In the spirit of better-late-than-never, Ritchot’s council hosted a virtual meeting with Ian Hyslop, contracted auditor from The Exchange Group. Hyslop’s purpose was to present to council an overall review of the RM of Ritchot’s 2021 financial statements.
Hyslop’s company, based out of Winnipeg, oversees financial audits for 32 municipalities around the province. The 2021 audit was the first to be completed by The Exchange Group for Ritchot.
Hyslop was quick to point out that his company was delayed in delivering a timely financial review due to a number of factors beyond their control. Not the least of these was the late receipt of required data coming from GFL Environmental Inc., a company with whom the RM partners for landfill management services and who oversees the financial aspects of the municipal landfill.
Normally, Hyslop says, The Exchange Group attempts to finalize audits by June of the proceeding year. In this case, GFL’s 2021 financial data pertaining to the landfill didn’t arrive until sometime in October 2022. Only after this could the audit company complete their mandated services.
Hyslop adds that timely and accurate financial statements are the best tool that a council has for exposing needed changes or adjustments which help with future financial goal-setting. They are also the basis by which a municipality creates its next budget.
Hyslop also raised concerns in regards to council’s ongoing financial arrangement with GFL.
The RM has partnered with a large-scale refuse collection company for approximately 20 years now. Contractually, the RM has split the assets and profits with the collection company, currently GFL, at a 63/37 split, with the majority belonging to the RM.
Regardless of their smaller share, though, the collection company is the party that’s tasked with all the financial record-keeping related to the landfill.
“My question is, ‘Would it not make more sense for Ritchot to take that over?’” Hyslop asked council. “I will leave that as a discussion point for council… at a different time. But it certainly would make some sense if you’re controlling that process. I’m not sure why it was set up the way it was.”
Apart from this, Hyslop said that Ritchot’s 2021 financial statements, overall, appeared clean and well managed.
He added that the reserve funds set aside by a council are a good indicator of how they’re doing in terms of managing the RM’s financial aspects.
“The primary use of reserves is acquisition of primary capital assets and paydown of debt,” Hyslop said, pointing out that Ritchot had $8.7 million in reserves at the end of 2021.
While not excessive, it looks sufficient for the RM’s needs at this stage, he said, but the future must also be considered in the bottom line of any reserve fund.
“You need to keep in mind that the fiduciary duty of council is not just to the lovely ratepayers that elected them,” said Hyslop. “It’s a perpetual fiduciary duty to recognize that you can’t simply abandon future ratepayers for the current ones, even though that’s the tendency as politicians… These decisions that you make [today] will either haunt you or not haunt you [into the future].”
Council voted in favour of adopting the 2021 audited financial statement as presented.
Following Hyslop’s presentation, follow-up discussion got underway around the virtual council table.
Regarding the delay in submission of financial data to the auditor last year, CAO Mitch Duval says it was likely a series of events that led to that outcome, including the hiring of a new chief financial officer (CFO) for the RM as well as council’s decision to contract a new auditing company.
Ritchot CFO Muhammad Zaman shared with council his intent to begin work on the 2022 year-end financials in March of this year with the anticipation of completing them sometime in June.
Councillor Janine Boulanger queried council about whether reconsideration should be given to GFL’s financial management of Ritchot’s landfill. Mayor Chris Ewen and Duval weighed in, suggesting that this would require resources that the RM simply doesn’t have at this point.
“It would be nice if we had total control, but it is a bigger beast than what it once was,” Duval said.
