HomeMy WebLinkAbout2020 Audit CorrespondenceThe Corporation of the Municipality of Bayham
Year End: December 31, 2020 Prepared by Reviewed by Reviewed by 4.4
Adjusting journal entries
Date: 1-1-2020 To 12-31-2020 our KU
W-T-2o21 rt74h;tl
Number Date Name Account No Reference Annotatlon Debit Credit Recurrence Misstatement
51 12-31-2020 Capital Asset Surplus
01-0100-1790 2,054,967.25
at 12-31-2020 Capital Asset Surplus
o t-010 ,1790 118,331.45
91 12-31-2020 Capital Asset Surplus
0p-010134790 342.08
1�1 12-34-2020 Reserve for Working Capital
01-0400-2301 342.08
91 12-31-2020 General Fund
01-0400-3000 2,054,967.25
B1 12-31-2020 Change in capital assets
01-55204001 148,331.15
Reallocate surplus to capital
2,173,640A8 2,173,640.48
Net Income (Loss) OAS
We approve the inclusion of the above adjusting journal entries in the 2020 financial statements.
PM" 1
GRAHAM SCOTTENNs LLP
CHARTERED PROFESSIONAL .ACCCiUNTAr1 TS
R 51.9-633�0700 � F 519-633-7009 P. 519.773,9265 • F 519-773,9683
450 Sunset Drive, St. Thomas, ON N5R 5VI 251ohn Street Sotrth, AVImef, ON N5H 2C1
www.grah ari iscott enrls.con r
May 20, 2021
The Corporation of the Municipality of Bayham
P. O. Box 160
56169 Heritage Line
Straffordville, Ontario, NOJ 1Y0
Dear Members of Council:
Re: Audit Findings
This letter has been prepared to assist you with your review of the financial statements of The
Corporation of the Municipality of Bayham for the year ending December 31, 2020. We look forward to
meeting with you and discussing the matters outlined below.
Significant Matters Arising
Changes to Audit Plan
There were no changes to the audit plan (as previously presented to you).
Other Matters
We have not identified any other significant matters that we wish to bring to your attention at this time.
Significant Difficulties Encountered
There were no significant difficulties encountered during our audit.
Comments on Accounting Practices
Accounting Policies
The significant accounting policies used by the entity are outlined in Note 1 to the financial statements.
• There were no significant changes in accounting policies.
• We did not identify any alternative accounting policies that would have been more appropriate in the
circumstances.
We did not identify any significant accounting policies in controversial or emerging areas.
Significant Accounting Estimates
The following significant estimates/judgments are contained in the financial statements
At year end potential allowances related to tax or other allowances in respect to properties including
vacancies, rebates or other are evaluated. No allowances have been at year end in respect of
property taxes or other receivables. It should be noted that there are significant balances owed to
the Municipality from Tribute Resources Inc. This entity has experienced cash flow issues and has
challenged property tax assessments and may face potential bankruptcy or liquidation. It is
managements expectation not all amounts will be recovered. At year end, it is estimated that the
Municipality's exposure to these entities is approximately $208,000, which is estimated at 30% of the
$695,000 in total owed to the Municipality. Although an allowance has not been provided on the
statement of financial statements, the Municipality has indicated they have set aside adequate
reserves to absorb any losses. These events are noted in the financial statements.
Based on audit work performed, we are satisfied with the estimates made by management.
Significant Financial Statement Disclosures
We did not identify any financial statement disclosures that are particularly significant, sensitive or
require significant judgments, that we believe should be specifically drawn to your attention.
Uncorrected Misstatements
We accumulated no significant uncorrected misstatements during our audit.
Significant Deficiencies in Internal Control
A deficiency in internal control exists when a control is designed, implemented or operated in such a way
that it is unable to prevent, or detect and correct, misstatements in the financial statements on a timely
basis, or when a control necessary to prevent, or detect and correct, misstatements in the financial
statements on a timely basis is missing.
A significant deficiency in internal control is defined as a deficiency or combination of deficiencies in
internal control that, in the auditor's professional judgment, is of sufficient importance to merit the
attention of those charged with governance.
To identify and assess the risks of material misstatement in the financial statements, we are required to
obtain an understanding of internal control relevant to the audit. This understanding is used for the
limited purpose of designing appropriate audit procedures. It is not used for the purpose of expressing an
opinion on the effectiveness of internal control and, as a result, we do not express any such opinion. The
limited purpose also means that there can be no assurance that all significant deficiencies in internal
control, or any other control deficiencies, will be identified during our audit.
We did not identify any control deficiencies that, in our judgment, would be considered significant
deficiencies.
Written Representations
In a separate communication, as attached, we have requested a number of written representations from
management in respect to their responsibility for the preparation of the financial statements in
accordance with Canadian accounting standards for public sector enterprises.
Other Audit Matters of Governance Interest
We did not identify any related party relationships or transactions that were previously undisclosed to us.
We did not identify any other matters to bring to your attention at this time.
We would like to thank management and staff for the assistance they provided to us during the audit.
We hope the information in this audit findings letter will be useful. We would be pleased to discuss them
with you and respond to any questions you may have.
This letter was prepared for the sole use of those charged with governance of The Corporation of the
Municipality of Bayham to carry out and discharge their responsibilities. The content should not be
disclosed to any third party without our prior written consent, and we assume no responsibility to any
other person.
Sincerely,
GRAHAM SCOTT ENNS LLP
Chartered Professional Accountants
Robert Foster, CPA, CA
Partner
Acknowledgement of Members of Council:
We have read and reviewed the above disclosures and understand and agree with the comments
therein:
Per: The Corporation_
f the Municipality of Bayham
Signe
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Print Name=
Date:
GRAHAM SCOTTENNs LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
R 519.633-0700 • F 519-633-7669 R 519.773,9265 • F 519 773-9663
450 Stntset Drive, St, Thomas, ON MR 5v1 25 John Street SO4ith, Aylmer, ON N912C1
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February 22, 2021
The Corporation of the Municipality of Bayham
P. O. Box 160
56169 Heritage Line
Straffordville, Ontario, NOJ 1Y0
Dear Members of Council:
Re: Audit Planning
We are writing this letter in connection with our audit of the consolidated financial statements for the
period ending December 31, 2020.
Our purpose in writing is to ensure effective two-way communication between us in our role as auditors
and yourselves with the role of overseeing the financial reporting process. In this letter we will:
a) Address our responsibilities as independent auditors and provide information about the planned
scope and timing of our audit.
b) Request a response to some audit questions and any additional information you may have that could
be relevant to our audit.
Current Developments in the Profession
Over the past number of years there have been significant developments in the area of financial
reporting, corporate governance and auditing. The upcoming changes over the next few fiscal years for
financial reporting as it relates to public sector accounting standards are described below.
PS 3450 - Financial instruments
The organization will be required to adopt the new standard PS 3450 - Financial Instruments. This new
standard will improve reporting and disclosures of financial instruments and financial risks that the
organization is exposed too. This standard may require the organization to report certain financial
instruments either at fair market value or amortized cost and to disclose certain risks such as liquidity,
credit, and market. These disclosures are not required under the current PSA framework, but are
consistent with other reporting frameworks within the handbook. This standard has been delayed to
fiscal years beginning on or after April 1, 2022, which would be the year end December 31, 2023.
Section PS 1201 - Financial Statement Presentation and PS 2601 - Foreign Currency Translations have
also been amended to incorporate the changes associated with PS 3450 - Financial Instruments and
would need to be adopted in the same period.
Audit Planning Letter 1
PS 3280 — Asset Retirement Obligations
This standard will apply for fiscal years beginning on or after April 1, 2022, which would be the year end
December 31, 2023. This standard may impact the liabilities associated with decommissioning of certain
assets of the organization. Examination and audit of the potential exposure to asset retirement
obligations will determine the impact of this standard.
PS 3400 — Revenue
This standard will apply for fiscal years beginning on or after April 1, 2023, which would be the year end
December 31, 2024. This standard will impact the timing of the revenue reported by the organization.
Examination and audit of the types of revenue will determine the impact of this standard.
We as auditors are not responsible for ensuring that the organization is prepared for the introduction of
these standard and these standards will only be considered in so far as it affects our audit
responsibilities under Canadian Auditing Standards. Management and Council are responsible for
anlayzing the impact on the organization, developing plans to mitigate the effects, and the preparation of
the financial statements under these new or updated Public Sector Accounting handbook standards.
Auditor Responsibilities
As stated in the engagement letter dated February 22, 2021, our responsibility as auditors of your
organization is to express an opinion on whether the financial statements present fairly, in all material
respects, the financial position, results of operations and cash flows of the organization in accordance
with Canadian accounting standards for public sector entities.
An audit is performed to obtain reasonable but not absolute assurance as to whether the financial
statements are free of material misstatement. Due to the inherent limitations of an audit, there is an
unavoidable risk that some misstatements of the financial statements will not be detected (particularly
intentional misstatements concealed through collusion), even though the audit is properly planned and
performed.
Our audit includes:
Assessing the risk that the financial statements may contain misstatements that, individually or in
the aggregate, are material to the financial statements taken as a whole; and
Examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements.
As part of our audit, we will obtain a sufficient understanding of the business and the internal control
structure of The Corporation of the Municipality of Bayham to plan the audit. This will include
management's assessment of:
The risk that the financial statements may be materially misstated as a result of fraud and error;
and,
The internal controls put in place by management to address such risks.
Audit Planning Letter 2
Planned Scope and Timing of Our Audit
In developing our audit plan, we worked with management to understand the nature of the entity The
Corporation of the Municipality of Bayham and to identify and assess the risks of material misstatement
in the consolidated financial statements, whether due to fraud or error. Our audit plan has been designed
to focus on the identified areas of risk.
Materiality
Overall materiality will be used to:
a) plan and perform the audit; and,
bj evaluate the effects of identified and uncorrected misstatements on the audit procedures performed
as well as on the consolidated financial statements.
The materiality amount will be reassessed at period end to ensure it remains appropriate.
Significant Changes During Period
The significant changes that we addressed in planning the audit for the current period are set out below:
a) Other
The coronavirus pandemic represents a significant economic event for most organizations.
As part of our audit, we will discuss with management the impact of this event on the organization
and as to whether there are any changes to controls or other business processes as a result of this
event. These discussions may impact our audit and may result in additional audit procedures or
financial statement estimates or disclosures.
Internal Control
To help identify and assess the risks of material misstatement in the consolidated financial statements,
we obtain an understanding of internal control relevant to the audit. This understanding is used in the
design of appropriate audit procedures. It is not used for the purpose of expressing an opinion on the
effectiveness of internal control. Should we identify any significant deficiencies in the internal control and
accounting systems, we will communicate them to you in our audit findings letter.
Significant Risks
In planning our audit, we identify significant financial reporting risks that, by their nature, require special
audit consideration. The significant risks we have identified and our proposed audit response is outlined
below:
Significant Risks Proposed Audit Response
Revenue recognition and completeness Analytical procedures
Substantive testing of revenues, including the consistent application of
accounting policies
Review of cut-off 2rocedures
Management override
Inquiries of management
Review of journal entries
Review of related -party transactions and management estimates
Valuation of estimates related to property tax vacancies,
Review analysis and discuss with management. Compare estimates with
rebates, and contingencies and liabilities related to properties
prior periods for consistency in methods and techniques for determining
1trith environmental issues
these estimates
(Accounts payable - existence and completeness
Analytical
Substantive testing and tests of controls
Audit Planning Letter 3
Litigation and legal estimates I Discussions with council and management
If there are specific areas that warrant our particular attention during the audit or where you would like us
to undertake some additional procedures, please let us know.
Uncorrected Misstatements
Where we identify uncorrected misstatements during our audit, we will communicate them to
management and request that they be corrected. If not corrected by management, we will then request
that you correct them. If not corrected by you, we will also communicate the effect that they may have
individually, or in aggregate, on our audit opinion.
Audit Findings
At the conclusion of our audit, we will prepare an audit findings letter to assist you with your review of the
consolidated financial statements. This letter will include our views and comments on matters such as:
• significant matters, if any, arising from the audit that were discussed with management;
• significant difficulties, if any, encountered during the audit;
• qualitative aspects of the entity's accounting practices, including accounting policies, accounting
estimates and financial statement disclosures;
uncorrected misstatements; and
any other audit matters of governance interest.
Audit Questions and Requests
Fraud
To help us in identifying and responding to the risks of fraud within the entity, we would appreciate your
responses to the following questions:
1 What oversight, if any, do you provide over management's processes for identifying and responding
to fraud risks? Management's processes could include policies, procedures, programs or controls
that serve to prevent, detect and deter fraud.
? Do you have any knowledge of any actual, suspected or alleged fraud, including misappropriation of
assets or manipulation of the consolidated financial statements, affecting the entity? If so, please
provide details and how the fraud or allegations of fraud were addressed.
Other Matters
Would you please bring to our attention any significant matters or financial reporting risks, of which you
are aware, that may not have been specifically addressed in our proposed audit plan. This could include
such matters as future plans, contingencies (including any liability for contaminated sites, such as
abandoned gas stations), events, decisions, non-compliance with laws and regulations, potential
litigation, specific transactions (such as with related parties or outside of the normal course of business)
and any additional sources of audit evidence that might be available.
We recognize your significant role in the oversight of the audit and would welcome any observations on
our audit plan.
Audit Planning Letter 4
This letter was prepared for the sole use of those charged with governance of The Corporation of the
Municipality of Bayham to carry out and discharge their responsibilities. The content should not be
disclosed to any third party without our prior written consent, and we assume no responsibility to any
other person.
Sincerely,
GRAHAM SCOTT ENNS LLP
Charteed Professional Accountants
IW-11-4
Robert Foster, CPA, CA
Partner
Per: The Corporation of the Municipality of Bayham
S
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igned Date: A�"
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Audit Planning Letter 5
GRAHAM SCOTTENNs LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
P. 519-633-0700 - F. 519.633-7009 P. 519-773-9265 - F 519--773.9683
450 Sunset Drive, St. Thomas, ON N5R 5V1 251ohn Street South, Aylmer, ON N51-1 2C1
www.grahamscottenns.com
February 22, 2021
The Corporation of the Municipality of Bayham
P. 0. Box 160
56169 Heritage Line
Straffordville, Ontario, NOJ 1YO
Dear Mr. Thomas Thayer:
The Objective and Scope of the Audit
You have requested that we audit the consolidated financial statements of The Corporation of the
Municipality of Bayham, which comprise the statement of financial position as at December 31, 2020,
and the statements of operations and accumulated surplus, changes in net assets and cash flows for the
year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.
We are pleased to confirm our acceptance and our understanding of this audit engagement by means of
this letter. Our audit will be conducted with the objective of our expressing an opinion on the consolidated
financial statements.
The Responsibilities of the Auditor
We will conduct our audit in accordance with Canadian generally accepted auditing standards. Those
standards require that we comply with ethical requirements. As part of an audit in accordance with
Canadian generally accepted auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements (whether
due to fraud or error), design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. However, we will communicate to you in writing concerning
any significant deficiencies in internal control relevant to the audit of the consolidated financial
statements that we have identified during the audit.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
ENGAGEMENT LETTER - 1
Conclude on the appropriateness of management's use of the going -concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the entity's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor's report. However, future events or conditions may cause the entity to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements
(including the disclosures) and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control,
there is an unavoidable risk that some material misstatements may not be detected, even though the
audit is properly planned and performed in accordance with Canadian generally accepted auditing
standards.
The Responsibilities of Management
Our audit will be conducted on the basis that management and those charged with governance,
acknowledge and understand that they have responsibility:
For the preparation and fair presentation of the consolidated financial statements in accordance with
Canadian accounting standards for public sector entities
For the design and implementation of such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
To provide us with timely:
Access to all information of which management is aware that is relevant to the preparation of the
consolidated financial statements (such as records, documentation and other matters);
Information about all known or suspected fraud, any allegations of fraud or suspected fraud and
any known or probable instances of noncompliance with legislative or regulatory requirements;
Additional information that we may request from management for the purpose of the audit; and
Unrestricted access to persons within The Corporation of the Municipality of Bayham from whom
we determine it necessary to obtain audit evidence.
As part of our audit process:
We will make inquiries of management about the representations contained in the consolidated financial
statements. At the conclusion of the audit, we will request from management and those charged with
governance written confirmation concerning those representations. If such representations are not
provided in writing, management acknowledges and understands that we would be required to disclaim
an audit opinion.
We will communicate any misstatements identified during the audit other than those that are clearly
trivial. We request that management correct all the misstatements communicated.
ENGAGEMENT LETTER - 2
Form and Content of Audit Opinion
Unless unanticipated difficulties are encountered, our report will be substantially in the form contained
below.
INDEPENDENT AUDITORS' REPORT
To the Members of Council, Inhabitants, and Ratepayers of The Corporation of the Municipality of
Bayham:
Opinion
We have audited the consolidated financial statements of The Corporation of the Municipality of Bayham,
which comprise the statement of financial position as at December 31, 2020, and the statement of
operations and accumulated surplus, statement of changes in financial assets and statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion, the corporation's consolidated financial statements present fairly, in all material respects,
the financial position of the corporation as at December 31, 2020, and the results of its operations and its
cash flows for the year then ended in accordance with Canadian accounting standards for public sector
entities.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the corporation in accordance
with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we
have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with Canadian accounting standards for public sector entities, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the corporation's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the corporation or to
cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the corporation's financial reporting
process.
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
ENGAGEMENT LETTER - 3
INDEPENDENT AUDITORS' REPORT (CONTINUED)
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements (Continued)
As part of an audit in accordance with Canadian auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements ,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the corporation's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the corporation's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's report to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
St. Thomas, Ontario
CHARTERED PROFESSIONAL ACCOUNTANTS
Licensed Public Accountants
If we conclude that a modification to our opinion on the consolidated financial statements is necessary,
we will discuss the reasons with you in advance.
ENGAGEMENT LETTER - 4
Confidentiality
One of the underlying principles of the profession is a duty of confidentiality with respect to client affairs.
Each professional accountant must preserve the secrecy of all confidential information that becomes
known during the practice of the profession. Accordingly, we will not provide any third party with
confidential information concerning the affairs of unless:
We have been specifically authorized with prior consent;
We have been ordered or expressly authorized by law or by the Code of Professional
Conduct/Code of Ethics; or
The information requested is (or enters into) public domain.
Communications
In performing our services, we will send messages and documents electronically. As such
communications can be intercepted, misdirected, infected by a virus, or otherwise used or communicated
by an unintended third party, we cannot guarantee or warrant that communications from us will be
properly delivered only to the addressee. Therefore, we specifically disclaim, and you release us from,
any liability or responsibility whatsoever for interception or unintentional disclosure of communications
transmitted by us in connection with the performance of this engagement. In that regard, you agree that
we shall have no liability for any loss or damage to any person or entity resulting from such
communications, including any that are consequential, incidental, direct, indirect, punitive, exemplary or
special damages (such as loss of data, revenues or anticipated profits). If you do not consent to our use
of electronic communications, please notify us in writing.
We offer you the opportunity to communicate by a secure online portal, however if you choose to
communicate by email you understand that transmitting information poses the risks noted above. You
should not agree to communicate with the firm via email without understanding and accepting these
risks.
Use of Information
It is acknowledged that we will have access to all personal information in your custody that we require to
complete our engagement. Our services are provided on the basis that:
You represent to us that management has obtained any required consents for collection, use and
disclosure to us of personal information required under applicable privacy legislation; and
We will hold all personal information in compliance with our Privacy Statement.
ENGAGEMENT LETTER - 5
Use and Distribution of our Report
The examination of the consolidated financial statements and the issuance of our audit opinion are solely
for the use of The Corporation of the Municipality of Bayham and those to whom our report is specifically
addressed by us. We make no representations of any kind to any third party in respect of these
consolidated financial statements or our audit report, and we accept no responsibility for their use by any
third party or any liability to anyone other than The Corporation of the Municipality of Bayham.
For greater clarity, our audit will not be planned or conducted for any third party or for any specific
transaction. Accordingly, items of possible interest to a third party may not be addressed and matters
may exist that would be assessed differently by a third party, including, without limitation, in connection
with a specific transaction. Our audit report should not be circulated (beyond The Corporation of the
Municipality of Bayham) or relied upon by any third party for any purpose, without our prior written
consent.
You agree that our name may be used only with our prior written consent and that any information to
which we have attached a communication be issued with that communication, unless otherwise agreed
to by us in writing.
Reproduction of Auditor's Report
If reproduction or publication of our audit report (or reference to our report) is planned in an annual report
or other document, including electronic filings or posting of the report on a website, a copy of the entire
document should be submitted to us in sufficient time for our review before the publication or posting
process begins.
Management is responsible for the accurate reproduction of the consolidated financial statements, the
auditor's report and other related information contained in an annual report or other public document
(electronic or paper -based). This includes any incorporation by reference to either full or summarized
consolidated financial statements that we have audited.
We are not required to read the information contained in your website or to consider the consistency of
other information on the electronic site with the original document.
Ownership
The working papers, files, other materials, reports and work created, developed or performed by us
during the course of the engagement are the property of our Firm, constitute confidential information and
will be retained by us in accordance with our Firm's policies and procedures.
During the course of our work, we may provide, for your own use, certain software, spreadsheets and
other intellectual property to assist with the provision of our services. Such software, spreadsheets and
other intellectual property must not be copied, distributed or used for any other purpose. We also do not
provide any warranties in relation to these items and will not be liable for any damage or loss incurred by
you in connection with your use of them.
We retain the copyright and all intellectual property rights in any original materials provided to you.
File Inspections
In accordance with professional regulations (and by our Firm's policy), our client files may periodically be
reviewed by practice inspectors and by other engagement file reviewers to ensure that we are adhering
to our professional and Firm's standards. File reviewers are required to maintain confidentiality of client
information.
ENGAGEMENT LETTER - 6
Accounting Advice
Except as outlined in this letter, the audit engagement does not contemplate the provision of specific
accounting advice or opinions or the issuance of a written report on the application of accounting
standards to specific transactions and to the facts and circumstances of the entity. Such services, if
requested, would be provided under a separate engagement.
Other Services
In addition to the audit services referred to above, we will, as allowed by the Code of Professional
Conduct/Code of Ethics, prepare your federal and provincial income tax returns and other special reports
as required. Management will provide the information necessary to complete these returns/reports and
will file them with the appropriate authorities on a timely basis.
Governing Legislation
This engagement letter is subject to, and governed by, the laws of the Province of Ontario. The Province
of Ontario will have exclusive jurisdiction in relation to any claim, dispute or difference concerning this
engagement letter and any matter arising from it. Each party irrevocably waives any right it may have to
object to any action being brought in those courts to claim that the action has been brought in an
inappropriate forum or to claim that those courts do not have jurisdiction.
Dispute Resolution
You agree that:
Any dispute that may arise regarding the meaning, performance or enforcement of this engagement will,
prior to resorting to litigation, be submitted to mediation; and
You will engage in the mediation process in good faith once a written request to mediate has been given
by any party to the engagement.
Indemnity
The Corporation of the Municipality of Bayham hereby agrees to indemnify, defend (by counsel retained
and instructed by us) and hold harmless our Firm, and its partners, agents or employees, from and
against any and all losses, costs (including solicitors' fees), damages, expenses, claims, demands or
liabilities arising out of or in consequence of:
(a) The breach by The Corporation of the Municipality of Bayham, or its directors, officers, agents, or
employees, of any of the covenants made by The Corporation of the Municipality of Bayham herein,
including, without restricting the generality of the foregoing, the misuse of, or the unauthorized
dissemination of, our engagement report or the consolidated financial statements in reference to
which the engagement report is issued, or any other work product made available to you by our
Firm.
(b) A misrepresentation by a member of your management or board of directors.
Time Frames
We will use all reasonable efforts to complete the engagement as described in this letter within the
agreed upon time frames. However, we shall not be liable for failures or delays in performance that arise
from causes beyond our control, including the untimely performance by The Corporation of the
Municipality of Bayham of its obligations.
ENGAGEMENT LETTER - 7
Fees at Regular Billing Rates
Our professional fees will be based on our regular billing rates, plus direct out-of-pocket expenses and
applicable HST, and are due when rendered. Fees for any additional services will be established
separately.
Fees will be rendered as work progresses and are payable on presentation.
Our fees and costs will be billed monthly and are payable upon receipt. Invoices unpaid 30 days past the
billing date may be deemed delinquent and are subject to an interest charge of 1.0% per month. We
reserve the right to suspend our services or to withdraw from this engagement in the event that any of
our invoices are deemed delinquent. In the event that any collection action is required to collect unpaid
balances due to us, you agree to reimburse us for our costs of collection, including lawyers' fees.
Costs of Responding to Government or Legal Processes
In the event we are required to respond to a subpoena, court order, government agency or other legal
process for the production of documents and/or testimony relative to information we obtained and/or
prepared during the course of this engagement, you agree to compensate us at our normal hourly rates
for the time we expend in connection with such response and to reimburse us for all of our out-of-pocket
costs (including applicable GST/HST) incurred.
Termination
If we elect to terminate our services for nonpayment, or for any other reason provided for in this letter,
our engagement will be deemed to have been completed upon written notification of termination, even if
we have not completed our report. You will be obligated to compensate us for all time expended and to
reimburse us for all of our out-of-pocket costs through to the date of termination.
Management acknowledges and understands that failure to fulfill its obligations as set out in this
engagement letter will result, upon written notice, in the termination of the engagement.
Either party may terminate this agreement for any reason upon providing written notice to the other party.
If early termination takes place, shall be responsible for all time and expenses incurred up to the
termination date.
If we are unable to complete the audit or are unable to form, or have not formed, an opinion on the
financial statements, we may withdraw from the audit before issuing an auditor's report, or we may
disclaim an opinion on the financial statements. If this occurs, we will communicate the reasons and
provide details.
ENGAGEMENT LETTER - 8
Conclusion
This engagement letter includes the relevant terms that will govern the engagement for which it has been
prepared. The terms of this letter supersede any prior oral or written representations or commitments by
or between the parties. Any material changes or additions to the terms set forth in this letter will only
become effective if evidenced by a written amendment to this letter, signed by all of the parties.
If you have any questions about the contents of this letter, please raise them with us. If the services
outlined are in accordance with your requirements, and if the above terms are acceptable to you, please
sign the copy of this letter in the space provided and return it to us.
We appreciate the opportunity of continuing to be of service to your organization.
Sincerely,
GRAHAM SCOTT ENNS LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
, "K;4 -'; /- - '; -
Robert Foster, CPA, CA
Partner
Acknowledged and agreed on behalf of The Corporation of the Municipality of Bayham by:
1M Th mas Thayer
I he Corporation of the Municipality of Bayham
ENGAGEMENT LETTER - 9
The Corporation of the Municipality of Bayham
P. O. Box 160
56169 Heritage Line
Straffordville, Ontario
NOJ 1Y0
May 20, 2021
Graham Scott Enns LLP
450 Sunset Drive
St. Thomas, Ontario
N5R 5V1
Dear Sir/Madame:
This representation letter is provided in connection with your audit of the consolidated financial
statements of The Corporation of the Municipality of Bayham for the year ended December 31, 2020 for
the purpose of expressing an opinion as to whether the consolidated financial statements are presented
fairly, in all material respects, in accordance with Canadian accounting standards for public entities.
In making the representations outlined below, we took the time necessary to appropriately inform
ourselves on the subject matter through inquiries of entity personnel with relevant knowledge and
experience, and, where appropriate, by inspecting supporting documentation.
We confirm that (to the best of our knowledge and belief):
Financial Statements
We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated
December 16, 2020 for:
a) Preparing and fairly presenting the consolidated financial statements in accordance with
Canadian accounting standards for public entities;
b) Providing you all relevant information, such as:
i) Accounting records, supporting data and other relevant documentation,
ii) Minutes of meetings (such as shareholders, board of directors and audit committees) or
summaries of actions taken for which minutes have not yet been prepared, and
iii) Information on any other matters, of which we are aware, that is relevant to the
preparation of the consolidated financial statements;
c) Ensuring that all transactions have been recorded in the accounting records and are reflected in
the consolidated financial statements; and
d) Designing and implementing such internal control as we determined is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error. We have also communicated to you any deficiencies in the design and
implementation or the maintenance of internal control over financial reporting of which management
is aware.
Management Representation Letter 1
2. Fraud and Non -Compliance
We have disclosed to you:
a) All of our knowledge in relation to actual, alleged or suspected fraud affecting the entity's
consolidated financial statements involving:
i) Management;
ii) Employees who have significant roles in internal control; or
iii) Others where the fraud could have a material effect on the consolidated financial
statements;
b) All of our knowledge in relation to allegations of fraud or suspected fraud communicated by
employees, former employees, analysts, regulators or others;
c) All known instances of non-compliance or suspected non-compliance with laws and regulations,
including all aspects of contractual agreements that should be considered when preparing the
consolidated financial statements;
d) All known, actual, or possible litigation and claims that should be considered when preparing the
consolidated financial statements; and
e) The results of our risk assessments regarding possible fraud or error in the consolidated financial
statements.
3. Related Parties
We have disclosed to you the identity of all of the entity's related -party relationships and transactions
of which we are aware. All related -party relationships and transactions have been appropriately
accounted for and disclosed in accordance with the requirements of Canadian accounting standards
for public entities.
4. Estimates
We acknowledge our responsibility for determining the accounting estimates required for the
preparation of the financial statements in accordance with Canadian accounting standards for public
entities. Those estimates reflect our judgment based on our knowledge and experience of past and
current events, and on our assumptions about conditions we expect to exist and courses of action
we expect to take. We confirm that the significant assumptions and measurement methods used by
us in making accounting estimates, including those measured at fair value, are reasonable.
5. Subsequent Events
All events subsequent to the date of the consolidated financial statements and for which Canadian
accounting standards for public entities requires adjustment or disclosure have been adjusted or
disclosed.
6. Commitments and Contingencies
There are no commitments, contingent liabilities/assets or guarantees (written or oral) that should be
disclosed in the consolidated financial statements. This includes liabilities arising from contract
terms, illegal acts or possible illegal acts, and environmental matters that would have an impact on
the consolidated financial statements.
Management Representation Letter 2
7_ Adjustments
We have reviewed, approved and recorded all of your proposed adjustments to our accounting
records. This includes journal entries, changes to account coding, classification of certain
transactions and preparation of, or changes to, certain accounting records. A list of these
adjustments is attached to this letter.
Other Representations
i) Accounting Policies
All significant accounting policies are disclosed in the financial statements and are consistent
with those used in the previous period.
ii) Future Plans
We have no plans or intentions that may materially affect the carrying value or classification
of assets and liabilities reflected in the consolidated financial statements.
Yours truly,
4ThomasFhayer, Chief Administrative Officer
Lorne
Management Representation Letter 3
