HomeMy WebLinkAboutAFC 2015-01-19 Agenda.pdfCityCityCityCity of Maple Ridgeof Maple Ridgeof Maple Ridgeof Maple Ridge
Audit & Finance CommitteeAudit & Finance CommitteeAudit & Finance CommitteeAudit & Finance Committee
January 19, 2015January 19, 2015January 19, 2015January 19, 2015
9999:00 A:00 A:00 A:00 AMMMM
Blaney RoomBlaney RoomBlaney RoomBlaney Room
ChairpersonChairpersonChairpersonChairperson (Acting)(Acting)(Acting)(Acting):::: Mayor Read
Committee Members:Committee Members:Committee Members:Committee Members: Councillors: C. Bell; R. Masse; T. Shymkiw
Staff:Staff:Staff:Staff: Chief Administrative Officer: J. Rule
GM – Corporate & Financial Svc: P. Gill
GM – Public Works & Development F. Quinn
GM – Community Dev. Park & Rec K. Swift
Manager of Accounting: C. Nolan
Manager of Financial Planning T. Thompson
Manager Sustainability & Corporate Planning L. Benson
Recording Secretary:Recording Secretary:Recording Secretary:Recording Secretary: Amanda Gaunt
AGENDAAGENDAAGENDAAGENDA
1.1.1.1. IntroductionsIntroductionsIntroductionsIntroductions
2.2.2.2. Appointment of ChairpersonAppointment of ChairpersonAppointment of ChairpersonAppointment of Chairperson
3.3.3.3. Approval ofApproval ofApproval ofApproval of aaaagendagendagendagenda
4.4.4.4. Approval of Approval of Approval of Approval of mmmminutes of inutes of inutes of inutes of May 12, 2014May 12, 2014May 12, 2014May 12, 2014
5.5.5.5. Background Materials Background Materials Background Materials Background Materials –––– Audit & Finance CommitteeAudit & Finance CommitteeAudit & Finance CommitteeAudit & Finance Committee
6.6.6.6. Adopt Terms of ReferenceAdopt Terms of ReferenceAdopt Terms of ReferenceAdopt Terms of Reference
7.7.7.7. InvestmentsInvestmentsInvestmentsInvestments
8.8.8.8. Other businessOther businessOther businessOther business
9.9.9.9. Next MeetingNext MeetingNext MeetingNext Meeting
• February 2, 2015
_______________________________
Agenda submitted by: C. Nolan, CPA, CGA
Manager of Accounting
Minutes
Agenda Item #4 Page 1
District of Maple RidgeDistrict of Maple RidgeDistrict of Maple RidgeDistrict of Maple Ridge
Audit & Finance CommitteeAudit & Finance CommitteeAudit & Finance CommitteeAudit & Finance Committee Meeting MinutesMeeting MinutesMeeting MinutesMeeting Minutes
May 12, 2014
The Minutes of the Audit and Finance Committee Meeting held in the Blaney Room of
the Municipal Hall, 11995 Haney Place, Maple Ridge, BC on Monday, May 12, 2014
at 8:00 a.m.
PRESENTPRESENTPRESENTPRESENT
Committee MembersCommittee MembersCommittee MembersCommittee Members Municipal StaffMunicipal StaffMunicipal StaffMunicipal Staff
Councillor Morden, Chair J. Rule, Chief Administrative Officer
Mayor Daykin P. Gill, General Manager, Corporate & Financial Services
Councillor Bell K. Swift, General Manager of Community Development, Parks
Councillor Masse and Recreation Services
C. Nolan, Manager of Accounting
GUESTGUESTGUESTGUESTSSSS T. Thompson, Manager of Financial Planning
Councillor Hogarth A. Gaunt, Confidential Secretary
B. Cox, External Auditor, F. Armstrong, Manager of Corporate Communications
BDO Canada LLP
The meeting was called to order at 8:00 a.m.
1.1.1.1. Approval ofApproval ofApproval ofApproval of aaaagendagendagendagenda
MOVEDMOVEDMOVEDMOVED by Mayor Daykin and SECONDEDSECONDEDSECONDEDSECONDED by Councillor Masse that the agenda
be approved with Item 5 being dealt with prior to Item 4.
CARRIEDCARRIEDCARRIEDCARRIED
2.2.2.2. Approval of Approval of Approval of Approval of mmmminutes of inutes of inutes of inutes of February 3, 2014February 3, 2014February 3, 2014February 3, 2014
MOVEDMOVEDMOVEDMOVED by Ernie and SECONDEDSECONDEDSECONDEDSECONDED by Councillor Masse that the minutes of
February 3, 2014 be approved.
CARRIEDCARRIEDCARRIEDCARRIED
3.3.3.3. 2013 Audit Update2013 Audit Update2013 Audit Update2013 Audit Update
• Overview of 2013 audit by external auditor
The auditor provided an overview of audit findings and reviewed the
management letter dated March 24, 2014. The auditor indicated that the
2013 external audit was a good audit with no bad results.
Agenda Item #4 Page 2
Audit & Finance Committee Meeting Minutes
May 12, 2014
Page 2
Note: Item 5 was dealt with prior to Item 4
4.4.4.4. Audit Contract for 2014Audit Contract for 2014Audit Contract for 2014Audit Contract for 2014----2016201620162016
• Staff report dated May 12, 2014 regarding the extension of audit services
with BDO for 2014-2016
i. Appendix 1 – Proposal from BDO
ii. Appendix 2 – Contaminated Sites report from November 12, 2013 Audit
Committee meeting
The General Manager of Corporate & Financial Services reviewed the report.
MOVED MOVED MOVED MOVED by Mayor Daykin and SECONDED SECONDED SECONDED SECONDED by Councillor Masse that the
agreement with BDO Canada LLP for the provision of audit services for three
years through the end of the 2016 audit be extended.
CARRIED
Note: Item 5 was dealt with prior to Item 4
5.5.5.5. Investment UpdateInvestment UpdateInvestment UpdateInvestment Update
Staff report dated May 12, 2014 titled “Quarterly Investment Report – First
Quarter, 2014”
The Manager of Financial Planning reviewed the report. He addressed the
fluctuations in market value and the impact on investments made by the
District.
6.6.6.6. Next Meeting Next Meeting Next Meeting Next Meeting –––– to be determinedto be determinedto be determinedto be determined
7.7.7.7. AdjAdjAdjAdjournmentournmentournmentournment –––– 8:44 a.m.8:44 a.m.8:44 a.m.8:44 a.m.
____________________________________________
Chair
Agenda Item #4 Page 3
Background Materials
Agenda Item #5 Page 1
Background Material
Audit & Fin a nce Com mittee
Role of the Audit & Finance Committee
Audit committees have played an important role in organizations for a long time and in recent years
their role has become even more important. In Maple Ridge, our committee is called the Audit &
Finance Committee and operates under terms of reference that are adopted at the beginning of each
term of Council. Those terms of reference are included as part of your agenda package and set out the
responsibilities of the committee.
Role of the External Auditor
The City’s external auditor is BDO Canada LLP. Their contract with the City runs through the completion
of work related to the 2016 fiscal year.
The external auditor is engaged for the following tasks:
• To provide an opinion on the accuracy of the City’s annual consolidated financials statements
• To complete income tax returns for the City’s wholly owned subsidiaries
o CDMR Developments Ltd.
o Maple Ridge Municipal Holdings Ltd.
o MRTC Civic Properties Ltd.
o MRTC Tower Properties Ltd.
• To review the Maple Ridge/Pitt Meadows cost share statements for recreation and police
services.
The external auditor’s role does not include things such as:
• Commenting on the City’s Official Community Plan
• Process improvement reviews
• Value for money audits
Audit Committee Calendar
The Audit Committee typically meets three times a year as follows:
Month Purpose Proposed for 2015
January / February Meeting with the external auditor to discuss the upcoming
audit of the financial statements for the year just ended.
2-Feb-2015
April / May Meeting with the external auditor to discuss how the audit
went and to review the Management Letter
4-May-2015
September Year-to-date financial update 14-Sept-2015
Additional meetings can be called as needed.
Agenda Item #5 Page 2
Financial Statement Orientation
The City’s Annual Consolidated Financial Statements are prepared according to the guidelines set by the
Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada. These
guidelines are the rules that we must follow in order to get a clean audit opinion. As new guidelines
(rules) are introduced we must incorporate them into our financial statements as they come into effect.
Government financial statements look quite different than the statements produced by a business as
the objectives for a business are different from those of a government. The goal of a business is to make
a profit whereas the goal of a government is to provide services. In order to meet the accountability
obligations associated with that objective, it is necessary to provide information not presented by a
business. For example, our statements include the budget to allow a comparison of actual results to
planned results; a business typically wouldn’t provide that type of information. It’s important to keep in
mind, though, that the financial plan and the financial statements are not prepared on the same basis.
The financial plan is prepared on a cash basis whereas the financial statements are prepared on an
accrual basis.
The following lists the financial statements the City produces and provides a brief description of each:
1. Statement of Financial Position
This statement is a government’s version of a balance sheet. A business builds equity over time,
which is the difference between total assets and liabilities. The equity number reported on the
balance sheet represents an owner’s share of the company at a point in time. As a government
we don’t have “owners” so reporting equity wouldn’t be meaningful. Readers of government
financial statements need information about the affordability of spending decisions and the
economic resources available to meet service commitments. The following highlights key things
to look for on the Statement of Financial Position.
o Financial assets, liabilities and non-financial assets are reported as a snapshot in time
(December 31st)
o Key numbers on the statement:
Net Financial Position
• Is calculated by subtracting liabilities from financial assets.
• If the result of the calculation is positive it is called Net Financial Assets
• If the result of the calculation is negative it is referred to as Net Debt
• A Net Debt Financial position provides an indication that revenues that
will be collected in the future are needed to pay for the amounts owed
at December 31st.
Accumulated Surplus
• The total of Net Financial Assets or Net Debt and the City’s non-financial
assets.
• Represents the City’s net economic resources available for service
provision.
• The bulk of this number is made up of the value of the City’s tangible
capital assets and is not a source of cash. It also includes the balances in
our reserves and the surplus amounts in the revenue funds.
Agenda Item #5 Page 3
2. Statement of Operations
This statement is a government’s version of an income statement. The objective of a private
sector company is to generate a profit from operations and its income statement is organized to
communicate how successful it was in achieving this objective. In contrast, the objective of a
government is to provide services and its primary revenue source is taxation. As a result
different information is needed to communicate a government’s financial performance during
the year.
The statement shows not only a government’s revenue and expenses but also the budgeted
amount for each item, not something you would typically see a business providing. Budget
information represents the policy and service level decisions made by Council and establishes
estimates of revenues and expenses for the year. Including this information in the statements
allows people to assess a government’s progress towards financial plan objectives and
demonstrates public accountability for government finances.
The following highlights key things to look for on the Statement of Operations:
o Revenues listed by type (property tax, grant etc.)
Revenues are recorded in the year they are earned.
In the case of revenues linked to capital projects those revenues are recorded at
the time of acquisition or construction of the City’s tangible capital assets.
o Expenses listed by type of service provision (recreation, protective services,
transportation etc.)
Expenses are organized by functional area as a way of communicating where a
government’s resources are directed. For example, our Statement of
Operations indicates that, in terms of resource allocation, Protective Services
receives a large proportion of the City’s resources.
It’s important to note that this section of the statement does not report
expenditures (cash outflows), rather it reports expenses. In the case of tangible
capital assets, the amounts spent in a year to acquire or construct assets is not
reported, instead the annual cost of using those assets is reported as
amortization expense. In the case of long lived assets that will result in a small
portion of the asset being expensed each year, for example 1/85th of what the
asset originally cost in the case of some water infrastructure.
Expenses grouped by object (salaries, goods and services, interest) are provided
in a financial statement note.
o Key numbers on the statement:
Annual Surplus
• The difference between annual revenues and expenses
o It’s important to keep in mind the implications of the way
revenues and expenses related to tangible capital assets are
recorded on the Statement of Operations. The rules described
above result in a timing mismatch that contributes to the
reported annual surplus, but does not necessarily represent a
cash surplus.
Accumulated Surplus
• Represents the City’s net economic resources available for service
provision. Once again, this does not necessarily represent cash.
Agenda Item #5 Page 4
3. Statement of Change in Net Financial Assets
This statement explains the change in Net Financial Position from year to year. Changes in this
number are explained by the excess or deficiency of revenues (cash inflows) over expenditures
(cash outflows). In order to get to this number we start with the annual surplus number from
the Statement of Operations and back out the non-cash items included in that number and add
in the cash amounts not included, such as expenditures to acquire or construct tangible capital
assets. As with the Statement of Operations, budget information is provided to allow a
comparison of actual results with the anticipated results set out in the financial plan.
4. Statement of Cash Flow
This statement reports the change in cash and temporary investments in the year and shows
how activities were financed and cash requirements met. This information helps financial
statement readers to understand a government’s ability to generate cash and meet its
obligations.
5. Notes to the Financial Statements
The financial statements describe, in numbers, the financial condition of a government at a
point in time and the activities during the fiscal year that contributed to that financial condition.
Relying on the numbers alone can lead to misunderstanding and false conclusions. The intent of
the notes to the financial statements is to include additional information about the items listed
in the statements in order to provide readers of the statements with a better understanding of
the government’s annual results.
6. Supplementary Schedules
As with the notes to the financial statements, the supplementary schedules are intended to
provide additional information to help the financial statement reader have a better
understanding of the annual results.
As noted above the City’s financial statements are prepared according to rules established by PSAB and
are intended to report the City’s financial position at the end of the year and the results of operations
during the year.
Agenda Item #5 Page 5
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Consolidated Statement of OperationsConsolidated Statement of OperationsConsolidated Statement of OperationsConsolidated Statement of Operations
For the year ended December 31, 2013
Actual Actual Actual Actual Budget Actual
2013 2013 2013 2013
2013
(Note 14)
2012
Revenue Revenue Revenue Revenue (Segment Report, Note 17)
Taxes for municipal purposes (Note 10)$$$$68,079,36068,079,36068,079,36068,079,360 $67,914,296 $64,939,423
User fees and other revenue 35,843,76635,843,76635,843,76635,843,766 34,961,647 34,698,238
Government transfers (Note 4)3,796,6333,796,6333,796,6333,796,633 6,385,880 4,421,302
Development revenue 9,799,0949,799,0949,799,0949,799,094 35,893,817 5,626,781
Interest and investment income
Investment Income 2,741,371
Interest Income 227,890
Less: Deferred amount (392,049)
Interest and investment income 2,577,2122,577,2122,577,2122,577,212 1,818,000 3,486,028
Gaming revenues 896,008896,008896,008896,008 500,000 819,341
Gain (loss) on disposal of tangible capital asset (2,449,158)(2,449,158)(2,449,158)(2,449,158)-(1,530,761)
Contributed tangible capital assets (Note 13)39,572,80839,572,80839,572,80839,572,808 16,500,000 16,709,523
158,115,723158,115,723158,115,723158,115,723 163,973,640 129,169,875
Expenses Expenses Expenses Expenses (Segment Report, Note 18)
Protective services 31,159,17531,159,17531,159,17531,159,175 34,536,700 30,619,435
Transportation services 16,504,54516,504,54516,504,54516,504,545 17,691,105 16,781,930
Recreation and cultural 19,628,82419,628,82419,628,82419,628,824 21,450,089 19,529,726
Water utility 14,809,05114,809,05114,809,05114,809,051 19,895,479 13,138,936
Sewer utility 9,582,6519,582,6519,582,6519,582,651 10,243,286 9,279,252
General government 13,565,95713,565,95713,565,95713,565,957 16,679,983 13,307,270
Planning, public health and other 5,487,5255,487,5255,487,5255,487,525 4,513,951 3,939,899
110,737,728110,737,728110,737,728110,737,728 125,010,593 106,596,448
Annual SurplusAnnual SurplusAnnual SurplusAnnual Surplus 47,377,99547,377,99547,377,99547,377,995 38,963,047 22,573,427
Accumulated Surplus - beginning of yearAccumulated Surplus - beginning of yearAccumulated Surplus - beginning of yearAccumulated Surplus - beginning of year 862,218,440862,218,440862,218,440862,218,440 862,218,440 839,645,013
Accumulated Surplus - end of year Accumulated Surplus - end of year Accumulated Surplus - end of year Accumulated Surplus - end of year (Note 15)$$$$909,596,435909,596,435909,596,435909,596,435 $901,181,487 $862,218,440
a). The notes to the Consolidated Financial Statements are an integral part of this statement
b). Contingencies, Commitments and Unrecognized Liabilities (Note 11)
c). Pension Plan (Note 5)
Agenda Item #5 Page 7
Consolidated Statement of Change in Net Financial AssetsConsolidated Statement of Change in Net Financial AssetsConsolidated Statement of Change in Net Financial AssetsConsolidated Statement of Change in Net Financial Assets
For the year ended December 31, 2013
Actual Actual Actual Actual Budget Actual
2013 2013 2013 2013 2013
(Note 14)
2012
Annual SurplusAnnual SurplusAnnual SurplusAnnual Surplus $$$$47,377,99547,377,99547,377,99547,377,995 $38,963,047 $22,573,427
Add (Less):Add (Less):Add (Less):Add (Less):
Change in Tangible Capital AssetsChange in Tangible Capital AssetsChange in Tangible Capital AssetsChange in Tangible Capital Assets
Acquisition of tangible capital assets (58,531,843)(58,531,843)(58,531,843)(58,531,843)(94,172,869)(31,715,399)
Amortization 17,830,75617,830,75617,830,75617,830,756 18,688,422 17,620,754
Proceeds from disposal of tangible capital assets 199,679199,679199,679199,679 -74,100
Loss (gain) on disposal of tangible capital assets 2,449,1582,449,1582,449,1582,449,158 -1,530,761
(38,052,250)(38,052,250)(38,052,250)(38,052,250)(75,484,447)(12,489,784)
Change in Other Non Financial AssetsChange in Other Non Financial AssetsChange in Other Non Financial AssetsChange in Other Non Financial Assets
Decrease (increase) in supplies inventory (61,166)(61,166)(61,166)(61,166)-97,258
Reclassification of undeveloped land bank 63,02563,02563,02563,025 -383,857
Decrease (increase) in prepaid expenses (68,626)(68,626)(68,626)(68,626)-(182,654)
(66,767)(66,767)(66,767)(66,767)-298,461
Increase (decrease) in Net Financial AssetsIncrease (decrease) in Net Financial AssetsIncrease (decrease) in Net Financial AssetsIncrease (decrease) in Net Financial Assets 9,258,9789,258,9789,258,9789,258,978 $(36,521,400)10,382,104
Net Financial Assets beginning of the yearNet Financial Assets beginning of the yearNet Financial Assets beginning of the yearNet Financial Assets beginning of the year 32,721,22832,721,22832,721,22832,721,228 32,721,228 22,339,124
Net Financial Assets end of the yearNet Financial Assets end of the yearNet Financial Assets end of the yearNet Financial Assets end of the year $$$$41,980,20641,980,20641,980,20641,980,206 $(3,800,172)$32,721,228
a). The notes to the Consolidated Financial Statements are an integral part of this statement
b). Contingencies, Commitments and Unrecognized Liabilities (Note 11)
c). Pension Plan (Note 5)
Agenda Item #5 Page 8
Consolidated Statement of Cash FlowConsolidated Statement of Cash FlowConsolidated Statement of Cash FlowConsolidated Statement of Cash Flow
For the year ended December 31, 2013
ActualActualActualActual Actual
2013201320132013 2012
Operating transactionsOperating transactionsOperating transactionsOperating transactions
Annual surplusAnnual surplusAnnual surplusAnnual surplus $47,377,995$47,377,995$47,377,995$47,377,995 $22,573,427
Items not utilizing cashItems not utilizing cashItems not utilizing cashItems not utilizing cash
Amortization 17,830,75617,830,75617,830,75617,830,756 17,620,754
Loss on disposal of tangible capital assets 2,449,1582,449,1582,449,1582,449,158 1,530,761
Contributed tangible capital assets (39,572,808)(39,572,808)(39,572,808)(39,572,808)(16,709,523)
Restricted revenues recognized (8,946,156)(8,946,156)(8,946,156)(8,946,156)(4,777,088)
(28,239,050)(28,239,050)(28,239,050)(28,239,050)(2,335,096)
Change in non-cash operating itemsChange in non-cash operating itemsChange in non-cash operating itemsChange in non-cash operating items
Increase in prepaid expenses (68,626)(68,626)(68,626)(68,626)(182,654)
Decrease (increase) in supplies inventory (61,166)(61,166)(61,166)(61,166)97,260
Decrease (increase) in accounts receivable 316,370316,370316,370316,370 (1,916,670)
Decrease (increase) in recoverable local improvements (29,425)(29,425)(29,425)(29,425)(216,206)
Decrease (increase) in other assets (33,390)(33,390)(33,390)(33,390)(74,116)
Increase (decrease) in accounts payable and accrued liabilities 3,337,5503,337,5503,337,5503,337,550 (208,203)
Increase (decrease) in deferred revenue 170,784170,784170,784170,784 308,019
Increase (decrease) in refundable performance deposits (1,851,677)(1,851,677)(1,851,677)(1,851,677)3,212,763
Increase (decrease) in employee future benefits 145,200145,200145,200145,200 60,600
1,925,6201,925,6201,925,6201,925,620 1,080,793
Cash provided by operating transactions 21,064,56521,064,56521,064,56521,064,565 21,319,124
Capital transactionsCapital transactionsCapital transactionsCapital transactions
Proceeds on disposal of tangible capital assets 199,676199,676199,676199,676 74,097
Acquisition of tangible capital assets (18,959,036)(18,959,036)(18,959,036)(18,959,036)(15,005,876)
Reclassification of tangible capital assets to available for sale (24,079)(24,079)(24,079)(24,079)-
Reclassificaton of land bank properties 63,02563,02563,02563,025 383,857
Cash applied to capital transactions (18,720,414)(18,720,414)(18,720,414)(18,720,414)(14,547,922)
Investing transactionsInvesting transactionsInvesting transactionsInvesting transactions
Decrease (increase) in portfolio investments (11,543,993)(11,543,993)(11,543,993)(11,543,993)57,497,587
(11,543,993)(11,543,993)(11,543,993)(11,543,993)57,497,587
Financing transactionsFinancing transactionsFinancing transactionsFinancing transactions
Proceeds from debt issues ----(5,520,000)
Debt repayment (2,585,308)(2,585,308)(2,585,308)(2,585,308)(1,938,761)
Collection of restricted revenues 8,738,9298,738,9298,738,9298,738,929 9,091,669
Cash applied to financing transactions 6,153,6216,153,6216,153,6216,153,621 12,672,908
Increase in cash and temporary investmentsIncrease in cash and temporary investmentsIncrease in cash and temporary investmentsIncrease in cash and temporary investments (3,046,221)(3,046,221)(3,046,221)(3,046,221)76,941,697
Cash and temporary investments - beginning of year 103,940,358103,940,358103,940,358103,940,358 26,998,661
Cash and temporary investments - end of yearCash and temporary investments - end of yearCash and temporary investments - end of yearCash and temporary investments - end of year $100,894,137$100,894,137$100,894,137$100,894,137 $103,940,358
Supplementary information:Supplementary information:Supplementary information:Supplementary information:
Non-cash transactions:
Transfer from undeveloped landbank properties to tangible capital assets 63,025 383,857
Transfer from tangible capital assets to inventory available for sale 24,079 -
a). The notes to the Consolidated Financial Statements are an integral part of this statement
b). Contingencies, Commitments and Unrecognized Liabilities (Note 11)
c). Pension Plan (Note 5)
Agenda Item #5 Page 9
Terms of Reference
Agenda Item #6 Page 1
Audit and Finance CommitteeAudit and Finance CommitteeAudit and Finance CommitteeAudit and Finance Committee
Terms of ReferenceTerms of ReferenceTerms of ReferenceTerms of Reference
CompositionCompositionCompositionComposition
• The Audit and Finance Committee will be comprised of the Mayor and three Councillors; a
quorum will be two members.
• Members will be appointed annually by the Mayor at the inaugural meeting or special
meeting of Council.
• The Mayor, or his designate, will be appointed Committee Chair.
• The Chief Administrative Officer, or designate, and the Chief Financial Officer will attend
meetings to provide input and answer questions.
AuthorityAuthorityAuthorityAuthority
• The Committee has the authority to investigate any activity of the Municipality.
• The Committee may retain persons having special expertise to assist it in fulfilling its
responsibilities.
MeetingsMeetingsMeetingsMeetings
• The Committee meets at least twice per year. The meetings are scheduled to permit
timely review of the annual financial statements and reports. Additional meetings may
be held as deemed necessary by the Chair of the Committee or as requested by the
external auditors.
• The Chair of the Committee will constitute a meeting as per the requirements of the
Community Charter.
• The person designated by the Committee to act as Secretary will prepare minutes for all
meetings.
ReportingReportingReportingReporting
• Minutes of the meetings of the Committee will be signed by the Chair, submitted to
Council and open for public inspection.
• Supporting schedules and information reviewed by the Committee will be available for
examination by any Council member.
ResponsibilitiesResponsibilitiesResponsibilitiesResponsibilities
• To meet with the external auditors appointed by Council and with the Finance
Department Staff to satisfy itself, on behalf of the Council, that:
• the Municipality has implemented appropriate systems to identify, monitor and
mitigate significant business risks;
• the Municipality has implemented appropriate systems of internal control to ensure
compliance with legal, ethical and regulatory requirements and that these systems
are operating effectively;
• the Municipality has implemented appropriate systems of internal control to ensure
compliance with its policies and procedures and these systems are operating
effectively;
• the Municipality has implemented appropriate systems of internal control over
financial reporting and that these systems are operating effectively;
• the Municipality’s annual financial statements are fully presented in all material
respects in accordance with generally accepted accounting principles, the selection
Agenda Item #6 Page 2
of accounting policies is appropriate and the annual financial statements should be
approved by Council;
• the information contained in the Municipality’s annual report and other disclosures is
accurate, complete and fairly presents the financial position and the risks of the
organization; and
• the external audit function has been effectively carried out and any matter that the
external auditors wish to bring to the attention of Council has been given adequate
attention.
• To review interim financial reports as deemed appropriate by the Chair of the Committee.
• To recommend to Council the reappointment or appointment of external auditors.
• To inquire into any matters referred to it by Council.
Agenda Item #6 Page 3
Investment Report
Agenda Item #7 Page 1
City City City City of Maple Ridgeof Maple Ridgeof Maple Ridgeof Maple Ridge
TO:TO:TO:TO: Audit and Finance Committee MEETINGMEETINGMEETINGMEETING DATE:DATE:DATE:DATE: January 19, 2015
FROM:FROM:FROM:FROM: Manager of Financial Planning MEETING:MEETING:MEETING:MEETING: Audit and Finance Committee
SUBJECTSUBJECTSUBJECTSUBJECT: 2014201420142014 InvestmentInvestmentInvestmentInvestment ReportReportReportReport
EXECUTIVE SUMMARY:EXECUTIVE SUMMARY:EXECUTIVE SUMMARY:EXECUTIVE SUMMARY:
Money held by the City, that is not immediately required, is invested and prudently managed in order
to achieve the objectives of safety, liquidity and return. The Investment Policy outlines the
parameters to manage the investments. It also calls for regular updates to the Audit and Finance
Committee summarizing the investments and any deviations from policy.
The Investment Portfolio Summary as of December 31, 2014 is attached. It highlights that the
investment portfolio had no deviations from the Investment Policy and the investments performed
relatively well in 2014, with a Return on Investment (ROI) of 2.76% compared to the benchmark
return of 1.53%.
The 2014 investment earnings, excluding any market value changes, totaled about $3 million. From
this, based on fund balances, approximately $1.6 million has been transferred to reserves and
Development Cost Charges. This leaves about $1.4 million in General Revenue investment earnings,
exceeding the budget of $1.1 million resulting in a contribution of $300,000 to the 2014 operating
surplus.
RECOMMENDATION(S):RECOMMENDATION(S):RECOMMENDATION(S):RECOMMENDATION(S):
NoneNoneNoneNone. . . . For information onlyFor information onlyFor information onlyFor information only....
DISCUSSION: DISCUSSION: DISCUSSION: DISCUSSION:
a)a)a)a) Background Context:Background Context:Background Context:Background Context:
Investment returns generate a significant amount of revenue for the City and more
importantly they are invested in a way to protect the public funds ensuring that they are safe
and available when needed. Council last revised the Investment Policy in June of 2011.
There is currently no need to amend the policy.
The calculated ROI includes unrealized gains or losses due to market price fluctuations.
Including these price fluctuations is appropriate, as it more accurately reflects the value one
could receive if the investments were sold. It reflects the investment decisions with respect
to the timing of when different investment terms are entered into. The benchmarks also
include market value changes so the comparison is relevant.
Agenda Item #7 Page 2
l~-
mapleridge.ca
Active management by staff, as well as insight and advice from our investment contacts
ensures that funds are invested appropriately and continue to produce returns that beat the
benchmark.
As mentioned, the market value of the bonds held in our investment portfolio fluctuates. It is
important to note that all our investments will mature at par at which point they will have no
gains or losses. Market gains or losses are only realized if the bond is sold.
As noted in the Investment Policy, deviations from policy are typical in March through early
June. This is due to the size of the holdings being lowest, just prior to property tax collections,
which may cause percentages on certain investment parameters to be higher.
b)b)b)b) Business Plan/Financial Implications:Business Plan/Financial Implications:Business Plan/Financial Implications:Business Plan/Financial Implications:
A significant portion of the funds invested are from Reserve Funds, Reserve Accounts,
Development Cost Charges (DCCs) and Water and Sewer Utility Funds. The interest earned
helps address inflationary costs.
The General Revenue Fund relies on returns from investments. These returns are
conservatively budgeted. A more aggressive reliance on investment earnings in the Financial
Plan is not advised.
CONCLUSIONS:CONCLUSIONS:CONCLUSIONS:CONCLUSIONS:
The schedules attached highlight the return on investments and how the holdings compare to the
parameters set out in the Investment Policy. There are currently no deviations. The return on
investment for 2014 is 2.76% and has exceeded the benchmark returns.
It is important to understand what is driving the returns as not to draw any incorrect conclusions.
The primary focus of our investments is safety and being able to meet our cash flow requirements.
Active management by staff, as well as insight and advice from our investment contacts ensure that
funds are invested appropriately and continue to produce returns that beat the benchmark.
“Original signed by Trevor Thompson”
_______________________________________________
Prepared by: Trevor ThompsonTrevor ThompsonTrevor ThompsonTrevor Thompson, , , , BBA, BBA, BBA, BBA, CPA, CPA, CPA, CPA, CGACGACGACGA
Manager of Financial PlanningManager of Financial PlanningManager of Financial PlanningManager of Financial Planning
“Original signed by Paul Gill”
_______________________________________________
Approved by: Paul Gill, BBA, Paul Gill, BBA, Paul Gill, BBA, Paul Gill, BBA, CPA, CPA, CPA, CPA, CGACGACGACGA
General Manager General Manager General Manager General Manager ---- Corporate and Financial ServicesCorporate and Financial ServicesCorporate and Financial ServicesCorporate and Financial Services
Agenda Item #7 Page 3
City City City City of Maple Ridgeof Maple Ridgeof Maple Ridgeof Maple Ridge
Investment Portfolio Return on Investment (ROI)Investment Portfolio Return on Investment (ROI)Investment Portfolio Return on Investment (ROI)Investment Portfolio Return on Investment (ROI)
Year to date as of December 31, 2014
TermTermTermTermssss are the term when purchased, not the term remaining to maturity. For example, a 7
year investment bought in 2008 would always be classified as Long Term even when it has
less than a year to maturity. Short Term is a year or less, Mid. Term is over a year and fewer
than 3 years and Long Term is anything over three years.
IIIInvestment (avg.) nvestment (avg.) nvestment (avg.) nvestment (avg.) is the average daily balance for the period, not the balance that is
currently held.
EarningsEarningsEarningsEarnings are calculated differently than accounting standards, as unrealized capital gains
(losses) are included. By taking the market price fluctuations into account, the management
of the investments are better measured. Benchmarks are calculated on the same basis
allowing for a more relevant comparison.
ROIROIROIROI is the annualized return on investment. It includes earnings as well as changes in
market value of the investments.
T e r m s T e r m s T e r m s T e r m s I n v e s t m e n t s (a v g .)I n v e s t m e n t s (a v g .)I n v e s t m e n t s (a v g .)I n v e s t m e n t s (a v g .)R e t u r n R e t u r n R e t u r n R e t u r n R O IROIROIROI B e n c h m a r kBenchmarkBenchmarkBenchmark
Long Term $43,860,947 $1,973,735 4.50%3.01%
Mid. Term 19,174,200 436,570 2.28%1.04%
Short Term 88,530,692 1,779,362 2.01%0.92%
T o t a lTotalTotalTotal $1 5 1 ,5 6 5 ,8 3 9$1 5 1 ,5 6 5 ,8 3 9$1 5 1 ,5 6 5 ,8 3 9$1 5 1 ,5 6 5 ,8 3 9 $4 ,1 8 9 ,6 6 8$4 ,1 8 9 ,6 6 8$4 ,1 8 9 ,6 6 8$4 ,1 8 9 ,6 6 8 2 .7 6 %2 .7 6 %2 .7 6 %2 .7 6 %1 .5 3 %1 .5 3 %1 .5 3 %1 .5 3 %
Agenda Item #7 Page 4
City City City City of Maple Ridgeof Maple Ridgeof Maple Ridgeof Maple Ridge
Investment Portfolio Investment Portfolio Investment Portfolio Investment Portfolio SummarySummarySummarySummary
December 31, 2014
* The province of BC has guaranteed deposits of BC Credit Unions. With this guarantee
regular policy limits of $10,000,000 per credit union can be exceeded.
T e r m s T e r m s T e r m s T e r m s H o l d in g sHoldingsHoldingsHoldings % H o l d i n g s% H o l d i n g s% H o l d i n g s% H o l d i n g s P o l i c y M a x .Po l ic y M a x .Po l ic y M a x .Po l ic y M a x .W i t h in Po lic y W i t h in Po lic y W i t h in Po lic y W i t h in Po lic y
Long Term (>3 years)$33,999,344 22%35%Y es
Mid. Term (> 1 year to 3 yrs.)28,378,683 18%40%Y es
Short Term (1yr or less)92,529,654 60%None Yes
T o t a lTotalTotalTotal $1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1
T e r m s T e r m s T e r m s T e r m s H o l d in g sHoldingsHoldingsHoldings A v g T e r mAvg T e r mAvg T e r mAvg T e r m P o l i c y M a x .Po l ic y M a x .Po l ic y M a x .Po l ic y M a x .W i t h in Po lic y W i t h in Po lic y W i t h in Po lic y W i t h in Po lic y
Long Term (>3 years)$33,999,344 5.31 yrs 6 yrs Y es
Mid. Term (> 1 year to 3 yrs.)28,378,683 1.18 yrs.none Yes
Short Term (1yr or less)92,529,654 76 days none Yes
T o t a lTotalTotalTotal $1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1 1.88 yrs.none Y es
I s s u e rIssuerIssuerIssuer H o l d i n g s H o l d i n g s H o l d i n g s H o l d i n g s % H o l d i n g s % H o l d i n g s % H o l d i n g s % H o l d i n g s Policy Max.W i t h in Po l ic y W i t h in Po lic y W i t h in Po lic y W i t h in Po lic y
Banks - Sched. I
BMO $5,999,344 4%25% per Sched. I Bank Yes
BNS 4,000,000 3%25% per Sched. I Bank Yes
CIBC 33,378,683 22%25% per Sched. I Bank Yes
TD 2,000,000 1%25% per Sched. I Bank Yes
TD - Cash 9,124,580 6%25% per Sched. I Bank Yes
Credit Unions
BlueS hore Financial 30,000,000 19%* None Prov. BC Guarantee Yes
Envision F inancial 49,664,911 32%* None Prov. BC Guarantee Yes
Westminst er Savings 20,740,163 13%* None Prov. BC Guarantee Yes
Bank s - S chedule II 0 0%25%, $10M, 3 yrs.Yes
Gov't - Fed.0 0%none Yes
Gov't - Prov.0 0%BC - none, othes 25%Yes
Gov't - Muni/ Reg. District 0 0%25%Yes
Municipal Finance Authority 0 0%25%Yes
Grand Total $1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1$1 5 4 ,9 0 7 ,6 8 1
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