Introductions · PS 1201 - Financial Statement Presentation Requires the presentation of a...
Transcript of 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
-
2 © 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.
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
-
3 © 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.
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
-
4 © 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.
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
-
5 © 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.
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
-
6 © 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.
Annual Financial Statement
Reports the consolidated annual results of a
municipality on an accrual basis, in accordance
with PSAS.
-
7 © 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.
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
-
8 © 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.
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
-
10 © 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.
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
-
11 © 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.
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
-
13 © 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.
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
-
14 © 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.
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
-
15 © 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.
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
-
16 © 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.
Observation #4
Consistent aggregation
Consistent aggregation (apples to apples comparison) enables readers
to identify variances
-
17 © 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.
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
-
18 © 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.
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]