introductions · ps 1201 - financial statement presentation requires the presentation of a...

1 © 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Introductions

  External auditors and advisors to many municipalities; in fact, we have

the leading market share of Canadian municipalities

  We serve as auditors for +10 municipalities in Alberta

  Current Advisory projects include MGA review, Municipal Benchmarking & Edmonton’s LRT Expansion


An Auditor’s Perspective

  PS 1201 - Financial Statement Presentation

  Requires the presentation of a comparison of the results for the accounting period with those originally planned, on a consistent basis

  CAS 700 - Forming an Opinion and Reporting on Financial Statements

  States that the auditor's opinion covers the complete set of financial

statements as defined by the applicable financial reporting framework


Originally Planned

  What does "originally planned" mean?

  Public Sector Accounting Discussion Group - January 7, 2014

View 1: Version 0, as approved by the appropriate authority

View 2: Amended budget

View 3: Budget does not require approval


Objectives of Budgeting

1.  Presents the total fiscal footprint of a municipality, both to

administration and citizens

2.  Complete representation of all revenues and expenditures, providing a framework for a municipality to operate responsibly and within its

means

3.  Readily understood by a motivated but non-expert reader


Types of Budgets

The Municipal Government Act requires that both an operating and a capital

budget be adopted.

  Operating budget

  Encompasses the everyday, recurring costs

  Includes operational costs, largely payroll and materials

  Capital budget

  Encompasses the multi-year costs of acquiring, constructing,

improving and removing capital assets

  Does not include amortization


Annual Financial Statement

Reports the consolidated annual results of a

municipality on an accrual basis, in accordance

with PSAS.


Cash vs. Accrual

  Cash

  Reports cash in and cash out on a transactional basis

  Accrual

  Recognizes revenue as earned and expenses as incurred, regardless of

timing of cash transactions

Differences between cash and accrual result when accounting for items

such as capital assets of pension obligations


Non-Expert Reader

  What / who is a knowledgeable reader?

  What / who is a non-expert reader?

Goal:

With only readily available information, a non-expert reader should be able

to perform an understandable comparison between budget information and

actual results, in order to review performance against plan.

9

As Seen by the Non-Expert Reader


Approved vs. Disclosed vs. Actual Operating Budget

-‐

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

Vancouver Saskatoon Winnipeg Toronto (x10) Halifax

Approved OperaEng Budget

Disclosed OperaEng Revenue

Actual OperaEng Revenue


Approved vs. Disclosed vs. Actual Capital Budget

-‐

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

Vancouver Saskatoon Winnipeg Toronto (x10) Halifax

Approved Capital

Disclosed Capital

Actual Capital

12

Elements of Better Budgeting


Observation #1

Consistent accrual accounting in budgets and financial statements

  Information become more understandable to the non-expert if budgets and

financial reports are consistently reported on an accrual basis


Observation #2

Combined operating and capital budget

  A municipality's full fiscal footprint is best communicated if the capital

and operating budgets are combined to represent total annual

spending


Observation #3

Multi-year budgets

  A non-expert gains deeper insight into future spending if presented

with multi-year information and can better consider the future

implications of today's spending


Observation #4

Consistent aggregation

  Consistent aggregation (apples to apples comparison) enables readers

to identify variances


Observation #5

Combined rate and tax supported expenditures

  Presentation of combined expenditures best presents a municipality's

fiscal footprint, as rate-supported programs still involve expenditures


Observation #6

Gross revenues and expenses

  Gross presentation allows for greater comparability to annual financial

statements

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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

Robyn Eeson, CA Partner, Audit KPMG LLP (780) 429-6074 [email protected]

Taylor Rolheiser, CA Senior Manager, Audit KPMG LLP (780) 429-7368 [email protected]

introductions · ps 1201 - financial statement presentation requires the presentation of a...

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