for mainly private lands with some going to partners and some on LPRCA lands. The various restoration projects are sponsored by and/or paid for by private individuals through the LPRCA Private Land Tree Planting Program, 50 Million Tree Program, Clean Water project and Ontario Power Generation/Forest Corridor Program. MOTION A-20/19 moved: R. Chambers seconded: D. Beres THAT the LPRCA Board of Directors approves the 2019 tree order as presented by the Lands & Waters Supervisor at its regular meeting of February 6, CARRIED b) TIMBER TENDERS SMITH AND HODGES TRACTS Two properties were tendered in December. Three bids were received by the deadline for the Smith Tract, and two bids were received by the deadline for the Hodges Tract. Both of the winning bids were within the expected range. MOTION A-21/19 moved: R. Geysens seconded: V. Donnell THAT the LPRCA Board of Directors accepts the tender submitted by Springwater Mills for marked standing timber at the Smith Tract LP for a total tendered price of $80,000.00, AND THAT the LPRCA Board of Directors accepts the tender submitted by Townsend Lumber Inc. for marked standing timber at the Hodges Tract LP for a total tendered price of $44, CARRIED c) ECOLOGICAL SURVEYS REPORT LPRCA conducts ecological surveys prior to forest management activities. These surveys are contracted out and conducted annually. In 2018 ecological surveys were conducted at three properties (Roney, Gesquire and MacKintosh Tracts) consisting of acres (66.5 Ha) total. Staff retained the services of Paul O Hara of Blue Oak Native Landscapes to complete the surveys. The Gesquiere Tract requires further study. FULL AUTHORITY COMMITTEE MEMBERS Dave Beres, Robert Chambers, Kristal Chopp, Michael Columbus, Valerie Donnell, Roger Geysens, Ken Hewitt, Tom Masschaele, Stewart Patterson, John Scholten, Peter Ypma - 3 -

6 MOTION A-22/19 moved: T. Masschaele seconded: R. Geysens THAT the LPRCA Board of Directors approves the recommendations contained in the report submitted by Blue Oak Native Landscapes titled Field Surveys for Species at Risk Plants and Provincially Rare Plants at the Roney, Gesquiere and Mackintosh Tracts CARRIED e) PRESCRIPTION OPERATING PLANS RONEY TRACT & GESQUIERE TRACT Staff prepares prescriptions/operating plans for the forest tracts that will receive some form of silvicultural treatment. Plans for the Roney and Gesquiere Tracts were presented. MOTION A-23/19 moved: D. Beres seconded: T. Masschaele THAT the LPRCA Board of Directors approves the prescription/operating plan for the Roney Tract and Gesquiere Tract. CARRIED f) YEARS OF SERVICE RECOGNITION There are two staff and one Board Member who reached service milestones in They will be recognized at the 2019 Annual General Meeting. MOTION A-24/19 moved: R. Chambers seconded: D. Beres THAT the Years of Service Recognition Report be received as information. CARRIED g) WATERFORD NORTH CA UPDATE The main washroom upgrade is on target to be completed prior to the 2019 season opening. The electrical/water upgrades have been delayed as no bids were received at the tender closing deadline. The project was revised and has recently been retendered with a closing date of February 21, The Phase One area is not expected to be available for camping until mid-june. MOTION A-25/19 moved: T. Masschaele seconded: R. Geysens THAT the LPRCA Board of Directors receives the following WNCA Capital update report as information. CARRIED FULL AUTHORITY COMMITTEE MEMBERS Dave Beres, Robert Chambers, Kristal Chopp, Michael Columbus, Valerie Donnell, Roger Geysens, Ken Hewitt, Tom Masschaele, Stewart Patterson, John Scholten, Peter Ypma - 4 -

7 h) GENERAL MANAGER S REPORT Budget presentations were provided to five municipal partners over December and January. The GM noted that Conservation Ontario has been very active in engaging the Provincial Government and she specifically referred to the ongoing correspondence regarding Bill 66, the proposed Open-for-Business Planning By-Law. MOTION A-26/19 moved: R. Chambers seconded: R. Geysens THAT the LPRCA Board of Directors receives the General Manager s Report for January 2019 as information. CARRIED MOTION A-27/19 moved: D. Beres seconded: T. Masschaele THAT the LPRCA Board of Directors does now enter into a closed session to discuss: Personal matters about an identifiable individual, including employees of the Authority CARRIED MOTION A-28/19 moved: P. Ypma seconded: R. Geysens THAT the LPRCA Board of Directors does now adjourn from the closed session. CARRIED The Chair adjourned the meeting at 7:05pm. Michael Columbus Chair Dana McLachlan Administrative Assistant FULL AUTHORITY COMMITTEE MEMBERS Dave Beres, Robert Chambers, Kristal Chopp, Michael Columbus, Valerie Donnell, Roger Geysens, Ken Hewitt, Tom Masschaele, Stewart Patterson, John Scholten, Peter Ypma - 5 -

8 LONG POINT REGION CONSERVATION AUTHORITY STAFF REPORT Date: February 12, 2019 File: To: Chair and Members, LPRCA Board of Directors From: Judy Maxwell, General Manager Re: 2019 Motor Pool Purchase Side by Side Utility Vehicles RECOMMENDATION THAT the LPRCA Board of Directors accepts the tender submitted by Norfolk Tractor for the purchase of two new side by side Kubota RTVX900 utility vehicles for a unit price of $13, and total price of $27, (excluding HST). BACKGROUND As part of the 2019 Capital Budget two trucks will be eliminated from our tangible capital asset registry and disposed of from the Motor Pool fleet. The two new side by side utility vehicles will be put into operations at Norfolk and Haldimand Conservation Areas. The 2019 Budget was set at $28, or $14, per unit. Tender Results The tender for the side by side utility vehicles was posted on the LPRCA website and sent out to seven vendors. The tender closed on Monday February 11 th, 2019 at 4:00 pm with five vendors submitting nine bids. The accepted bids were opened publicly with the following results (all are plus HST): Meets/Exceeds Price / Unit Total Price Bidder Model Tender Requirements (Excluding HST) (Excluding HST) Lockhart's Odyssey Can-AM Defender HD8 - Gas $ 14, $ 28, Norfolk Tractor Kubota RTV X900 - Diesel $ 13, $ 27, Premiere Equipment Ltd. John Deere HPX615E - Gas $ 14, $ 29, Premiere Equipment Ltd. John Deere HPX615E - Diesel $ 16, $ 32, Hal-Nor Equipment Honda Pioneer Gas $ 18, $ 37, Hal-Nor Equipment Honda Pioneer Gas $ 20, $ 40, Hal-Nor Equipment Kioti K Diesel $ 18, $ 37, Chesterman Power Products Polaris Ranger Gas $ 13, $ 26, Chesterman Power Products Polaris Ranger EV - Electric $ 16, $ 33,

9 COMMENTS All the bids/models did not meet the required tender specifications. Specifically, the low bid model failed to have a tilt box capacity of kg. It is recommended the Board award the tender to Norfolk Tractor (Kubota RTV-X900G) the lowest bidder which met the specifications of the tender. BUDGET IMPLICATION The total capital budget was $28, with the difference between the budgeted and actual transferred to internally restricted capital levy reserve as part of the fiscal year-end process. Prepared by: Approved and submitted by: Aaron LeDuc, CPA, CGA Manager of Corporate Services Judy Maxwell, CPA, CGA General Manager/Secretary Treasurer 7

10 LONG POINT REGION CONSERVATION AUTHORITY STAFF REPORT Date: February 13, 2019 File: To: Chair and Members, LPRCA Board of Directors From: Judy Maxwell, General Manager Re: 2019 Motor Pool Purchase Lawn Tractor RECOMMENDATION THAT the LPRCA Board of Directors accepts the tender submitted by Blue West Equipment for the purchase of one new sub-compact lawn tractor (Kioti CS2210) for $12, (excluding HST). BACKGROUND As part of the 2019 Capital Budget the 2007 lawn mower in operation at Backus Conservation Area is set for replacement with a new front-mount diesel lawn mower. The 2019 Budget was set at $22, Tender Results The tender for the front-mount diesel lawn mower was posted on the LPRCA website and sent out to six vendors. The tender closed on Monday February 11 th, 2019 at 4:00 pm with four vendors submitting bids. The accepted bids were opened publicly with the following results (all are plus HST): Price Bidder Model (Excluding HST) Blue West Equipment Kioti CS2210 $ 12, Hal-Nor Equipment Kioti CS2210 $ 13, Norfolk Tractor Kubota BX2380 $ 12, Premiere Equipment Ltd. John Deere 1023E $ 15, COMMENTS All vendor bids/models met or exceeded the required tender specifications. It is recommended the Board award the tender to Blue West Equipment (Kioti CS2210) the lowest bidder. 8

11 BUDGET IMPLICATION The total capital budget was $22, with the difference between the budgeted and actual transferred to internally restricted capital levy reserve as part of the fiscal year-end process. Prepared by: Approved and submitted by: Aaron LeDuc, CPA, CGA Manager of Corporate Services Judy Maxwell, CPA, CGA General Manager/Secretary Treasurer 9

12 FORMAL MOTIONS FOR THE ANNUAL GENERAL MEETING LONG POINT REGION CONSERVATION AUTHORITY FEBRUARY 22, 2019 The following resolutions will be presented for adoption at the Annual General Meeting of February 22, That the LPRCA Board of Directors authorizes the Chair or Vice-Chair and the General Manager or Manager of Corporate Services to borrow funds as required for the day-to-day operations of the Authority. That the LPRCA Board of Directors approves the Chair, Vice-chair, General Manager and Manager of Corporate Services as designated signing officers for Authority business for the year That the LPRCA Board of Directors authorizes all members appointed to the Lee Brown Committee from the Community at Large be deemed to be Authority members for the purpose of receiving remuneration for their services on the same basis as regular members of the Authority for That the LPRCA Board of Directors designates the Authority Chair as the Authority s representative to Conservation Ontario (CO), with the Vice-Chair designated as alternate, and further that the General Manager be directed to participate on appropriate committees of CO, and be authorized to vote in the absence of the designated representatives. 10

13 LONG POINT REGION CONSERVATION AUTHORITY AUDIT and FINANCE COMMITTEE - MINUTES Members in attendance: D. Beres, M. Columbus and S. Patterson Staff in attendance: J. Maxwell, A. LeDuc and D. McLachlan. KPMG Auditors in attendance: M. Betik Regrets: V. Donnell and J. Scholten The meeting was called to order by D. Beres at 9:05am. February 14, 2019 ADDITIONAL AGENDA ITEMS None DECLARATION OF PECUNIARY INTEREST None recorded. ELECTION OF CHAIR AND VICE-CHAIR The positions of Chair and Vice-Chair were declared vacant. M. Columbus nominated D. Beres for Chair who accepted the nomination. No other nominations were received. MOTION AUD 1/19 moved: M. Columbus seconded: S. Patterson THAT Dave Beres is declared the LPRCA Audit and Finance Committee Chair for CARRIED S. Patterson nominated M. Columbus for Vice-Chair who accepted the nomination. No other nominations were received. MOTION AUD 2/19 moved: S. Patterson seconded: D. Beres THAT Mike Columbus is declared the LPRCA Audit and Finance Committee Vice-Chair for CARRIED AUDIT COMMITTEE MEMBERS Dave Beres, Michael Columbus, Valerie Donnell, Stewart Patterson, John Scholten 11

14 MINUTES OF THE PREVIOUS MEETING None BUSINESS ARISING None NEW BUSINESS REVIEW AND APPROVAL OF THE DRAFT 2018 AUDITED FINANCIAL STATEMENTS - KPMG Staff introduced the Matthew Betik of KPMG who reviewed the financial statements. Mr. Betik reported a clean audit with no modifications or qualifications. As per industry standards he noted the changes in the reporting. REVIEW OF AUDIT FINDINGS REPORT - KPMG Mr. Betik noted that audit will be considered complete upon receipt of legal responses, due tomorrow, and final approval from both the Audit and Finance Committee and LPRCA Board of Directors at the Annual General Meeting scheduled for February 22, The audit methodology was explained as was the audit materiality which is the threshold used to evaluate the effects of misstatements on the audit. The auditor determined that there were no errors, omissions, adjustments or corrections requiring adjustment reported. MOTION AUD 3/19 moved: S. Patterson seconded: M. Columbus THAT the LPRCA Audit and Finance Committee recommends that the financial statements, notes and schedules fairly present the financial position of the Long Point Region Conservation Authority and therefore recommends to the general membership their approval at the AGM on February 22, MOTION AUD 4/19 moved: S. Patterson seconded: M. Columbus CARRIED THAT the LPRCA Audit and Finance Committee receives the Audit Findings Report for 2018 as information. CARRIED AUDITOR/COMMITTEE DISCUSSION Staff were excused while the Committee held a private discussion with the Auditors. M. Betik left the meeting. AUDIT COMMITTEE MEMBERS Dave Beres, Michael Columbus, Valerie Donnell, Stewart Patterson, John Scholten 12

15 REPORT ON 2018 OPERATING RESULTS Staff reviewed the highlights of each department noting that the organization s revenues exceeded expenditures by $1.67 million. The variances were explained including the two main sources; a land donation and the sale of the administration building. Staff also reviewed the capital projects and their current status. MOTION AUD 5/19 moved: S. Patterson seconded: M. Columbus THAT the LPRCA Audit and Finance Committee receives the Budget Performance Report as at December 31, 2018 as information. CARRIED The Audit Committee requested that the external auditing services be sent for Request for Proposal and it will be completed in Staff has a good working relationship with KPMG. Their fees have been very reasonable for the quality of work received and they also work for other conservation authorities. MOTION AUD 6/19 moved: M. Columbus seconded: S. Patterson THAT the LPRCA Audit and Finance Committee recommends to the general membership that KPMG, LLP, Chartered Accountants be appointed LPRCA s auditors for 2019 or until a successor is appointed. The next meeting is yet to be determined. The Chair adjourned the meeting at 11:00am. CARRIED D. Beres Dana McLachlan Audit Committee Chair Administrative Assistant AUDIT COMMITTEE MEMBERS Dave Beres, Michael Columbus, Valerie Donnell, Stewart Patterson, John Scholten 13

16 Financial Statements of LONG POINT REGION CONSERVATION AUTHORITY Year ended December 31, 2018 DRAFT 14

17 LONG POINT REGION CONSERVATION AUTHORITY Index to the Financial Statements Year ended December 31, 2018 INDEPENDENT AUDITORS REPORT Statement of Financial Position 1 Statement of Operations and Change in Accumulated Surplus 2 Statement of Changes in Net Financial Assets 3 Statement of Cash Flows 4 Notes to Financial Statements 5-15 DRAFT 15

18 KPMG LLP 115 King Street South 2nd Floor Waterloo ON N2J 5A3 Canada Tel Fax KPMG LLP is 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. KPMG Canada provides services to KPMG LLP. INDEPENDENT AUDITORS' REPORT To the Board of Directors of Long Point Region Conservation Authority Opinion We have audited the financial statements of Long Point Region Conservation Authority (the Entity), which comprise: the statement of financial position as at December 31, 2018 the statement of operations and change in accumulated surplus for the year then ended the statement of changes in net financial assets for the year then ended the statement of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies (Hereinafter referred to as the ''financial statements''). In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2018, and its results of operations and its cash flows year then ended in accordance with Canadian public sector accounting standards. Basis for Opinion DRAFT We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the ''Auditors' Responsibilities for the Audit of the Financial Statements'' section of our auditors' report. We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged With Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 16

19 Page 2 In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity's financial reporting process. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. DRAFT Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Entity to cease to continue as a going concern. 17 7

20 Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants, Licensed Public Accountants Waterloo, Canada February 22, 2019 DRAFT 7 18

21 LONG POINT REGION CONSERVATION AUTHORITY Statement of Financial Position December 31, 2018, with comparative information for Financial Assets Cash (note 3) $ 409,477 $ 289,033 Investments (note 4) 8,436,725 7,014,407 Accounts receivable 218, ,984 Accrued receivable 73,836 12,780 Other receivables 68,996 47,091 9,207,450 7,720,295 Financial Liabilities Accounts payable and accrued liabilities 291, ,656 Deferred revenue (note 6) 881, ,993 1,172,329 1,171,649 Net financial assets 8,035,121 6,548,646 Non-Financial Assets Tangible capital assets (note 5) 6,633,236 6,447,871 Net assets $ 14,668,357 $ 12,996,517 Accumulated Surplus Accumulated surplus - internally restricted (note 7) $ 2,975,635 $ 1,488,916 Accumulated surplus - externally restricted (note 8) 5,059,486 5,059,730 Accumulated surplus - tangible capital assets 6,633,236 6,447,871 Commitment (note 10) DRAFT Total accumulated surplus $ 14,668,357 $ 12,996,517 See accompanying notes to financial statements. On behalf of the Board: Director 19 1

22 LONG POINT REGION CONSERVATION AUTHORITY Statement of Operations and Change in Accumulated Surplus Year ended December 31, 2018, with comparative information for 2017 Budget Actual Actual (note 9) Revenue: Municipal levies: General $ 1,553,674 $ 1,553,674 $ 1,462,129 Special 368, , ,326 Government grants: Provincial transfer 68,240 68,240 68,240 Federal transfer Corporate/fixed services 91, , ,393 Community relations 5,500 22,459 14,921 Watershed management services 232, , ,292 Conservation land management - forestry 416, , ,405 Backus Heritage conservation area 459, , ,206 Conservation land management - conservation parks 997, , ,881 Donations - 460,000 50,000 Other 249, , ,338 Gain (loss) on disposal of tangible capital assets - 518,067 (1,805) Total revenue 4,442,534 5,934,313 4,843,326 Expenditures: Corporate/fixed services 974,148 1,113,219 1,135,361 Community relations 147,632 61, ,386 Watershed management services 732, , ,710 Conservation land management - forestry 343, , ,096 Backus Heritage conservation area 660, , ,351 Conservation land management - conservation parks 781, , ,866 Other 560, , ,484 Total expenditures 4,200,403 4,262,473 4,267,254 DRAFT Excess of revenue over expenditures $ 242,131 $ 1,671,840 $ 576,072 Accumulated surplus, beginning of the year 12,996,517 12,420,445 Accumulated surplus, end of the year $ 14,668,357 $ 12,996,517 See accompanying notes to financial statements. 20 2

23 LONG POINT REGION CONSERVATION AUTHORITY Statement of Changes in Net Financial Assets Year ended December 31, 2018, with comparative information for Excess of revenue over expenditures $ 1,671,840 $ 576,072 Acquisition of tangible capital assets (785,193) (178,694) Loss (gain) on disposal of tangible capital assets (518,067) 1,805 Proceeds on disposal of tangible capital assets 991,477 4,117 Amortization of tangible capital assets 126, ,539 Change in net financial assets 1,486, ,839 Net financial assets, beginning of year 6,548,646 6,011,807 Net financial assets, end of year $ 8,035,121 $ 6,548,646 See accompanying notes to financial statements. DRAFT 21 3

24 LONG POINT REGION CONSERVATION AUTHORITY Statement of Cash Flows Year ended December 31, 2018, with comparative information for 2017 Cash provided by (used in): Operating activities: Excess of revenue over expenditures $ 1,671,840 $ 576,072 Items not involving cash: Amortization of tangible capital assets 126, ,539 Loss (gain) on disposal of tangible capital assets (518,067) 1,805 Land donation (460,000) - Changes in non-cash operating working capital: Accounts receivable 138,568 (175,475) Accrued receivable (61,056) (5,662) Other receivables (21,905) 14,382 Accounts payable and accrued liabilities 64,559 2,030 Deferred revenue (63,879) 74, , ,901 Investing activities: Acquisition of tangible capital assets (325,193) (178,694) Change in investments (1,422,318) (546,161) Proceeds on disposal of tangible capital assets 991,477 4,117 (756,034) (720,738) Change in cash 120,444 (99,837) Cash, beginning of year 289, ,870 Cash, end of year $ 409,477 $ 289,033 See accompanying notes to financial statements. DRAFT 22 4

25 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements Year ended December 31, Purpose of organization: The Long Point Region Conservation Authority (the Authority) is established under the Conservation Authorities Act of Ontario and works with local communities, and other partners, to achieve the conservation, restoration, development and responsible management of our water, land and natural habitats through programs that balance human, environmental and economic needs. The objectives of the Authority are as follows: (a) To ensure that the Long Point Region watershed lands and waters are properly safeguarded, managed and restored. (b) To protect, manage and restore watershed woodlands, wetlands and natural habitats. (c) To develop and maintain programs that will protect life and property from natural hazards such as flooding and erosion. (d) To provide opportunities for the public to enjoy, learn from and respect the watershed s natural and cultural environments. 2. Significant accounting policies: The financial statements of the Authority are prepared by management in accordance with Canadian generally accepted accounting principles for organizations operating in the local government sector as recommended by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada. Significant aspects of the accounting policies adopted by the Authority are as follows: (a) Description of fund balances: DRAFT Internally restricted funds are those with restrictions imposed by the Board of Directors. Internally restricted funds are as follows: (i) The Education Centre Maintenance Fund for the maintenance of the Backus Conservation Education Centre. (ii) The OPG Forest Corridor Fund for the long-term monitoring of forest areas. (iii) The Memorial Woodlot Fund for the donations to Memorial Woodlot Fund and cost to Memorial Woodlot Fund at Backus. (iv) The Lee Brown Waterfowl M.A. Capital Replacement Fund for the capital replacements of Lee Brown Waterfowl M.A. 23 5

26 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Significant accounting policies (continued): (a) Description of fund balances (continued): (v) The Capital Levy fund for capital additions, replacements or improvements within the Authority. (vi) Externally restricted funds are those with restrictions imposed by the individuals external to the Board of Directors. Externally restricted funds are as follows: - revenues and expenditures related to the Backus Heritage Village are recorded in the Backus Heritage Village Trust Fund - revenues and expenditures related to the Leighton and Betty Brown scholarships are recorded in the Leighton and Betty Brown Scholarship Fund. (b) Revenue recognition: The Authority follows the accrual method of accounting for contributions where unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Restricted contributions are deferred and recognized as revenue in the year in which the related expenditures are incurred. (c) Expenses: Expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes expenditures in the period in which they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. (d) Investments: DRAFT All of the investments are classified as held-to-maturity investments and are carried at amortized cost using the effective interest rate method. The Board has the intention to hold the investments until maturity. 24 6

27 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Significant accounting policies (continued): (e) Tangible capital assets: Tangible capital assets are recorded at cost which includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets, excluding land and landfill sites, are amortized on a straight-line basis over their estimated useful lives as follows: Asset Useful Life - Years Buildings and building improvements 50 years Land improvements 20 years Equipment 20 years Computers 5 years Vehicles 10 years Infrastructure years Annual amortization is charged in the year of acquisition and in the year of disposal. Assets under construction are not amortized until the asset is available for productive use. Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and also are recorded as revenue. (f) Donations: The Authority records cash donations as revenue in the year cash is received. Donated materials and services are recorded as revenue and expenditure when the fair market value of the material and services donated is verifiable, only to the extent the Authority has issued a charitable donation receipt for those materials and services. (g) Use of estimates: The preparation of financial statements occasionally requires management to make assumptions that affect reported amounts of certain assets and liabilities at the year-end date and certain revenue and expenditures for the year then ended. Actual amounts may differ estimates.draft from those 25 7

28 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Significant accounting policies (continued): (h) Contaminated sites: 3. Cash: Contaminated sites are defined as the result of contamination being introduced in air, soil, water or sediment of a chemical, organic or radioactive material or live orgamism that exceeds an environmental standard. A liability for remediation of contaminated sites is recognized, net of any expected recoveries, when all of the following criteria are met: (a) an environmental standard exists (b) contamination exceeds the environmental standard (c) the organization is directly responsible or accepts responsibility for the liability (d) future economic benefits will be given up, and (e) a reasonable estimate of the liability can be made. The cash balance is comprised of: General $ 401,275 $ 275,805 Externally restricted: Backus Heritage Village 7,750 9,006 Leighton and Betty Brown Scholarship 452 4,222 DRAFT $ 409,477 $ 289,

29 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Investments: The Authority holds short-term guaranteed investment certificates, money market funds and cash within investments. The investment balance is comprised of: Government and corporate bonds, maturing at various dates between 2019 and 2031, yields varying between 1.2% and 4.859% $ 3,535,000 $ 3,615,000 Guaranteed investment certificates maturing at various dates between 2019 and 2020, yields varying between 1.0% and 5.0% 2,778,782 1,274,081 Principal protected notes - fixed income note, yields varying between 0% and 7.5% 2,000,000 2,000,000 Money market funds, no specified maturity or yield 9,199 9,255 Cash 89,224 49,216 8,412,205 6,947,552 Plus: accrued interest 12,885 13,886 Plus: unamortized purchase premium 11,635 52,969 24,520 66,855 DRAFT $ 8,436,725 $ 7,014,

30 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Tangible capital assets: Accumulated Net book Accumulated Net book Balance, amortization, value, amortization, value, Opening end of beginning, beginning end of end of balance Additions Disposals year of year of year Deletions Amortization year year Land $ 3,818,065 $ 463,129 $ - $ 4,281,194 $ - $ 3,818,065 $ - $ - $ - $ 4,281,194 Land improvement 12,939 6,794-19,733 3,235 9, ,094 15,639 Building 2,646,241 9, ,567 2,085,838 1,075,602 1,570,639 98,766 49,254 1,026,090 1,059,748 Equipment 368,866 42, , , ,983-15, , ,166 Furniture & Fixtures - 3,765-3, ,577 Computers 224,138 3, , ,186 25,952-8, ,291 21,411 Vehicles 454,770 38,750 34, , , ,584 32,270 35, , ,018 DRAFT Infrastructure 1,082, ,901-1,300, , ,944-16, , ,483 $ 8,607,389 $ 785,193 $ 604,446 $ 8,788,135 $ 2,159,518 $ 6,447,871 $ 131,036 $ 126,418 $ 2,154,902 $ 6,633,

31 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Deferred revenue: The Authority receives certain amounts principally from other public sector bodies, the proceeds of which may only be used in the conduct of certain programs or completion of specific work. Further, certain user charges and fees are collected, for which the related services have yet to be performed. These amounts are recognized as revenue when the related expenditures are incurred or services performed. Deferred revenue balance is comprised of: Balance, beginning of year $ 944,993 $ 870,783 Externally restricted contributions 114, ,943 Interest earned, restricted (82,384) (51,380) Contributions used in operations (96,480) (106,353) Balance, end of year $ 881,114 $ 944, Internally restricted funds: Internally restricted funds are comprised of the following: Balance, Transfer Transfer Balance, beginning from to end of year operations operations of year Education Centre Maintenance $ 100,000 $ - $ - $ 100,000 OPG Forest Corridor 45, ,328 Memorial Woodlot 9,703 1,841-11,544 Lee Brown Waterfowl M.A. Capital Replacement 6,545 1,073-7,618 Dam Reserve - 50,000-50,000 Administration Office - 569, ,567 Strategic Investments in Operations and Capital - 421, ,385 Capital Levy 508, , , ,237 Unrestricted Reserve 818, , ,411 1,230,956 DRAFT $ 1,488,916 $ 2,066,048 $ 579,329 $ 2,975,

32 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Externally restricted funds: Externally restricted funds are comprised of the following: Balance, Excess Transfer Balance, beginning revenue over to end of year expenditures internally restricted of year Backus Heritage Village $ 68,507 $ 1,300 $ (2,500) $ 67,307 Leighton and Betty Brown Scholarship 118,723 1,955 (1,000) 119,678 Backus Woods 4,872, ,872, Budget figures: $ 5,059,730 $ 3,256 $ (3,500) $ 5,059,486 The planned results and planned amounts (budget information) have been derived from the budget approved by the Board on January 18, Commitment: The Authority rents a premise under a long-term operating lease that expires October 2023, with three optional renewal periods. The operating lease payments are as follows: DRAFT 2019 $ 102, , , , , ,

33 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Pension agreements: The Authority makes contributions to the Ontario Municipal Employees Retirement System (OMERS), which is a multi-employer plan, on behalf of full-time members of staff and eligible parttime staff. The plan is a defined benefit pension plan, which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. In 2018, the Authority s contribution to OMERS was $110,727 ( $133,478). The latest available report for the OMERS plan was December 31, At that time the plan reported a $5.4 billion actuarial deficit ( $5.7 billion deficit), based on actuarial liabilities of $93.6 billion ( $87.0 billion) and actuarial assets of $88.2 billion ( $81.42 billion). Ongoing adequacy of the current contribution rates will need to be monitored and may lead to increased future funding requirements. DRAFT 31 13

34 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Segmented information: Conservation Conservation Backus land Watershed land Heritage management/ Corporate/ Community management management/ conservation conservation 2018 fixed services relations services forestry area parks Other Total Revenue: Levies $ 564,757 $ 142,132 $ 460,072 $ - $ 171,247 $ - $ 584,016 $ 1,922,224 Grants , ,240 Fees 321,103 22, , , , ,904 2,504,763 Forestry , ,019 Donations 460, ,000 Gain on disposal of tangible capital assets 518, ,067 Total revenue 1,863, , , , , , ,920 5,934,313 Expenditures: Salaries and wages 503,794 33, , , , , ,005 2,537,960 Administration 185,115 7,955 5,131 56,944 53,039 50,330 12, ,550 Professional fees and other services 139,911 10, ,226 71,752 31,299 90,822 29, ,352 Amortization 14,992-9,717-33,889 14,458 53, ,418 Repairs and maintenance 29, ,183 10,220 44,642 91,992 Motor pool 3,572 1,287 11,879 11,386 17,157 33,680 91, ,586 Other 235,977 7,893 28,728 5,635 37,482 68,696 38, ,615 Total expenditures 1,113,219 61, , , , , ,701 4,262,473 DRAFT Excess of revenue over expenditures $ 750,708 $ 103,445 $ 115,004 $ 142,058 $ 34,844 $ 250,562 $ 275,219 $ 1,671,

35 LONG POINT REGION CONSERVATION AUTHORITY Notes to Financial Statements, continued Year ended December 31, Segmented information (continued): Conservation Conservation Backus land Watershed land Heritage management/ Corporate/ Community management management/ conservation conservation 2017 fixed services relations services forestry area parks Other Total Revenue: Levies $ 556,286 $ 124,012 $ 474,368 $ - $ 92,977 $ - $ 563,812 $ 1,811,455 Grants , ,240 Fees 299,393 14, , , , ,338 2,440,031 Forestry , ,405 Donations 50, ,000 Loss on disposal of tangible capital assets (1,805) (1,805) Total revenue 903, , , , , , ,150 4,843,326 Expenditures: Salaries and wages 577, , , , , , ,095 2,533,151 Administration 177,774 4,684 3,820 1,366 56,395 46,531 14, ,664 Professional fees and other services 104,228 8, , ,882 68,520 89,003 28, ,448 Amortization 17,126-11,712-33,457 14,458 56, ,539 Repairs and maintenance 8, ,841 22,018 32,507 74,556 Motor pool 11,297 1,769 17,804 14,147 15,018 29,752 80, ,756 Other 239,197 8,311 18,821 87,528 46,728 47,069 29, ,140 Total expenditures 1,135, , , , , , ,484 4,267,254 DRAFT Excess (deficiency) of revenue over expenditures $ (231,487) $ (44,453) $ 148,190 $ 82,309 $ 19,832 $ 309,015 $ 292,666 $ 576,

36 Long Point Region Conservation Authority Audit Findings Report for the year ended December 31, 2018 Prepared February 4, 2019 for upcoming Audit Committee meeting on February 12, 2019 kpmg.ca/audit KPMG audit findings report 1 34

37 Table of contents EXECUTIVE SUMMARY 2 MATERIALITY 4 THE AUDIT OF TODAY, TOMORROW & THE FUTURE 11 THE 2018 AUDITORS REPORT 13 ADJUSTMENTS AND DIFFERENCES 14 APPENDICES 15 APPENDIX 1: REQUIRED COMMUNICATIONS 16 APPENDIX 2: MANAGEMENT REPRESENTATION LETTER 17 APPENDIX 3: ENGAGEMENT LETTER 18 APPENDIX 4: AUDIT QUALITY AND RISK MANAGEMENT 19 APPENDIX 5: BACKGROUND AND PROFESSIONAL STANDARDS 20 APPENDIX 6: CURRENT DEVELOPMENTS 21 APPENDIX 7: LEAN IN AUDIT 24 The contacts at KPMG in connection with this report are: Matthew Betik Partner Tel: (519) mbetik@kpmg.ca Stacey Kraemer Audit Senior Manager Tel: (519) skraemer@kpmg.ca KPMG audit findings report 35 1

38 Executive summary Purpose of this report The purpose of this Audit Findings Report is to assist you, as a member of the audit committee, in your review of the results of our audit of the financial statements as at and for the year ended December 31, Finalizing the audit As of February 12, 2019, we have completed the audit of the financial statements, with the exception of certain remaining procedures, which include amongst others: Receipt of management representation letter dated February 22, 2019 Receipt of legal responses as at February 15, 2019 Completing our discussions with the audit committee Obtaining evidence of the Board s approval of the financial statements Our auditors report will be dated upon the completion of any remaining procedures. *This Audit Findings 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 Findings 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 KPMG audit findings report 36 2

39 . Executive summary Audit risks and results Our audit is risk-focused. In planning our audit we have taken into account key areas of focus for financial reporting. These include: grant revenue, deferred revenue, and grant receivables (government transfers); and revenue recognition policies See pages 6 to 10 Audit materiality Materiality has been determined based on budget revenue for We have determined materiality to be $110,000. See page 5 Significant accounting policies and practices There have been no initial selections of, or changes to, significant accounting policies and practices to bring to your attention. Control and other observations We did not identify any control deficiencies that we determined to be significant deficiencies in internal control over financial reporting. KPMG audit findings report 37 3

40 Executive summary Adjustments and differences We did identify a disclosure omission as in prior years that remains uncorrected. Which is discussed further on page 14 and Appendix 2. Independence We are independent and have extensive quality control and conflict checking processes in place. Current developments Your 2018 Auditors Report has changed from the prior year. See page 13 for a summary of these changes. There are no other new relevant accounting or auditing changes to be brought to your attention at this time. We have included a summary of future accounting standards in Appendix 6. Materiality KPMG audit findings report 38 4

41 Materiality determination Comments Amount Benchmark Materiality Based on an estimate of profit before taxes for the year. This benchmark is consistent with the prior year. Determined to plan and perform the audit and to evaluate the effects of identified misstatements on the audit and of any uncorrected misstatements on the financial statements. The corresponding amount for the prior year s audit was $100,000 $4.765 million $110,000 % of Benchmark The corresponding percentage for the prior year s audit was 2.2% 2.3% Audit Misstatement Posting Threshold (AMPT) Threshold used to accumulate misstatements identified during the audit. The corresponding amount for the previous year s audit was $5,000 Different threshold used to accumulate reclassification misstatements. $5,500 $60,000 Materiality represents the level at which we think misstatements will reasonably influence users of the financial statements. It considers both quantitative and qualitative factors. To respond to aggregation risk, we design our procedures to detect misstatements at a lower level of materiality. We will report to the Audit Committee: Corrected audit misstatements Uncorrected audit misstatements KPMG audit findings report 39 5

42 Audit risks and results Significant findings from the audit regarding other areas of focus are as follows: Other area of focus Why are we focusing here? Government grants Appropriate revenue recognition Our response and significant findings We examined contracts, letters and other supporting documentation to support the yearend balances and revenue recognition or deferral of revenue. A misstatement was identified and corrected by Management, no other issues noted. In this instance, a portion grant revenue, in the amount of $17.8K, restricted to future years, was recorded in the current period. This occurred because LPRCA had incurred the expenses under the grant program, however, it had already exceeded the maximum grant for the current year. KPMG audit findings report 40 6

43 Audit risks and results Professional requirements Why are we focusing here? Fraud risk from revenue recognition. This is a presumed fraud risk under Canadian Auditing Standards however this risk can be rebutted. The risk of fraud from revenue recognition has been rebutted. Our response and significant findings We exercise professional judgement to rebut the presumed risk of fraud in revenue recognition after we consider and evaluate the facts and circumstances of the audit. We have rebutted the fraud risk over revenue recognition. There are limited perceived opportunities to commit fraud and LPRCA revenue sources require very minimal judgement. LPRCA performance is not measured based on earnings and a significant portion of revenues can be tied directly to government funding support. KPMG audit findings report 41 7

44 Audit risks and results Professional requirements Why are we focusing here? Fraud risk from management override of controls. This is a presumed fraud risk. We have not identified any specific additional risks of management override relating to this audit. Our response and significant findings We exercise professional judgement to rebut the presumed risk of fraud in revenue recognition after we consider and evaluate the facts and circumstances of the audit. We have rebutted the fraud risk over revenue recognition. There are limited perceived opportunities to commit fraud and LPRCA revenue sources require very minimal judgement. LPRCA performance is not measured based on earnings and a significant portion of revenues can be tied directly to government funding support. No issues noted during our review of journal entries. KPMG audit findings report 42 8

45 Audit risks and results Financial statement caption Why are we focusing here? Tangible capital assets and gain on sale of tangible capital assets Unusual transaction Our response and significant findings During the year the Authority sold its administration building and land to a neighbouring business. As part of the sale the Authority entered into a lease agreement to lease a significant portion of the building. The lease is a five year lease with LPRCA options for three additional renewals. Based on the terms of the lease agreement, the lease will be accounted for as an operating lease. Additional disclosures have been added to the financial statements for lease commitments. A gain on disposal of approximately $520K was recorded, based on the difference between the sale proceeds of $991K and the net book value of the asset of $470K KPMG audit findings report 43 9

46 Other observation In our view, a key area for management s attention is asset management: Year TCA Additions TCA Amortization Summary observation (thous. $) (thous. $) Average In aggregate, over the past seven years, tangible capital assets have been acquired at a multiple of 2.2 of amortization. To ensure that tangible capital assets are being renewed at a sustainable rate, a multiple of should be maintained over the long term. If the large land acquisition of $437 in 2013 is excluded, the ratio is 1.7. Note that large infrastructure projects can skew this analysis and need to be considered qualitatively. Excluding land, the ratio of net book value to cost of tangible capital assets is 0.52 ( ). This means that your assets, on average, are less than 1/2 of the way through their useful lives. KPMG audit findings report 44 10

47 The audit of today, tomorrow & the future As part of KPMG s technology leadership, our audit practice has developed technologies and alliances to continuously enhance our capabilities and deliver an exceptional audit experience. Technology empowers us with the ability to perform deep analysis over your financial information, focusing our effort and interactions on the areas of greatest risk and minimizing disruption to your business. Harness the power of digital analytics for deeper insights and increased quality Increasing automation in routine areas Broader, deeper views of your data, and richer, more informed perspectives on risks D&A Ledger Analysis Analytics Advanced Capabilities KPMG Clara Connectivity Risk Assessment People Consistent results, early issue identification Strong business acumen & advanced technology skills Enhanced focus on the risks within the business Technology we use today Tool KPMG Clara Client Collaboration Journal Entry Analysis Benefit to audit KCCC is our secure audit platform and a one-stop shop through which we plan, execute and manage the audit, providing you with real-time access to the process at every step, including exchange of information and access to the real-time reporting you need in one central location. Our journal entry tool assists in the performance of detailed journal entry testing based on engagement-specific risk identification and circumstances. Our tool provides auto-generated journal entry population statistics and focusses our audit effort on journal entries that are riskier in nature. KPMG audit findings report 45 11

48 The audit of today, tomorrow & the future We continue to make significant investments in enhanced methodologies, new technologies and strategic alliances with leading technology companies that can have a transformative impact on auditing, and more broadly, financial reporting. KPMG is investing in the development of innovative audit technologies through both internal solutions and our alliances with technology firms including Finger Food, Microsoft, IBM Watson and others. We are committed to investing in cognitive technology to develop external auditing tools and technologies. Cognitive technology will enable us to teach a machine how to perceive, reason, and learn like a human being. This will be transformative to our profession, and will directly benefit Long Point Conservation Authority in the future. We are developing intelligent automation to enable programmed reviews of unstructured data in source documents; freeing our professionals to focus their efforts on areas of greater risk. This may sound simple, but it s actually quite powerful, with complex underlying technologies. Technology under development Tool Business process mining (BPM) Optical Contract Reader & Analysis Tool Benefit to audit BPM harnesses sub-ledger analytics and provides us with a deeper understanding of your processes. Our BPM tool is currently being piloted globally and will be coming soon to Canada. The tool provides immediate visualization of how 100% of your transactions are being processed to complement your process narratives and flow charts. A deeper understanding of your processes enhances our understanding of your business. This will ensure our team is focused on auditing the right risks and leveraging your team s resources efficiently. It also helps us identify inefficiencies or manual workarounds in a process and highlights where the process is under stress. Our Optical Contract Reader & Analysis Tool provides us with capabilities to improve the effectiveness and efficiency of the contract review process. This works by automating the ingestion of contracts and related source documents and extracting and summarizing key terms for the audit engagement team s consideration, in turn providing increased coverage of the population and resulting in greater audit quality. The tool can also be used to read unstructured source documents in PDF format, extracting certain data such as invoice date, invoice number, account number, order number and total amount. This data is then compiled and compared to structured data from the general ledger. Time savings generated from this intelligent automation solution will allow our team to focus their efforts on areas of greater risk. KPMG audit findings report 46 12

49 The 2018 Auditors Report Highlights of changes to your 2018 auditors report Re-ordering of the auditors report including moving opinion to the first section. Separate section on Material Uncertainty Related to Going Concern if a material uncertainty is identified. Separate section on Other Information (e.g. Annual Report). Expanded descriptions of management s responsibility, including those related to assessing the Entity s ability to continue as a going concern. New description of responsibilities of those charged with governance. Expanded descriptions of management s, those charged with governance and auditors responsibilities. KPMG audit findings report 47 13

50 Adjustments and differences Corrected adjustments Adjustments and differences identified during the audit have been categorized as Corrected adjustments or Uncorrected differences. These include disclosure adjustments and differences. Professional standards require that we request of management and the audit committee that all identified adjustments or differences be corrected. We have already made this request of management. The management representation letter includes all adjustments identified as a result of the audit, communicated to management and subsequently corrected in the financial statements. Uncorrected differences The management representation letter includes the Summary of Uncorrected Audit Misstatements, which disclose the impact of all uncorrected differences considered to be other than clearly trivial. Public Sector Accounting Standards requires that budget information be disclosed on the statement of changes in net financial assets. This is an uncorrected presentation difference in the financial statements. We concur with management s representation that the presentation difference is not material to the financial statements. Accordingly, the differences have no effect on our auditors report. KPMG audit findings report 48 14

51 Appendices Appendix 1: Required communications Appendix 2: Management representation letter Appendix 3: Engagement letter Appendix 4: Audit Quality and Risk Management Appendix 5: Background and professional standards Appendix 6: Current developments Appendix 7: Lean in Audit 49

52 Appendix 1: Required communications In accordance with professional standards, there are a number of communications that are required during the course of and upon completion of our audit. These include: Auditors Report Management representation letter The conclusion of our audit is set out in our draft auditors report attached to the draft financial statements. In accordance with professional standards, copies of the management representation letter are provided to the Audit Committee. The management representation letter is attached. Engagement letter The objectives of the audit, our responsibilities in carrying out our audit, as well as management s responsibilities, are set out in the engagement letter in Appendix 3. In accordance with professional standards, copies of the engagement letter are to be provided to the Audit Committee annually. Required inquiries Professional standards require that we obtain your views on risk of fraud and other matters. We make similar inquiries of management as part of our audit; responses to these will assist us in planning our overall audit strategy and audit approach accordingly. KPMG Audit Findings Report 16 50

53 Appendix 2: Management representation letter KPMG Audit Findings Report 17 51

54 KPMG LLP 115 King Street South 2nd floor Waterloo, ON N2J 5A3 Canada February 22, 2019 Ladies and Gentlemen: We are writing at your request to confirm our understanding that your audit was for the purpose of expressing an opinion on the financial statements (hereinafter referred to as "financial statements") of Long Point Region Conservation Authority ("the Entity") as at and for the period ended December 31, GENERAL: We confirm that the representations we make in this letter are in accordance with the definitions as set out in Attachment I to this letter. We also confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves: RESPONSIBILITIES: 1) We have fulfilled our responsibilities, as set out in the terms of the engagement letter dated November 29, 2018, including for: a) the preparation and fair presentation of the financial statements and believe that these financial statements have been prepared and present fairly in accordance with the relevant financial reporting framework. b) providing you with all information of which we are aware that is relevant to the preparation of the financial statements, such as all financial records and documentation and other matters, including: (i) the names of all related parties and information regarding all relationships and transactions with related parties; and (ii) the complete minutes of meetings, or summaries of actions of recent meetings for which minutes have not yet been prepared, of shareholders, board of directors and committees of the board of directors that may affect the financial statements. All significant actions are included in summaries. c) providing you with unrestricted access to such relevant information d) providing you with complete responses to all enquiries made by you during the engagement e) providing you with additional information that you may request from us for the purpose of the engagement. f) providing you with unrestricted access to persons within the Entity from whom you determined it 52

55 Page 2 necessary to obtain audit evidence. g) such internal control as we determined is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. We also acknowledge and understand that we are responsible for the design, implementation and maintenance of internal control to prevent and detect fraud. h) ensuring that all transactions have been recorded in the accounting records and are reflected in the financial statements. i) ensuring that internal auditors providing direct assistance to you, if any, were instructed to follow your instructions and that management, and others within the entity, did not intervene in the work the internal auditors performed for you. INTERNAL CONTROL OVER FINANCIAL REPORTING: 2) We have communicated to you all deficiencies in the design and implementation or maintenance of internal control over financial reporting of which we are aware. FRAUD & NON-COMPLIANCE WITH LAWS AND REGULATIONS: 3) We have disclosed to you: a) the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud b) all information in relation to fraud or suspected fraud that we are aware of that involves: management; employees who have significant roles in internal control over financial reporting, or others where such fraud or suspected fraud could have a material effect on the financial statements. c) all information in relation to allegations of fraud, or suspected fraud, affecting the financial statements, communicated by employees, former employees, analysts, regulators, or others. d) all known instances of non-compliance or suspected non-compliance with laws and regulations, including all aspects of contractual agreements, whose effects should be considered when preparing financial statements. e) all known actual or possible litigation and claims whose effects should be considered when preparing the financial statements. SUBSEQUENT EVENTS: 4) All events subsequent to the date of the financial statements and for which the relevant financial reporting framework requires adjustment or disclosure in the financial statements have been adjusted or disclosed. RELATED PARTIES: 5) We have disclosed to you the identity of the Entity s related parties. 6) We have disclosed to you all the related party relationships and transactions/balances of which we are aware. 7) All related party relationships and transactions/balances have been appropriately accounted for and 53

56 Page 3 disclosed in accordance with the relevant financial reporting framework. ESTIMATES: 8) Measurement methods and significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable. GOING CONCERN: 9) We have provided you with all information relevant to the use of the going concern assumption in the financial statements. 10) We confirm that we are not aware of material uncertainties related to events or conditions that may cast significant doubt upon the Entity s ability to continue as a going concern MISSTATEMENTS: 11) The effects of the uncorrected misstatements described in Attachment II are immaterial, both individually and in the aggregate, to the financial statements as a whole. 12) We approve the corrected misstatements identified by you during the audit described in Attachment II. NON-SEC REGISTRANTS OR NON-REPORTING ISSUERS: 13) We confirm that the Entity is not a Canadian reporting issuer (as defined under any applicable Canadian securities act) and is not a United States Securities and Exchange Commission ( SEC ) Issuer (as defined by the Sarbanes-Oxley Act of 2002). We also confirm that the financial statements of the Entity will not be included in the consolidated financial statements of a Canadian reporting issuer audited by KPMG or an SEC Issuer audited by any member of the KPMG organization. Yours very truly, By: Ms. Judy Maxwell, General Manager cc: Audit Committee 54

57 Page 4 Attachment I Definitions MATERIALITY Certain representations in this letter are described as being limited to matters that are material. Misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Judgments about materiality are made in light of surrounding circumstances, and are affected by the size or nature of a misstatement, or a combination of both. FRAUD & ERROR Fraudulent financial reporting involves intentional misstatements including omissions of amounts or disclosures in financial statements to deceive financial statement users. Misappropriation of assets involves the theft of an entity s assets. It is often accompanied by false or misleading records or documents in order to conceal the fact that the assets are missing or have been pledged without proper authorization. An error is an unintentional misstatement in financial statements, including the omission of an amount or a disclosure. RELATED PARTIES In accordance with CPA Canada Public Sector Accounting (PSAB) related party is defined as: Related parties exist when one party has the ability to exercise, directly or indirectly, control, joint control or significant influence over the other. Two or more parties are related when they are subject to common control, joint control or common significant influence. Two not-for-profit organizations are related parties if one has an economic interest in the other. Related parties also include management and immediate family members In accordance with CPA Canada Public Sector Accounting (PSAB) a related party transaction is defined as: A related party transaction is a transfer of economic resources or obligations between related parties, or the provision of services by one party to a related party, regardless of whether any consideration is exchanged. The parties to the transaction are related prior to the transaction. When the relationship arises as a result of the transaction, the transaction is not one between related parties. 55

58 Attachment II Summary of corrected misstatements # Account # Account Name Description / Identified During Error Type Amount Income Effect DR (CR) Impact on financial statement captions - DR(CR) Balance Sheet Effect Cash Flow Effect Statement of Comprehe nsive Income - Debit (Credit) Equity at Current Current Operating Investing Financing period end Assets Liabilities Activities Activities Activities DR (CR) Income effect Non- Current Assets Non- Current Liabilities $ $ $ $ $ $ $ $ $ $ N/A 17,804 17,804 17,804 (17,804) Gov Grants - Provincial To adjust over accrual of revenue based on funding agreement Accrued Revenue (17,804) - (17,804) , Total effect of corrected misstatements 17,804 17,804 (17,804) Recorded by 56

59 Attachment II Summary of uncorrected misstatements in presentation and disclosures 1 PSAB requires that the budget is presented for the statement of changes in net assets. Uncorrected Factual 57

60 Appendix 3: Engagement letter KPMG Audit Findings Report 18 58

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74 Appendix 4: Audit Quality and Risk Management KPMG maintains a system of quality control designed to reflect our drive and determination to deliver independent, unbiased advice and opinions, and also meet the requirements of Canadian professional standards. Quality control is fundamental to our business and is the responsibility of every partner and employee. The following diagram summarizes the six key elements of our quality control system. Visit our Audit Quality Resources page for more information including access to our audit quality report, Audit quality: Our hands-on process. Other controls include: Before the firm issues its audit report, the Engagement Quality Control Reviewer reviews the appropriateness of key elements of publicly listed client audits Technical department and specialist resources provide real-time support to audit teams in the field We conduct regular reviews of engagements and partners. Review teams are independent and the work of every audit partner is reviewed at least once every four years. We have policies and guidance to ensure that work performed by engagement personnel meets applicable professional standards, regulatory requirements and the firm s standards of quality. Other risk management quality controls Independent monitoring Independence, integrity, ethics and objectivity KPMG Audit quality and risk management Engagement performance standards Personnel management Acceptance & continuance of clients / engagements We do not offer services that would impair our independence. The processes we employ to help retain and develop people include: Assignment based on skills and experience Performance evaluation Development and training Appropriate supervision and coaching We have policies and procedures for deciding whether to accept or continue a client relationship or to perform a specific engagement for that client. Existing audit relationships are reviewed annually and evaluated to identify instances where we should discontinue our professional association with the client. All KPMG partners and staff are required to act with integrity and objectivity and comply with applicable laws, regulations and professional standards at all times. KPMG Audit Findings Report 19 72

75 Appendix 5: Background and professional standards Internal control over financial reporting As your auditors, we are required to obtain an understanding of internal control over financial reporting (ICFR) relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances for the purpose of expressing an opinion on the financial statements but not for the purpose of expressing an opinion on internal control. Accordingly, we do not express an opinion on the effectiveness of internal control Our understanding of ICFR was for the limited purpose described above and was not designed to identify all control deficiencies that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all significant deficiencies or material weaknesses and other control deficiencies have been identified. Our awareness of control deficiencies varies with each audit and is influenced by the nature, timing, and extent of audit procedures performed, as well as other factors. Documents containing or referring to the audited financial statements We are required by our professional standards to read only documents containing or referring to audited financial statements and our related auditors report that are available through to the date of our auditors report. The objective of reading these documents through to the date of our auditors report is to identify material inconsistencies, if any, between the audited financial statements and the other information. We also have certain responsibilities, if on reading the other information for the purpose of identifying material inconsistencies, we become aware of an apparent material misstatement of fact. We are also required by our professional standards when the financial statements are translated into another language to consider whether each version, available through to the date of our auditors report, contains the same information and carries the same meaning. The control deficiencies communicated to you are limited to those control deficiencies that we identified during the audit. KPMG Audit Findings Report 20 73

76 Appendix 6: Current developments The following is a summary of the current developments that are relevant to the Authority: Standard Summary and implications PS 3420, Inter-entity Transactions This standard relates to the measurement of transactions between public sector entities that comprise the government s reporting entity. Transactions are recorded at carrying amounts with the exception of the following: (a) In the normal course of business use exchange amount (b) Fair value consideration use exchange amount (c) No or nominal amount provider to use carrying amount; recipient choice of either carrying amount or value fair. (d) Cost allocation use exchange amount This standard is effective for fiscal periods beginning on or after April 1, 2018 (the Authority s December 31, 2019 yearend). Implications: The Authority will have to identify these transactions and determine if they have been measured at the carrying amount if required. Financial Instruments A standard has been issued, establishing a standard on accounting for and reporting all types of financial instruments including derivatives. The effective date of this standard has recently been deterred and it is now effective for fiscal periods beginning on or after April 1, 2019 (the Authority s December 31, 2020 yearend). Implications: This standard will require the Authority to identify any contracts that have embedded derivatives and recognize these on the consolidated statement of financial position at fair value. Portfolio investments in equity instruments are required to be recorded at fair value. Changes in fair value will be reported in a new financial statement statement of re-measurement gains and losses. This standard sets out a number of disclosures in the financial statements designed to give the user an understanding of the significance of financial instruments to the Authority. These disclosures include classes of financial instruments and qualitative and quantitative risk disclosures describing the nature and extent of risk by type. The risks to be considered include credit, currency, interest rate, liquidity, and market risk. KPMG Audit Findings Report 21 74

77 Standard Summary and implications PS 3250, Employee Benefits Identified as the top priority in PSAB s 2014 Project Priority Survey, the Board has approved a project to review Section PS 3250, Retirement Benefits, and Section PS 3255, Post-employment Benefits, Compensated Absences and Termination Benefits. Since the issuance of these Sections decades ago, new types of pension plans have been introduced and there have been changes in the related accounting concepts. This project will involve looking at issues such as deferral of experience gains and losses, discount rates, how to account for shared risk plans, multi-employer defined benefit plans and vested sick leave benefits. Other improvements to existing guidance will also be considered. A new, comprehensive Handbook Section on employment benefits will replace the two existing Sections. PSAB have sent out an invitation to comment. In 2019 they will deliberate comments received on three invitations to comment. PS 3280, Asset Retirement Obligations Public Private Partnerships This standard describes how to account for and report asset retirement obligations associated with tangible capital assets. This standard is effective for fiscal periods beginning on or after April 1, 2021 (the Authority s December 31, 2022 yearend). Implications: The Authority will have to identify if they have any asset retirement obligations In recent years, governments across Canada are increasingly using various forms of public private partnership arrangements for the provision of assets and delivery of services. This project is expected to develop in two stages. The first stage will involve contemplating specific issues, including project scope, recognition and measurement of a public private partnership and disclosure requirements. Other issues will also be considered. The second stage will involve determining how to account for public private partnerships. The objective is to develop a public sector accounting standard specific to public private partnerships. In the first quarter of 2019, PSAAB is expecting to release an Exposure Draft PS 3041, Portfolio investments This section revises and replaces PS 3040, Portfolio Investments. It describes how to account for and report portfolio investments. PS 3400, Revenue Currently the Public Sector Accounting Handbook has two sections that address two major sources or revenue, government transfers and tax revenue. This new standard addresses the recognition, measurement and presentation of revenues that are common in the public sector other than government transfers and tax revenue. PSAB has approved this section, in the fourth quarter of 2018 the final standard will be released. KPMG Audit Findings Report 22 75

78 Our discussions with you, our audit opinion and what KPMG is seeing in the marketplace both from an audit and industry perspective indicate the following is specific information that will be of particular interest to you. We would, of course, be happy to further discuss this information with you at your convenience. Thought Leadership Overview Links Accelerate Accelerate is a KPMG trends report and video series that includes the perspective of subject matter leaders from across KPMG in Canada on seven key issues impacting organizations today that are disrupting the audit committee mandate. Link to report The Blockchain shift will be seismic Blockchain technology is a focused disruptor of the very foundations of external and internal audit: financial recordkeeping and reporting. This Audit Point of View article offers insight on how blockchain technology is impacting business and what audit committees should be thinking about to prepare for certain risks. Link to report Audit Quality 2017 Learn about KPMG's ongoing commitment to continuous audit quality improvement. We are investing in new innovative technologies and building strategic alliances with leading technology companies that will have a transformative impact on the auditing process and profession. How do we seek to make an impact on society through the work that we do? Link to report KPMG Audit Findings Report 23 76

79 Appendix 7: Lean in Audit An innovative approach leading to enhanced value and quality How it works Our innovative audit approach, Lean in Audit, further improves audit value and productivity to help deliver real insight to you. Lean in Audit is process oriented, directly engaging organizational stakeholders and employing hands-on tools, such as walkthroughs and flowcharts of actual financial processes. By embedding Lean techniques into our core audit delivery process, our teams are able to enhance their understanding of the business processes and control environment within your organization allowing us to provide actionable quality and productivity improvement observations. Any insights gathered through the course of the audit will be available to both engagement teams and management. For example, we may identify control gaps and potential process improvement areas, while management has the opportunity to apply such insights to streamline processes, inform business decisions, improve compliance, lower costs, increase productivity, strengthen customer service and satisfaction and drive overall performance. Lean in Audit employs three key Lean techniques: Lean training Provide basic Lean training and equip our teams with a new Lean mindset to improve quality, value and productivity. Interactive workshops Perform interactive workshops to conduct walkthroughs of selected financial processes providing end-to-end transparency and understanding of process and control quality and effectiveness. Insight reporting Quick and pragmatic insight report including immediate quick win actions and prioritized opportunities to realize benefit. KPMG Audit Findings Report 24 77

80 kpmg.ca/audit KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative ( KPMG International ). KPMG member firms around the world have 174,000 professionals, in 155 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 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. 78