Audit plan raises questions about salary disclosure
Councillors also wondered about materiality increase
| Posted: Saturday, Sep 14, 2013 06:00 am
A councillor suggested the city disclose what the top 50 civic employees make to the public.
During Monday’s standing committee on finance meeting, Coun. Cam MacKay tossed out the disclosure idea during a session with the city’s auditors about the audit plan for 2013.
“Is there anything to stop us here at the City of St. Albert to say, ‘You know what, instead of just doing the bare minimum of disclosing council and our city manager (salaries), we’ll disclose the top 50 people here, what they make, their benefits?” MacKay asked.
Representatives from Deloitte, the auditor, said there was nothing in the accounting standards that would prevent such a disclosure, but city manager Patrick Draper decided to “address that question before it goes too far.”
Draper said there could be freedom of information concerns, employee retention issues and potential labour negotiation impacts if such a policy came into play.
“I’m not saying it’s out of the question but it would definitely take some serious thought,” Draper said.
MacKay asked if the audit’s scope would include making sure St. Albert’s employee salaries would be in line with the policy for non-union staff that the city’s wage rate be within the 60th percentile of salaries among comparative municipalities. He was told that would be outside of the audit’s scope.
Contaminated site questions
Councillors and the mayor also raised concerns about contaminated sites, which were mentioned during management’s updates on implementations of Deloitte’s previous recommendations from earlier audits.
Mayor Nolan Crouse wanted to know if the list of sites, which the committee heard was submitted internally and not yet to council, needed to have its liability funded and not just listed on future financial statements.
Rachel Gosse, the lead engagement partner from Deloitte on the audit team, said it was a new incoming standard that they will have to be listed as a line item from 2015 onwards.
“The funding question is a separate question and it would be up to council as to whether or not you’re comfortable not having a fund set aside for certain liabilities,” Gosse said.
Coun. Len Bracko wanted to know, in the case of contaminated sites being owned privately, who has to pay for remediation efforts. That was taken as an information request for city staff.
Materiality levels questioned
Gosse told council that Deloitte has set the preliminary materiality level for 2013 at $5-million, a jump from $3.7-million in 2012. Materiality is the magnitude of misstatements in financial statements that could influence decisions made using those statements. The audit plan presented to council said Deloitte would report to the committee “all uncorrected misstatements greater than a clearly trivial amount of $250,000 … and any misstatements that are, in our judgment, qualitatively material.”
“That’s a big jump,” said Coun. Cathy Heron of the switch to $5-million. Kayla Thompson, assistant manager on the audit team from Deloitte, said the amount depends on the budget and the auditor’s discretion within a specified range, and in this case chose to increase it.
Coun. Malcolm Parker wanted to know if at some point they’d stop employing a formula and give a dollar point, since as the city’s net assets grow, the materiality would as well.
“At what point do we say this is a significant amount of money and we should look into it,” Parker said, “One million dollars is a significant amount of money.”
Gosse explained the materiality level used by auditors should be different from the checks managers should be doing, saying those municipal managers should be checking as close to the dollar as possible.
“We do test items below this materiality amount,” Gosse said. She said they could make a change to their materiality amounts tested, but it would change the scope of the audit and mean more work.
The audit plan from Deloitte was approved by the committee, which consists of all the councillors and the mayor, unanimously.