City of Powell River receives clean audit

City of Powell River has been provided a clean audit by accounting firm BDO, LLP.

At a May 14 special council meeting, BDO partner Brian Szabo outlined the findings of the audit of the city’s books for the year ending December 31, 2024.

Szabo said the audit checked materiality levels to guide the audit and also to determine that at the end of the process, whether individual errors or an accumulation of errors are material to the financial statements, where the accounting firm would not be in a position to sign the auditor’s report.

“The status of the audit was substantially complete,” said Szabo. “We have wrapped up all our review processes and subject to council’s approval of the financial statements and then receiving the signed management representation letter, we will be in a position to sign the auditor’s report.”

Szabo said the findings assessed the risks at the outset of the audit each year and that a number of risks are standard to all audits. He said management override of internal controls is one, indicating that management is in a position, if they wanted to, to override controls.

“We do address this risk by performing a number of procedures, primarily for journal entries that are executed throughout the year, but also addressing any significant estimates that are made, and ensuring there is no bias apparent from those estimates,” said Szabo. “All these procedures were performed with no matters noted.”

Szabo said the second risk was fraudulent revenue recognition, which is more prevalent in the private sector and public companies.

“We do a fair amount of work, particularly around grant revenue, to make sure the relevant activities are performed prior to recognizing that revenue,” said Szabo. “All the audit testing in this area was performed and no matters were noted that suggested there were any misstatements.”

Szabo said there were no adjustments made as a result of the audit and there were no disclosure omissions.

A slideshow presented to councillors stated: “We are not aware of any fraud affecting the organization. If you have become aware of changes to processes, or are aware of any instances of actual, suspected or alleged fraud since our discussion at planning, please let us know. We have complied with relevant ethical requirements and are not aware of any relationships between the City of Powell River and our firm that may reasonably be thought to bear on our independence.”

City senior manager of financial services Ryan Youngman then provided an analysis of the city’s financial statements. He said the city has a draft clean audit opinion, which it is pleased about.

He reviewed the city’s consolidated statement of financial position, which provides a snapshot of the city’s finances. In terms of cash and cash equivalents, it increased over 2023 by $16.8 million to $63.8 million, including Powell River Community Forest dividends, as well as collections of accounts receivable, primarily due to receipt of grant funds from the provincial government for construction of the consolidated wastewater treatment plant.

Youngman said liabilities were $56.8 million, which is consistent with the prior year.

Reviewing the consolidated statement of operations, Youngman said the city raised $27.8 in taxation. Government transfers were 9.6 million due to increased grant revenues, primarily around the airport rehabilitation project. Overall, revenue came in at $56.5 million, which is consistent with the prior year, said Youngman.

Looking at expenses, general government services increased by almost $1 million to 10.1 million, primarily due to an increase of $900,000 in Powell River Community Forest grants to community organizations, said Youngman. Overall expenses came in at $45.3 million, which is fairly consistent with the prior year, resulting in an annual surplus of $11.2 million, he added.

Council voted unanimously to approve the city’s draft 2024 audited financial statements for the year ending December 31, 2024.

Join the Peak's email list for the top headlines right in your inbox Monday to Friday.