GFOABC Dollars & Sense - December 2020 - Issue 113

Dollars & Sense P e r s p e c ti v e

Issue #113 • December 2020

Member Profile: Symone Curry MFA Pooled Advisory Committee COVID 19: Driving Change

p r es i d e nt ’ s m es s ag e in this issue President’s Message 2 Executive Director’s Message 3 Member Profile 4 MFA’s Corner 5 Economic Recap Q4 7 Year in Review: The Impact of COVID-19 on Local Government Risks and Risk Mitigation 10 Expecting the Best, but Anticipating the Worst – Why Business Continuity Is Important 12 The Dreadful Auditor 13 Boot Camp – During a Pandemic 14 COVID 19 – Driving Change for Local Governments 15 Engaging Residents to Address the Impact of COVID-19 on the Budget 17 Responding Flexibly to COVID-19: Delivering the 2021 Assessment Roll 19 Collectors’ Corner 21 Quarterly Question 22 Thank You Exhibitors 23 Thank You Sponsors 24

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hat a year it has been… Last week the Board held its December meeting – virtually of course – which among other things, included a roundtable discussion on how the pandemic has affected us and also what impact it may have on the upcoming budget discussions.

No matter where you are in the process, this year’s budget process likely looks different from years past, and not just because of the virtual aspect. The pandemic has prompted discussions on deciding how to proceed with strategic plans, maintaining service levels or providing minor rate relief.

Many rely on or are assisted by senior levels of government providing financial liquidity and support (businesses, citizens and to a lesser degree local governments). Government financial support, as a percentage of GDP has been more generous than most nations. The arrival of the BC Safe Restart funding does take much of the sting out of short-term costs and revenue impacts. In the longer term, there are COVID related grant funding opportunities to consider.

This year highlighted how reliant we are on each other and the depth of those interdependencies.

For those of you that are not naturally extroverted, please reach out to your network: exercise it, grow it

and strengthen it. Admittedly not my strong suit and it may not be yours, but fortunately, there are many colleagues across the Province for which it is. Our resiliency is strengthened by the support GFOABC members provide to each other.

It’s been a year that none of us could have predicted but I am proud to be part of a group of professionals that has risen to the challenge.

On behalf of the Board, I would like to thank our members, partners and most importantly GFOABC staff for continuing to provide high levels of service while directly or indirectly serving our communities and improving the lives of citizens. • Board of Directors President Trevor Thompson Vice President Lorraine Coughlin Secretary-Treasurer Nyla Attiana Past President Genelle Davidson Directors at Large Jim Bauer Jeannie Bradburne Shelley Hahn Rianna Lachance Lenora Lee Jennifer Lockhart Michelle Mason Talitha Soldera Staff Kala Harris, Executive Director Erica Christie, Manager, Operations and Member Services Gerilee McBride, Graphic Design

e x e c uti v e d i r e c t o r ’ s m es s ag e A

s this year draws to a close, we would like to take this opportunity to reflect on the year that was. Due to the global pandemic, for GFOABC, the year that was—was VIRTUAL. This time last year we could not have imagined a virtual conference, virtual Boot Camp or virtual Fall Professional Development. We certainly could not have imagined the ability of this two-person association to transform the majority of its annual programming from in-person delivery to webcast, and that we would see programming participation at an all-time high.

We leveraged all the technology tools in our toolbox, and even helped to develop a few new tools with the assistance of our technology partners. We invited you, our sponsors and exhibitors, speakers and facilitators, and most importantly, our members to join us on this virtual journey—and boy, did you ever!

We are extremely mindful that without all of you our work simply would not be possible and are grateful for your participation and engagement with us over the past year. I think the social media post above following our virtual conference sums it up best.

While there is no doubt that the coming year will continue to be full

of uncertainty, we are extremely excited about what the year to come has in store.

Set against the backdrop of this past year, our annual conference, The Future is Now: Response, Recovery & Resilience, will explore the many challenges local government finance faced in the early days of the pandemic, recovery efforts and what the new normal looks like for local governments across BC. The pandemic had a huge impact on local governments here in BC, Canada, and the rest of the world.

This year, more than any other year, is the time to acknowledge local

government finance’s role in meeting the very real challenges by nominating someone from your organization for a GFOABC Excellence in Local Government Finance Award.

Nominations will open in January and close in March; we hope you will take the time to consider the amazing work that you or your team have done this year!

Lastly, I would like to express my appreciation for the support provided by the Board of Directors, Committees, and staff this past year.

Wishing you and yours a wonderful, socially distanced holiday season! • Kala Harris Executive Director

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 3

M e m b e r P r o f i le ANNE YANCIW interviews symone curry

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ymone Curry was born in The Bahamas and raised in Lytton, British Columbia, the “Hot-Spot and River Rafting Capital of Canada”. She attended Kumsheen Secondary School and went on to attend Thompson Rivers University in Kamloops. She was a member of the Lytton Ambassador program, a program mandated to nurture provincial leaders of the future and forge links of friendship & understanding throughout BC communities. Symone is an avid supporter of youth programs, and having grown up in a small community where there were few youth-focused activities, does her best to support healthy initiatives.

Symone has had a diverse work history, having worked for the Health Department of a local First Nation Band as a Medical Office Assistant for a Nurse Practitioner pilot project with Interior Health Authority and six First Nation Bands. She also spent several years as a Dental Receptionist, as well as an Administrative Assistant for the School of Construction at Southern Alberta Institute of Technology.

Symone’s passion for public service led her to apply for the Administration Clerk/Receptionist position at the Village of Lytton in August, 2019. Symone lacked local government experience, but it quickly became apparent that she was a quick learner and had a talent for finance, and in October, 2019, she moved into the Finance Clerk role. After March 11, 2020, Symone and the new Administration Clerk were the only two staff members who continued to work out of the Village Office, despite the fact that they were both still learning their roles.

The desire to learn more and perform her job well led Symone to attend Council meetings and to respond to Council questions with agenda reports. She also signed up for the GFOABC Bootcamp in August 2020. While other attendees at Bootcamp spent the week absent from work 4 | GFOABC.CA

and focused entirely on the conference, Symone, acutely aware that the only other person in the office was the Administration Clerk and aware that the Village had just lost a CAO, made the decision to attend while continuing to work full time at her job.

I met Symone at the beginning of September and was quickly impressed with her knowledge, work and ability to learn.

Symone is committed to physical fitness and spends four hours every day in the gym. I was not surprised that the same drive and determination that has built her muscles was applied to the challenge of simultaneously attending the GFOABC Bootcamp full time while working full time.

Shortly after I started with the Village of Lytton, Symone identified some critical dates and actions, things that are normally handled by more senior staff. Her grasp of prioritization is keen and was crucial to the Village meeting important requirements.

Symone enjoys working at the Village and has found a fit in local government with her values, commitment and service ethic. She is ambitious and plans to continue with educational opportunities offered through the LGMA, and through this, be able to contribute to the betterment of her community in a greater and more meaningful way. •

ANNE YANCIW has over 21 years of experience in local government with seven of those years spent as a CAO. She started her career in local government working for the City of Calgary, moved to the Village of Valemount and later, the Town of Smithers. More recently as a consultant to local governments and providing Interim CAO services.

M fa ’ s c o r n e r MFA Forms Pooled Fund Advisory Committee (PFAC) – One Year In

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n June of 2019, the Municipal Finance Authority of BC (MFA) put a call out to local government investment professionals interested in being part of the newly establish Pooled Fund Advisory Committee (PFAC). The purpose of the Committee is to assist MFA management in creating, managing, and monitoring their pooled fund product suite.

The Committee was officially formed, and the membership is comprised of 10 diverse representatives located throughout the province who are responsible for the day-to-day management of their local government’s reserve pools. Committee members have a term of two years and are eligible to serve up to three terms. I am proudly one of the newly appointed members and am amazed at the calibre of representatives.

The Committee meets quarterly, with the first meeting held in person in September of 2019 (remember when we could do that safely), and quickly dove into the Committee’s mandate to: • Review performance of existing pooled funds and fund managers.

• Advise on the operations (set-up, disclosures, ongoing reporting, etc.) of pooled funds.

• Advise on the creation of new pooled funds.

• Exchange ideas and leverage our cooperative structure to get more from investment service providers.

• Report on relevant recommendations/findings from the group to the MFA Investment Advisory Committee of the Board or the Board of Trustees.

• Exchange information and market intelligence with a focus on the Canadian fixed income markets.

In addition to the quarterly reviews of the MFA’s pooled funds’ performance, there is a large educational component to the Committee’s existence. My personal favourites are the almost daily musings from the MFA’s very own Chief Executive Officer (CEO), Peter Urbanc on all things happening within the economy (I do not believe this man sleeps). In all seriousness, the volume and timeliness of information is impressive and so relevant as we are all navigating such a historic time in our economy’s history (I dare not say unprecedented). Not only how the pandemic is affecting our investment and debt rates, but how we navigate our Council and Boards’ desire for either socially responsible investing (SRI) or incorporating environmental, social and governance (ESG) factors into an investment policy. Continued next page.

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 5

Year-End Support from CPAs like you

Since the Committee has been established, here are just some of the accomplishments made to date: 1. L aunched the MFA Mortgage Fund on January 28, 2020, allowing local governments access to another asset class – commercial mortgages.

2. In May 2020, the Committee discussed how to de-risk the existing Intermediate Fund by focusing on liquidity and high-quality low risk investments (Government of Canada, provinces, municipalities and the six chartered banks) changing it to a government-focused Ultra Short-term Bond Fund.

3. Redesigned the monthly and quarterly reporting for participants, making the information more accessible.

Do you have the resources in place to meet all your deadlines?

4. My belief is that the work of the PFAC is more relevant and important than ever. We still have a long road ahead of us as it relates to the pandemic and it is unknown how it will continue to impact the economy and the communities we serve. •

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TINA PERREAULT is a CPA, CMA and has worked in finance and accounting for almost 25 years, ranging from national insurance agencies, private & public sector, to being a small business owner. Tina is currently the General Manager of Corporate Services and Chief Financial Officer for the Sunshine Coast Regional District, where she has worked for over 12 years. She oversees the Finance, Purchasing & Risk Management, Information Technology, Corporate Facilities and Asset Management divisions of the organization.

e c o n o m i c r e ca p Q 4 have an anchor, but don’t drag it in the water by avery Shenfeld

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oaters know to have an anchor aboard, even if for now, they choose to raise the anchor to get moving.

That should be as true for fiscal policy in troubled times, when it would be a mistake to burden near term planning by dropping an anchor into the waters, and thereby shortchange the economy on necessary fiscal largesse.

But when making decisions about policies that can impact revenues or spending when those troubles are gone, you need an anchor to be able to stop unsustainable deficits in their tracks.

The federal government’s fall statement was justified in eschewing a near-term fiscal ceiling. But it also argued that where the government would end up years down the road wouldn’t be spelled out as a firm pledge until the economy had fully recovered. That might be too late.

The Finance Minister has rightly acknowledged that the room to spend isn’t “infinite”, and the Prime Minister has also noted that the generosity of some current programs is, by design, temporary. But there are other, permanent programs that the government has discussed with respect to childcare and drug benefits that have yet to be assigned a price tag, and pressure from provinces for more generous health transfers.

These are all initiatives worth due consideration. But saying that fiscal room isn’t “infinite” doesn’t give the cabinet enough guidance to define what will, in fact, be affordable under long term revenue projections, or if not, what the tax take would have to be to finance them, and whether such a tax burden would in itself impede growth.

There are ways to have an anchor without leaving it dragging down the ship, i.e., without unduly limiting room to respond to the pandemic. One already in sight was in fall statement’s forecast for the annual deficit in 2025, which is under 1% of GDP. Restating that as a goal to be achieved at full employment could be part of a

fiscal anchor statement. That could be supplemented by a ceiling for interest on federal debt as a share of GDP, choosing a target that leaves a bit of elbow room for near term stimulus if needed, but also building in a gradual climb in interest rates on new issues.

Given the uncertainty, the government announced its intention to detail a further $70-100 billion in fiscal stimulus in the next three years. We’re a bit more optimistic on the pace of the post-Covid recovery, and Ottawa might even find that it can trim that package a bit.

Note that falling deficits ahead would not be a cyclically-adjusted fiscal tightening if they come from the revenue benefits, and the spending declines, associated with Canadian individuals and businesses earning more money on their own, and no longer qualifying for temporary assistance. It would be wise, therefore, to put what the government calls guardrails now on the scale of stimulus spending, letting it come in below $70 billion if employment and hours worked achieve certain milestones. To put a twist on a phrase from our history, the policy should be stimulus if necessary, but not necessarily stimulus. Continued next page.

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 7

Canadian Forecast Summary

Sources: Statistics Canada, Bank of Canada, CIBC World Markets Inc.

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JAMES HOBSON, CFA, PM, First Vice-President, Portfolio Manager, Investment Advistor & Chairman’s Council Member 403-260-0574 james.hobson@cibc.ca CHARET CHAHAL, CIM, Portfolio Manager, Investment Advisor & Chairman’s Council Memeber 403-260-0440 charet.chahal@cibc.ca This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change.

CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. © CIBC World Markets Inc. 2020. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. James Hobson and Charet Chahal are Investment Advisors with CIBC Wood Gundy in Calgary The views of James Hobson and Charet Chahal do not necessarily reflect those of CIBC World Markets Inc. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.

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Year in Review: The Impact of COVID-19 on Local Government Risks and Risk Mitigation

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he COVID-19 pandemic has had a profound impact on all aspects of daily life. From individual health and safety measures, to the changing nature of work, life today looks a lot different than a few months ago. The pandemic has caused tremendous uncertainty and triggered a need to rethink how we live and interact with public spaces.

Local governments in BC and across the world are re-evaluating and reprioritizing their risks to develop efficient and effective strategies to ensure already constrained public resources are going where it matters most. A focus on risks with the greatest potential impact and velocity will help local governments rebuild and develop resilience in the new reality of a post-COVID world.

A recent survey of local governments conducted by KPMG assessed the risks with the greatest impact and insights on mitigation strategies. Respondents noted the following as the most likely and severe risks currently facing their local government: 1. Economic crisis - failure to provide sufficient financial support to workers and businesses during restrictions leading to significant loss of savings, income, business failure, and mass migration; 2. Funding availability - loss of revenue and increasing debt levels limit governments’ abilities to invest, impacting what is considered a public service, the ability to provide services, support for social programs and economic recovery; 3. Inequitable effects of the pandemic - the impact of the pandemic is felt disproportionally within lower-income individuals driving demand for action on inequality at both a local and global level; 10 | GFOABC.CA

4. Pandemic health response - the health response is inadequate due to insufficient healthcare resource, delays in the availability of a vaccine or treatments, detection of infectious individuals, and/or incorrect decisions made on the lifting of restrictions resulting in the loss of lives and confidence; and 5. Trust, leadership and politics - people’s loss of trust in leadership (viewed as incompetent/insincere/ uninformed/out of touch) leads to political instability, change in political systems and fragmentation making widespread consistent decision making increasingly difficult, thereby impacting the economy and health.

In addition to considering which risks are the most likely and most severe, we must also begin to think about how risks are connected between each other. Risks are not individually isolated and form complex relationships that impact or trigger other risks. These combinations, or risk clusters, pose the greatest threats due to their strong connections and domino effect. The following seven risks create the strongest clusters of interrelated risks which if not mitigated could result in significant impacts to local governments and their citizens: • Economic crisis • Civil unrest • Individualism vs the Common Good • Trust, leadership and politics • Funding availability • Tax (scope, nature and/or rates) • Inequitable effects of the pandemic

When developing effective mitigation strategies and determining where to focus limited resources, local governments should consider moving away from traditional risk management prioritization and think of the dynamics, relationships, and networks that exist within local governments and the risks facing them. KPMG’s study identified that the most powerful systemic mitigant is Trust, leadership and politics. It ranks highly on its effect on every other risk, including economic crisis. In addition to the pervasive impact across risks, it has high velocity with the ability to trigger impacts on other risks within six months.

Looking forward to 2021, there will be lots to do as local governments continue their journey to the new reality. Consideration of risks, risk clusters and relationships, and mitigation strategies form a key component of local government plans for the new year.

For additional insights from the KPMG study and a full listing of the top 18 risks identified, please visit our website. •

BRANDON MA is an Audit Partner with over 12 years of experience providing assurance and business advisory services. He is passionate about making our clients’ businesses and organizations better. Brandon’s experience spans a broad range of industries, with a focus on all subsectors of the public sector, not-for-profit and technology industries, as well as consumer markets, food processing, and professional associations. His diverse experience is an asset to clients in delivering high audit quality and providing valuable data-driven insights.

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 11

Expecting the Best, but Anticipating the Worst – Why Business Continuity Is Important

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usiness continuity is about having a plan to deal with interruptions so that your local government can continue to function. You might not need to activate the plan now, but that does not mean that it is useless. Having a business continuity plan not only provides a roadmap and tools to continue to support operations and collect revenue, but it can also strengthen existing processes and practices.

COVID-19 has tested everyone. Local governments who had a plan in place or had started a business continuity plan when the pandemic was declared were able to adapt more quickly and became more resilient with this test of their plans.

Local governments without a business continuity plan at the beginning of the COVID-19 response were overwhelmed as they pulled together a plan of action. As a result, their response to the pandemic tended to be less efficient or complete by comparison.

Before you consider formalizing your COVID-19 response into a business continuity plan, consider: Have you completed a business impact analysis or risk assessment?

• Start with your essential services. Are they interdependent? What critical infrastructure is required to deliver these services? What is the impact of losing or limiting access to these services and infrastructure?

Do you have a skills matrix for essential staff?

• Cataloguing the specialized skills of essential staff can help to identify a skills gap or a need for cross-training of others.

Answering each of these questions will help you understand what you need to consider and include in your business continuity plan. Your responses will help to identify the information required to write the plan, the resources needed to support a plan, and the gaps that require analysis. More information and resources can be found at the MIABC’s Business Continuity Hub page.

The Provincial Government is in the process of modernizing the Emergency Program Act. Changes to the legislation are scheduled to be released in the Spring of 2021 and will likely include a requirement that local governments have business continuity plans. This new requirement will place a significant burden on local governments that currently do not have plans in place. The Province has not yet provided details as to what support Emergency Management BC will provide to local governments or the timeline for compliance.

Members of the MIABC can take advantage of the new option in the Loss Control Program offering training on business continuity that can be tailored to the needs of individual members. For more information on the MIABC’s programs, contact Sandra Mayo at smayo@miabc.org or AskUsAnything@miabc.org. •

What “disaster” scenarios are you considering?

• It is difficult to write for all possible scenarios.

What scenarios are most likely to occur or will have the biggest impact if they do? What are you most concerned about? Consider scenarios other than an earthquake, as the impact of an earthquake will be regional, not only local, which complicates potential mitigation strategies.

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SANDRA MAYO is the Risk Control Specialist at MIABC, Sandra is part of the Member Services Team, focusing on the newly launched Loss Control Program to meet the evolving needs of members. Until recently, Sandra managed risk and insurance at the City of Coquitlam and, prior to that, managed risk and insurance at the YMCA of Greater Vancouver.

The Dreadful Auditor

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nce a year they invade your offices, disrupt your team and dig through your files. Months later you finally get back a copy of your financial statements along with a big bill. But have you ever really thought about how an audit can benefit you?

The Local Government Act and the Community Charter require that the finance officer for every local government in British Columbia prepare financial statements in accordance with generally accepted accounting principles for local government. They also require that the statements must be audited by an independent auditor who reviews the accuracy and completeness of the financial statements and provides an audit opinion on them.

If you’re a finance officer I’m going to challenge you to ensure that your local government hires a really exceptional auditor and that you’re getting the best value for the taxpayer’s money.

How do you know the difference? That can be tricky, but if you’re either dreading the auditor’s visit or find it inconsequential that’s probably a sign that there’s a problem.

The auditor should communicate to you what their responsibilities are and how they will perform the audit.

I’d start by asking myself how much time the auditor spends in your office and the types of questions they ask. Have they spent time discussing the planning for the audit with you as well as going over your internal controls and risk areas? Have they discussed what materiality level they plan on using and have you determined that this is appropriate for your organization?

Are they relying on information you are providing or are they doing an appropriate number of confirmations from outside sources?

Take the time to compare your financial statements with the presentation format and completeness of the disclosures in the model financial statements available on the BC Govt website.

Do your financial statements provide enough information to allow your Council to understand the financial information and make good decisions based on it?

If you are not proficient with all the requirements, is the auditor providing recommendations to ensure that your financial statements meet all the requirements for presentation and disclosure?

There are large audit firms and small local firms.

You’ll want to ensure that the audit firm is the right fit for you. They should be providing you with a list of the audit team and their qualifications as well as identifying who will be performing the quality control review. If you’re in the process of hiring a new audit firm ask for references and do your due diligence before making a recommendation to your Council.

If you’re dreading the auditor’s visit then you are missing out on all the benefits an auditor can provide to your organization. As a CFO for a small local government, I look forward to the audit. It’s an opportunity for me to improve my knowledge and it’s confirmation that my work has been checked by a professional and that I’m continuing to provide the best possible service to our municipality. •

JENNIFER LARSON, CPA, CGA started her professional career as a small business accountant in central BC. Moving to Yellowknife in 2003 she joined a mid-sized firm and focused her career on public sector audits throughout the Northwest Territories and Nunavut.

Returning to BC she joined another mid-sized firm before deciding in 2016 to focus her career in the municipal finance sector as the CFO for the District of Stewart.

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 13

Boot Camp – During a Pandemic

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have to say that I understand why the course is titled “Boot Camp”. This was an intense, but fun, weeklong course. I have heard others talk about the course in the past, but never did I think it would have been this jam packed. They had us hopping from 8:00 in the morning until 9:00 at night some nights. Which made the days go by fast. The days were always packed with great information and fun. I have to say that after 12 years in local government I did come away with new information and a better understanding of things, as well as some great contacts.

2020 has brought us many changes and challenges to our daily jobs. This has also filtered into how we attend courses, conferences and meetings now. Zoom or WebEx have become common words in our daily lives. We have had to adapt quickly to a new way of learning and meeting with each other. Even though some days you feel like you are either the Brady Bunch or on Hollywood Squares. But I also learned that as a participant in a Zoom meeting you are able to sabotage the presenter’s presentation. This little act earned the Red Team points. Go Red Team Go.

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This change to how we attend courses has pros and cons associated with it. The pro is that you do not have to sleep on the very uncomfortable beds at the University of Victoria, and trust me they are not comfortable. The biggest con is that you do not get the in-person social interaction with the other students and presenters. The in-person training gives a whole different feel to the training. Allows you to ask more questions and be able to talk to the presenters and students during and after the class. This networking adds to the training that happens during the week and gives you some great contacts for the future. We did get to break out into our groups and have sessions with them, which were amazing, you just miss out on getting to talk to all the other students. Even though I am an introvert, I did miss the social interaction.

I would highly recommend this course, not only to new individuals, but also to individuals who have been in the position for awhile. There is always room to learn something new. •

TRACY BOWEN joined the Cowichan Valley Regional District in October 2007, with 11 years experience in the banking industry. She completed both her Chartered Professional Accountant (CPA) and Bachelor of Commerce in 2011 and is always looking to increase her knowledge about local government finance.

COVID 19 – Driving Change for Local Governments

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t’s no secret that local governments have traditionally been slow to change legacy systems and processes. The thinking being if it’s not broken, it’s not a priority.

But the COVID-19 pandemic has forced organizations to rethink the way they do business to accommodate work-from-home practices, social distancing protocols, and safer transacting with residents and customers.

The pandemic has in fact nudged changes that may ultimately reduce costs and provide more efficiency. Cloud migration is one of the key steps being taken by organizations to modernize their operations.

Over the last few months, we have seen many examples of organizations adapting to the new reality. The following are some risks to be considered and managed to ensure you continue to have effective internal controls, data security, and efficient processing.

Data Accessibility and Security • Increased access to data from multiple environments – risk that the data can be accessed and manipulated causing integrity issues.

• Employees working remotely – privacy and security is a heightened risk when data is accessed and saved in multiple locations.

• With increased access, do you have multiple versions of documents being utilized? What are the protocols for storing and protecting the master?

Data Processing and Accuracy • Using a third party to process and/or manipulate information does not guarantee success. The basic philosophy of garbage in/garbage out applies.

• Consistent with your controls to review information processed by employees, any information processed by third parties should be reviewed for accuracy and completeness.

Data Integration and Efficiency • Have you reviewed how information transfers between systems to ensure it is accurate and complete?

• Is the process working as planned? When manual processes are implemented to fix challenges, how can these be eliminated to maximize efficiency and minimize risk?

Internal Control Change, including Evidence of Controls • As processes are automated, the associated checks and controls need to evolve accordingly. Some manual processes may be automated, and some manual processes may continue to be executed, but in a virtual environment.

• It is important to identify the key controls that existed pre-COVID and confirm they still exist and/or have been appropriately modified in the new system.

• In preparation for audit season, it will also be important to see the evidence of the control processes.

Does the system allow electronic approvals? Is there a report that shows approvals that occurred? If you continue to approve manually, but in a digital environment, how are approvals documented? Are digital signatures on PDFs acceptable? Are there secure signature processes, and where are those signatures stored?

Continuous Improvement • Once new processes are in place there may be overlapping and/or redundant systems. This is a good opportunity to review all the platforms and processes to identify whether any can be eliminated.

For example, are you saving copies of invoices on a server, or in a separate data warehouse? Does your financial system allow you to keep the invoices in the system linked to the data entry? Continued next page.

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 15

Until recently, cloud migration has been a taboo topic in the local government world, but we are seeing that properly sourced cloud solutions can provide stability, security, and efficiency.

Action Plan for Your Local Government: • Conduct a gap assessment of the existing internal controls. Review and update.

• Update the data security and privacy policies and procedures.

• Conduct a post-change effectiveness review to determine success and next steps if necessary. •

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KRISTINE SIMPSON is an A&A partner at BDO Canada with over 20 years of experience specializing in public sector and not-for-profits. She has assisted clients with improving financial and organizational strategy, internal control reviews, P3 partnerships, and other capital consulting. You can reach Kristine at ksimpson@bdo.ca or (604) 443-4735.

Engaging Residents to Address the Impact of COVID-19 on the Budget

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ublic sector organizations across North America are facing considerable budget pressures as a result of the COVID-19 pandemic. This may necessitate slashing funding to programs and/or increasing tax rates.

That is likely to be very unpopular with your stakeholders (council, board, and/or residents). Working through these options will require careful planning, making trade-offs, and effectively communicating new realities to stakeholders to get their buy-in.

If you’ve read our Style & Substance blog articles before or attended our webinar series on best practices for communicating financial information, you know we have strong opinions on effective communication. In a time of massive budget challenges, your team’s ability to communicate your message clearly and effectively is more important than ever.

Over and above what we have laid out in our articles and presentations, what can your finance or budget department do to help stakeholders understand the complex issues you are facing?

Too Much or Too Little Detail Stakeholder engagement is nothing new. Publication of large budget documents, public meetings to discuss these documents, focus groups, and advisory committees have been utilized for decades to engage with residents to educate them and receive their feedback. These approaches are often challenged by the complexity of the topic and the time investment required to execute them.

Who wants to read even a 200-page budget book? Not to mention the logistical problems of running large meetings and focus groups in a time of social distancing.

As an alternative, local governments can utilize surveys or online budget tools to broaden the public meeting’s reach. These tend to be more approachable and therefore attractive to a typical stakeholder. This comes at the cost of the depth of detail and nuance

necessary to truly educate the audience about the organization’s constraints.

What you need then is the ability to reach as many stakeholders as possible, in a way that encourages their participation and focuses on educating them on the context, constraints, and challenges we face while soliciting their feedback.

“Not having learned it is not as good as having learned it; having learned it is not as good as having seen it carried out; having seen it is not as good as understanding it; understanding it is not as good as doing it. He who carries it out, knows it thoroughly”.

—The Works of Hsüntze

Engage Stakeholders with Budget Simulations This is where simulations come in. As technology has evolved, simulations have proven themselves to be the best of both worlds: broad reach and accessibility to maximize participation combined with detail and nuance.

Continued next page.

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 17

Participants are invited to investigate the budget initially at a highly summarized level. This has the advantage of minimizing initial complexity and enabling understanding of the budget’s overall state (e.g., surplus, deficit). They can drill down into more and more detail to understand the composition of the budget.

Finally, and most importantly, stakeholders are asked to increase or decrease budgeted amounts by department, service area, or program based on their own priorities and preferences. You can present them with a series of options to choose between that will impact the budget. Participants attempt to craft the budget they would like to see but will regularly bump into problems. Want to triple the budget on policing? Sure! But that puts us into a major deficit.

How will you fund this increase?

Participants can add comments explaining their rationale. All this data is collected for the hosting finance/budget department to analyze and leverage in refining the budget.

Bringing your stakeholders into the budget process with simulations will allow them to much more clearly understand the challenges you are facing and provide the feedback necessary to ensure you are optimally meeting their expectations. •

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JAMIE BLACK is President of F.H. Black & Company Incorporated. For the last 20 years, he has consulted and trained finance officers, auditors & accountants in government, higher education and corporations throughout Canada and the U.S. His work focuses on increasing finance department efficiency and effectiveness through the implementation of technology and best practices.

Responding Flexibly to COVID-19: Delivering the 2021 Assessment Roll

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cross society, the COVID-19 pandemic has presented unprecedented uncertainty. Commencing early April, BC Assessment faced significant challenges with our offices temporarily closed and staff transitioning to telework. On-site inspections, civic office visits, and contact with property owners were also suspended. Additionally, the Property Assessment Appeal Board extended the appeal deadline from April 30 to June 1, delaying appeal resolution and generating persistent risk to the assessment roll. Most notably, activity in B.C.’s real property market froze.

After the initial shock of altered operations waned, BC Assessment quickly adjusted and carried on our important work. We assessed risks, threats, and opportunities for preparing the 2021 assessment roll.

Our temporary measures necessitated alternative means of capturing physical changes to properties (i.e. new construction and renovations), which are critical to ensuring the accuracy, equity, and stability of the roll. On May 1, we implemented Citrix ShareFile, an encrypted, FOIPPA compliant file sharing application enabling electronic transfer of property information by local governments; subsequently, 100 communities have transferred over 5,000 files.

Recognizing concerns on potential revenue shortfalls and tax shifts between property classes, BC Assessment activated an advanced special committee to scrutinize real property market trends. Sales volume in April and May was down in the range of 35% to 55%. Property values, however, remained fairly stable, likely due to historically low interest rates and limited supply of properties listed for sale.

Through summer, our staff gradually returned to the office and resumed property inspections, with limited office visits, and contact with

property owners. Except for Northern BC, sales volumes in all regions surpassed 2019 levels; furthermore, residential property values started rising. Commercial and industrial sales activity remained low, but value changes were moderate across many property types.

Building permit activity between January and the end of October was down 12% versus 2019. Growth in the tax base not related to market movement, or non-market change (NMC), was down 14% versus the 2020 roll.

Continued next page.

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Responding to the need for earlier access to information, we published cumulative (year-to-date) NMC reporting starting October 1. Additionally, Preview Roll NMC reporting was published for the first time, which enabled distinguishing between value changes due to market movement and NMC. The 2021 Preview Roll ranges of change noted below are generally of similar magnitude as those experienced by many communities for the 2020 roll.

What does the future hold? Operationally, we anticipate increased flexibility in staff working arrangements and greater utilization of electronic processes and information transfer, which presents further opportunities for operational efficiencies. Regarding assessed values, property appraisers analyze market transactions (i.e. sales), then, apply that evidence and data to assessments. While we do not predict the future, should interest rates and supply of available properties remain

20 | GFOABC.CA

at historic lows and further pandemic lockdowns be avoided, current value trends are intuitively anticipated to continue. Additionally, anecdotal evidence suggests potential of a strong recovery in the construction sector, which could bode well for future NMC. •

Manager, Local Government Relations, MICHAEL SPATHARAKIS has worked as an accredited appraiser and assessor (Appraisal Institute of Canada) for 15 years.

He holds a Bachelor of Arts (VIU), a Certificate in Real Property Valuation (UBC), a Certificate in Local Government Administration (CapU), and is completing a Masters in Public Administration (UVic).

c o l le c t o r s ’ c o r n e r Conflict of Interest and the Collector

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inancial officers are sometimes faced with a conflict resolution situation. For example, just before this year’s annual tax sale auction I was asked “Can the mayor bid on a property at the tax sale auction?” There are several aspects to this question. First – legislation.

Since I’m not a lawyer, I might be missing something, but the Local Government Act (LGA) (S645 and S650) simply states that “the collector must conduct the annual tax sale by offering for sale properties with delinquent taxes by public auction and that the highest bidder above the upset price for a parcel . . . must be declared the purchaser”. The LGA is silent as to who can bid on a property with one exception which is S648 which says that a person authorized by the council may bid for the municipality at the annual tax sale. I see nothing in the legislation that requires or gives the collector the prerogative to determine who is eligible to bid on a property.

Second – ethics or conflict of interest. For example, can the collector bid on a property? Or the mayor, a councillor, the CAO, a municipal employee, or their spouses, or one of the owners of

the tax sale property? The collector has the prerogative to determine the method of conducting the tax sale auction and may require all bidders to register to bid. However, I see nothing in the legislation prohibiting these situations. In my opinion the collector is not responsible for nor has the prerogative to determine who is eligible to bid on a property. The tax sale auction would proceed. So how do you avoid a situation like this? A council approved policy (e.g. Conflict of Interest Policy or Standard of Conduct Policy or Code of Ethics Policy). Such a policy may be very broad, but should include who is prohibited from bidding on or acquiring a property at a tax sale auction held by the municipality.

Whatever council decides, it should be clear that the mayor, the councillors, or staff persons ensure that their affairs and financial interests do not cause an actual, potential, or perceived conflict of interest. With this in mind the collector should not accept a sealed bid on behalf of a bidder or even inquire as to who might be bidding at the auction.

Third – optics or in other words, what would it look like to taxpayers

if the local newspaper headline read “Councillor Smith purchased a delinquent property at the annual tax sale auction last Monday for a fraction of the assessed value!” I think there are seminars available on how to do damage control in an embarrassing situation such as this one.

As I said above, the collector is not the enforcer of who bids at the tax sale. However, a Conflict of Interest Policy would eliminate many difficult situations. As the collector, our role is to be objective, independent, apolitical, and unbiased whether it’s regarding tax sale or any other of our duties and responsibilities. •

DOUG STEIN has worked in municipal finance for over 30 years. In 2011 he retired from his position as Manager of Revenue Services for the District of Saanich. Doug leads the Collectors’ Forum, is a GFOABC Life Member, and a CPA, CMA.

DECEMBER 2020 • DOLLARS & SENSE PERSPECTIVE | 21

CIVICINFOBC CIVICINFOBC

q u a rte r ly q u estio n

Property Tax 2020...What was the outcome?

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espite some early grim predictions on property tax collection, BC local governments have reported collecting most property tax revenue receivables as of October 2020. With 36% of municipal governments reporting, the average collection rate was 92% while the median was 96% for all classes.

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quarterly question the next Quarterly Question: Only 22% of BC municipalities reported keeping July as the final penalty tax due date, while 14% have final penalty calculation due dates after October 1st. The latest penalty collection due date reported was December 15th.

October collection rates also exceeded expected collections reported back in early July.

Thank you to all who participated in this questionnaire. The online forum is a great place to continue the conversation.

staffing levels… how has covid changed operations?

APLEASE USE THIS LINK TO BE A PART OF THE RESULTS OF THE NEXT QUARTERLY QUESTION. YOUR PEERS WILL THANK YOU! The survey should only take about 2–3 minutes to complete. The responses to this question will be profiled in the next GFOABC Newsletter.

If you have a topic for a future quarterly question, please contact the office at office@gfoabc.ca or (250) 382-6871

If you would like to learn more about this free service, contact CivicInfoBC at info@civicinfo.bc.ca 22 | GFOABC.CA

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