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Home My WebLink AboutAFC 2022-02-28 Agenda.pdf City of Maple Ridge Audit & Finance Committee AGENDA – REGULAR MEETING Monday, February 28, 2022 at 10:00 am Meeting Access Information Due to the COVID-19 pandemic we will be holding the Audit & Finance Committee (AFC) meeting via Zoom teleconference. Members of the AFC and the public are asked to join the meeting using the following access information: Join the meeting from your computer, tablet or smartphone https://mapleridge-ca.zoom.us/j/85142472315?pwd=eGZYSWhZT3lHVHhTWTFFUFVINHBJdz09 Or join the meeting using your phone Dial: 1-778-907-2071 Meeting ID: 851 4247 2315 Passcode: 775759 1. CALL TO ORDER 2. APPROVAL OF THE AGENDA 3. ADOPTION OF MINUTES – July 12, 2021 4. DELEGATIONS – NIL 5. NEW AND UNFINISHED BUSINESS 5.1 2022 Meeting Schedule 5.2 2021 Investment Update 5.3 Auditor Planning Report for 2021 6. QUESTION PERIOD 7. NOTICE OF CLOSED MEETING – NIL 8. ADJOURNMENT Next Meeting: March 28, 2022 Agenda Submission Deadline: March 14, 2022 QUESTION PERIOD Question Period provides the public with the opportunity to ask questions or make comments on subjects that are of concern to them. Each person will be given 2 minutes to speak. Up to ten minutes in total is allotted for Question Period. Virtual online meeting including the Blaney Room mapleridge.ca Doc#2854737 City of Maple Ridge Audit & Finance Committee MEETING MINUTES The Minutes of the Regular Meeting of the Audit & Finance Committee held virtually and in the Blaney Room, City Hall on July 12, 2021 at 1:04 pm COMMITTEE MEMBERS PRESENT Mayor Morden, Chair Councillor Dueck* Councillor Robson STAFF MEMBERS PRESENT Al Horsman Chief Administrative Officer Christina Crabtree* General Manager Corporate Services Scott Hartman* General Manager Parks, Recreation & Culture David Pollock General Manager Engineering Services Catherine Nolan Deputy Director of Finance Trevor Thompson Director of Finance Dan Olivieri Research Technician Erin Mark Clerk 3 *Participated remotely due to the COVID-19 pandemic. 1. CALL TO ORDER 2. APPROVAL OF THE AGENDA R/2021-AFC-013 It was moved and seconded That the agenda for the July 12, 2021 Audit & Finance Committee Meeting be approved as circulated. CARRIED 3. ADOPTION OF MINUTES R/2021-AFC-014 It was moved and seconded That the minutes of the June 14, 2021 Audit & Finance Committee Meeting be adopted as circulated. CARRIED 4. DELEGATIONS – Nil Audit & Finance Committee Meeting Minutes July 12, 2021 Page 2 of 2 Doc#2854737 5. NEW AND UNFINISHED BUSINESS 5.1. Business and Financial Planning Guidelines 2022-2026 Staff report dated July 12, 2021 providing information on the proposed Business and Financial Plan Guidelines for 2022-2026. D. Olivieri, Research Technician, provided a presentation regarding the Business Planning cycle and the purpose of the Business and Financial Plan Guidelines which include to: • Receive direction from Council for developing Business Plans • Set clear expectations for the public • Identify budget changes for the entire five-year plan T. Thompson, Director of Finance, spoke about the proposed increases in the proposed Guidelines, the impact on the Average Home, and Amenity Contributions including an option to utilize future Amenity Contributions collections towards existing projects. Committee members provided their feedback on the Guidelines and asked questions of staff. A. Horsman, Chief Administrative Officer, shared that the Guidelines will be provided for Council consideration at the July 13, 2021 Workshop Meeting. 6. QUESTION PERIOD – Nil 7. NOTICE OF CLOSED MEETING – Nil 8. ADJOURNMENT at 2:18 pm Mayor Mike Morden, Chair /em Su Mo Tu We Th Fr Sa Su Mo Tu We Th Fr Sa Su Mo Tu We Th Fr Sa 1 1 2 3 4 5 1 2 3 4 5 2 3 4 5 6 7 8 6 7 8 9 10 11 12 6 7 8 9 10 11 12 9 10 11 12 13 14 15 13 14 15 16 17 18 19 13 14 15 16 17 18 19 16 17 18 19 20 21 22 20 21 22 23 24 25 26 20 21 22 23 24 25 26 25 26 27 28 29 27 28 27 28 29 30 31 Su Mo Tu We Th Fr Sa Su Mo Tu We Th Fr Sa Su Mo Tu We Th Fr Sa 1 2 1 2 3 4 5 6 7 1 2 3 4 3 4 5 6 7 8 9 8 9 10 11 12 13 14 5 6 7 8 9 10 11 FCM 10 11 12 13 14 15 16 15 16 17 18 19 20 21 12 13 14 15 16 17 18 17 18 19 20 21 22 23 22 23 24 25 26 27 28 19 20 21 22 23 24 25 24 25 26 27 28 29 30 29 30 31 26 27 28 29 30 2022 Calendar January February March E A KBR Meeting Dates - 1:00 pm via Zoom 24/ 31 April 23/ 30 May June Audit & Finance Committee Monday, February 28 Monday, April 25 Monday, March 28 Monday, June 13I I IL_ •. .:.:_�;�_:!_;_...:.:,:··_J· llllillliillillililllililllil■ mapleridge.ca CITY OF MAPLE RIDGE EXECUTIVE SUMMARY: li s Jry 0 RECOMMENDATION: ifmi ly 9934 Page 1of5 BCDEFGH 28 K LMNO PQRSTIURL, " % % DISCUSSION: a) Background Context: Under the Community Charter, one of the categories of investments that municipalities are permitted to purchase is debt that is guaranteed by a chartered Canadian bank. Canadian banks continue to be very strong. However, as a result of the Financial Crisis of nearly a decade ago, banking regulations have and continue to be introduced and/or strengthened. Investment returns generate a significant amount of revenue for the City, and more importantly, the investments are safe and funds are available when needed. The parameters around the new MFA Growth Fund have been announced and a review of the Investment Policy is underway and an update will be presented to this committee at the next meeting. , 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. 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. Several municipalities in the lower mainland share information and investment approaches. Maple Ridge participates both with this group and on the Municipal Finance Authorities Pooled Fund Advisory Group. Municipalities in several other provinces are able to invest in a broader spectrum of asset classes. Burnaby initiated the conversation with a UBCM resolution to bring similar options to BC. This initiative received support from elected officials and municipal staff. Several municipalities have been working with the Province and MFA to develop parameters and conditions to achieve this. Much of the conversation is around governance and ensuring municipalities understand the time horizon and volatility of different asset classes. The MFA launched the Growth Fund in January of 2022. The next Audit and Finance Committee meeting will include additional information on this fund and the required policy updates and approvals to be able to participate. The MFA Pooled Investment Fund Quarterly Market Update and is attached for information. b) 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. These reserves receive a portion of the investment interest earned. 2993674 Page 2 of 5 CONCLUSIONS: The schedules attached highlight the return on investments and how the holdings compare to the parameters set out in the Investment Policy. There is currently one deviations from policy, however, the balance is in a savings account so very liquid. The return on investments of 1.6% exceeded the benchmark return of negative 0.2%. The negative benchmark return is a function of interest rates increasing which reduces the market value of the bonds. The primary focus of our investments is safety and being able to meet our cash flow requirements. Funds are invested appropriately and continue to produce relatively competitive returns. ~.- Prepared by: 4 n, BBA, CPA, CGA Direct r of Finance & Chief Financial Officer ~ Approved by: Christina Crabtree General Manager Corporate Services Concurrenc?:' Scott Hartman Chief Administrative Officer Attachments: A) Investment Portfolio ROI 8) Investment Portfolio Summary C) MFA Pooled Investment Fund Quarterly Market Update 2993674 Page 3 of 5 Term Long Mid. Short Total City of Maple Ridge Investment Portfolio Return on Investment (ROI) For 2021 Investments (avg.) Return ROI Benchmark $54,276,712 $1,736,672 3.2% -1.0% 16,675,969 359,194 2.2% -0.1% 162,625,246 1,537,369 0.9% 0.1% $ 233,577,927 $3,633,235 1.6% -0.2% Term means the term to maturity from the purchase date, not the term remaining to maturity. For example, a 7 year investment bought in 2016 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 less than three years and Long Term is anything over three years. Investment (avg.) is the average daily balance for the period. Return or earnings are calculated differently than current 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. ROI is the annualized return on investment. Benchmark used is the Municipal Finance Authority (MFA) Money Market Fund, MFA Intermediate Fund and MFA Bond Fund & benchmarks the MFA reports against. - 2993674 Page 4 of 5 City of Maple Ridge Investment Portfolio Summary As of December 31, 2021 Term to Maturity Long Term (>3 Years) Mid. Term (>1 year to 3 yrs.) Short Term Issuer Banks BMO BNS CIBC National* TD Credit Unions Blue Shore Envision Vancity Westminster Government Fed. Prov. Muni/Reg. District Municipal Finance Authority Total Holdings $ 76,000,000 41,000,000 152,424,021 $269,424,021 Holdings $ 10,000,000 25,172,032 42,820,478 77,230,826 41,318,055 13,000,000 30,000,000 15,000,000 3,882,630 8,000,000 $269,424,021 % Holdings 28% 15% 57% % Holdings 4% 10% 16% 29% 15% 6% 11% 6% 1% Policy Max. 35% 40% none Policy Max. 25% 25% 25% 25% 25% None, Prov. Guarantee None BC None, others 25% 25% 25% Within Policy Yes Yes Yes Within Policy Yes Yes Yes NO Yes Yes Yes Yes Yes Yes Yes Yes Yes * The just over half of the funds in National Bank are in a High Interest Saving Account. The funds are accessible within a day and as such having holdings over the policy maximum is much less of a concern. 2993674 Page 5 of 5 Municipal Finance Authority of BC MFA Pooled Investment Fund Monthly Performance Report 1 As of December 31, 2021 MFA Money Market Fund 0.02 0 .04 0.15 0.15 FTSE Canada 30-day T-B ill lndex 3 -0.01 -0.01 -0.04 -0.04 Difference +o.03 +a.OS +0.19 +0.19 MFA GovernmentForused Ultra-Short Bond Fund 0.06 -0 .15 -0 .01 -0.01 FTSE Canada 365-Day Tr eas ury Bill Index 0.06 -0.1 5 -0.07 -0 .07 Difference +0.00 +0.00 +0.06 +0.06 MFA Bond Fund 0.35 -0.40 -0.82 -0.82 FTSE Canada Shor t Term Ov era ll Bond Index 0.35 -0.54 -1.13 -1.13 Difference +0.00 +0 .14 +0.31 +0.3 1 MFA Fossil Fuel Free Short-term Bond Fund 0.35 -0.44 -0.92 -0.92 FTSE Canada Short Term Overall Band Index 0.35 -0.54 -1.1 3 -1.13 Difference +0.00 +0.10 +0.21 +0.21 MFA Mortgage Fund 0.64 0.47 1.45 1.45 FTSE Can ada Sho rt Term Overall Ba nd Index 0 .34 -0.56 -1.18 -1.18 Difference +0.30 +1.03 +2.63 +2.63 0.95 1.09 3.60 0.65 0.72 3.33 +0.30 +o.37 +0.27 1.44 1.40 3.27 1 .30 1.12 2 .91 +0.14 +o.28 +0.36 2.88 2.12 5.58 2.25 1 .66 5.27 +0.63 +0.46 +0.31 1.67 0.71 +0.96 2.91 1.46 +1.45 1 Total return less thanoneyearis rot an nu alizOO. Fbrtfolio and t:enchmark pe rformarce is net of total fe es an d expenses of 12.5 basis po fltspe r an rum (Mmey Ma rket Fund and G:)vernma,t Focused Ultra -S hat Bond Fund), 20 basis points per anrum (B ond Fund and Fossa Fuel FreeSt-ort-tenm Bond Fu nd), and 25 basis points per annum(Mortgage Fund) 'Inception dates : Money Mari<et Fu nd -May 1, l!E9; Governmait Focused Ul tra-Sho rt Bond Fun d -May 18, 20Xl (previous ly lrtenme d0te Fund -March 3Q 1994); Bond Fund -May i 1983, FossU Fu el Free Bon d Fund - May 5, 202Q Mortgage Fund -January 29, 2020 Growth of $10K Investment Over 10 Years* $13,000 $12,500 $12,000 $11,500 $11,000 $10,500 $10,000 rl N ('i') rl rl rl ' ' ' u u u QJ QJ QJ 0 0 0 -MFA Money Market Fund *Performance is net of fees ~ u QJ 0 l/) rl u QJ 0 I.D rl ~ 0 ~ ' u QJ 0 00 rl ' u QJ 0 -MFA Government Focused Ultra-Short Bond Fund ~ ' u QJ 0 ~ ' u QJ 0 -MFA Bond Fund rl N ' u QJ 0 MFA Money Market Fund The principa I objective of the Money Market Fund is to provide participating investors with interest income through investing pr i marily in high -quality money market instruments. The Fund will hold assets with maturities no longer than 366 days . Over the month, the yield curve flattened as long-term Government of Canada bond yields fell by more than short-term Government of Canada bond yields. Against this backdrop, the MFA Money Market Fund returned +0.02% over the month. MFA Money Market Fund 1 FTSE Canada 30-day T-Bi/1 Index Differen ce 0.02 -0 .01 +0.03 1 Total return is net of fees (12 .S bp; amu all y). To ta l ret urn le;s tha n 1 year is not cY1 nu alize d $11,500 Growth of $10K Investment $11,000 $10 ,500 0.04 -0 .01 +0.05 -FTSE Canada 30 DayT-Bill Index $10,000 ..-< N rn ;-!; Lf) I.D r--. 00 m 0 ..-< ..-< ..-< ..-< ..-< ..-< ..-< ..-< N ' ' ' ' ' ' ' ' ' ' u u u u u u u u u u QJ QJ QJ QJ QJ QJ QJ QJ QJ QJ 0 0 0 0 0 0 0 0 0 0 *F und performance is net o f fees MFA Money Market Fund Monthly Distribution 2 .00 (¢ per unit) 1.50 1 .00 0.50 0.00 *Di stributio ns in clude all interest in come and coupon payme nts ea rn ed on in vestm ents, and are p aid d aily. Total in co me, d i\id ed by th e t ota l units outstanding o n reco rd d ate, is t he inco me di st ributi on pe r unit pa id t o in vestors. ..-< N ' u QJ 0 0.15 -0 ,04 +0.1 9 0.15 -0.04 +0 .19 0.95 0.65 +0,30 1.09 0.72 +0,37 3.60 3 .3 3 +0 .27 Fund total net assets $1,702,882,601 $1,678,832,820 Average term Yield to maturity Number of issues Number of iss uers -., .. "1 ■111•■l ■;;;r1 J (1 11 ••~ ,J:':" STABLE TRUST D/N ENBRIDGE GAS INC D/N C.I.B.C. B/A PRIME TRUST D/N C.I.B .C. B/A PLAZA TRUST D/N TD BANK B/A SOUNDTRUSTD/N INTER PPLCOR D/N TRANSCANADA PIPE D/N I11,.-,..-,11air,a•,11:.i ' ,. Financial Non-Financial Government* Mortgages/MBS Pooled fund cash 56 days 0 .30% 181 44 53 days 0.32% 190 42 .;f.; f">t~ ~ ,., 2.21% 2.21% 2.02% 1.78% 1.76% 1.70% 1.60% 1.56% 1.55% 1.46% ~ ... &i) -~~ I '.>" , 'ii"~•T oPC--= 21.98% 25.42% 78.02% 74.58% 0.00% 0.00% 0.00% 0.00% 0 .00% 0 .00% *includ es fed era l and provincial governm ent RlH 56.84% 63.81% RlM 11.30% 10.57% Rll 31.86 % 25 .63% MFA Government Focused Ultra-Short Bond Fund Th e pri nc ip a l objective of the Government Focu sed Ultra-short Bond Fund is to provide participating investors with interest income . The Fund aims to achieve moderate ca pita I appreciation by act ive ly m a naging Fund investments. Th e Fund will hold asse t s with m aturities no lo ng e r than 2 years at the tim e of purc ha se. Over the month, the MFA Government Focused Ultra -S hort Bond Fund re turn ed +0.06%, performing i n line with the benchmark. Th e fund re m a in s biased towards hig h-quali t y provincia I and fin a ncia I corpora te bond s given their yield advantage over si m il arte rm federa I bonds. MFA Government Forused Ultra-Short Bond Fund 0.06 -0.15 FTSE Canada 3 65-Day Tr easury Bill Index 0.06 -0 .15 Differenc e +0.00 +0.00 Tot a return is neto ees 12.5 µ; amu a y}. Tota ret urn les s an 1 year is not ann ual ize 2 Gove rn me nt Focused Ultra-S hort Bo nd Fund -May 18, 20~ (prevbusly lrterm ediate Fund -March 30, 1994 ) $12,000 $11,500 $11,000 $10,500 $10,000 3 .00 2 .50 2.00 1.50 1.00 0 ,00 .-i .-i ' u QJ 0 Growth of $10K Investment -MFA Government Fo cused Ultra -Short Bo nd Fund -FT SE Cana da 365-Day Tr eas ury Bill Ind ex N (Y) ~ ~ <.O r---.-i .-i .-i .-i ' ' ' ' ' ' u u u u u u QJ QJ QJ QJ QJ QJ 0 0 0 0 0 0 00 0) .-i .-i ' ' u u QJ QJ 0 0 •Fund performan ce is net o f fees MFA GovernmentForused Ultra-Short Bond Fund Monthly Distribution (¢ per unit) 0 ~ ~ C's ' u C QJ a; 0 C *Distrib utio ns in clud e al l interest in co me and cou pe n payme nts ea rn ed on in 1.estments, and are paid mo nt h ly. To t al inco me, divid ed by the tot al units outsta ndi ng on reco rd d ate, is the income di stribution per unit paid to investo rs. -0.01 -0.01 1.44 1.40 3.27 -0 .07 -0.07 1.30 1 .12 2 .91 +0.06 +0.06 +0 .14 +0 .28 +0 .3 6 ·"" ·'.i ::: ••• ~••tr•:£l ,;:;,. ji,.,:r.l"l:WI . liDfiTiH .... . ... ., Fund total n et assets $324,990,644 $312,279,395 Average term 0.89 years 0.85 years Yield to maturity 0 .68% 0.72% Modified duration 0.87 years 0.83 years Number of issues 10 11 Number of iss uers 8 8 -\}~ff'~i ,,, '.~~?-.) ----•-;, .. ~ ,.,1,••••-111 11••·•:.L.,~ 't.: , 11.J.l:'l.tl•"-<...-~ 1111.."f Ontario 3 .2%,J un 2, 2022 3 1.00% Ontario 2.9%, Jun 2, 2023 11.99% Ca nad a Housing Tru st 2.4%, Dec 15, 10.77% 2022 Bank of Nova Scotia 2.4%, Dec 5, 2022 7 .91% RBC 2.4%, Dec 5, 2022 7 .48% Alberta 1.6%, Sep 1, 2022 7 .23% C.I.B.C. 2.4%,Jun 9, 2023 5.18% Alberta 2 .6%, Dec 15, 2022 4 .89% Ca n ada Housing Trust 2 .7%, Dec 1, 20 22 4.74% Quebec 3.5%, De c 1, 2022 4.55% ·--• ::'.4,.l:f ' :.~.K{.;"(•~ {'i .... tr ·.•:u .•· . ...__ -~ ,r ·,,t -~~-••-· Fi nancia l 24.81% 24.85% Non-Financial 0 .00% 0 .00% Government* 75.19% 75.1 6% Mortgages/M BS 0.00% 0 .00% Pooled fund cash 0.00% 0.00 % •in clud es f ederal and provincial gove rnm ent AAA/RlH 25 .13% 15.15% AA/RlM 66.46% 69.35% A/Rll 8.42% 15 .14% MFA Bond Fund Th e princ ipa I obj ect ive of the sho rt-term Bo nd Fu nd is to p rovide parti c i pat ing investors with interest in come . Th e Fu nd a i ms t o ac h ieve moderate ca p it a I appreciation by active ly m anag ing Fun d i nvest m e nts. T he Fund wi ll ho ld assets w ith m at u ri t ies n o lo nge r tha n 7 .25 yea r s at t he t im e of purc h ase . Th e M FA Bo nd Fund r eturne d +0.35% over t he month, pe rfor ming i n lin e wit h its be nc hm ark. T he po rt fol io's overw eig ht b ia s t o corpora t e bonds w as add itive to r e lat ive performa nee.However, this w as offset by t he po rt fo li o's sho rt durati o n position and underwe ight b ias t o f ede r a I bo nds, whic h det racte d fro m re lative ret urns. MFA Bond Fund FTSE Canada Short Term Overall Bond Index Differ en ce 0 .35 0.35 +0.00 Tot a return is net o ees 20 ps annu a n 1 yea r is not anru ali:ze d. 3 Incept ion dat e: May 1, 1989 $14 ,000 $13,500 $13,000 $1 2,500 $12,000 $1 1,500 $11,000 $10,500 $10,000 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 rl rl ' u QJ 0 Growth of $10K Investment -MF A Bond Fu nd -FT SE Cana da Short Te r m Ov er al l Bond In de x ;::j ' u QJ 0 ("() rl ' u QJ 0 ;-!i ' u QJ 0 ~ ' u QJ 0 *Fund perfo rm ance is net of fees t.D rl ' u QJ 0 ~ ' u QJ 0 00 rl ' u QJ 0 MFA Bond Fund Monthly Distribution (C per un it) ' u QJ 0 ~ ' u QJ 0 *Di stri b ution s includ e all interest income and coupo n paym ents ea rn ed o n i nvest ments, and are pa id mo nth ly. Total i nco me, d rv id ed by the t o tal unit s o u tstan din g on reco rd d ate, is th e income distribution pe r unit pai d to i nvest o rs. -0.40 -0 .54 +0.14 rl N ' u QJ 0 -0 .82 -0 .82 -1.13 -1 .13 +0.31 +0.3 1 2 .88 2.2 5 +0.63 2 .12 1 .66 +0.46 5 .58 5.27 +0.31 l3rnr.lr ----. . . . . .. •,S•'.' rn.-:EYil .. m::i-ml.i:-;-, Fun d tot al net as sets $734 ,649,123 $717,412,434 Average term 2.67 years 2.68 years Yield to mat u rity 1.44 % 1.40% Modified du ration 2.52 yea rs 2 .53 years Numbe r of iss u es 146 141 Numbe r of issu ers 66 66 ll..-1"JtW ■l••1 IHt ■1u:_ •~".'.R_:'- ·-.~, .. _ ---·, .... ·. ''It:~_.:" m,-:--,,~'i"c'" .. \ Onta rio 2 .6%,Ju n 2, 20 25 4 .8% Ca nada 0 .5%, Nov 1, 2023 4.5% Cana da 1.0%, Sep 1, 2026 4 .5% Ca nada 0.8%, Feb 1, 20 24 4.2% Canada Ho usi ng Trust 1 .6%, Dec 15, 2026 3 .9% Canada Hous i ngTrust2 .6%, Dec 15, 2023 3 .6% Canada Hous i ng Trust 1.3%, Ju n 15, 2026 2.4% Ma nu fact u rers Li fe Ins ur. 3.2%, Nov 22, 2.3% 2027 Ontario 1 .8%, Sep 8, 20 25 1 .9% Onta rio 2.4%, Ju n 2, 20 26 1.7% Financ ial 17 .13% 17.70% Non -Financ ial 30.53% 29 .36% Government * 38 .10% 38.93% Mo rtgage s/M BS 5 .07% 5.11% Poo led fu nd cash 9 .16% 8 .90% *include s f ederal and provin cia l gove rnm ent Cash & short term 9 .16% 8.90% AAA 24 .19% 25 .82% AA 19 .03% 19 .06% A 24.73% 24.42% BBB & be low 17.83% 16.69% Mo rtgages/M BS 5 .0 7 % 5 .11 % MFA Fossil Fuel Free Short Term Bond Fund The principa I objective of the Fos sil Fuel Free Short-Term Bond Fund is to provide participating investors with interest income. The Fund aims to achieve moderate ca pita I appreciation by actively managing Fund investments. The Fund will hold assets with maturities no longer than 7.25 yea rs at the time of purchase. The Fund sha II not invest in secur ities of Issuer s directly involved in the extraction, processing and transportation of coal, oil, or natural gas ("fossil fuels"). Over the month, the Fossil Fuel Fre e Short-Term Bond Fund returned +0.35%, performing in line with its benchmark. The portfolio's overweight bias to corporate bonds was additive to relative performance. However, this was offset by the portfolio's short duration position and underweight bias to federa I bonds, which detracted from relative returns. MFA Fossil Fuel Free Short-term Bond Fund FTSE Canada Short Term Overall Bond In dex Difference 0 .35 0 .35 +0.00 -0.44 -0 .54 +0.10 -0.92 -1.13 +0.21 -0.92 -1.13 +0.21 1.67 0.71 +0.96 Tota l returnis netoffees 20 psannua . Totalreturn lesstl"en lyearisnotanrualized. ln cep:ionda te:M ayS, X:>20 6.00 5.00 4 .00 3 .00 2.00 1.00 MFA Fossil Fuel Free Short-term Bond Fund Quarterly Distribution (C per unit) 0.00 - ..--i ..--i ..--i r,J r,J r,J 0 0 0 r,J r,J r,J r,J m 'SI" Cf Cf Cf ~ *Distributions include all interest income and coupon pay ments earned on in 1.est ments, and are paid quarterly. Total income, d ivided by the total units outstanding on record date, is the income distribution per unit paid to investors. Fund total net assets* $159,415,254 $160,000,464 Average term 2.66 years 2 .66 years Yield to maturity 1.42% 1.36% Modified duration 2.52 years 2.52 years Number of issues 8 7 88 Number of is suers 39 42 *MFA owns units of the RBC Vision Fossil Fuel Free Short-term Bond Fund (total size $277,072,141) U'iJ.-Uliilt l illl :..: ?-_'. {,~ \ -,:.·~,--:. ~ l.'91."7 -,., ~C:.W.•~ Canada 1.0%, Sep 1, 2026 5.26% Ontario 2 .6%,Jun 2, 2025 4.65% Canada Hou sing Trust 1.6%, Dec 15, 2026 4.41% Ontario 3.5%,Jun 2, 2024 3.40% Hydro Once Inc . 0 .7%,Jan 16, 2023 3.29% Canada Hou sing Trust 1.3%, Jun 15, 2026 3.07% Bruce Power LP 3.0%, Jun 21,2 024 2.72% Ontario 2 .9%,Jun 2, 2023 2.57% Ontario Power Gen 2.9%, Apr 8, 2025 2.52% Bank of Montreal, 2.9% Mar 6, 2024 2.08% Financial 18 .63% Non -Fi nan cia l 29.30% 26.99% Government* 36.21% 37.70% Mortgages/MBS 4.47% 4.39% Pooled fund cash 11.38% 11.52% *incl ud es fed eral and provincia l government Cash & short term 11.38% 11.52% AAA 20.01% 21.57% AA 25.74% 24.78% A 24.43% 25 .2 0% BBB & below 13 .98% 12.55% Mortgages/MBS 4.47% 4.39% MFA Mortgage Fund The principa I objective of the Mortgage Fund is to provide participating investors with interest income, and divers ifi cation benefits by ca pita lizing on the ii liqui dity premium offered by the Canadian commercia I mortgage markets. The Fund sha II indirectly invest primarily in first mortgages on income producing commercia l properties in Canada with an average term of 2 to 5 years . Th e MFA mortgage fund returned +0 .64% over the month, outperforming its benchmark. Mortgage spreads were broadly flat over the month, end ing December at a yield of 161 basis points over simil ar-term Government of Canada bonds . MFA Mortgage Fund 0.64 0.47 1.45 1.45 FTSE Canada Short Term Overall Bond Index 0.34 -0.56 -1.18 -1.18 Difference +0.30 +1.03 +2.63 +2.63 Total return is net of fees (25 bps annual~). Total return less th3n 1 yea r is not anrua lized. 3 In ception date: January 29, 20JJ L:::::IIIATt ■I 1r.;1r; ., .. .. , wi, .. ..,...,1 Fund tota l net assets* $143,056,406 Weight average spread 163 bps over sim il ar term GoC bonds Weighted average amortization 21.5 years Average term-to-maturity 3.9 years Current portfolio yield 2 .31% Weighted average duration 3.2 years Weighted loan-to-value 54% Weighted average cash flo w coverage 1.7x Number of mortgage s 566 Largest mortgage 2.1% Marketable securities & cash 12.0% *MFA owns units of the PH&N Mortgage Pe nsron Trust (total srze $5,127,968,919) 9.00 8.00 7.00 6.00 5.00 4.00 3 .00 2.00 1.00 0.00 rl N 0 N rl cJ MFA Mortgage Fund Quarterly Distribution (C per unit) rl rl N N 0 0 N N N N') cJ cJ ,.• ... ' '.,• $144,001,156 161 bps over similar term Goe bonds 21.6 years 4.0 years 2.28% 3.3 years 55% 1.7x 555 2.1% 13.4% rl N 0 N 'Sf° cJ *Distributions in clude al l interest income and coupon payments earned on im.estments, and are paid quarterf,,. Total income, divided by the total units outstanding on record date, is the income distribution per unit paid to investors. 2.91 1.46 +1.45 2990729 Page 1 of 2 TO: Audit & Finance Committee MEETING DATE: 28-Feb-2022 FILE NO: 05-1830-20 FROM: Chief Administrative Officer MEETING: Audit & Finance Committee SUBJECT: Auditor Planning Report for 2021 EXECUTIVE SUMMARY: As part of their work to ensure that the City’s Consolidated Financial Statements can be relied on BDO Canada LLP is required to communicate with Council, through the Audit & Finance Committee, before the start of the audit. The attached Audit Planning Report from BDO Canada LLP provides the Committee with information regarding the work that the auditors will undertake during their audit of the City’s 2021 Consolidated Financial Statements and provides contact information for the audit team should the Committee wish to contact them directly. RECOMMENDATION: That the attached Audit Planning Report be received for information DISCUSSION: a) Background Context: BDO Canada LLP is required to communicate to Council, through the Audit & Finance Committee, both before and after the audit as part of their work to form an opinion regarding the City’s Consolidated Financial Statements. The attached audit planning report is their pre-audit communication to you. In previous years the audit partner has attended meetings to review this letter with you. This year, in looking for opportunities to streamline our year-end processes we are providing you with the report, highlighting some key points and affirming the opportunities for you to communicate directly with the auditors should you wish to do so. The auditors are responsible for planning and performing the audit in such a way that the y can be reasonably sure that the statements are free of material misstatements. To accomplish this their work considers the risk of misstatement due to fraud, or that revenues or expenses may be misstated beyond a material amount. The materiality amount is set each year, using a standardized formula, and represents the amount by which amounts in the statements could be misstated without affecting their overall reliability. For 2021, this limit set at $3.2 million for operations and $22.5 million for tangible capital assets. Staff work diligently to ensure that the statements are free of all misstatements to the extent possible. City of Maple Ridge ------,W·-- mapleridge.ca Should you wish to communicate directly with the audit team contact information is provided on page 5 of the audit planning report and included here for convenience. Name Role Phone Number E-Mail Brian Szabo , CPA, CA Engagement Partner 604-646-3389 bszabo&bdo.ca Mario Piroddi, CPA , CA, CISA Quality Review Partner 250-372-9505 mpiroddi@bdo.ca Andrew Davies, CPA Assurance Sr. Manager 604-646-6221 andavies@bdo.ca Darren Taylor, CPA , CA Indirect Tax Partner 604-443-4725 dtaylor@bdo.ca Following the conclusion of the audit BDO Canada LLP will prepare another report providing information on the work completed and details their findings. We will ask the engagement partner to attend that meeting to address any questions you may have at that time. CONCLUSION: The attached Audit Planning Report provides Council, through the Audit & Finance Committee, with information about th e upcoming audit of the City's 2021 Consolidated Financial Statements. A post audit report will be provided follow ing the conclusion of the audit. It is expected that report will be available in late April. Prepared by: Catherine Nolan, CPA, CGA Deputy Director of Finance --✓--~ Reviewed by: Tr tv'or Tho ~BA, CPA, CGA Director of Finance ~ Approved by: Christina Crabtree General Manager of Corporate Services , s Concurrence: Scott Hartman Chief Administrative Officer Attachments: (A) Audit Planning Report 2990729 Page 2 of 2 Back to contents ~ To the Audit and Finance Committee of the City of Maple Ridge We are pleased to provide you with this planning report to highlight and explain key issues we believe to be relevant to the audit of City of Maple Ridge (the "City") financial statements for the year ended December 31 , 2021. The enclosed planning report includes our approach to you r audit, the significant risks we have identified and the terms of our engagement. At the year-end meeting , we will provide you with a copy of our draft audit opinion and discuss the nature, extent and results of our audit work. We will also report any significant internal control deficiencies identified during our audit and reconfirm our independence. Our audit and therefore this report will not necessarily identify all matters that may be of interest to the Audit and Finance Committee in fulfilling its responsibilities . This report has been prepared solely for the use of the Audit and Fi nance Committee and should not be distributed without our prior consent. Con sequently, we accept no responsibility to a third party that uses this communication . We look forward to completing our draft audit report opinion and discussing our conclusions with you. In the meantime, please feel free to contact us if you have any questions or concerns. Yours truly, Bl>O~LLP BDO Canada LLP 2 I City of Maple Ridge Table of Contents Audit timeline Your dedicated BOO audit team Auditor's responsibilities Audit risk areas and planned responses Materiality Using the work of others How we audit financial statements Our audit approach Recommended resources Spotlight on sustainability Appendices 4 5 6 9 10 11 12 13 14 15 16 For the year ended December 31, 2021 IBDO For the year ended December 31, 2021 Audit timeline Planning and interim Release of audit report fieldwork Upon approval of the financial statements by the Mayor and November 2021 Council -Anticipated to be early ·, May 2022 II 11 Provide audit planning Present final report to the report to the Audit and Mayor and Council Finance Committee February 2022 Early May 2022 II II Clearance meeting with Year:-end audit work management Starts March 7, 2022 and BDO Mid April 2022 4 I City of Maple Ridge IBDO PHONE NUMBER EMAIL Engagement Partner 604.646.3389 bszabo@bdo.ca Quality Review Partner 250.372. 9505 mpiroddi@bdo.ca Assurance Senior Manager 604.646.6221 andavies@bdo.ca 604.443.4725 dtaylor@bdo.ca Back to contents For the year ended December 31, 2021 Auditor's responsibilities: financial statements We are responsible for forming and ex pressing an opinion on the financial statements that have been prepared by management , with oversight by those charged with governance. The audit of the financial statements does not relieve management or those charged with governance of their responsibilities. The scope of our work, as confirmed in our engagement letter attached as Appendix A to this letter, is set out below: Year-End Audit Work ► Work with management towards the timely issuance of the financial statements. ► Provide timely and constructive management letters. This may include deficiencies in internal control identified during our audit. ► Present significant findings to the Mayor and Council including key audit and accounting issues, any significant deficiencies in internal control and any other significant matters arising from our work. 6 I City of Maple Ridge Q .... We are required to obtain an understanding of the system of internal control in place in order to consider the adequacy of these controls as a basis for the preparation of the financial statements, to determine whether adequate accounting records have been maintained and to assess the adequacy of these controls and records as a basis upon which to design and undertake our audit testing. We are required to report to you in writing about any significant deficiencies in internal control that we have identified during tile audit._ I BDO Back to contents Auditor's responsibilities: fraud We are responsible for planning and performing the audit to obtain reasonable assurance that the financial statements are free of material misstatements, whether caused by error or fraud, by: ► Identifying and assessing the risks of material misstatement due to fraud; ► Obtaining sufficient and appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses ; and ► Responding appropriately to fraud or suspected fraud identified during the audit. The likelihood of not detecting a material misstatement resulting from fraud is higher than the likelihood of not detecting a material misstatement resulting from error because fraud may involve collusion as well as sophisticated and carefully organized schemes designed to conceal it. 7 I City of Maple Ridge For the year ended December 31, 2021 Behind the audit report Learn how we audit your financial statements SEE OUR PROCESS I BDO Back to contents Auditor's responsibilities: fraud Throughout our planning process , we performed risk assessment procedures and related activities to obtain an understanding of the City and i ts en vironment, i ncluding the Ci t y's internal control, to obtain i nformation for use in identifying the risks of material misstatement due to fraud and made inquiries of management regarding: ► Management 's asse ssment of the risk that the financial statements may be materially misstated due to fraud, including the nature, extent and frequency of such assessment s; ► Management's process for identifying and responding to the risks of fraud in the City, including any specific risks of fraud that management has identi f i ed or that have been brought to its attention , or classes of transactions, account balances, or disclosures for which a risk of fraud is likely to exist; ► Management's communication , if any , to those charged with governance regarding its processes for identifying and responding to the risks of fraud rele vant to the City; and ► Management's communication , if an y, to employees regarding its view on business practices and ethical behavio r. We are not currently aware of any fraud affecting the City. If you are aware of any instances of actual, suspected , or alleged fraud , please let us know . 8 I City of Map le Ridg e Back to contents For the year ended December 31, 2021 Audit risk areas and planned responses Based on our knowledge of the City's business , our past experience, and knowledge gained from management and Mayor and Council, we have identified the following significant audit risk areas that we wish to raise to your attention. Risks classified as significant arise due to a combination of: complex accounting rules, changes in operations or business l ines, the extent of estimation and judgment involved in the financial statement area , and the existence of new accounting pronouncements that affect them . We request your input on the following significant risks and whether there are any other areas of concern that Mayor and Council have identified. Financial statement areas Risk of Fraudulent Revenue Recognition [Rebuttable presumption] Recognition of Grant & Government Transfer Revenue Management Override of Internal Controls [Mandatory audit consideration] 9 I City of Maple Rid ge Risks noted Auditing standards require us to consider the risk of fraudulent revenue recognition, due to the nature of the City's revenue, we have rebutted this presumption. Nevertheless, accounting standards relating to grant and government transfer revenue recognition are complex and open to variation in application. There is a risk that grants or revenue derived from other government transfers may be incorrectly deferred into future periods or recognized prior to stipulations being met. Management is generally in a unique position to perpetrate fraud because of its ability to directly or indirectly manipulate accounting records , and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. This risk is not unique to the City. Audit approach Review of funding agreements , with a focus on key terms related to revenue recognition criteria, including: total funding amounts, eligibility criteria, stipulations and potential repayment . Verify a sample of grant fund receipts to the bank statement and supporting payment notification from the funder. Expenditures incurred for projects funded by arrangements that include stipulations will also be reviewed to ensure those expenditures meet the requirements of the funding agreement. Review other revenue streams to ensure they are recorded in accordance with revenue recognition standards . Review of transactions recorded in various ledgers for unusual, non- recurring adjustments that are not addressed by other audit procedures. Test the appropriateness of key estimates, and any adjustments made in the preparation of the financial statements. I BDO Bac k to contents •--•--•--•--Materiality Materiality for financial statement amounts relating to operations is preliminarily set at $3.2 million . Materiality for tangible capital assets is preliminarily set at $22 .5 million. These materiality calculations are based on the City's preliminary results . Materiality will be re -assessed throughout the audit process as the City's financial results become available, and as any audit adjustments are identified . We will communicate any changes in materiality to the Mayor and Council as part of our final audit reporting materials. 10 I City of Ma ple Ridge Misstatements are considered to be material if they could reasonably be expected to influence the decisions of users based on the consolidated financial statements. We will communicate all corrected and uncorrected misstatements identified during our audit to the Mayor and Council, other than those which we determine to be "clearly trivial." We encourage management to correct any misstatements identified throughout the audit process . Bac k to contents Using the work of others Experts engaged by management To complete the audit of your financial statements, we will rely in part on the work of, and the report prepared by, HUB International Limited. This expert's work relates to the employee future benefits liability recognized by the City. Canadian generally accepted auditing standards require us to communicate with this expert. We propose to discuss the following with HUB International Limited: ► The objective and nature of our audit engagement and how we intend to use the expert 's findings and report. ► Our assessment of the significant and risk aspects of the engagement that will affect the expert's work. ► The requirement to advise us if they have any relationship with the City which could impair their judgment or objectivity in the conduct of their engagement. ► The nature, timing and extent of the expert's work and our planned review of it, possibly including review of their working papers. ► Confirmation that the assumptions used in their calculations are consistent with those used in the prior periods and with industry standards. ► Their obligation to advise BDO Canada LLP of any matters up to the estimated audit report date that may affect their calculations and their report. We ask that the appropriate level of management review the data provided to HUB International Limited and that they also review the assumptions used and results reported by the expert. 11 I City of Maple Ridge ,, 0 1 PUBLIC SECTOR ACCOU N T IN G STAN DARDS {P SAS ) UPDATE 2021 It has been a busy year for the Public Sector Acc ounting Board {PSAB or the "Bo ard"). Like many organizations. the Boar d has been hard at work dea ling with the ever-evolving situation of the COVID-19 pandem ic. The Bo ard has continued to adapt and make quick decisions t o address stakeholde r needs. Whi le t he Board and its co mm ittees have allocated some o· t heir focus to th e pandemic. they have contin ued to purs ue variou s ongoin g projects. This publication: • loo ks at the impact of COVI D-1 9 • outli nes new standards effective over the next few years • reviews the futu re of PSAS lists projects that w ill Impact public se ctor entitles In the future. DOWNLOAD PSAS UPDATE Rea dy for AROs? PSAS 3280, Asset Retirement Obligations, is required to be imp lemented in the City's fiscal year starting January 1, 2023. Are y ou r eady? If not, reach out to yo ur Dedicated BDO Team Follow this link for a brief on AROs