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HomeMy WebLinkAboutFIN 15-25Report to Executive Committee Report Number: FIN 15-25 Date: October 6, 2025 From: Stan Karwowski Director, Finance & Treasurer Subject: 2024 Year End Audit and Financial Statements (Final) - File: F-3300-001 Recommendation: 1. That the Report FIN 15-25 regarding the results of the 2024 Year End Audit and Financial Statements (final), as submitted by Deloitte LLP, be received for information; and 2. That the 2024 draft Audited Consolidated Financial Statements for the City of Pickering be approved. 3. That Deloitte LLP be reappointed to provide external auditing services to the City of Pickering for a three year term. Executive Summary: The purpose of this report is to present the financial results of the 2024 Audit and present the draft Audited Consolidated Financial Statements for the year ended December 31, 2024. The auditor has provided an unmodified audit report on the financial statements. This means that the financial statements present fairly, in all material respects, the financial position of the City and its operations, changes in its net financial assets and its cash flows in accordance with Canadian public sector accounting standards. The auditor did not identify any significant deficiencies during the audit to formally report to Council. Under section 296 of the Municipal Act, 2001, Council must appoint an auditor, licensed under the Public Accounting Act, 2004, for a period not to exceed five years. The current auditor, Deloitte LLP (Deloitte), was last appointed at the Council meeting of March 27, 2023 (Resolution #119/23), as the City’s external auditors for a period of three years from and the including the audits for 2022 to 2024. As the term ends with the 2024 year end audit, it is recommended the firm be reappointed for a three year term. Relationship to the Pickering Strategic Plan: The recommendations in this report respond to the Pickering Strategic Plan Corporate Key: Good Governance/Customer Service Excellence. Financial Implications: The City’s financial position is healthy and strong and the City is able to meet its current financial commitments and in the future. FIN 15-25 October 6, 2025 Page 2 Discussion: The purpose of this report is to present the financial results of the 2024 Audit and present the draft Audited Consolidated Financial Statements for the year ended December 31, 2024. The timing of the 2024 year end audit and preparation of the financial statements was delayed to due to challenging circumstances affecting the audit timetable. The City began implementing a new Payroll System, WorkForce Now, in the mid-year of 2024 and the new system went live for the City in early 2025. During the audit period, the new payroll system presented additional challenges for the staff who were also managing the audit process. With the retirement of two senior staff members heavily involved in the financial reporting and payroll processes, the financial audit process was delayed due to limited resources. The Finance Department runs on a lean “staffing model.” The Public Sector Accounting Board introduced three new accounting standards in 2024, specifically PS 3160 Public Private Partnerships, PS 3400 Revenue and PSG-8 Purchased Intangibles. The City adopted the three new standards during 2024 prospectively, and the standards have been disclosed in the financial notes. There was no impact on the financial statements of the City. The audit for the year ended December 31, 2024 has now been completed. The auditor’s Report on the results of the 2024 Audit is included as Attachment 1. This Report, prepared by Deloitte, summarizes its findings from the December 31, 2024 audit and comments on significant matters regarding the audit. Appendix 1 provides a summary of communication requirements which Deloitte is required to bring to Council’s attention. The independence letter in Appendix 2 confirms that Deloitte is independent from the City. Appendix 3 is the draft management representations letter which is provided by the City to the auditors. This letter indicates that the financial statements are management’s responsibility and that management has provided and disclosed all necessary information to ensure that the financial statements are not materially misstated. This letter will be signed by the appropriate authorities upon approval of the financial statements. The scope of the audit does not include an in-depth evaluation of all systems or internal controls, however, the auditors may report on matters that come to their attention during the course of their review. No significant matters came to their attention to report. The draft Audited Consolidated Financial Statements for the year ended December 31, 2024 are included as Attachment 2. These statements are the responsibility of management and have been prepared by City accounting staff under the direction of the Director, Finance & Treasurer. The auditors are responsible to express an opinion on these Consolidated Financial Statements based on their audit. An unmodified audit report has been issued which means the auditors have indicated that in their opinion, the consolidated financial statements are fairly presented, in all material respects. In other words the City has a clean report. The Consolidated Financial Statements include the activities of the City of Pickering Public Library Board. The City’s investment in Elexicon Corporation is accounted for on a modified equity basis, which means the City includes its share of Elexicon’s income or loss in the Consolidated Financial Statements. FIN 15-25 October 6, 2025 Page 3 Reappointment of Auditors Deloitte was last appointed to conduct the statutory audits for the 2022 to 2024 fiscal years. Experience in the public sector, specifically municipalities, range of other services available and knowledge of the client are important considerations for appointment of the auditor. In Canada, Deloitte is one of the largest public accounting firms and has vast experience within the municipal sector. The City relies on Deloitte’s experience and expertise as it relates to the City’s financial environment and other City operations. Deloitte is a trusted partner that provides advice based on their knowledge and experience working with both the City and many other municipal clients. They have been providing a variety of auditing, accounting and advisory services to a number of municipalities including seven of the eight local municipalities and the Regional Municipality of Durham. The services provided by Deloitte have clearly demonstrated proficiency in the municipal environment, particularly Public Accounting Board standards and guidelines. Based on the City’s experience to date, Deloitte has provided an excellent level of service; their comments and assistance is relevant and practical. The fees for the 2025 audit services has increased to $99,650 with an increase estimated for years 2026 and 2027. This includes the audit services for the City of Pickering, Pickering Public Library Board and the Trust Fund. In the present economic environment combined with the introduction of new auditing standards and a more sophisticated and integrated financial system fees will increase year over year. n accordance with the City’s purchasing policy (PUR 010 Appendix 1 6(b)), external Auditors’ services are an exception and therefore the City’s Purchasing Policy does not apply. Staff believe this is reasonable fee for audit service in light off all the contributing factors and is recommending that Deloitte be reappointed for the three year term. Attachments: 1.Report on the Results of the 2024 Audit 2. 2024 Draft Audited Consolidated Financial Statements Prepared By: Approved/Endorsed By: Susan Marsh Stan Karwowski Manager, Accounting Services Director, Finance & Treasurer Original Signed By:Original Signed By: FIN 15-25 October 6, 2025 Page 4 Recommended for the consideration of Pickering City Council Marisa Carpino, M.A. Chief Administrative Officer Original Signed By: Attachment 1 to Report FIN 15-25 Attachment 2 to Report FIN 15-25