2007-05-09 Finance Committee MinutesFINANCE COMMITTEE
CITY OF SAINT JOHN
MINUTES
WEDNESDAY, MAY 9, 2007 - 4:30 p.m.
Present:
Deputy Mayor Hooton, Chairperson
Mayor Norm McFarlane
Councillor Ferguson
Councillor Titus
Greg Yeomans
Terry Totten
Cathy Graham
Also present - Jackie Ferrar, Recording Secretary
Messrs. Bob Crowley and Jon Morin of Ernst & Young entered the meeting.
1. Approval of minutes - March 13, 2007
On motion of Mayor McFarlane
Seconded by Councillor Ferguson
RESOLVED that the minutes of the March 13, 2007
meeting be approved.
Question being taken, the motion was carried.
2. Audit Report - Ernst & Young
Mr. Crowley distributed their presentation document and provided the Committee with
an overview of their audit approach noting that they are now in the final stages of the
audit. The audit scope was reviewed with Mr. Crowley advising that the audit report, a
Section 5600 report, is a qualified audit opinion on disclosed basis of accounting for the
following financial statements: General Fund, Water and Sewerage Utility and Reserve
and Trust Funds. He explained that the report is a qualified opinion, as were the two
previous years, due to the pension solvency funding obligation not being paid or
recorded by the City for the General Fund and Water and Sewerage Utility. Mr. Totten
advised that the City is currently in the voting process with regard to pursuing solvency
exemption.
Discussion continued with Mr. Crowley commenting with respect to the General Fund
net unadjusted equity difference of $8,604,267 - unaccrued pension expenses of $8.4
million and reversing the prior year error of $.2 million.
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May 9, 2007
Mr. Yeomans reviewed the General Fund - Statement of Revenue and Expenses noting
the year end surplus of approximately $1 million. Continuing he provided a detailed
review of the Expense Items, and Notes to the Financial Statements. A brief discussion
followed regarding the Heart and Lung liability for 2006 in the amount of $2,015,5000.
Councillor Ferguson expressed concern that the December 31, 2003 actuarial valuation
for the Pension Plan is used for these financial statements and questioned why a more
up -to -date valuation was not carried out.
Revenues, expenses and fiscal services for the Water and Sewerage Utility were
reviewed with Mr. Yeomans advising that consumption is down for all customers
resulting in less revenue.
Speaking with regard to the capital fund and long term debt for the General Fund and
the Water and Sewerage Utility, Mr. Yeomans stated that in the General Fund the
debenture debt in 2006 was $54.8 million versus $51.6 the previous year noting with the
aggressive capital program over the next couple of years this will continue to increase
and if the borrowing rates escalate it could cause hardship on the utility budget. He
explained that the Utility budget has gone from $42.1 million to $44.3 million long term
debt and a considerable amount of work is anticipated in this area as well.
Responding to a question raised with respect to the $1 million surplus, Mr. Yeomans
expressed the opinion that it should be carried forward into 2008.
Discussion came to a conclusion with Mrs. Graham providing an overview of the
Reserve and Trust Funds pointing out that all the Funds are earning interest with only
one receiving any significant use, that being the Land Subdivision Fund.
On motion of Mayor McFarlane
Seconded by Councillor Ferguson
RESOLVED that the proposed Financial Statements
for the City of Saint John General Fund, Water and Sewerage Utility and Reserve and
Trust Funds as at December 31, 2006 be forwarded to Common Council on May 22,
2007.
Question being taken, the motion was carried.
A brief discussion followed concerning the management letter with concerns being
expressed by Councillor Ferguson. Responding, Mr. Crowley stated it will go to
management first for their response, and then it will come back to the Finance
Committee for final approval.
The meeting adjourned at 5:10 p.m.
Chairperson