Town of View Royal 2020 Audit Findings Report to the Mayor and Council December 31, 2020
Detailed report from the auditors summarizing the audit process, materiality levels, and significant matters.
Town of View Royal
2020 Audit Findings
Report to the Mayor and Council December 31, 2020
Cory Vanderhorst, CPA, CA T: 250.753.8251 E: cory.vanderhorst@mnp.ca
May 4, 2021
Members of the Mayor and Council of Town of View Royal
Dear Sirs/Mesdames:
We are pleased to submit to you this report for discussion of our audit of the consolidated financial statements of Town of View Royal (the “Town”) as at December 31, 2020 and for the year then ended. In this report we cover those significant matters which, in our opinion, you should be aware of as members of the Mayor and Council.
We have completed our audit of the consolidated financial statements of the Town which has been carried out in accordance with Canadian generally accepted auditing standards.
Unless unforeseen complications arise, our Independent Auditor’s Report will provide an unmodified opinion to the the Mayor and Council of the Town.
This report is intended solely for the information and use of the Mayor and Council and management and should not be distributed to or used by any other parties than these specified parties.
The matters raised in this and other reports that will flow from the audit are only those which have come to our attention arising from or relevant to our audit that we believe need to be brought to your attention. They are not a comprehensive record of all the matters arising, and in particular we cannot be held responsible for reporting all risks in your business or all control weaknesses. This report has been prepared solely for your use and should not be quoted in whole or in part without our prior written consent. No responsibility to any third party is accepted as the report has not been prepared for, and is not intended for, any other purpose.
We would like to express our appreciation for the excellent cooperation we have received from management and employees with whom we worked.
We appreciate having the opportunity to meet with you and to respond to any questions you may have about our audit, and to discuss any other matters that may be of interest to you.
Sincerely,
MNP LLP Chartered Professional Accountants
INTRODUCTION
As auditors, we report to the Mayor and Council on the results of our examination of the consolidated financial statements of Town of View Royal (the “Town”) as at and for the year ended December 31, 2020. The purpose of this Audit Findings Report is to assist you, as members of Mayor and Council, in your review of the results of our audit. To facilitate in your understanding of our findings, Appendix A to this report summarizes our audit process.
Our report will discuss the status of our engagement, as well as communicate to you significant audit, accounting and reporting matters arising from our procedures. We hope that this report is of assistance to you, and we look forward to discussing our findings and answering your questions.
ENGAGEMENT STATUS
We have substantially completed our audit of the consolidated financial statements of the Town and are prepared to sign our Independent Auditor’s Report subsequent to completion of the following procedures:
- the Mayor and Council review and approval of the consolidated financial statements
INDEPENDENT AUDITOR’S REPORT
We expect to have the above procedure completed and to release our Independent Auditor’s Report on May 5, 2021.
Unless unforeseen complications arise, our Independent Auditor’s Report will provide an unmodified opinion to the the Mayor and Council of the Town.
SIGNIFICANT AUDIT, ACCOUNTING AND REPORTING MATTERS
AUDIT AND REPORTING MATTERS
The following significant matters arose during the course of audit that we wish to bring to your attention.
| AREA | COMMENTS |
|---|---|
| CHANGES FROM AUDIT SERVICE PLAN | Over the course of our audit, the following deviation was made from the Audit Service Plan: Materiality was increased from $680,000 per the Audit Service Plan to $750,000. This change resulted from a difference in annual revenues from preliminary to actual, as we use the Town's annual gross revenue to calculate materiality. |
| FINAL MATERIALITY | Materiality is a concept used to assess the significance of misstatements or omissions that are identified during the audit and is used to determine the level of audit testing that is carried out. The scope of our audit work is tailored to reflect the relative size of operations of the Town, and is affected by our assessment of materiality and audit risk. Final materiality used for our audit was $750,000 for December 31, 2020 and $680,000 for December 31, 2019. |
| DIFFICULTIES ENCOUNTERED | No significant limitations were placed on the scope or timing of our audit. |
| IDENTIFIED OR SUSPECTED FRAUD | Due to the inherent limitations of an audit and the nature of fraud, including attempts at concealment through forgery or collusion, an audit conducted in accordance with Canadian generally accepted auditing standards cannot be relied upon to detect fraud. While our audit cannot be relied upon to detect all instances of fraud, no incidents of fraud, or suspected fraud, came to our attention in the course of our audit. |
| IDENTIFIED OR SUSPECTED NON-COMPLIANCE WITH LAWS AND REGULATIONS | Nothing has come to our attention that would suggest any non-compliance with laws and regulations that would have a material effect on the consolidated financial statements. |
| MATTERS ARISING IN CONNECTION WITH RELATED PARTIES | No significant matters arose during the course of our audit in connection with related parties of the Town. |
| SIGNIFICANT DEFICIENCIES IN INTERNAL CONTROL | Our audit process focuses on understanding the controls utilized in management’s reporting systems, including for estimates, to the extent necessary to identify overall and specific financial reporting risks. This risk assessment allows us to concentrate our audit procedures on high risk areas and, where possible, place reliance on controls within the financial reporting system to reduce the extent of our testing. It is important to note that our assessment was not, nor was it intended to be, sufficient to comment or conclude on the sufficiency of internal controls. We are required under Canadian generally accepted auditing standards to communicate all significant deficiencies identified during an audit to the Mayor and Council on a timely basis. However, we may not be aware of all significant deficiencies that do, in fact, exist. While our review of controls was not sufficient to express an opinion as to their effectiveness or efficiency, no significant deficiencies in internal control have come to our attention. |
| GOING CONCERN | We have not identified any material uncertainties related to events or conditions that may cast significant doubt on the Town's ability to continue as a going concern. We are of the opinion that the going concern assumption is appropriate in preparation of the consolidated financial statements. |
| MATTERS ARISING FROM DISCUSSIONS WITH MANAGEMENT | We would like to formally acknowledge the cooperation and assistance we received from the management and staff of the Town. There were no significant matters discussed, or subject to correspondence, with management that in our judgment need be brought to your attention. |
| SIGNIFICANT DIFFERENCES | No significant differences were proposed to management with respect to the December 31, 2020 consolidated financial statements. |
AUDITOR’S VIEWS OF SIGNIFICANT ACCOUNTING PRACTICES
The application of Canadian public sector accounting standards allows and requires the Town to make accounting estimates and judgments regarding accounting policies and financial statement disclosures.
As auditors, we are uniquely positioned to provide open and objective feedback regarding your Town’s accounting practices, and have noted the following items during the course of our audit that we wish to bring to your attention.
| AREA | COMMENTS |
|---|---|
| ACCOUNTING POLICIES | The accounting policies used by the Town are appropriate and have been consistently applied. |
| FINANCIAL STATEMENT DISCLOSURES | The disclosures made in the notes to the consolidated financial statements appear clear, neutral and consistent with our understanding of the entity and the amounts presented in the consolidated financial statements. |
OTHER MATTERS
MANAGEMENT REPRESENTATIONS
We have requested certain written representations from management, which represent a confirmation of certain oral representations given to us during the course of our audit.
APPENDIX A – MNP AUDIT PROCESS
Our audit was carried out in accordance with Canadian generally accepted auditing standards, and included a review of all significant accounting and management reporting systems, with each material year end balance, key transaction and other events considered significant to the consolidated financial statements considered separately.
Our audit process focused on understanding the controls utilized in management's reporting systems to the extent necessary to identify overall and specific financial reporting risks. This risk assessment enabled us to concentrate our audit procedures on the areas where differences were most likely to arise. Our assessment was not, nor was it intended to be, sufficient to conclude on the effectiveness or efficiency of internal controls.
During the course of our audit, we have:
- Examined, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements
- Assessed the accounting principles used and significant estimates made by management
- Obtained an understanding of the Town and its environment, including management internal controls (regardless of whether we relied on them for the purpose of the audit), sufficient to identify and assess the risks of material misstatement of the consolidated financial statements and to design and perform audit procedures
- Reviewed and assessed those accounting systems deemed necessary to support our audit opinion
- Evaluated the overall consolidated financial statement presentation
- Performed a subsequent events review with management
- Reviewed and assessed the status of contingencies, commitments and guarantees
- Reviewed and assessed exposure to environmental liabilities
We have obtained written representations from management, included as additional materials following this report, in order to confirm oral representations given to us and reduce the possibility of misunderstanding. Specifically, we have obtained written confirmation of significant representations provided on matters that are:
- Directly related to items that are material, either individually or in the aggregate, to the consolidated financial statements
- Not directly related to items that are material to the consolidated financial statements, but are significant, either individually or in the aggregate, to the engagement
- Matters relevant to management judgments or estimates that are material, either individually or in the aggregate, to the consolidated financial statements
Independence Communication
May 4, 2021
Mayor & Council Town of View Royal 45 View Royal Avenue Victoria, BC V9B 1A6
Dear Mayor & Council:
We have been engaged to audit the consolidated financial statements of the Town of View Royal (the "Town") as at December 31, 2020 and for the year then ended.
CAS 260 Communication With Those Charged With Governance requires that we communicate with you matters that are significant to our engagement. One such matter is relationships between the Town and its related entities or persons in financial reporting oversight roles at the Town and MNP LLP and any affiliates (“MNP”) that, in our professional judgment, may reasonably be thought to bear on our independence. In determining which relationships to report, the Standard requires us to consider relevant rules and related interpretations prescribed by the appropriate professional accounting body and applicable legislation, covering such matters as:
(a) Holding a financial interest, either directly or indirectly, in a client; (b) Holding a position, either directly or indirectly, that gives the right or responsibility to exert significant influence over the financial or accounting policies of a client or a related entity; (c) Personal or business relationships of immediate family, close relatives, partners or retired partners, either directly or indirectly, with a client or a related entity; (d) Economic dependence on a client; and (e) Provision of non-assurance services in addition to the audit engagement.
We are not aware of any relationship between the Town and MNP that, in our professional judgment, may reasonably be thought to bear on our independence, which have occurred from January 1, 2020 to May 4, 2021.
We hereby confirm that MNP is independent with respect to the Town within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of British Columbia as of May 4, 2021.
This report is intended solely for the use of Council, management and others within the Town and should not be used for any other purposes.
We look forward to discussing with you the matters addressed in this letter as well as other matters that may be of interest to you at our upcoming meeting. We will be prepared to answer any questions you may have regarding our independence as well as other matters.
Sincerely,
MNP LLP Chartered Professional Accountants
MNP LLP – Wherever Business Takes You
About MNP LLP
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