Appendix E – Draft management representation letter
A draft letter from Town management to the auditors confirming the integrity of the financial information provided for the audit.
Appendix E – Draft management representation letter
Management Representation Letter
May 7, 2019
Grant Thornton LLP Suite 650-1675 Douglas Street Victoria, BC V8W 2G5
Dear Sir/Madam:
We are providing this letter in connection with your audit of the consolidated financial statements of Town of View Royal as of December 31, 2018, and for the year then ended, for the purpose of expressing an opinion as to whether the consolidated financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of Town of View Royal in accordance with Canadian public sector accounting standards.
We acknowledge that we have fulfilled our responsibilities for the preparation of the consolidated financial statements in accordance with Canadian public sector accounting standards and for the design and implementation of internal controls to prevent and detect fraud and error. We have assessed the risk that the consolidated financial statements may be materially misstated as a result of fraud, and have determined such risk to be low. Further, we acknowledge that your examination was planned and conducted in accordance with Canadian generally accepted auditing standards (GAAS) so as to enable you to express an opinion on the consolidated financial statements. We understand that while your work includes an examination of the accounting system, internal controls and related data to the extent you considered necessary in the circumstances, it is not designed to identify, nor can it necessarily be expected to disclose, fraud, shortages, errors and other irregularities, should any exist.
Certain representations in this letter are described as being limited to matters that are material. An item is considered material, regardless of its monetary value, if it is probable that its omission from or misstatement in the consolidated financial statements would influence the decision of a reasonable person relying on the consolidated financial statements.
We confirm, to the best of our knowledge and belief, as of May 7, 2019, the following representations made to you during your audit.
Financial statements
- The consolidated financial statements referred to above present fairly, in all material respects, the financial position of the entity as at December 31, 2018 and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards as agreed to in the terms of the audit engagement.
Completeness of information
- We have made available to you all financial records and related data and all minutes of the meetings of shareholders, directors, and committees of directors, as agreed in the terms of the audit engagement. Summaries of actions of recent meetings for which minutes have not yet been prepared have been provided to you. All significant board and committee actions are included in the summaries.
- We have provided you with unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.
- There are no material transactions that have not been properly recorded in the accounting records underlying the consolidated financial statements. The adjusting journal entries which have been proposed by you are approved by us and will be recorded on the books of the entity.
- The restatements made to correct material misstatements in the prior period consolidated financial statements have been properly recorded, are approved by us, and will be recorded on the books of the entity.
- We are unaware of any known or probable instances of non-compliance with the requirements of regulatory or governmental authorities, including their financial reporting requirements.
- We are unaware of any violations or possible violations of laws or regulations the effects of which should be considered for disclosure in the consolidated financial statements or as the basis of recording a contingent loss.
- We have disclosed to you all known deficiencies in the design or operation of internal control over financial reporting of which we are aware.
- We have identified to you all known related parties and related party transactions, including sales, purchases, loans, transfers of assets, liabilities and services, leasing arrangements guarantees, non-monetary transactions and transactions for no consideration.
Fraud and error
- We have no knowledge of fraud or suspected fraud affecting the entity involving management; employees who have significant roles in internal control; or others, where the fraud could have a non-trivial effect on the consolidated financial statements.
- We have no knowledge of any allegations of fraud or suspected fraud affecting the entity’s consolidated financial statements communicated by employees, former employees, analysts, regulators or others.
- We acknowledge our responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud.
- We believe that the effects of the uncorrected financial statement misstatements summarized in the accompanying schedule are immaterial, both individually and in the aggregate, to the consolidated financial statements taken as a whole.
Recognition, measurement and disclosure
- We believe that the significant assumptions used by us in making accounting estimates, including those used in arriving at the fair values of financial instruments as measured and disclosed in the consolidated financial statements, are reasonable and appropriate in the circumstances.
- We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities, both financial and non-financial, reflected in the consolidated financial statements.
- All related party transactions have been appropriately measured and disclosed in the consolidated financial statements.
- The nature of all material measurement uncertainties has been appropriately disclosed in the consolidated financial statements, including all estimates where it is reasonably possible that the estimate will change in the near term and the effect of the change could be material to the consolidated financial statements.
- Any business combination that occurred during the year has been properly accounted for with appropriate consideration of amounts that should be allocated to goodwill and other intangible assets.
- Any goodwill or intangibles on the books of the entity are evaluated whenever events or changes in circumstances indicated the carrying amount may not be recoverable to determine whether or not they have been impaired, and an appropriate loss provision is provided in the accounts where there has been a permanent impairment.
- All outstanding and possible claims, whether or not they have been discussed with legal counsel, have been disclosed to you and are appropriately reflected in the consolidated financial statements. Refer to Note 17 in the consolidated financial statements.
- All liabilities and contingencies, including those associated with guarantees, whether written or oral, have been disclosed to you and are appropriately reflected in the consolidated financial statements.
- All “off-balance sheet” financial instruments have been properly recorded or disclosed in the consolidated financial statements.
- For any derivative financial instruments that the entity has entered into we have used reasonable assumptions and methodologies in valuing these derivative financial instruments and have appropriately reflected all such transactions in the financial statements, including identifying and accounting for any embedded derivative financial instruments. We have provided to you the terms of transactions involving derivative financial instruments, including any side agreements, and confirm that all transactions involving derivative financial instruments have been conducted at arm’s length and at fair value. The entity complies with the documentation requirements of the Canadian public sector accounting standards for derivative financial instruments that are conditions precedent to specified hedge accounting treatments. As well we have provided to you details of any written options that the entity has entered into.
- With respect to environmental matters: a) at year end, there were no liabilities or contingencies that have not already been disclosed to you; b) liabilities or contingencies have been recognized, measured and disclosed, as appropriate, in the consolidated financial statements; and c) commitments have been measured and disclosed, as appropriate, in the consolidated financial statements.
- The entity has satisfactory title to (or lease interest in) all assets, and there are no liens or encumbrances on the entity’s assets nor has any been pledged as collateral.
- We have disclosed to you, and the entity has complied with, all aspects of contractual agreements that could have a material effect on the consolidated financial statements in the event of non-compliance, including all covenants, conditions or other requirements of all outstanding debt. Refer to Note 10 in the consolidated financial statements.
- The Goods and Services Tax (GST) and Harmonized Sales Tax (HST) transactions recorded by the entity are in accordance with the federal and provincial regulations. The GST and HST liability/receivable amounts recorded by the entity are considered complete.
- Employee future benefit costs, assets, and obligations have been determined, accounted for and disclosed in accordance with the requirements of Section PS 3250 Retirement Benefits of the Chartered Professional Accountants of Canada (CPA Canada) Public Sector Accounting Handbook.
- The defined benefit obligation for the defined benefit plan, as of the balance sheet date, has been measured using the most recently completed actuarial valuation prepared for funding purposes.
- There have been no events subsequent to the balance sheet date up to the date hereof that would require recognition or disclosure in the consolidated financial statements. Further, there have been no events subsequent to the date of the comparative financial statements that would require adjustment of those financial statements and related notes.
Other
- We have considered whether or not events have occurred or conditions exist which may cast significant doubt on the Town’s ability to continue as a going concern and have concluded that no such events or conditions are evident.
Yours very truly,
Kim Anema, Chief Administrative Officer
Dawn Christenson, Director of Finance