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HomeMy WebLinkAboutFIN 14-20Report to Executive Committee Report Number: FIN 14-20 Date: November 2, 2020 From: Stan Karwowski Director, Finance & Treasurer Subject: 2020 Year End Audit (Interim) File: F-3300-001 Recommendation: 1.That the Audit Service Plan as submitted by Deloitte LLP, set out in Attachment 1 to this report, be received for information; and 2.That the Interim Chief Administrative Officer and the Director, Finance & Treasurer be authorized to sign the confirmation of change to the master services agreement on behalf of the City. Executive Summary: In accordance with generally accepted auditing standards, the Audit Service Plan is prepared to communicate the auditor’s approach and reporting responsibilities to the Executive Committee, who has oversight responsibility for the financial reporting process . This plan is submitted at the commencement of the year end audit. Financial Implications: The base audit fee for City and Library is estimated at $70,000. This is the same fee as in the previous year. Sufficient provision is available in the 2020 Budget. Discussion: In the Committee’s role as the body responsible for oversight of the financial reporting process, it must review the Audit Service Plan for the 2020 year end audit. The Audit Service Plan includes the scope of the audit services to be provided, the auditor’s reporting responsibilities and an outline of the audit approach. It is included as Attachment 1 to this report. The master services agreement (MSA) with Deloitte LLP (Deloitte), dated October 17, 2019, summarizes the services Deloitte will provide, their responsibilities and management’s responsibilities. There was a new general business term added in regards to COVID-19 which is provided in the confirmation of changes letter (Attachment 2). The signing of the confirmation of change forms part of the master services agreement with Deloitte. Attachments: 1.2020 Audit Service Plan 2.Confirmation of Changes Relating to Updates to the General Business Terms -C¾of- PJ(KERJNG FIN 14-20 Subject: 2020 Year End Audit (Interim) Prepared By: ~~~ Kristine Senior, CPA, CA Manager, Accounting Services Recommended for the consideration of Pickering City Council Marisa Carpino Interim Chief Administrative Officer Approved/Endorsed By: November 2, 2020 Page 2 Stan Karwowski, MBA, CPA, CMA Director, Finance & Treasurer 00 The Corporation of the City of Pickering 2020 Audit service plan For the year ended December 31, 2020 Attachment #1 to Report #FIN 14-20 Deloitte. Dear Executive Committee Members: We are pleased to provide you with our audit service plan for The Corporation of the City of Pickering (the “City”), for the year ending December 31, 2020. This document describes the key features of our plan including our audit scope and approach, our planned communications with you, and our team. Our audits will include: ● An audit of the City of Pickering’s consolidated financial statements (the “Financial Statements”) for the year ending December 31, 2020 prepared in accordance with Canadian Public Sector Accounting Standards (“PSAS”) ● An audit of the City of Pickering Public Library Board’s financial statements for the year ending December 31, 2020 prepared in accordance with Canadian PSAS, and ● An audit of the Trust Funds of the City of Pickering’s financial statements for the year ending December 31, 2020 prepared in accordance with Canadian Accounting Standards for Not -for-Profit Organizations. Our commitment to you is straightforward: we will provide you with outstanding professional services delivered by an experienced and dedicated team of professionals. Our professionals will continue providing you with best practices and insights to face the increasingly complex array of issues and challenges encountered by the City. This report has been provided to the Executive Committee (the “Committee”) on a confidential basis. It is intended solely for the use of the Committee to assist you in discharging your responsibilities with respect to the various financial statement audits enumerated above and is not intended for any other purpose. We look forward to discussing our audit service plan with you and answering any questions you may have. Yours truly, Chartered Professional Accountants Licensed Public Accountants Deloitte LLP 400 Applewood Crescent Suite 500 Vaughan, ON L4K 0C3 Canada Tel: 416-643-8400 Fax: 416-601-6610 www.deloitte.ca October 15, 2020 Private and confidential To the Members of the Executive Committee of The Corporation of the City of Pickering 1 The Esplanade Pickering ON L1V 6K7 2020 Audit service plan Deloitte. The Corporation of the City of Pickering | Table of contents i © Deloitte LLP and affiliated entities Table of contents Executive summary 1 COVID-19 Impacts 3 Audit risks 5 Revised CAS 540, Auditing Accounting Estimates and Related Disclosures 7 Appendix 1 – Audit approach 9 Appendix 2 – Communication requirements 13 Appendix 3 – New and Revised Public Sector Accounting Standards 15 Appendix 4 – Deloitte resources a click away 16 The Corporation of the City of Pickering | Executive summary 1 © Deloitte LLP and affiliated entities Executive summary 1 Revenue recognition 2 Management override of controls 3 Implementation of new financial system 4 Management judgments and accounting estimates 5% of materiality We are responsible for providing reasonable assurance that your financial statements as a whole are free from material misstatement. Materiality 3% of expenses Preliminary materiality Clearly trivial threshold Audit scope and terms of engagement We have been engaged to perform an audit of the City, Library and Trust Funds’ Financial Statements, as at, and for the year ending, December 31, 2020 (the “Financial Statements”) prepared in accordance with Canadian Public Sector Accounting Standards (“PSAS”) for the City and the Library Board and Canadian Accounting Standards for Not-For-Profit Organizations for the Trust Funds. Our audit will be conducted in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). The terms and conditions of our engagement are described in the Master Services Agreement for Professional Services dated October 17, 2019, which has been signed on behalf of the Committee and management, and Confirmation of Changes letter dated November 2, 2020 which is to be signed. Audit risks Our materiality levels are based on professional judgment and will be determined using total expenses or fund balances as a reference point for the ultimate determination of materiality as follows: • Consolidated financial statements for the City – approximately 3% of expenses • City of Pickering Public Library Board – approximately 3% of expenses, and • City of Pickering Trust Funds – approximately 3% of fund balances We will inform the Executive Committee of all uncorrected misstatements greater than a clearly trivial amount (5% of materiality) and any misstatements that are, in our judgment, qualitatively material. In accordance with Canadian GAAS, we will ask that any misstatements be corrected. 0 © 0 D .______I - D ---1 I...----- The Corporation of the City of Pickering | Executive summary 2 © Deloitte LLP and affiliated entities Fraud risk We will develop our audit strategy to address the assessed risks of material misstatement due to fraud. Determining this strategy will involve: 1. Enquiry of those involved in the financial reporting process about inappropriate or unusual activity. 2. Testing a sample of journal entries throughout the period as well as adjustments made at the end of the reporting period. 3. Identifying and obtaining an understanding of the business rationale for significant or unusual transactions that are outside the normal course of business. 4. Evaluating whether your accounting policies may be indicative of fraudulent financial reporting resulting from management’s effort to manage earnings. 5. Evaluating whether the judgements and decisions related to management estimates indicate a possible bias. 6. Incorporating an element of unpredictability in selecting our audit procedures. We will ask the Committee for their views about the risk of fraud, whether they know of any actual or suspected fraud affecting the City and their role in the oversight of management’s antifraud programs. If we suspect fraud involving management, we will immediately inform the Committee of our suspicions and discuss the nature, timing, and extent of audit procedures necessary to complete the audit. Use of the work of specialists We intend to rely on the work of the following expert during our audit: •Deloitte Risk Advisory We intend to use our own IT specialists to assess the design and implementation of general computer controls as well as testing of any systems conversion processes (if applicable). If our assessment does not provide us with sufficient, appropriate audit evidence, we will need to perform additional audit procedures to address the risks of material misstatements in the Financial Statements. • The Corporation of the City of Pickering | COVID-19 Impacts 3 © Deloitte LLP and affiliated entities COVID-19 Impacts Other than COVID-19, and the related impacts to revenue, cash management and operations of the City, we are not currently aware of any significant events that would impact the audit of the financial statements for the December 31, 2020 year-end. We have incorporated these COVID-19 considerations in the “Audit risks” section of this document. Below are some of the Deloitte resources we have developed and have available to assist with the potential impacts COVID-19 may have on the 2020 audit. We will continue to monitor the status of the situation and, if necessary will discuss and finalize an action plan with management as to how to best continue to conduct the audits remotely, if necessary. COVID-19 Working remotely What makes Deloitte’s audit different going forward is that with our technology platform, we focus efforts on what actually matters rather than taking a “needle in a haystack” random sampling approach. Through consistent processes and capabilities within our global audit platform, we facilitate a better client experience by focusing on what matters, reducing client burden, and delivering value. How would this look and feel different for you? One centralized collaboration portal where you can quickly drag and drop files, ask clarifying questions, get reminders. You have visibility into audit and request status on real- time dashboards, whether on your computer or on a mobile app. Deloitte Connect Using Spotlight’s data analytics capabilities, we’re able to be laser-focused on transactions that are out of the norm. This means less burden on you and your team providing audit support, more relevant and smarter questions, and less time wasted on immaterial issues. Spotlight - -- I " C ~ I_ -I 1:11111111111 I" p ,,,.,,. __ ,. __ "'_..,._ , ...... ~ I- i--• -=-..:--~ ·--· ·-··------------- The Corporation of the City of Pickering | COVID-19 Impacts 4 © Deloitte LLP and affiliated entities COVID-19 Resources A secure web-based application for preparing, sending, receiving and managing confirmations. We’re able to automatically create confirmations, have you apply your signature to the entire batch, and send them electronically rather than by mail. This approach also provides much better visibility into the status of all of the confirms with a clear real-time dashboard. iConfirm • Deloitte public domain on COVID-19 (includes links to government grant program details) • Our Deloitte COVID-19 Information Centre brings together Deloitte insights to help businesses manage and mitigate the risk. • Webcasts for clients (recordings of past webcasts and invitations for upcoming webcasts) • Centre for Financial Reporting COVID-19 section where clients will find all our external- facing resources • POVs and thought Leadership – various reading material and toolkits • Leveraging artificial intelligence - Deloitte has created a COVID-19 Economic Recovery Dashboard to monitor the health, community/social activity, financial and economic indicators that will signal when the rebound stage has arrived. • - 0 0 - --- The Corporation of the City of Pickering | Audit risks 5 © Deloitte LLP and affiliated entities Audit risks The following tables set out the audit risks that we identified during our preliminary planning activities, including our proposed response to each risk. Our planned audit response is based on our assessment of the likelihood of a risk’s occurrence, the significance should a misstatement occur, our determination of materiality and our prior knowledge of the City. Revenue recognition* Significant Audit risk Our proposed audit response Under Canadian GAAS, we are required to evaluate the risk of fraud in revenue recognition. For municipalities, there is a risk around the occurrence, completeness and accuracy of revenue, deferred revenue, and classification of recognition related to government transfer/grants. We recognize that as a result of COVID-19 there may be certain changes to other revenue streams (i.e. recreation, permits and fees, etc.) which will be captured as part of our audit response. Certain revenue streams are presumed areas of significant audit risk. We will test the design and implementation of controls in significant revenue streams and perform substantive analytic procedures and/or detailed testing in these areas, and Substantive testing to determine if restricted contribtions (i.e. development charges), and government transfers/grants have been recongized appropriately. (Revenue vs. deferred revenue). Management override of controls* Significant Audit risk Our proposed audit response Under Canadian Auditing Standards, it is the responsibility of the management, with the oversight of those charged with governance to place a strong emphasis on fraud prevention and detection. Oversight by those charged with governance includes considering the potential for override of controls or other inappropriate influence over the financial reporting process. Management override of controls is present in all entities. It is a risk of material misstatement resulting from fraud and therefore is considered as a significant risk. Our audit tests the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of financial statements We obtain an understanding of the business rationale for significant transactions that we become aware of that are outside of the normal course of business, or that otherwise appear to be unusual given our understanding of the City and its environment We review accounting estimates for bias and evaluate whether the circumstances producing the bias, if any, represent a risk of material misstatement In addition, experienced Deloitte personnel are assigned to the testing and review of journal entries and areas of estimates, and Professional skepticism will be maintained throughout the audit. • • • • • • • The Corporation of the City of Pickering | Audit risks 6 © Deloitte LLP and affiliated entities Areas of Special Audit Consideration During our risk assessment, we identified some areas of audit risk that will require special audit consideration. These areas of risk, together with our planned responses, are described below: Management judgments and accounting estimates Audit risk Our proposed audit response Management judgments and accounting estimates may be subject to estimation uncertainty. Significant judgements and estimates Accounts involving significant estimates include allowance for doubtful accounts, certain accrued liabilities, post-employment benefits liability, WSIB liabilities and estimates relating to the useful lives of tangible capital assets. Understand how management makes the accounting estimates and the underlying data on which those estimates are based. Review support for significant assumptions made by management. (i.e., third party source data). Evaluate whether the significant assumptions made by management provide a reasonable basis for the accounting estimate, whether and how management considered alternative assumptions or outcomes, and why they have rejected them. Review transactions and events occurring subsequent to year-end to determine the reasonableness of estimates made at year-end. Review the consistency of assumptions made by management. *Area of Significant risk Implementation of new financial system Audit risk Our proposed audit response The City is in the process of implementing a new financial system, SAP, which is expected to go live during fiscal 2021. Given the complexity associated with such a significant undertaking and the impact on numerous City departments, proper planning is critical to ensure implementation success and the proper conversion and migration of financial data. Although the go live date is scheduled for fiscal 2021, as part of the 2020 audit, we will obtain an understanding of the project scope for the systems implementation through discussion with Finance and IT management to assess the implications on our audit strategy. We will obtain an understanding of the City’s data conversion and migration plans from the current to the new system to assess the impact on the extent of testing required. We will also discuss with management to ensure that key considerations and audit trail as part of a typical systems integration have been factored into the project plan. Based on the discussions above, we will formulate our preliminary systems and data conversion testing plan for the 2021 audit. Understand how management makes the accounting estimates and the underlying data on which those estimates are based. • • • • • • • • • The Corporation of the City of Pickering | Revised CAS 540, Auditing Accounting Estimates and Related Disclosures 7 © Deloitte LLP and affiliated entities Revised CAS 540, Auditing Accounting Estimates and Related Disclosures Drivers for the Revised Standard • Changes in financial reporting frameworks and standards include a greater focus on complex accounting estimates, which highlights the importance of fostering professional skepticism • The revised standard strives to improve communication and transparency between auditors and those charged with governance on complex accounting estimates. • Our communication and transparency with the Committee previously were already in compliance with this new standard. Scalability of Audit Efforts Enhanced requirements on disclosures and audit documentation How will it impact your audit? Enhanced focus on evaluating the work of management’s experts and external information sources Emphasis on Auditor’s Professional Skepticism, Management Bias and Contradictory Evidence Enhanced focus on management’s processes and controls More robust risk assessments The Corporation of the City of Pickering | Revised CAS 540, Auditing Accounting Estimates and Related Disclosures 8 © Deloitte LLP and affiliated entities What can you expect from your auditor? Management • Greater focus in assessing how management understands the nature, extent, risks, and controls associated with accounting estimates • Varying audit procedures to drive work efforts based on assessed risk levels including consideration to adopt a control reliance approach to auditing accounting estimates. • More interaction with management’s experts • Specific written management representations Communication with the Committee • The Committee can expect to have enhanced dialogue on accounting estimates. This may include the auditor’s views and assessment of: • significant qualitative aspects of the entity’s accounting practices relating to accounting estimates and related disclosures; • indicators of management bias; • appropriateness of management’s methods, assumptions and data used; and • significant deficiencies in internal controls around accounting e stimates The Corporation of the City of Pickering | Appendix – Audit approach 9 © Deloitte LLP and affiliated entities Appendix 1 – Audit approach Deloitte’s audit approach is a systematic methodology that enables us to tailor our audit scope and plan to address the unique issues facing the City Focus area Risk based audit • Deliver a customized risk assessment, focusing our attention and resources on the audit areas that are most relevant to the City. Confidential Information • Protecting the privacy and confidentiality of our clients and the firm is a cornerstone of the professional standards every Deloitte partner and practitioner commits to upholding every day. • Deloitte employs technical, physical, and procedural safeguards, including our Confidential Information Program, to appropriately safeguard your data before, during, and after the course of the engagement. Professional skepticism • Obtain a thorough understanding of the relevant facts and information , analyze reasonable alternatives, apply a questioning mindset and challenge management’s assumptions. • Perform a more rigorous review of potential contradictory evidence. Consultations • Involve additional resource or consult with technical resources concerning the significant or unusual events. • Understanding your current business and its structure • Understanding your accounting processes and internal controls • Understanding your IT systems • Identifying potential engagement risks and planning control testing and substantive procedures directly related to the risks • Consideration of the risk of fraud • Inquiring directly of the Committee about fraud risk • Assessing risks and controls relating to information technology • Incorporate an element of unpredictability when selecting the nature, timing and extent of our audit procedures. • Evaluating the design and determining the implementation of internal controls relevant to the audit • Performing substantive audit procedures • Prior to rendering our report, we will conclude whether: o The scope of the audit was sufficient to support our opinion, and o The misstatements identified during the audit do not result in the financial statements being materially misstated. • Reconfirming our independence Delivering professional excellence Assesssing and responding to engagement risk Developing and executing the audit plan Reporting and assessing performance Initial Planning • The Corporation of the City of Pickering | Appendix – Audit approach 10 © Deloitte LLP and affiliated entities When general IT controls (GITCs) may be relevant? For example: A billing system that performs many functions (such as processing orders, generating invoices, and tracking financial balances) and it processes and houses data. The entity relies on the functionality and the data processed by the system. Additionally, the volume and complexity of transactions processed by system is considered high. Therefore the billing system is relevant to the audit. Factor #1 Data For example: •3-way match of the purchase order, goods receipt and invoice prior to payment •The calculation of depreciation expense •Access is restricted to update inventory quantity Factor #2 Automated Controls For example, a system- generated A/R aging report from the financial reporting application is used to determine the allowance for doubtful accounts. Factor #3: System Generated Reports For example, a telecommunications company uses its application system to create a log of the services provided to its customers, to initiate and process its billings for the services, and to automatically record such amounts in the general ledger. It is a highly automated environment and therefore most of the audit evidence is maintained in the application system itself. The team has concluded that substantive procedures alone would not be sufficient to address certain risks of material misstatements. Therefore, the application system is relevant for the audit. Factor #4: Substantive Procedures The determination of which IT system aspects are relevant to our audit is based on the four factors. The Corporation of the City of Pickering | Appendix – Audit approach 11 © Deloitte LLP and affiliated entities Focus area Audit technology • Deloitte Connect – Use Deloitte’s secure, online collaboration site to facilitate a two-way dialogue between the Deloitte team and the City team to effectively manage engagement coordination and provide greater transparency allowing both management and auditor visibility over client request status. • Deloitte Spotlight - Gather data and test journal entries, identify risks and anomalies more quickly, and generate meaningful insights through data visualization. • Argus – Use Deloitte’s artificial intelligence tool to analyze the population of contracts or other documents to identify variations, potential risks and hone in on items of interest. Innovating our audit approach Use of Innovation Audit Analytics Argus Excel analytics Deloitte Spotlight Deloitte Signal Deloitte Connect Deloitte Signal delivers a comprehensive, customized, and flexible data analysis using trends, metrics, and ratios from coordinated external and internal resources. Deloitte’s artificial intelligence tool that extracts analytics across an entire population of documents and highlights variations that can help us identify risks. Deloitte’s proprietary tool, focuses testing on high-risk transactions and streamline common audit test procedures. We are leveraging specialists and technology-powered solutions in our audit delivery model to transform the way we plan and execute our audits. Deloitte Spotlight mines journal entry data to test 100 percent of select populations in a matter of minutes, identifies risks and anomalies more quickly, and generates meaningful insights through data visualization. Deloitte’s secure, online collaboration site that facilitates a two-way dialogue between the Deloitte team and client team to effectively manage engagement coordination. • The Corporation of the City of Pickering | Appendix – Audit approach 12 © Deloitte LLP and affiliated entities Focus area Processes • Optimizing interim - Proactively shift work forward from peak periods, including journal entry testing to our interim visit. • Project management - Enhance project management oversight and effective communications between the audit team and management. The Corporation of the City of Pickering | Appendix – Communication requirements 13 © Deloitte LLP and affiliated entities Appendix 2 – Communication requirements Required communication Reference Audit Service Plan 1. Our responsibilities under Canadian GAAS, including forming and expressing an opinion on the financial statements CAS1 260.14 2. An overview of the overall audit strategy, addressing: a. Timing of the audit b. Significant risks, including fraud risks CAS 260.15 3. Significant transactions outside of the normal course of business, including related party transactions CAS 260 App. 2, CAS 550.27 Enquiries of those charged with governance 4. How those charged with governance exercise oversight over management’s process for identifying and responding to the risk of fraud and the internal control that management has established to mitigate these risks CAS 240.21 5. Any known suspected or alleged fraud affecting the City CAS 240.22 6. Whether the City is in compliance with laws and regulations CAS 250.15 Year-end communication 7. Modification to our audit plan and strategy CAS 260.A26 8. Fraud or possible fraud identified through the audit process CAS 240.40-.42 9. Significant accounting policies, practices, unusual transactions, and our related conclusions CAS 260.16 a. 10. Alternative treatments for accounting policies and practices that have been discussed with management during the current audit period CAS 260.16 a. 11. Matters related to going concern CAS 570.25 12. Management judgments and accounting estimates CAS 260.16 a. 13. Significant difficulties, if any, encountered during the audit CAS 260.16 b. 14. Material written communications between management and us, including management representation letters CAS 260.16 c. 15. Circumstances that affect the form and the content of the auditor’s report CAS 260.16d. 16. Modifications to our opinion CAS 260.A21 17. Our views of significant accounting or auditing matters for which management consulted with other accountants and about which we have concerns CAS 260.A22 18. Significant matters discussed with management CAS 260.A.22 1 CAS: Canadian Auditing Standards – CAS are issued by the Auditing and Assurance Standards Board of CPA Canada The Corporation of the City of Pickering | Appendix – Communication requirements 14 © Deloitte LLP and affiliated entities 19. Matters involving non-compliance with laws and regulations that come to our attention, unless prohibited by law or regulation, including illegal or possibly illegal acts that come to our attention CAS 250.23 20. Significant deficiencies in internal control, if any, identified by us in the conduct of the audit of the financial statements CAS 265 21. Uncorrected misstatements and disclosure items CAS 450.12-13, 22. Any significant matters arising during the audit in connection with the City’s related parties CAS 550.27 The Corporation of the City of Pickering | Appendix – New and Revised Public Sector Accounting Standards 15 © Deloitte LLP and affiliated entities Appendix 3 – New and Revised Public Sector Accounting Standards The following is a summary of certain new or revised Canadian Public Sector Accounting Standards that will become effective in 2022 and beyond. Public Sector Accounting Standards Title Description Effective Date Section PS 3280 - Asset retirement obligations This Section establishes standards on how to account for and report on the legal obligations associated with the retirement of tangible capital assets. Effective April 1, 2022. Earlier adoption is permitted. Section PS 3400 - Revenue This Section establishes standards on how to account for and report on revenue. Specifically, it differentiates between revenue arising from transactions that include performance obligations and transactions that do not have performance obligations. Effective for fiscal years beginning on or after April 1, 2023. Earlier adoption is permitted. This Section may be applied retroactively or prospectively. The Corporation of the City of Pickering | Appendix – Deloitte resources a click away 16 © Deloitte LLP and affiliated entities Appendix 4 – Deloitte resources a click away At Deloitte, we are devoted to excellence in the provision of professional services and advice, always focused on client service. We have developed a series of resources, which contain relevant and timely information. See links below to receive practical insights, invitations to Deloitte events/webcasts, and newsletters via email and other electronic channels. You will be able to select business topics and industries that align with your interests. Canada’s Best Managed Companies (www.bestmanagedcompanies.ca) Target audience Directors and CEO/CFO The Canada's Best Managed Companies designation symbolizes Canadian corporate success: companies focused on their core vision, creating stakeholder value and excelling in the global economy. Centre for financial reporting (https://www.iasplus.com/en-ca/standards) Target audience Directors and CEO/CFO Controller and Financial reporting team Web site designed by Deloitte to provide the most comprehensive information on the web about financial reporting frameworks used in Canada. Deloitte Viewpoints (https://www.iasplus.com/en-ca/tag- types/deloitte-viewpoints) Target audience CFO Controller and Financial reporting team Electronic communications that helps you to stay on top of standard-setting initiatives impacting financial reporting in Canada. CFO's corner (https://www.iasplus.com/en-ca/cfos-corner) Target audience CFO and VP Finance Controller and Financial reporting team Editorial providing insights into key trends, developments, issues and challenges executives face, with a Deloitte point of view. Deloitte Dbriefs (https://www.iasplus.com/en- ca/dbriefs/webcasts) Targeted audience CFO and VP Finance Controller and Financial reporting team Learning webcasts offered throughout the year featuring our professionals discussing critical issues that affect your business. Recent publications (ASPE) Revenue (Jan 13, 2020) Accounting for shares issued in tax planning arrangements (ROMRS) (Dec, 18, 2019) Agriculture (Dec 18, 2019) • • • • • • • • • • • • • • • ------- • • Re: Confirmation of Changes Relating to Updates to the General Business Terms Dear Mrs. Carpino and Mr. Karwowski: This letter is issued to you further to the Master Services Agreement for Professional Services (“MSA”) between The Corporation of the City of Pickering (the “Client”) and Deloitte LLP (“Deloitte”) dated October 17, 2019. This letter is subject to the terms of the MSA, the appendices to the MSA and the general business terms that form part of the MSA, all as may be updated or amended from time to time. The purpose of this letter is to confirm our mutual understanding of the updates to the general business terms. Update of General Business Terms The Corporation of the City of Pickering (the “Client”) and Deloitte agree to the following new or modified general business terms being added to the general business terms of the Agreement. 1.Force Majeure – No party shall be deemed to be in breach of the engagement as a result of any delays or non-performance directly or indirectly resulting from circumstances or causes beyond its reasonable control, including, without limitation, fire, epidemic or other casualty, act of God, strike or labor dispute, war or other violence, any law, order or requirement of an y governmental agency or authority, or pandemics (including, without limitation, COVID-19 and any such restrictions or conditions on working practices in response to such a threat). For greater certainty, Deloitte shall have no liability for any failure or delay to perform its obligations related to the Services, to the extent caused and/or contributed to by the spread of COVID -19 and its associated impacts. This confirmation of change letter (including any appendices and documents incorporated by reference) will continue in force for future services provided by us to you unless amended. Deloitte LLP 400 Applewood Crescent Suite 500 Vaughan ON L4K 0C3 Tel: 416-601-6150 Fax: 416-601-6151 www.deloitte.ca November 2, 2020 Private and confidential Marisa Carpino Interim Chief Administrative Officer The Corporation of the City of Pickering 1 The Esplanade Pickering ON L1V 6K7 Stan Karwowski Director, Finance and Treasurer The Corporation of the City of Pickering 1 The Esplanade Pickering ON L1V 6K7 Attachment #2 to Report #FIN 14-20 Deloitte. The Corporation of the City of Pickering November 2, 2020 Page 2 Please sign and return a copy of this letter to indicate your acknowledgement that it is in accordance with your understanding of the arrangements for our engagement. Yours truly, Chartered Professional Accountants Licensed Public Accountants Enclosure The services and terms set forth in and incorporated into this letter are acknowledged and approved by the Corporation of the City of Pickering: _________________________________ Signature _________________________________ Title _________________________________ Date _________________________________ Signature _________________________________ Title _________________________________ Date