25 replies to this topic

[Zoe]

Monday Magazine reports that Langford has missed the deadline for filing its financial statements for 2009.

According to British Columbia’s Local Government Act (the legislation that defines the existence and operations of our municipal governments) “a local government’s Statement of Financial Information must be prepared in accordance with the Financial Information Act. The SOFI must be made available for public viewing by June 30 each year and be accessible for the following three years.”

And while some municipalities don’t like to make a public spectacle of the document (probably because it lists the salaries of all municipal employees earning over $75,000), this year Langford has gone one step further and not yet bothered to file one.

As for the reason that Langford failed to meet its reporting deadline, a provincial ministry of community and rural development spokesperson tells Monday,

“The Ministry has been in contact with the City of Langford and City staff are working with their auditors to ensure the financial information is available as soon as possible. Changes to public sector accounting rules that took effect for 2009 required local governments to count, value and amortize their capital assets for the first time. This has, in some cases, caused delays in the publication of financial information.”

Yep, tough to know what a half-built highway interchange is worth.

There were reports of irregularities in the new five-year plan last spring.



Source: Langford's Fudge-it Budget

Inside Langford reports: "The five year plan is interesting as it seems to have budgeted the assumption of receiving several grants, an apparently unusual accounting technique (the more common technique appears to be to adjust your five-year plan after receiving a grant, than budgeting as if you were going to receive it when you don’t know whether you will or not)."

According to another post on Inside Langford, the plan calls for draining the city's capital reserves by the end of 2010:

Over the past years, Langford has built up capital reserves totaling over $7.5 million. With ambitious capital expenditure programs such as Recreation 2010, the crossing of the E&N at Peatt Road and proposed storm water management works mainly in south Langford these reserves will be drawn down to essentially zero by the end of 2010 . . .

Let's hope they get this all sorted out. Nobody wants a forensic audit, right?

[spanky123]

The accounting changes are relatively minor. They require munis to amortize rather than capitalize some capital asset expenditures. Seems to me that other munis didn't have a problem getting this done on time.

Accounting changes don't happen over night. Langford staff would have known about the changes well in advance and we are now nearly a month and a half beyond the filing deadline.

[Zoe]

Says here that the city of Colwood got KPMG to do an audit, and they found the city let developers run up a $740,000 debt.

I'm wondering if KPMG is going to audit Langford? What will they say about the "six or seven million" the city treasurer reports was spent on the interchange on behalf of the developers?

[Zoe]

Almost three months after the deadline for municipalities to turn in their 2009 financial statements, Langford's are still incomplete and we have idea when they will be presented. Every other municipality in the CRD completed the 2009 financials on time. The delay is blamed on the implementation of new reporting rules for capital assets, which were announced back in 2006.

Steven Ternent, Langford's treasurer, is back from his month-long vacation, and I've been playing "Twenty Questions" with him for over a week. He hasn't shed much light on the issue so far, but here's what he has to say.

Steve confirms the city is still being audited by KPMG. He says it is not a forensic audit, and he claims there is no link to the interchange.

I followed up by asking, "Are there complications arising from the creditor action with Bear Mountain, or the LSA payment agreement?"

Steve's response: "There are no tax issues if that is what you mean by complications."

I asked for more information on why the audit was taking so long.

"Implementation of PSAB 3150 has required significant change to financial statement presentation and restatement of 2008 financial statements to ensure comparability. The delay is due to technical accounting issues around these changes."

Steve says the revised 2008 statements will be presented to the Administration and Finance Committee as part of the 2009 financial statements, once they are complete.

The Administration and Finance Committee is advertised as meeting every month on the second Tuesday. Only three meetings have taken place this year, in February, May, and this past Tuesday. I attended this week's meeting – it took less than five minutes for the committee to accept the 2010 quarterly statements and adjourn.

It seems unusual that Langford would need to spend months revising its 2008 financials for what's been described above as a relatively minor change, and one that's been in the works for 4 years. Observers are wondering if there has been some creative accounting in past years, or if tangible assets were "gifted" to the municipality, making it difficult to value them.

[Zoe]

Typo alert: I meant "we have NO idea" when the financials will be presented.

[spanky123]

In my opinion the only way you are going to see resolution to this is to take up the issue with the Ministry. I was told by Langford staff more than a month ago that the statements had been completed and were with the auditor. There is no way that the auditor is taking this long to review the statements unless there are areas of concern.

I would agree that BM and the interchange are a problem but these are 2009 financial statements and BM was not in receivership at the time.

Apparently Colwood still uses a DOS based accounting system and sticky notes to do their books yet even they were able to get statements prepared and audited on time!

[Zoe]

The city of Langford is finally presenting its 2009 financial statements to the Administration and Finance Committee today at 4:45 pm. Here's the agenda and reports (pdf).

It's a big document, but I noticed a couple things right off the bat. KPMG signed off on the financial statements in April 2010, so the treasurer was not being forthright when he told me in September that the municipality was still being audited.

The treasurer also said the city was revising its 2008 financial statements. Those statements are included in the 2009 report.

Re: the question of "how to value a Bridge to Nowhere" - the answer is: it is an asset. Page 44:

Included in assets under construction is $14,818,377 for work done on the Spencer Interchange Upon completion of the project, ownership of the portion of the interchange that is in the Trans Canada Highway right of way will be transferred to the Province of BC. At December 31. 2009 the cost of the assets to be transferred totalled $14,278,326.

Page 45: In 2008 and 2009, the city claims it spent $11,963 and $33,437 on archaeology assessments that it refused to release to the public.

The quarterly reports are interesting as well. It looks like the city paid BM (formerly Bear Mountain) Landscaping over $55,000 in August and $45,000 in September. I would have to go back through the other quarterly reports, but this one company could be making over half a million a year. I'm told this expense bill is for landscaping the Bear Mountain Parkway from Millstream Ave. to the resort.

[Bernard]

Page 45: In 2008 and 2009, the city claims it spent $11,963 and $33,437 on archaeology assessments that it refused to release to the public.

I do not know the details of what they were doing or where, but the norm is for all archeological work not to be public. The reason for this is to reduce the danger of people disturbing sites that are found. I also do not know what sort of agreement there is between the local First Nations and the Arch Branch - they may very well have an agreement in place that restricts release of information, such agreements are not uncommon in BC.

The reports should have been shared with local First Nations and they should have been informed of any application to do archeological work.

[Zoe]

Hi Bernard, that's not exactly correct. Archeology reports may be exempt from FOI requests for that reason, but previous court decisions have ruled that the public has a right to know if a development will destroy native heritage sites. Langford allowed the public to view the report briefly, and then withdrew it citing FOI privacy. During the court case I launched with Forest Action Network, they tried various other arguments for suppressing the report, none of which was quite successful. The ruling helped clarify when the public interest is served by disclosure.

[Bernard]

Hi Bernard, that's not exactly correct. Archeology reports may be exempt from FOI requests for that reason, but previous court decisions have ruled that the public has a right to know if a development will destroy native heritage sites. Langford allowed the public to view the report briefly, and then withdrew it citing FOI privacy. During the court case I launched with Forest Action Network, they tried various other arguments for suppressing the report, none of which was quite successful. The ruling helped clarify when the public interest is served by disclosure.

I do not disagree with you on that at all, I was merely pointing out it is not the normally information made available to the public.

To destroy a site (know as a site 'alteration'), there has to be an application made to the Arch branch to do so, the application's existence is a matter of public record.

[spanky123]

Muni's don't report to GAAP, they have their own accounting standard. I am not an expert on this standard, but I can't see anywhere that shows the $9M or so currently owed by developers to the City for the interchange.

[Zoe]

I can't see anywhere that shows the $9M or so currently owed by developers to the City for the interchange.

I couldn't find those numbers either. And we still don't have a cost breakdown for how much Langford owes TD on its line of credit, how much was contributed by the province, and how much came from the DCC.

[spanky123]

I am wondering if the verbage about transferring the interchange to the Province is implying that the Province has now taken over this project and the developers are off the hook.

[Zoe]

The financial statements were presented Tuesday. Questions came from members of the Admin and Finance Committee, answers were from treasurer Steve Ternent.

I've added notes following statements from the treasurer that I found confusing and contradictory.

p. 19, Administration, other
Q: Why the huge jump in miscellaneous expenses - 600%?
A: I don't know why. I will find out and report back to the chair. It's only $48,000, which isn't much overall.

p. 25, Capital Projects
Q: The budget was $42 million, but we only spent $7 million?
A: $14 million was budgeted for the SportsPlex ... (inaudible discussion) The Spencer Interchange was budgeted for completion but it's not likely to re-start this year. We will budget it for completion again next year.

p. 26 on, Consolidated Financial Statements
Q: Why the delay in reporting?
A: The deadline was May 15. We didn't make the deadline, obviously. This is because of two major changes.

1) Rigorous reporting of capital assets. We had to calculate accumulated depreciation on all assets since the beginning.

2) Change of format to a standard commercial-type format, so we had to restate everything in that format.

(NOTE: this is the first I've heard of a format change. I'm not sure it's a statutory requirement. Perhaps it's something Langford decided to do.)

Langford is not the only one that didn't get the statements done - it's actually pretty common across BC.

(NOTE: It does not appear to be common at all. Langford is the only municipality in the CRD that failed to submit its statements on time.)

There was also a delay because the auditors won't sign off on reports for incomplete statements.

(NOTE: This is confusing - KPMG signed off on its report on April 16.)

In 2005, we had trouble with getting the financial statements done on time, too.

The new format is difficult. It's hard to tell what the surplus is. This format makes it more consistent with commercial enterprise. But commercial enterprises don't have funds like sewer fund and DCC fund and reserve fund.

The capital asset reporting is a challenge. When you have land that's dedicated as parkland, and it can only be parkland, what is the value?

Q: $1?
A: That's what I would say. Same with the roads. They are always going to be roads, so how do you value the land?

Q: Well, we could sell the naming rights?
A: Ha ha ha.

Q: When do you expect next year's report to be done?
A: It should be done by the end of April.

Q: Is that a statutory requirement?
A: Um, yes it is. But what can you do? (Shrugs and raises hands in a
gesture of helplessness.)

NOTE: I'm still not completely clear on what caused the delay. I'm also trying
to figure out if the auditors signed off on the revised 2008 statements - KPMG's report only references the financial statements for the year ending December 31, 2009.

[spanky123]

[quote name='Zoe']
Q: Is that a statutory requirement?
A: Um, yes it is. But what can you do? (Shrugs and raises hands in a
gesture of helplessness.)
[quote]

We can fire the treasurer and hire someone who give a sh&t! Absolutely unacceptable if that is truly what he said.

[Zoe]

That is what he said - I took notes. I'll try to follow up. Ternent has always been professional, informative and polite with me. I'd rather talk to him than a few others I could name. But I'm more confused now than I was before the meeting.

[Zoe]

But there`s no harm done in any case - Ternent went on to say that there was no negative consequences for missing the deadline, just a few phone calls from the province inquiring when the statements would be complete. I got the sense that it's not a big deal. I just think there is more to the story and that's what I'm wondering about.

[Maverick]

Who in the he** made you chief of police.With all this investigating you sound like you own the place.
If you haven`t figured it out by now,no one around here needs your help.Go to Alberta, I here the oil sands people are looking for someone to tar and feather.

[Holden West]

^Oh, put your man pants on and stop fretting. This stuff is interesting.

In 2005, we had trouble with getting the financial statements done on time, too.

The new format is difficult. It's hard to tell what the surplus is. This format makes it more consistent with commercial enterprise. But commercial enterprises don't have funds like sewer fund and DCC fund and reserve fund.

The capital asset reporting is a challenge. When you have land that's dedicated as parkland, and it can only be parkland, what is the value?

But every jurisdiction in the CRD--heck, the world--deals with stuff. It's as if they're the only municipality to contemplate the concept of land valuation. Maybe then they can invent a way for people to pay money based on the value of their property in order to pay for civic services. They could patent that.

[Sparky]

With all this investigating you sound like you own the place.

In fact you are correct. All of the residents and building owners are stakeholders in the municipality. They all have some skin in the game.

Too bad there are only a few that get off the couch and question the decisions that the elected representatives make on the owner's behalf.

Welcome to democracy.