The Municipality of Chatham-Kent is trending in the right direction to becoming debt-free.
Since its inception, the Municipality of Chatham-Kent has had its financial records, and its financial control systems audited annually by an independent firm of external auditors appointed under contract by Council.
The senior audit partner provides the opportunity to meet directly with the Audit Policy Committee in closed session at least annually, with Municipal staff absent, to obtain comments and instructions. In addition to the standard audit report, the auditor conducts extra tests and examinations based on the Audit Policy Committee’s concerns. Results of the audit are shared directly with the Audit Policy Committee, and ultimately the statements are approved by Council via report.
Under section 286 of the Municipal Act, 2001, Finance is responsible for payments and collections, record-keeping, investments, and providing Council with financial information. All financial statements are prepared by Municipal staff. The Auditor reviews these statements to ensure compliance with legislation, regulations and Accounting Standards.
As well as investigating specific Council concerns, the external auditor has several objectives.
This includes obtaining assurance that the financial statements are free of material misstatement and evaluating the fairness of presentation of the financial statements in accordance with local government accounting standards established by the Public Sector Accounting Board (PSAB) and the Chartered Professional Accountants of Canada (CPA Canada).
The external auditor has concluded a review of the records of the Corporation and has issued an unqualified audit opinion on the basis of this review. This means that there were no significant internal financial control weaknesses or material errors noted during the audit.
Matt Torrance, Director of Financial Services, presented the results of the 43-page report to council on July 12. The results showed the Municipal 2020 year-end cash basis surplus is $3,767,954 ($3,758,227 in 2019).
“On the statement of financial position, we have highlighted that we have a $35 Million cash that was transferred from our general bank, and it was invested in principal-protected notes,” said Torrance.
The Director of Financial Services also noted that debt has decreased by $10 Million in LTD, with no debt issued in 2020.
According to Torrance, the municipality’s long-term debt totals $57 Million. Of this, 33.8 Million is attributable to the public utilities commission, and the debt payments are funded through water and sewer rates. Of the remaining 23.2 million, 13.1 is covered by senior government funding, leaving 10.1 million dollars to be funded by the general tax base. This equates to roughly $95 after debt per resident of Chatham-Kent.
“The municipality continues to pay down debt, reducing our debt load from $161 Million in 2010 to $57 Million in 2020. If the municipality does not incur any new debt, this will be further reduced to $47 Million by 2021.”
The presentation by Torrance also highlighted that in 2020 reserves increased by $22 Million while operating expenses decreased by $3 Million.
“This caused our total reserves as a percentage of expenses to increase from 2019. This financial indicator shows us how much money is set aside for future needs. The increase in reserves can be used to assist council with meeting their objectives and providing the ability to fund major capital projects while incurring little to no further debt,” said Torrance.
Additionally, Torrance noted that the municipality’s $203 Million Net Asset position indicates that assets exceed liabilities and that, therefore, past transactions are not negatively impacting future revenue requirements. This increased by $45 Million from 2019.
“Chatham-Kent was in a net financial debt position prior to 2014. It has improved to a strong net financial asset potion, increasing by 272 million over the last decade,” said Torrance.
Bird Bouchard, Local Journalism Initiative Reporter, The Ridgetown Independent News