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A Free Weekly Publication Serving All of Beaver County Wednesday, January 19, 2022, Volume 15, Issue 3
Auditors discuss parametres of 2021 Financial Audit Plan with County council
Patricia Harcourt
Beaver County auditors MNP LLP presented a review of the county’s 2021 Financial Audit Plan at January 5’s regular meeting, attended by Benji Waser. Waser discussed MNP’s approach to audits, the “engagement team” for the firm, the scope an audit would take and the timelines for obtaining results of an audit. The county’s audit service plan was given to council for its sole purpose. Later, council did go into closed session to discuss aspects of the plan. The audit included the county’s consolidated financial statements for the year ending in December 2021. “At MNP, our objective is to perform an efficient high quality audit which focuses on those areas that are considered higher risk,” he stated, in a preliminary statement. The audit firm is dedicated to integrity standards and open channels of communication, said Waser, “and will work with management to coordinate the effective performance of the engagement.” Topics for discussion included changes to the business operations and developments in the financial reporting and regulation
environment; business plans and strategies; parametres around fraud; the management oversight process; other issues and concerns; and, the county’s specific needs and expectations. “Although Beaver County continues to grow and evolve, we are not aware of any specific events or circumstances during the year that will have a significant effect on our audit outside of the impact of COVID-19,” the report stated. The report also explained its focus “on significant risks identified during the pre-planning and planning and risk assessment stages ensuring that audit procedures are tailored to your specific circumstances and appropriately address those risks.” Council was reminded of its responsibilities to approve financial statements and monitor management performance. “Council should consider the potential for management override of controls or other inappropriate influences, such as earnings management, over the financial reporting systems, including controls to prevent and detect fraud and misstatement, and to monitor compliance with relevant laws and regulations.” Waser’s report also explained that, “the scope of our audit work is tailored to reflect the relative
size of operations of the county and our assessment of the potential for material misstatements in the county’s consolidated financial statements as a whole.” In emphasizing relative audit risk and what was termed “materiality,” the auditors consider the size, complexity and growth of the county; changes within the organization, management or accounting systems and, concerns expressed by management. The auditors “recognize uncertainties inherent in the measurement of amounts based on the use of estimates, judgement and consideration of future events, and make reasonable economic decisions based on the consolidated financial statements,” in establishing the “materiality level” of the statements. The audit will look at several significant and high risks which auditors will examine, including deferred revenue and restricted contributions (significant risk), gravel inventory which is difficult to visually inspect, weigh or measure or count (higher risk); tangible capital assets (TCAs higher risk); and Salaries and wages with staff being over or under paid (higher risk). Also examined would be the Claystone Waste Limited Partnership, in part because “components that are significant
due to either individual financial significance to the group or because it is likely to include significant risks of material misstatement of the group financial statements.” Waser outlined the timeline for the audit with a presentation and interim procedures on January 5, year-end fieldwork procedures from February 28 to March 4, and draft year end consolidated financial statements to be discussed with management on April 13. The final presentation of the December 31, 2021 audit findings report would be made to council on April 20, along with a presentation of the audit firm’s management letter and issuance of the independent auditor’s report. Council held a brief discussion before going into closed session regarding liability for contaminated sites, an area of particular interest with so many abandoned well sites since the downturn in the oil and gas industry. This was based on a question by Councillor Lionel Williams (Division 2) regarding problems of asbestos and buried tanks factoring into the county’s financial future. Waser replied that “liability for contaminated sites…if used, would be scoped out now.” But he added that it “will become an issue in a couple of years.”
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