Nov 17/04 Report
1:53 - 4:30 pm

Agenda:

• http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
  Strategic-Planning-Budgets/2004/Nov17/Agenda.pdf

Attendance:

Members:

• Jackson - Chairing in the absence of Mayor DiIanni
• Collins
• Merulla
• Ferguson
• Kelly

Non-Members:

• McCarthy
• Whitehead
• Bratina

Staff: All senior management staff (except Emergency Services), Internal Auditor, and briefly Mario Joanette (Mayor's office) and about 12 other staff.

Press: Spectator (Carmelina Prete)

7.1 City of Hamilton Citizen's Satisfaction Survey Results:

Staff report:
http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/CM04032.pdf (1:53 - 3:00 p.m.)

'Market Probe Canada', selected comments from presentation:

General Themes: ".Essentially people would like to see social services covered by their income taxes not by the City's property taxes, .People really aren't willing to pay to have better services.they probably think that their services are at an ok level.'good is good enough'. .Clients have.walked away from delighting everyone because it's a very expensive thing to do. .Also you have to manage what you have - there's a little of that going on too. .Things that are highly used, they don't want them (fee increases).."

Economic development and the downtown core: ".People do feel that their tax dollars should be used to retain businesses, create jobs.the waterfront should be developed, the downtown core should be developed, and they're really split on the airport. .How much they used the downtown core.2/3 do.goes down steadily with age (increase). .would go downtown more often.having better destinations was stronger than increased protection or better security".

Social responsibility: "...Interesting things we discovered about social responsibility.quite fascinating.. 84% support, which is very high support, for responsibility to make services available to the disabled.and very strong support to pay for services for disadvantaged residents. So there's a very strong social responsibility message here - that they expect the City of Hamilton to do this.and it's again linked into those civic pride issues.it's got a lot to do with what a city should be and has to be".

Culture and recreation: ".Copps Coliseum, Farmer's Market, Hamilton Place.destination spots.widely used, I think those are very high ratings for places like that. 20% had used a program. Children's recreation programs came up the highest.(1/3 of those with children used programs)".

Communications: ".City website use actually had quite high ratings (37% used), quite a strong number since you're running about 60-65% that have internet access these days.and also the regular newspaper ads.got quite high ratings (usage).slightly lower ratings for when people were looking tailed information to meet their needs by city staff.but still pretty good.not abnormal.. Keeping Municipal City Centres open was supported even by those not using them."

Conclusions: ".The areas with a lot of influence on resident's overall perceptions of this City have to do with high level needs around connoting leadership, and vision, and civic pride, and involvement, and effective communication. So those are things that you need to pay attention to, and while it's hard to ask very specifics around those items they did tend to get lower ratings than the specific services that you offer. The data suggests that the City can't just look at usage figures to assess what is most important. There's very strong evidence here that social responsibility, issues about providing services to the disabled and the economically disadvantaged. There's a responsibility to promote the downtown core, to support economic development and job creation. Communications with residents is a cornerstone in determining perceptions. It's probably an area you could make more leverage of, that a lot of it has to do with - when you think of those higher level needs - explaining things to people, to giving them that vision and what you're doing, and sometimes you don't actually have to do more you just have to explain more.. Culture and recreation gets quite high usage.and communicate that this is a thriving place to live. Waste and collection and HSR actually got quite good ratings. Roads, traffic, parking and by-law enforcement would be the areas to look at for improvement. .The downtown is likely to benefit more from cleanliness, free parking and better destinations. Policing, security, and downtown cameras don't seem to be the big issue".

Discussion:

Merulla is interested to know about the questions - some are "warm and fuzzy", and some are more specific - "leading questions"? Regarding communication satisfaction, was 'contacting the councillor' included? (No) It was implied in the presentation that some services were given to some groups free, and Merulla asks for confirmation on this. Staff can't answer for sure (there's no one from Culture and Recreation attending) this but Jo Ann Priel (Public and Social Health and Community Services) says she'll make sure he gets info on this. Paying user fees for Bocce was in one of the charts in the presentation and Merulla asks if the survey specifically asked about this. (Yes). He wants to know why Festival of Friends wasn't rated. (Only City run events rated).

Collins asks about how the questions were formulated (re Bocce question inclusion). He notes that the survey will probably be used to make decisions about reduction of services or increases in user fees at budget time, and is concerned about the lack of questions about the "behind the scenes services". "In reading through this I see services that are very visible but which do not make up the lion's share of our operation". It is explained that the consultants spent 'the better part of two days' with all 6 city departments asking for their input. Glen Peace (City Manager) says that the survey is intended not for staff, but as a "tool for Council", and that councillors can have input into the questions asked in future surveys.

Whitehead notes that there is little support for increased fees for recreation services for children (75% opposed), but more so for ice user fees (47% opposed), and says that "everyone involved is in fact the youth". The consultant says that everyone was asked that question and that some people "don't have direct experience and don't know what they're paying" and that she can get him the breakdown because "you're right, some people might have had men's hockey leagues in mind when they answered that question".

Ferguson is curious to know when the survey was done in relation to the installation of the new system (IP Telephony) at the Municipal Service Centres. (Survey done in August/September 2004, before new system in place.) He also asks about downtown cameras - "do they feel more secure or do they feel a big brother syndrome"? The consultants say that the survey indicates that security measures have less support than other things that might cause people to visit the core more - "if it (security) was really a huge issue it would have jumped to the top and it didn't"

8.1(a) 2003 External Audit Management Letter: http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/2003%20City
%20Audit%20Mgmt%20Letter%20Final%20Oct%2004.pdf
(3:00 - 4:10 p.m., including item 8.1b). Quorum lost 3:08-3:20)

Fay Booker (Grant Thornton):

".For the committee's attention we've supplied for you again this year.our letter of recommendations arising from our observations from our conduct of the external audit that we did of the 2003 financial statement. Our work is very focused on the financial statements and ensuring financial integrity of financial reporting. So we don't look at all the internal controls across the organization. .I'll just highlight some of the items in the report.. .There are six particular items that we've brought forward for your attention this year. And some items are carried over from previous years as we're not satisfied that they've been appropriately addressed and, in fact, resolved.

One item.again.is the Control Environment for the organization . that which is established by the oversight body, .and your senior management team. And some of the key tools in establishing that control environment will be .your internal audit function. So we've cited again . that we think that this committee's terms of reference be reviewed so that the mandate is clear enough in terms of the responsibilities around financial reporting and the internal controls thereof. We've recommended an internal review of the internal audit function to ensure that they're employing the right methodologies and practices to give you the information that you need. So, that's our first finding and the one that we'd like to put the most emphasis on.

The second finding.is related to the Information Technology (IT) area, .(which is) key to any organization in terms of information and we've cited very specific items for your IT group to look at. There's general agreement from that group on the items that we've noted, and they've provided explanation on a time frame that they intend to act on those recommendations.

The next few items really focus on the financial area. .The need to have some improvement in the financial reporting controls.. Also improvement in accounting estimates which appear in the financial statements at the end of the year. in accounting for Provincial grants and subsidies, as well as reconciling cash balances".

Discussion:

Merulla: ".On a scale of one to ten where would you put our financial situation at this point, from a process and staffing standpoint.?" Booker : "In terms of your finance and accounting departments?" Merulla : "That's correct". Booker : "I think the departments have come a long way over the three years we've been focusing on your audit, and we've seen incredible improvements over the past couple of years particularly. .There are some items that need attention and need some critical analysis done on financial information as it's received in the finance group". Merulla : "What would you say our weakest aspect is at this point then?" Booker : ".I would summarize it as the critical analysis part. When information is being received is it being subjected enough to a critical analysis to ensure that it has integrity and to ensure that it's coming to the group in the right way. Is it timely, is it accurate, are all the different parameters being considered in terms of estimates, especially when you get into accrual accounting and liabilities and getting into the completeness of information". Merulla: "OK. And who do you believe actually should be completing that critical analysis?" Booker: "I think your finance and accounting groups are the ones responsible for preparing financial statements so they're the ones who have the responsibility for ensuring the integrity of your financial reporting".

Jackson (chairing meeting): "Fay, is that it for your report at this time? I know we're going to get Joe, and your responses Joe, to that report in a minute. Fay?" Booker : "I would just like to advise the committee that this is my last time with the committee. I'm actually leaving Grant Thornton at the end of this year and setting up my own consulting practice.." Jackson : "Thank you very much Fay, and all the best to you.."

Collins : ".I'm just going to go through the numbers in the report. The first one's about the control environment, and the I guess the most disturbing thing is in the second paragraph where it states that ' During our 2003 audit, we observed instances that continue to suggest weaknesses in the control environment, and which may reflect an absence of appropriate control consciousness at all levels of the City: That's a pretty far reaching statement to make. And then the next sentence reads: ' Significant misstatements in the financial statements were noted during each of the three most recent external audits'. Can I get a comment on that in regards to that, understanding that we've made some progress.this is the one that was made the priority - there's still some work to be had in this area?" Booker: "Yes. Fair observations in terms of the strength of the statements.designed to increase the robustness of the priorities over the control environment, which is established by this body as much as it will be established by your senior management team. And, there were misstatements, and (they) were reported to committee each time we've met.. And it also speaks to how quickly, or how - the lack of timeliness of dealing with internal audit findings. .not presented in a timely basis to provide useful information - the fact that they can sit on people's desk and not get delivered to the committee, it really speaks to a lack of discipline that's needed to ensure that there's the right control culture within the organization". Collins: "And that's one of the concerns that I've raised privately with Mr. Rinaldo - the fact that the correspondence from Grant Thornton is actually addressed to the committee members and it's dated September 27 th , and yet when I inquired about this last week with Clerks - or two weeks ago - I was informed that it was to go to staff for comment and then on to committee for report and resolution or discussion. I'm trying my best to recall a situation where correspondence to the municipality was addressed to certain individuals and it didn't find it's way into our offices or any staff person. You'll note on the cover letter it's dated September 27, Strategic Planning and Budgets Committee and yet it's taken - well it's the middle of November now. So I would first and foremost, from this time forward, have a clear understanding with our staff that when the reports are forwarded, or these management letters.are forwarded, that if they're addressed to council that they're delivered to council. And so can I get a comment maybe from Mr. Rinaldo, or perhaps Mr. Peace on that item?" Peace: ".in regards to what appears to be a delay, I did in fact, after receiving the correspondence arrange to meet with Fay. We did have one, maybe two meetings. We discussed this. There was obviously a need for a management response.and so I didn't want to distribute or come here till all of that was collected and we had a balanced response. So, I don't know if that overall contributed to the delay, but that's clearly some of the reason why it's appeared today, and.." Collins: "Ok, but the hesitancy in forwarding it to council on the 27 th is that we didn't have a response to some of the issues raised by the auditors?" Peace: "Well, two things. One, I hadn't had an opportunity to speak to Fay and I needed a chance to get a clear view of what we were talking about and have that discussion with staff, and the second part is exactly that - I wanted to give you a balanced response to those issues". Collins: "But had it been a positive report, would we have received it earlier?" (Someone laughs) Peace: ".It would not have. I would have gone through the same process - met with Fay and got a management comment before I forwarded it you". Collins: "I would suggest then that we all come to the same understanding that if it's addressed to council, or committee, that in fact we at least receive it, and from there, just as we do at Council, we can refer this back to the appropriate committee and staff for comment.. I've been asking.I've been bothering Mary (clerk) over the past several months as to where this sits. And even the auditors.. Knowing that it was finished but not having access to it is an issue in itself. So if we would need this in a form of a motion I'd be happy to do that, but I don't see why we'd need to do that as it's the normal process with any other correspondence that we get". Jackson: "So Councillor - Glen, just on that point, that's understood?" Peace: "Understood Chair, and I'll take it as direction".

Collins: ".The other issue is that Council had approved a resolution - in '03 it's noted - that we were going to undertake an operational review of the internal audit process, so we've give that direction to staff. It's noted here, in the first part of the letter, that we've yet to undertake any initiatives related to that. I did receive recently from Mr. Peace a letter stating, I guess, that it's the desire of staff to undertake a review in '06.allow Mr. Peace speak to this, and then I have my own comments. Peace: ".Just two comments. We've have changed the reporting structure for the internal auditor. Now the work plan and the reporting structure administratively is to me, but the work plan initiatives are directly to this standing committee, and therefore at the direction of Council. What I'm suggesting to you - if you just follow the benchmark practices we wouldn't be due for that review until January of 2007. I suggested to you that if, in fact, if you wanted to comply with that you could do a review in 2006. I also indicated that I would take direction from this committee and Council, so if you choose to have that in 2005 clearly I'll take that as direction". Collins: "Mr. Chairman, when we get quorum again which we don't have right now I would be prepared to move that we undertake that as a priority for 2005, only because it was mentioned in prior audits. I know that when I met with the internal auditor - and I thought it was a great exercise to meet with staff and talk about the issues that we would like to see covered under the umbrella of internal audit - that my list was quite lengthy. I think we all recognize, or should recognize that maybe that area needs more resources, number one. But there are other aspects or reasons to undertake that review and they are listed in the findings and then eventually in the recommendations. And to understand, or to get back to, again, that first line that says that ' significant misstatements in the financial statements noted during each of the three most recent external audits (2001-2003) ' I believe in looking at that, and some of the inventory issues that we were just through - the salt: the 2 million dollars there, and we sent our internal auditors off and they undertook an exercise to investigate that - just to know that those issues are floating around in the organization and we've yet to address them possibly because we don't have the resources is a little disturbing. So for me that is a priority - undertaking the review.and I don't know if I want to move this again, because it's already on record from September 10, 2003 that we want to look at this, so I would just reinforce that motion if that's possible.." Jackson: ".Keep that motion in a state of abeyance (till the end of the discussion)".

Collins : ".To move on to financial reporting controls. In the first paragraph it says ' Recent and well-publicized corporate scandals and instances of fraudulent or otherwise erroneous financial reporting have elevated expectations of publicly accountable entities regarding controls over financial reporting processes. Increasingly, it is expected that management demonstrate solid evidence to support all amounts, conclusions and disclosures embodied in financial reporting. ' and reading on with the findings: ' There are insufficient controls in place to ensure the completeness and accuracy of budget figures presented in the City's consolidated financial statements .'"

(This last sentence is the correct reading of the hard copy handed out to committee on Nov. 17 th but interestingly it reads differently in the posted on-line copy of the audit letter. There it reads like this: There could be improved controls and audit trail to ensure the completeness and accuracy of budget figures presented in the City's consolidated financial statements.' CATCH later reported this to the clerk and learned that the audit report posted to item 8.1a) is the 'final' version, whereas the report posted to item 8.1b), the hard copy that the councillors were working from, is a draft copy).

"I would need a better explanation on that because it's suggesting that some of the information we're receiving is either incomplete or inaccurate. .I would ask Ms. Booker to comment and then staff.." Booker: "I'm actually going to let Marty (Stolman) comment on that, then I have a couple of comments (on issues previously raised by Councillor Collins)". Stolman: "We're certainly not suggesting here that we're aware of any errors in terms of the budget information that is presented on financial statements, and the City does have processes and controls around taking the budget information that is presented to Council and inputting to the data system and tracking that. Our issue is more the format of the annual consolidated financial report . there is no controls there, that we have seen anyway, that indicate that that information can be tied back to the specific approvals that came from Council. And we wouldn't be speaking necessarily about any single number.would be speaking about every single number that appears as a budgeted number". . Staff ( Joe Rinaldo): "I want to make, everyone to understand that the budget controls in the People Soft (computer program) are reconciled and on a regular basis, as indicated in my response to it. What the auditor's are referring to is the budget information in the budget statements, which incidentally are not un-audited. In the past we have never provided the auditors with reconciliation on numbers. What they do - for the purposes of the purposes of financial reporting a number of things are eliminated. They're not presented in the same way that they're presented to Council. I do know that our reconciliation of the financial information in the financial system is, I'm satisfied with that. It's been reviewed a number of times by the internal auditor and she's satisfied that we have the proper reconciliation. What I will undertake to do for next year, because this was raised to me at the end of the process, we will provide the auditors with a reconciliation on the basis of how we presented it in the financial statement and tie it back in to.the financial information, financial statement. But we haven't provided it in the past". Collins: "So they are all reconciled?" Rinaldo : "Oh, absolutely. If you look at my response to it there's a complete reconciliation.the only thing is that there's a restatement of it when we present it in a financial statement. For example we eliminate, we net out inter-fund transactions, that's a requirement for us for purposes of financial reporting. So that's what they haven't seen, is how that works out, so we will provide that. In fairness I was advised of that at the last minute and I said that for next year we'll certainly provide that. .I want to point out that the auditors didn't find anything wrong with it, they just said that we should reconcile it". Collins: "And why I raise that is later in the report at Provincial Grants and Subsidies it says 'management's review identified approximately $6 million worth of cumulative errors in account balances . and recorded an accounting entry to take this into 2003 revenues' and it talks about $1.5 million that we could not reconcile. So, .based on your comment you mention that everything reconciles and I'm looking at that statement later in the audit that states that there's a million and a half that we can't really account for in regards to those.payments. So.how do we address this issue?" Rinaldo: ".The other statement deals with the budget information in the financial statements.the second matter deals with the subsidies that we received from the province. We've identified for you for the past three years that the subsidies have not been reconciled for the last 10 years. .Staff has been working diligently to reconcile.it goes back beyond 2001.significant improvements. We know that for 2004 we've got reconciliation for the current subsidies. We have to go back and clean up some of the stuff that's still outstanding from prior years. We're in the process of doing that.. We had to make some adjustment in our statements which were identified to you when we presented the financial statements. The other problem we have.is that the bank.the payments that we make for social assistance is the provincial system. The provincial auditor has identified that the problem we have is that the system does not work properly, and that's one of our difficulties in reconciling that account, because the information.does not tie in.. We hope that by the end of this year we'll be in a position to have the resolved once and for all". Collins: "And I guess that's what causes me concern. You're suggesting that the issues are.being resolved and I'm looking at a line, for instance, that says ' there are insufficient controls in place to ensure the completeness and accuracy of budget figures'. So you talk about that relationship, maybe not unique to Hamilton, but still a million and a half.trying to sort out.. But going back to the financial controls.and maybe I should ask the auditors.. Financial controls.big issue last three years.. What should we be doing that we're not doing?" Booker: "The City has an responsibility to provide financial reporting in accordance with the requirements that are out there.. It's the City's responsibility to ensure that the information being presented is accurate, with.latitude.for small.error. At the end of the day the City is signing off on those financial statements that they're correct so, .there should be some analysis gone through to substantiate that the balances are.correct. .People are reading those and taking assurance .that they must be able to trust those. . We point (that) out - that we would expect that the accounting staff themselves are going through that severe analysis.." Collins: "So other municipalities would have. (those) checks and balances in place? .There should be another outlet within the organization that ensures that the information.is correct before we make changes...? Booker: ".Need to assume that checks and balances - that double check is being done.." Collins: ".I understand what is being suggested here, but what I would need to know how do we build that into our own process without driving our costs up. Other municipalities must have a similar organizational structure, and we always benchmark our costs to other municipalities, so we'd now be asking our staff to undertake a review of situation with the same resources that we have today. Is that what you're suggesting, or does it mean reprioritizing the workload of our staff . giving them extra resources to do what your suggesting?" Booker: "Your staff will tell you best what resources they have. But we go into some clients and they have everything ready for us. We don't even ask or outline what is necessary to conduct the audit because they've gone through the critical analysis themselves, and prepared the working papers that they know they need to substantiate the balances that are there.." Collins: "So is it normal to deal with an external audit.in November.?" Booker: "This is uh, yes I would say this is pretty late, . when what you should be seeing is us here (now) presenting the plan for 2004. So very long. I would say that you're the only client that has this length of delay. .Protocol.go over a draft with your management team. So, early September Joe received a draft of the letter, and your City Manager received a draft.. We provide it for them. .Failing getting any comments from them we finalize it and we wait a period to get responses. If we're not getting responses, we basically have an obligation to get the letter in front of Council, and that's basically what we did for this letter this year. We basically felt that if we don't get it in front of Council the information is useless because it will not be timely, as is the case that we're seeing with your internal audit group. It's unusual that we have to force the process, that we're forcing the information to the client rather than the client pulling it from us".

Quiet Pause

Collins: "I'm going to go on with my questions and come back with comments to later.." Jackson: "And while we have quorum you might want to make you motion about the operational review for 2005". (But Collins doesn't do this yet)

Collins: "Miss Booker's last comment leads to my next question from Appendix A, under Responsibility and Timing, and now I've kind of jumped to the next part where Staff has reported back. The timing of the information coming.you mention that this is not normal to be receiving this (now).. The delays.what problems does it create, you noted there's increased audit costs.what kind of operational issues do we run into.?" Booker: ".Costs, having your external audit company delving into things.that's expensive time, .reconciliations.you can run into problems with your bank, you could go past the time when you could return items for them to honour, you could basically have people doing bad things and going unnoticed for an inordinately long time and that indicates that that becomes acceptable within the organization. And that's why I duly noted that scandals that have been happening, and why I take a lot of time to teach the rules around corporate governance and internal auditing, because those organizations allowed it to happen, and for organizations that have a high level of public accountability you have to demonstrate a very strong sense of discipline. And that's what we're looking at particularly when we're looking at a taxpayer-funded organization. Collins: "And I guess that's why the salt one (see previous SP&B meeting reports) rubbed us the wrong way, because it was from 2001.." Booker: "Yes, and under the professional standards act.the internal audit must go through a review every 5 years, but what we're saying is that your internal audit group has yet to go through a professional review. We've raised it before - that group needs a professional review, for your benefit and for their benefit to determine whether they're adequately resourced - are they using the right methodologies, are they reporting the right information, are they getting the co-operation across the organization that they need in order to do their work. This has nothing to do with the standards.this has everything to do with control consciousness and the oversight body being effective at doing their job".

Collins: "Mr. Chair, that's all the questions that I have, I don't want to monopolize the time.." Jackson: ".Move your motion?" Collins: ".I would move that as per the external auditors recommendations, and as per Council's approved resolution on September 10, 2003 that we direct our staff to immediately advertise for an external review of the City's internal audit function". Merulla: "I'll second that". Jackson: ".In '05 instead of '06". Collins: "And there was another key ingredient that I would like to attach to that, that is that an education and awareness initiative designed to elevate the control consciousness at all levels of the City - councillors, management and staff - be conducted at some point in time. . Whether that comes about with the review or with our external auditors I'll leave to staff to come back with a recommendation as to how that happens". Motion CARRIED.

Ferguson: ".You're leaving Grant Thornton.no axe to grind, no cross to bear.. If 01' was a five, what's '03?" Jackson: "On a rating scale of 1 to 10". Booker: "I would say that you're probably at a 7. We have high expectations for a billion dollar corp. that is a publicly accountable body, so there is a high bar there's no doubt about it. You have made progress from '01, yes". Ferguson: ".How many other billion dollar corporations .I'm talking timing.is November late.? Booker: "Yes." Ferguson: "But not at this volume.?" Booker: "We have clients that can close and we're in front of the audit committee by January 29 th . We have clients that are billion dollar corporations where we're in front of the audit committee in March. It's not often we go past the first quarter". Ferguson: "If their books are closed within 30 days, there's residual paper that comes in after 30 days." Booker: "We have clients that can close their books in 15 days, 20 days. What they do is look at historical patterns for establishing." (Interrupted) Ferguson: "You don't get bank reconciliation for 15 days". Booker: "You can go on-line and get your bank statement within days of month end. If you're using paper copy, yes. But most organizations would be using the on-line version". Ferguson: "Well in an audit you need paper. I don't want to debate it.I have no skills in.at all". Booker: "Some of us have been 20 plus years in the auditing business". Ferguson: "Yup. And that's my point - we hire you because you're the best. And you're saying we were a 5 now we're a 7, so we're going the right way". Booker: ".Definitely making improvements.yes". Ferguson: "Is this a fair statement, that your profession is a little jittery since Enron?" Booker: "There's no doubt there's been a lot of focus on the external audit profession.changes.new rules.standards.huge change in the profession over the past few years, so when people site 'years ago', well years ago doesn't matter anymore. We have new standards; it's the new era. Clearly the profession has been under a lot of scrutiny.so yes, we take seriously unadjusted or unnoticed errors and that's why we report to audit committees now every item that we find. There's a very low threshold for any type of error - we have a responsibility to report, report, report. And in fact our reporting line is not to management anymore, it's to the oversight body, and that's been a big adjustment for the management group as well". . Ferguson: ".In terms of the quality of the work you're getting from the finance department would a $.5 million reduction on the budget have an impact on that, first of all on the timing?" Booker: "Timeliness.your statements were signed off in June. Hopefully that could be improved, but that's up to the management team. Ferguson: "But the budget for Finance was cut by $.5million for '04.would that effect the turnaround time of the statements?" Booker: "That would really be up to management and their restructuring and their processes".

Merulla: ".Recapping what was previously mentioned.what I've gathered so far is that there's been extra costs associated with our delay in response, we have a lack of critical analysis in respect to our books, we've not pursued the professional review that's been strongly suggested, there's a question with respect to the accuracy of the numbers being presented, the organization's finance department lacks discipline, there is some question with respect to the integrity of the process, there's a lack of check and balance, we're the only client that your company serves that's been to the extent that we've been delayed, and Mr. Rinaldo stated clearly that everything was reconciled but essentially it wasn't from the Provincial aspect, and that although we have improved we need to improve much better because we're dealing with the public trust and funds. . So we need a lot of work to do.expeditiously. We should direct staff to address this yesterday rather than tomorrow.. It's something that a number of us have been mentioning for a number of years, unfortunately it's taken this long to recognize that we've come to a point where we have these problems.."

Whitehead: I'm waiting for Joe's presentation, cause I'm sure that some of the answers can be found in (it). I do have one question.where should we be? Booker: "It's hard to work with these scales, but if that's what works. I would suggest that if you were able to achieve a scale of 8.9, 9, or 9.1. There will always be something that needs improvement. What you don't want is gaps, or omissions in process that allows multimillion dollar items to get through. That's what you want to worry about.. You'll never achieve a ten, and I don't think any of our clients are at a 10.." Whitehead: ".Question re timing..and budget cut in finance.. To our finance person, when did that cut - because we completed the budget..?" Rinaldo: "The budget reductions, some of them were implemented part way through because we actually held positions open as a result of the tentative - even though Council didn't approve the budget till later - we kept some of the positions vacant recognizing that there was a potential for that reduction to happen". Whitehead: "So when in fact was the budget - that $500 line approved by Council?" Jackson: "I think the budget was finished, finalized in late April, Councillor, as I recall.." Whitehead: "So, in fact, it would have had a negligible effect on the timing of receiving the appropriate documentation for the auditors, I would think.." Rinaldo: "Quite frankly, some of the positions were kept open because that was up in limbo so we did have lower resources to do the year end statements". Whitehead: He restates the situation.

Merulla: "Is it common that billion dollar corporations make million dollar mistakes everyday?" Booker: "Um. That's uh, a pretty wide open question. There will be mistakes that occur, in terms of processing of items and uh. But at the end of the day what's more important is that there are checks and balances to detect whether any mistakes have been made. And you want those checks and balances to kick in as quickly as possible from a time line perspective so that you can correct any errors, because it might mean that you have to go outside the organization in order to make that correction.

And there will be time limits if you're trying to make a correction with a bank or a supplier or whatever it might be". Merulla: "But if a CEO, or a chief financial officer said to you, 'don't worry about it, we make million dollar mistakes everyday', would you be concerned.?" Booker: "I would think that that would be a - I would be surprised if a head of finance would actually make that kind of a statement. Uh." (Interrupted) Merulla: "Thank you. Thank you Mr. Chairman".

Jackson: "Thank you Fay. Appreciate again your thoroughness and your excellent work. Motion to receive the external auditors presentation and her letter? Ferguson/Collins. CARRIED Now I'll going to get to management's response.."

8.1 b) 2003 Audit Management Letter - City Management Response: http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/2003%20City%20Audit
%20Mgmt%20Letter%20Final%20Oct%2004.pdf
(3:00 - 4:10 including item 8.1a), quorum lost 3:08- 3:20)

Joe Rinaldo (General Manager, Finance and Corporate Services): ".Just for the purposes of preparing financial statements, most municipalities in Southern Ontario usually finish by the end of March. Very few of them do it before then, and the reason for that, unlike corporations, we have inter-governmental relationships for - for example we wouldn't be able to get some the information from the province in terms of finalizing our statements, because that information is readily available. I want to remind council that in 2002 we did our financial statements at the end of August. As part of the restructuring, as you know, we've had a lot of turnover in the years 2001 and 2002, and as a result we did it at the end of August. In 2003 we moved that up to the middle of May, when the auditors first signed off - they don't sign off till you actually review it - but they'd pretty well signed off in May. So we had made significant improvements..

In terms of the management I spoke to the auditors already, and what we're going to do next year is, right after the financial statements - within a very short period of time - we'll go to council immediately with the audit management letter, and we've agreed to do that. Part of that was trying to get some of the responses of clarifications when we were dealing with the draft responses. In terms of the comments that you've received, I'll go through my responses and I'll focus on the - the internal audit is really the City Manager, so I'm not going to speak to that part of it.

The uh, in terms of information technology governance which is on page - my responses are on page 7 and 8. We certainly acknowledge that we need a formal disaster recovery plan, and we plan on doing that. As you know, over the last few years we've amalgamated a lot of systems and we're in a position to do that, and as well as a security - a formal security plan. I can assure you that our IT tells us that we do have a lot of checks and balances in place, but we don't have a formal disaster recovery plan and we'll be putting that forward for your consideration during the 2005 budget.

In terms of the financial reporting issues that we talked about - in terms of providing them further analysis on a revenues and expenditures we will undertake to do that in 2003. In terms of the budget information for the purposes of financial statements, if you read my response, you will notice clearly that there is formal reconciliation of the financial statements - of the budgets - as it relates to the budget that is presented to council on a program - the department-to-department program. However, as I indicated earlier, in fact we don't do it that way. In fact we actually we eliminate a number of transactions, because that's the financial requirements, but we will provide them a reconciliation of how that number was. Again, I want to emphasize that they did not detect any problem with those, they just simply identified that they didn't provide that, and they identified that for me late in the audit process and I did review it and was satisfied that the information was correct. But for the next term we will provide them that information.

In terms of accounting estimates, the two that they talk about here is the water and sewer. As I indicated to you - cause now the billing is done by Hamilton Utilities Corporation - they didn't provide us with a formal report at the end of the year so we can be in a position to properly accrue the amount of revenues that should belong in the current year. For example, consumption that is used in the year 2003, even thought it's billed in 2004, must be reported in 2003. So the uh, Hamilton Utilities are now going to give us a formal report, and we will make that accrual on the basis of a formal report based on actual consumption. In the past we've estimated, and because of the fluctuation - we had one summer that we had a very dry summer and one that we had a very wet summer - so when we used estimates they were off quite a bit. But in fact I just want to point that out that that's not a lost of revenues, that's simply a timing issue as to when you record the revenues in 2003 and 2004.

In terms of the property tax, vacancy rebates, that point, that issue was identified for me during the audit process, and I immediately made the accrual for the additional rebates we were providing for the months of January/February, when the deadline was. It's my understanding that it's the practice of all the municipalities - the previous municipalities since 1988 never accrued for that, and that's why staff missed it. As soon as I was made aware of it I corrected the problem immediately.

In terms of the Provincial Grants we've indicated to you, yah we've acknowledged that we've had issues in terms of the reconciliation of the Provincial Grants Program because of the very large number of grant programs that the provincial government provides to municipalities like us. It's not uncommon for municipalities to have the same type of grants, such as Toronto and everybody else, having the same challenges as we're having. I believe we've now put in place reconciliation for the current level, and we're trying to clean up, and we're trying to clear up some of the outstanding balances from prior years, and we hopefully have that resolved this time around.

The bank reconciliation, I pointed out the problem we had with the system - it's not our system - we're relying on a provincial system - and they're not giving us the information that we need to reconcile. We've made efforts to work around that and provide that information. In terms of the cemetery trust funds not being reconciled, that wasn't being done by the finance department, now - I spoke to Mr. Stewart (Manager of Public Works) - we will undertake to do those reconciliations that was being done by operational staff and they weren't done properly, they weren't reconciled properly as part of the year end, we discovered it at the last minute. There's not a lot of transaction but we put in place a method of resolving that issue for the future. What I can tell you is that you will get misstatements when they report to you on a regular basis, and I'll give you an example of one that we presented for you when we presented the financial statements. Last year the Province gave us an additional $3 million related to the Community Reinvestment Fund. That related to 2002 and prior years. We had no knowledge of that information. The auditors are required under their requirements to identify that for you - that in fact that that is revenues that were taken in 2003 that should have been taken in 2002. But unfortunately sometimes you will get that. Another good example is when we issue retroactive payments we make an estimate. For example salaries, in 2003 we issued . retroactive payments for all our unions that went back to 2001. Obviously during the 2001 we had to estimate those, in fact some of those had to be adjusted accordingly. So, there will always be some adjustments that go back and forth between the years, but it's not something that's lost revenues, it's simply the timing of when it's reported in it's financial statement. So I'm confident that staff are making every effort to, in fact, improve the financial controls in this area, and these areas have been rectified, and were rectified for the 2003 financial statements, and they were reflected properly. There's nothing in the financial statements that was there that the auditors are not happy with because they signed off on it, that's what I want to assure the public".

Discussion:

Collins: "On reconciliation of the cash balances, it notes that there are 'two specific instances where cash general accounts could not be reconciled or substantiated.' and it goes on to explain the $1.6 million unreconciled balance, and it says that 'the City has not yet been able to conclusively determine the nature of this discrepancy', although I guess we have found $1.3 million increase to liability to the Province. Can someone explain how that system works, and Joe maybe you can rationalize the, and maybe even explain first and foremost the cash balance, uh, - the general ledger accounts, the difference between other accounts and then maybe touch on that subject matter?" Rinaldo: "Normally what we would do on any account cash balance bank account - we do that for all other bank accounts - we do a full reconciliation. The difficulty we have with Ontario Works, as you know, the volume of checks there is by far the greatest that we have in any of our operations that we currently have. Unfortunately with the, in the OW component we're relying on a provincial system to tell us what payments we make, and unfortunately it doesn't match with what we've got in our bank accounts, and that's one of things that we're trying to work with. So, if.in our own system we normally have no problem reconciling these bank accounts, so all the other bank accounts that we have for payroll, accounts payable, for all other activities with the exception of those small trust fund accounts that somehow got omitted - that wasn't reconciled - we have no problem reconciling them. . The Provincial Auditor pointed (this problem) out to the Province - that (it's) not working properly.. The staff are very competent.." Collins: "They're recommending that we reconcile on a monthly basis.. How far back can you reconcile our cash accounts? Are we following that.?" Rinaldo: "Most of our accounts are.I just did a review, most of them are pretty well up to date. There are a few that are falling behind, but we'll have them all done in time. There's one or two areas where we've had staff turnover and uh, and uh, but most of the account that they're asking us to reconcile, is, will be - we're pretty well 2/3rds there. ." Collins: "How far back would the worst one go, for instance?" Rinaldo: (silence) "Ah. June. But they will be caught up before year-end. They've got, the staff developed a plan to actually reconcile those accounts". Collins: "Ok. Thank you for the information. On the other matters brought forward Joe, we briefly touched on it before with our discussion with the auditors, but the financial control environment, and some of the checks and balances we spoke of earlier, can you maybe explain why we may not have those, in comparison to some other municipalities? It's identified as a weakness, and I've read your response here, but it really doesn't get to how we correct it". Rinaldo: "The financial control environment, in fairness, we have not provided the response as part of that part. I think that what Fay's talking about (is) the corporation as a whole, not the finance department.. And what they're identifying is there isn't that environment where we've set up for members of Council, what their role is and, you may recall that you and I had that discussion. I think what we need to do is have that session where we explain what the role is of Council, .committee, . internal audit, .management, and.various operations. Whole system.. Where I worked before we had a very good handle on that part of it. We did a really good job, we did our financial statements by the end of February, and that was one of the fastest municipalities that ever did it, and we had all of those systems in place, and the program managers were very disciplined in actually monitoring and being accountable for their budgets, and that's the thing that we haven't been able to - that we need to make significant improvements on as a city". Collins: "I think where they placed . the most emphasis is on the financial control system, and the first line says (reads it again), and when I looked at your response, you responded to the other comments made under control environment but there's absolutely nothing there to respond to that point. So, understanding that that's been highlighted by the auditors, as someone who's looking for some improvement in the system, what is your answer to that in regards to the checks and balances - and you heard the conversation before (Rinaldo tries to interrupt) to improve that?" Rinaldo: "I believe that we have the financial controls in place. There's no doubt that we need to provide the auditors more information to do the excess function. But I, (Collins interrupts)". Collins: "Before you go on, now I think we're at a crossroads here. (Rinaldo is trying to interrupt) We have our external auditor saying that we don't have controls in place - you say we do". Rinaldo: "I was going to qualify it, but you didn't give me a chance (he's laughing). I believe we have those things in place. Some of the things that they have identified for you.a good example is the inventory on the snow removal. Once we discovered that (we weren't reporting this correctly) management corrected this, it wasn't the auditors. All they were telling you is that we had done that. But we as management has taken that initiative, because we think that that's a responsible way of doing it". Collins: "I'm glad you raised that one, because if you look at that one Council made a substantial cut in the winter maintenance budget based on the information you provided during the 2001 budget. Staff came forward and said.we're over budgeting for materials. So we're basing it on a false amount. And you.I don't mean you, because actually it was Public Works, came forward and said we have an opportunity to reduce.. Council went ahead with that, only to reverse that decision years later because we found that we'd made a mistake in our inventory. And so I think that that gets back to the auditor's point that if we're not catching these things - and we're catching them two or three years later these mistakes are in fact impacting our operation -and hurting us in other ways, maybe not strictly financial". Rinaldo: "You're actually - and I acknowledge that. But I want to remind you in 2001 that was the year of the inventory - that was the year we amalgamated - that was the year we had no staff helping the operating departments. ( Collins ."yah, yah, I don't.") What we're talking about here is amalgamating a billion dollar corporation, with the greatest respect. There's going to be issues on that. I've been through two amalgamations and I can tell you in both situations we had these kinds of issues on the beginning of an amalgamation. As soon as we detected the problem with inventory we corrected the issue.. But I agree with you on that.and I can tell you that the department head at that time didn't know that that was a problem with the inventory or I'm sure that he wouldn't have made that recommendation .in terms of that adjustment that happened in that period of time. Now my staff is telling me that we're setting up systematic ways to make sure that inventory is being counted in a proper way, and we're going to review the procedures again with the external auditors to see whether we've made the necessary improvements in that". Collins: ".I appreciate that, and I understand the history to that, and I think Mr. Rinaldo's explanation is an accurate one. The problem is that I'm trying to deal with it from a high level view and I'm trying to see it as an example of the deficiencies within our current system that the auditors have noted - that these types of mistakes will come back to haunt us at a later time - snow budget, salt inventory, case in point - if we don't have internal checks and balances. And all I want to emphasize is that there is little here to Council to suggest - in writing - that we're doing anything to change the current system. Mr. Rinaldo's provided an overview of what's happened in that particular instance, but the auditors point is that could be happening 10 other times in 10 different areas of the organization and we wouldn't know about it and we wouldn't know about it because we don't have the proper internal controls in place. All I'm asking at this point in time, and I'll put another motion, that staff report back on that main issue in control environment based on that first bullet point. There's no response in the back from staff talking about that issue and I think that's an important one that need to be addressed.ask our staff to, and if they want time to do that , I suggest that the first quarter '05 to get a report on initiatives that the municipalities can undertake to improve upon the issues that were highlighted upon by the external auditors in this report".

Kelly: ".I agree with the intent and being expeditious about this.but given the fact that we're going to be moving into the '05 budget and there are some other things here, I'd hate for staff to come back and say 'well we just haven't had time'. Let's be realistic about the time frame.. I would obviously bow to the mover of the motion.." Collins : ".My concern is that the auditors highlighted this year over year, so it's not a new problem. So, I think that our own staff would probably have some ideas as to how we resolve this in that time frame. . To give 6 months to come back on such an important item is uh, dangerous". Peace: ".My sense is that this is related to the internal audit review.and I'd rather not speculate about the return at least until we get the RFP (request for proposal for a consultant to conduct the review) and have some discussion with.successful vendor.. I think you probably don't want to deal with this in isolation.." Jackson : "Councillor Collins, I understand you've done excellent homework on this. Can I suggest that the word may be strive ?" Collins : "Can I ask the external auditors, I mean I don't see - I can see the relation in the first point to internal audit, I think the other recommendations specifically deal with the internal audit and give examples. I see the first one as an internal control mechanism; it's checks and balances as it relates to the compilation of information and the dissemination eventually of that information. Can I get their take on its relation to internal audit and whether the two are specifically intertwined?" Booker: "With respect to the significant misstatements referred to in that first bullet, there's no doubt the finance area comes under a lot of attention during our delivery of this report, because that's where we spent all our time, is on the financial reporting side. In regards to those misstatements I think they're also talked about in points 3 to 6 and your management team has already provided responses on those items there. With respect to the recommendations which we've provided - and there are three specific bullets there, with respect to the City Manager's point, the first bullet which is 'this committees mandate will have an inter-link with operational review of the internal function'. If your mandate is not appropriate then that function will not be able to report to you in an appropriate way, and there are best practices out there in terms of what should be in your mandate. So if you fix your mandate that will also help fix your internal audit function.. With respect to timing this is a issue we raised, and you did put forward a motion September 2003 that I would remind you has not been acted on yet. So, I think your timing is important as you haven't dealt with this since September of 2003, which you said you were going to.." Collins: "So then understanding that the first part relates to governance, mandate - is that really an issue for the internal audit review to cover? I would see that as maybe outside of that, understanding that internal audit's a function of the control environment, I don't see governance or mandate. Or can it just be included and expand the scope of the internal audit review?" Booker: "You could deal with it in one of two ways. One is you can look at your mandate and fix it according to some of the best practices that are out there. Secondly, you could include that as part of that RFP - to take a look at whether the mandate of this group is right, and then look at the internal audit function; what needs changed to enable that mandate". Collins: "Ok. Then on that suggestion I would include that, if I could, with the RFP motion, if there's consensus to do that. . But I'm still stuck on the timelines, which would be included with what the Chief (City Manager used to be the Fire Chief, they still sometimes refer to him that way) is saying, so the sooner that RFP goes out, the better". . Peace: "I'll report back once the RFP is back and I have a sense of timing.report back to SP&B.." Kelly: ".My concern is that I know how involved that we get staff in our budget process, and .if it's our expectation that we're going to expect staff to have, you know, a completion date of 1 st quarter - we send staff back to look at things, we send them back for special reports during the budget process, we're hearing reports already about how they're working overtime situations in order to accommodate us.some of those special requests. If we can accommodate this in the RFP I think we can do as Councillor Collins is suggesting. I want to see this moved as expeditiously as well but I want to be pragmatic about it as well, so if it's included I think we can actually accommodate both things that Councillor Collins is suggesting and at the same time not put extra pressure on staff who I know we're going to be dumping on starting in January with budget process as well. I'd like to see this done next week if we could, but we simply don't have the staff to do it, so if it's included in the RFP request I think we can accommodate both requests, so I'll be supportive of Councillor Collin's motion". Merulla: "Just on this particular motion.just in response to Councillor Kelly is the fact that the City has incurred extra costs related to the delays, there's been a lack of critical analysis within the department, lack of professional review, lack of accuracy within the reporting itself, lack of discipline within the department, integrity has come up as a question, and lack of check and balances. . And one other fact was really emphasized that because of the fact that we're dealing with public funds and public trust that the bar's always raised higher as a direct result, as it should be, so to slow down that process would be doing something not in the best interest of the people we represent. So, that's why I support the initiative". .

Whitehead: ".We talk about Provincial Grants and reconciliation and you talk about the fact that there are different systems and when we talk to the auditor I don't know if I have the real sense - because the auditor talked about we could straight to banks for reconciliation within 15-20 days. In your comments did you anticipate the challenges that municipalities have with reconciling, uh, - you're at the mercy of the Province in terms of providing information"? Booker: "And many public sector bodies have challenges when they're dealing with other public sector levels, and there's no doubt. And we see that across the public sector. When I made reference - and the subject matter's changing a bit from what Councillor Ferguson asked earlier - you can get your bank statements for your corporate accounts relatively quickly.. When you're dealing with another level of government, yes, it's going to take longer, so does that mean four months past year-end everything should be done, complete? Yes that would be reasonable. Would it be reasonable to do it just in the month of January? No, it won't be reasonable to have everything done in the month of January, for a December year-end". Whitehead : "Great, I just wanted that clarification. And to Joe, I'm focusing on a specific fund that was provided by the Province of Ontario, and I wanted to understand from doing the reconciliation and what the implications were because the dollars arrived so late, and how do you address that within your finance? That's the $19.5 million received from the Province of Ontario. It arrived late in the year relatively speaking and I'm wondering what impacts that has considering we we're already halfway through the year, or ¾ of the way through the year in regards to the program. And was there a cost created because of the lateness.?" Rinaldo: "Well, in regards to reconciliation it's relatively straightforward. It's one transaction so it's easy to reconcile. In terms of timing ideally if we would have got it around mid-year then we wouldn't have had a negative cash flow from that point of view, the costs, the opportunity costs of investing it, so we probably had a small negative cash flow because we received it in September rather than July which would have been - mid-year would have been the best time for it to be neutral from a point of view of the payment we received". Whitehead: "But that wouldn't be the type of example we're referring to when we talk about dealing with the Province in respect to (Rinaldo interrupts)". Rinaldo: "No. What I'm referring to is the various subsidies we receive for the public health and social services program, that's primarily, and we're talking about $300 million for a variety of programs and statements that we have to provide to the Province, and there's so many programs that it's uh, for municipalities, that it's extremely hard to get reconciliation. I can tell you that when I was in the GTA we were clamoring with the Province in regard to getting proper reconciliation in regard to some of the payments that they were making to us in regard to that. All GTA municipalities were complaining about the same issue - it's the lack information that we get from the Province in order to reconcile those numbers is one of the challenges we have. Now I believe that we're getting there and hopefully, but, uh, but at least this year we'll have a better handle on reconciliation of those accounts. But it's extremely complex the way the Province funds municipalities, particularly in the area of public health and social services".

Jackson: "Ok. Councillor Collins your motion please, on the control environment? That it be married in with the RFP the City Manager's going.for the operational review? Collins: "Yup. The operational review and the mandate requirements of the audit process be included in the RFP for the internal audit review". Jackson: "And the City Manager will give us an update on that as soon as possible." Collins: "Correct". Jackson: "Moved and seconded, all those in favour, opposed? CARRIED. Motion on 8.1b) Managements overall response to Grant Thornton's presentation.that it be received and management actions be approved? Moved by Councillor Kelly, seconded by Councillor Merulla?" Merulla: "No, I'd rather not". Jackson: "Moved by Councillor Kelly, seconded by Councillor Collins? (Pause) A shrug of the shoulder. All those in favour? Any opposed, motion CARRIED". Jackson thanks everyone (staff and consultants).

8.2 Capital Budget Variance Report, as of August 31, 2004.

http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/FCS04127%20Capital%20
Variance%20Report-August%2031%202004.pdf (4:10 - 4:17 p.m.)

Discussion:

Collins: ".The one issue I wanted to raise in regards to - if you look at all the accounts in Appendix A, B,& C these are ongoing works in progress, and there are a number of programs that have yet to be undertaken or started, or initiated. So I guess the concern that I have in going through the budget process we always question every year 'is it absolutely necessary that all of the items included - in this case capital budget list - are required for the calendar year in which we're taxing or borrowing for'? And it frustrates me to know that here we are in November, understanding that this is an August 31 st report.there are literally dozens of projects from our budgeted year from 2004, or 2003, or 2002 and there are some going back to 2000 and 2001, where we've yet to expend the majority of those funds allocated to those accounts. So, we've either taxed our constituents or borrowed to fund these projects, which were at one point in time priorities, and yet there are dozens of them that we haven't even started". (end of taped portion) He goes on to cite examples from the variance list, in this case the purchase of furniture, a line item from last year, but the account still not drawn from, and wonders if this is still a priority? Scott Stewart (Manager, Public Works, Infrastructure and Environment) responds saying this is a Facilities item, but cannot explain why the money has not been spent yet. Collins indicates that this problem says to him that the capital budget system is not working, and wants the issued referred to the Strategic Planning process that the Council is currently undergoing in preparation for the budget season. Jackson suggests that as the meeting has been a long one that the committee re-look at this issue and have a detailed discussion at the next meeting 2 weeks from then. The recommendation to receive the item is CARRIED.

8.3 2004 Tax and Rate Operating Budget and Overtime Variance Report to August 31, 2004:
http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/FCS04127%20Capital%20
Variance%20Report-August%2031%202004.pdf (4:18 - 4:20 p.m.)

Quorum is lacking and Councillor Merulla, who is outside the Chambers on the phone, is called back in by Clerk to make quorum so that they can vote to receive this item, which they do. Item CARRIED, No discussion.

8.4 Financial Reporting Changes - Public Sector Accounting Board Recommendations on government Reporting Entity:
http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/FCS04118%20Financial%20
Reporting%20Changes%20-%20Public%20Sector%20Govt%20Rptg%20Entity.pdf

Item CARRIED, No discussion.

9.1 Mitigation Options for 2004 Projected Current Budget Deficit Public Works Department:
http://www.city.hamilton.on.ca/Clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2004/Nov17/PW04115.pdf (4:20-4:30 p.m.)

Discussion:

McCarthy, who is not a member of the committee, forgets herself and tries to make a motion on the item, and is reminded that she is not able to do this. This is the second time in this meeting that she's done this and everyone is amused.

Collins is interested to know what's changed since they last saw this report, and makes comments about the winter reserve being 'over in the budget'. He has questions about the reserves and Rinaldo says 'yes, there is an overall surplus in operations'.'absorb impact of winter control', and that this is only a report that needs to be received for information.

Meeting adjourned at 4:30.

Committee's outstanding business (from the agenda): 6 items.
(Of particular note is item A. Initiated in Feb/04 by Council. Issue: 2002 External Management Letter. Status: 'Follow-up actions to be brought back to Committee'.