COUNCIL REPORT: APPOINTMENT OF EXTERNAL AUDITOR

APPOINTMENT OF EXTERNAL AUDITOR

TO: Council
DATE: October 16, 2024
FROM: Steven Vella, Manager of Accounting
MEETING DATE: December 3, 2024

RECOMMENDATION:

THAT Council confirm the appointment of MNP LLP as external auditors for View Royal for fiscal years 2024 through 2028 (inclusive);

AND THAT staff be authorized to execute a contract with MNP LLP for the provision of financial audit services for a total of $136,275 (exclusive of taxes, administrative fees, and disbursements) for the five-year term of the agreement.

ALTERNATIVE OPTIONS:

Option #2: THAT Council confirm the appointment of MNP LLP as external auditors for View Royal for the fiscal years 2024 and 2025;

AND THAT staff conduct a public competitive process for audit services for a term of five years in 2025.

PURPOSE:

Section 169 of the Community Charter states a council must appoint an auditor for the municipality.

BACKGROUND:

On September 3, 2019, Council resolved:

MOVED BY: Councillor Mattson
SECONDED BY: Councillor Rogers

C-113-19 THAT MNP LLP be appointed as external auditors for View Royal for fiscal years 2019 through 2023 (inclusive);

AND THAT staff be authorized to execute a contract with MNP LLP for the provision of financial audit services for a total of $112,875 (exclusive of taxes) for the five-year term of the agreement.

CARRIED

The fee schedule for these years was as follows, net of applicable taxes, administrative fees, and disbursements:

• 2019 - $20,475
• 2020 - $21,525
• 2021 - $22,575
• 2022 - $23,625
• 2023 - $24,675

Staff have obtained fee estimates, net of any applicable taxes, administrative fees, and disbursements for the next five years as follows. Of note, there is no fee increase proposed for 2024:

• 2024 – $24,675
• 2025 – $25,900
• 2026 – $27,200
• 2027 – $28,500
• 2028 – $30,000

Council endorsed the appointment of MNP as the Town’s external auditor for it’s 2024 fiscal year at Council’s December 5, 2023 meeting. Extending the appointment for a further four years is supported under the Town’s purchasing policy 1600-021 (attached as Appendix A) Section 10.8.14:

Where a public competitive process is impractical because of the need to obtain unique third-party skills, there is a requirement for contractor continuity, or there is a strong case for the cost effectiveness of maintaining or retaining an existing contractor for a specific task.

There is a chance that offering a competition for audit services will produce lower total audit fees over the five-year term; however, a change in auditor carries with it increased demand for staff time to assist new audit personnel in understanding the Town’s processes, internal controls, and staffing skillsets, which inform the audit plan.

MNP has a good understanding of the Town’s current finance department context and processes. With MNP’s support, Town staff have developed a contactless, virtual audit process via Microsoft 365 which provides a high level of efficiency and communication.

During 2024, the finance department experienced a 50% turnover of senior full-time staff – the Director of Finance and Technology and the Senior Accountant/Financial Analyst. While these positions have been or will be filled, it will take some time for new staff to gain a complete understanding of all aspects of the finance function at View Royal. Finance staff will be more fully supported by retaining the current audit firm for the short-term.

ANALYSIS:

Impacts and implications can be summarized as follows:

ALIGNMENT:

The recommended option aligns with the Town’s following core guiding documents as follows:

• Strategic Plan: Strategic Priority D: Financial sustainability & service excellence
• Official Community Plan: N/A
• Other Policy Documents: Purchasing Policy #1600-021

PUBLIC PARTICIPATION GOAL:

The desired level of public participation for the recommended option is: [x] Inform [ ] Consult [ ] Involve [ ] Collaborate [ ] Empower
[ ] N/A

TIME CRITICAL:

To provide cost certainty, the Town’s auditor for the 2025 fiscal year should be appointed prior to finalizing the 2025 financial plan.

CONCURRENCE:

REVIEWED BY: