Halifax City hall through the memorial arch
Audit and Finance Standing Committee

Fire department needs more money to complete a tender

Routine audit meeting stumbles over procedure, tech issues
 | March 25, 2021

Joint Audit Committee and Audit and Finance Standing Committee, March 25, 2021

Meeting recap (the important stuff):

In a meeting plagued by process and technical issues, the Joint Audit and Audit and Finance Committees persevered with their work. 

The Audit and Finance Committee was fairly routine, passing two information items on to council. The first item was the city’s investment activity for the fiscal quarter ending Dec. 31, 2020, which saw the city get a 0.19 per cent return on investments to date. The second item was writing off uncollectible debts, of which there were fewer this year. There weren’t as many because the things that generally require this, like events, didn’t happen due to COVID. 

The committee added two items to their agenda, the first is to give the fire department more money to implement their plan to make fire services more data driven. The tender process is ongoing, so they weren’t allowed to provide a lot of details, but it sounds like the amount approved for the tender isn’t enough to pay for what they want. 

The committee also made some changes to the terms of reference for a committee (details to follow once I get them from the city). There was talk of adding an interrupter clause, but our city council’s practice of off-the-cuff motion votes caused a procedural snafu. Which isn’t super interesting to non-nerds, but they did manage to sort it out.  

The Audit Committee approved KMPG’s plan for auditing the city. This audit will come back at some point. The committee also welcomed its two new civilian members, Caroline Duchesne and Claude Carter.  

Who said what (paraphrased): 

Russell: We have two new committee members, members of the public Caroline Duchesne, Claude Carter care to introduce yourself?  

Caroline Duchesne: I’ve been the Senior VP of Finance for Nova Scotia Liquor Corporation for 14 years.

Russell: We have a consolidated audit from KPMG, and a report. 

Carey Blair, KPMG: (This is all in technical language, if I get it a little wrong accountants please correct me!) Just briefly on COVID-19, we considered if there property tax deferrals and what the risks are with deferrals. We assessed the benefits that were given out to see if they were properly accounted for. Government transfers, employee benefits, actuarial calculations; we factored it all. We apply all professional and ethical standards to our audits. We try and identify financial missteps or biases where management has influenced the financial statements. We look at payroll, routine and treasury, a.k.a. cash management, to see if the numbers add up. And we double check the city’s auditors, Grant Thornton. (This is a really technical presentation, but he’s essentially explaining that in this audit, KPMG is looking at anything that costs the city money either on their own, like a large one time thing, or systemically, like if the city’s spending money on little stuff regularly without examining why, or if it’s fixing the thing the money’s supposed to fix.

Russell: Claude has joined us, can you introduce yourself?

Claude Carter: My question is about the systems of internal control, how does it deal with looking at those and giving information back to us about the adequacy of controls? 

Blair: The purpose of this audit is not to assess internal controls, but to assess if there is wrong information. But if we identify big deficiencies we have to tell you. We have to understand the controls to understand the risk though. Their effectiveness comes from design and implementations but we will test them sometimes if we need to. We frequently check payroll processes because it’s such a large amount of money, and need to understand their processes to understand the risks. 

Carter: The reporting of observations of deficiencies, there is a level of reporting to management why wouldn’t those be given to you at least for information purposes? 

(Side note: I feel like I’m covering a meeting in a language that isn’t actually English, this is quite jargon heavy.)

Blair: There’s no professional obligation for me to report them to you, but they should be CC’d to you, but I am not aware of any within the past two years. 

Hendsbee: Page 11, materiality, we have $1 billion and $50 million of expenses a year? And assets of $2 billion? 

Blair: Correct.

Hendsbee: You mentioned the AG’s office, is anyone from the AG’s office here looking at the report? 

Jane Fraser, CFO: No, and your question about the benchmarks, our budget won’t match.

Hendsbee: Will the AG be sent this report? 

Fraser: She’ll probably see it, yes. 

Russell: Transactions overwritten by management, are they flagged somehow? 

Blair: There is no specific flagging within the HRM. We look at every transaction and look for specific characteristics, like entries made on Sundays, or entries made by someone who doesn’t normally make entries. 

Russell: Have you seen other flag setting in other entities? 

Blair: Sometimes at the middle level of management. This is more for people at the top if they pull rank and tell a subordinate to do something. So we ask middle management types if they’ve ever been pressured to do something or felt uncomfortable. 

Russell: If you identify a gap will you explain it to us and help us fix it? 

Blair: Yes. 

Cleary: Under collaboration for the audit, it says making a webpage for the process, when will it be set up? Who has access to the website? 

Blair: We don’t use the website with the HRM currently because the servers aren’t in Canada so we don’t want to put your data not in Canada. That’ll change in the next two years. But it would be for management to upload stuff we ask for and they can track progress. (Sounds like an audit Slack.)

Cleary: So it won’t be for this one? 

Blair: No we use an in-house Dropbox setup. 

Deagle-Gammon: The individual associations not covered by this audit still have annual reporting which would be included? 

Blair: Yes. We audited the Zatzman Sportsplex, for example, but individually it’s not a lot of money. So it wouldn’t be part of this, the assumption is the smaller orgs spent all the money you’ve assigned to them. 

Fraser: We changed the requirement from an annual audit to an annual review, because audits are expensive and we can manage our assets in other ways as the city.

Deagle-Gammon: *Reads the motion for agenda item 5 as written

M/S/CVoteAyeUnanimous

Russell: The next meeting will probably be in July or August. So this is the end of the Joint Audit Committee, and now we’re on to the Audit and Finance Standing Committee! On to the city’s investment activities, a report from Vicki Robertson.

Fraser: Motion first? 

Cleary: *Reads the motion for agenda item 12.2.1 as written*

Russell: Questions? A presentation? 

Robertson: No presentation, but I can answer any questions. 

M/S/CVoteAyeUnanimousReport is sent to council

Russell: Uncollectible accounts, motion? 

Cleary: *Reads the motion for agenda item 12.2.2 as written

Russell: Questions about this one? 

Cleary: We went to great lengths to allow people not to pay tax during COVID, is that why these numbers are lower? 

Robertson: We’ve had fewer events than normal, which is where we normally see write-offs, but events didn’t happen due to COVID. Same with recreation, we’ve had fewer sports due to COVID, but now people also have to pay upfront due to our new software, so that eliminated a lot too.

M/S/CVoteAye – Russell, Deagle-Gammon, Hendsbee, Purdy, Cleary, Morse – Nay – Cleary – Motion passed

Russell: Item 15.2, added agenda item.

Deagle-Gammon: *Reads the motion* I understand the rationale to go from three years to five years, can we specify five consecutive years? And learning from COVID can we put an interruption clause in there? 

Elizabeth Taylor: I think it’s understood to be five consecutive, but yes. And the interrupter clause is a good idea to add via a motion. 

Deagle-Gammon: At regional council there was a conversation about whether or not the chair of the events committee needs to be appointed by audit and finance, do we need to wait for the staff report? 

Taylor: Yes.

Russell: Are you making the motion for consecutive years and interrupter clause? 

Deagle-Gammon: Yes.

Cleary: Do we need a report for what the clause would look like? 

Hendsbee: And just for a state of emergency from the province or can the municipality do it? 

Taylor: We can consider both in the report. 

Deagle-Gammon: *Reads the motion

M/S/CVoteAyeUnanimous

Russell: Now we can’t vote on the main motion until the report comes back. 

Hendsbee: Should we formally table it or just tell the council we’re waiting? The interrupter clause is maybe something we should consider for all our committees. But the consecutive five years should be easy to do on its own.

Russell: The previous motion was for both.

Hendsbee: Can we break it up? 

Clerk: You’ve already passed the joint one, if you want to change things we should stop and make sure you got it right. 

Cleary: Since we have an understanding, but not the exact wording, we can jerry rig this – *explains how to separate the two using the already passed motion* – Is that legal? 

Russell: I agree, lawyer? 

Karen Brown, lawyer: I would recommend a supplementary report and move forward with the whole package together. If you want to just do the one amendment for the word ‘consecutive’ that’s fine, but not joined to the clause. It’s up to you, but the supplementary report would do both at the same time if the timing works anyway. 

Russell: Since we’ve already voted on the single motion that combines the two of them…

Hendsbee: Motion of reconsideration to split ‘em? 

Clerk: That would have to be at the next meeting. 

Hendsbee: The AO says we can do it right after the vote is done. 

Clerk: Break for five minutes to organize ourselves? 

Russell: Works for me.

*Break to sort themselves out

Brown: I’ve looked it up, but the reconsideration motion is for the next meeting if you want to do that. You can vote to do it at this meeting if two-thirds of you agree to it. 

Deagle-Gammon: The intention was for it to be five consecutive years, and also have an interrupter clause so that if it wasn’t five consecutive years they’d still get funding. If we could do a motion to reconsider to break it up, get the ‘consecutive’ in there, and then get the report for the interpreter clause. 

Russell: Since it’s a two-thirds we’ll do recorded vote.

Deagle-Gammon: Motion to reconsider!

M/S/CVoteAye – Hendsbee, Purdy, Cleary, Morse, Deagle-Gammon, Russell – Abstain – Savage (absent)

Deagle-Gammon: I move to request a report to add an interrupter clause. 

M/S/CVoteAyeUnanimous

Deagle-Gammon: I move to put the term consecutive be used in article 4.c(1)(b).

M/S/CVoteAyeUnanimous

Russell: Any further discussion on the main motion? 

M/S/CVoteAyeUnanimous

Russell: On to 15.2.

Cleary: *Reads the motion*

Russell: Is there a presentation on this? 

Chief Stuebing: Deputy Meldrum can talk about it.

Russell: Anyone have any questions? 

Meldrum: We put the tender out to market in 2020, we got five proposals, one of the recommended proponents doesn’t have the required funding to move forward with it. I don’t know what further information I can provide as it’s still an open procurement process.

Fraser: I recommend that’s all you say until the tender is completed, since it’s ongoing. 

Russell: Other questions? 

Cleary: What’s the timeframe? The data and modelling, when will it be available? This budget? Next budget? You might not know this until the tender closes. 

Clerk: A bunch of people just froze. City hall has lost internet.

Purdy: I’m at city hall, I don’t think I’m on the internet though. (???????)

Russell: Break then? 

*Break to sort themselves out*

Russell: We have internet issues. We’re looking into it, but nearly everyone is back. Where were we? 

Cleary: I won’t repeat the whole thing, but with the modelling, do you have a timeline on when you expect to see the data and have it impact your decision making? 

Stuebing: Immediately. The goal is to improve our knowledge about our performance indicators, what data we have, how we can use it, and what data we need to make better decisions. And once it starts we’ll never stop using it. We hope to have it to you by summer. It’s not only about getting access to an industry expert, but also informing our future decisions and getting in front of the city’s growth. 

M/S/CVoteAyeUnanimous 

*Meeting adjourned*

Present:

Councillor Paul Russell, Chair (District 15)

Councillor Cathy Deagle-Gammon, Vice Chair (District 1)

Councillor David Hendsbee (District 2)

Councillor Trish Purdy (District 4)

Councillor Shawn Cleary (District 9)

Councillor Kathryn Morse (District 10)

Mayor Mike Savage

Claude Carter – Citizen Member (Only for Joint Audit Committee)

Caroline Duchesne – Citizen Member (Only for Joint Audit Committee)

Absent: 

N/A

Interviews:

N/A – COVID

Previous meeting minutes and current agenda:

Previous meeting

Current agenda (Audit)

Current agenda (Audit and Finance)


 Let’s cut to the chase: The Committee Trawler wouldn’t exist if it wasn’t for the support of our readers, like yourself. Sign up now – and with your monthly contribution (or one-time contribution) you can help us stay afloat. In return, we will give you a say on the content you want to see on The Trawler.