9912 Municipal Finance: Assignment Guidelines

Scenario:

You have recently been hired as the internal auditor for the Municipality of Everything is Fine. You report directly to the Commissioner of Financial Services/Treasurer. The Treasurer informs you on your first day that the external audit is scheduled for the end of the month, so you have about 3 working weeks to complete an internal audit and present your findings to the Treasurer. Some of the key areas of focus of the internal audit this year are:

A. Development Charges (non-tax revenue)

B. Staff compensation (largest expenditure line)

Pertinent Information:

"Municipality of Everything is Fine" has a taxable revenue base of 1 billion, of which residential tax revenues make up about 63%

The municipality recently published their new development charges studies with new set of rates. The treasurer is not 100% sure if new charges are being applied to new development applications

The municipality has recently gone through a heated union negotiation which eventually resolved into a newly negotiated union contract allowing 2% annual COLA (cost of living adjustment) for union employees for the next 3 years.

The Treasurer would like you to provide a comprehensive report (1000-1200 words) outlining your approach on the following areas:

1. Approach of the internal audit (hint: internal audit should mirror external audit and anticipate approach and methodology of an external audit). (40 MARKS)

2. How are you ensuring compliance have been met for the key focus areas ( A & B) (Hint: internal testing of whether right fees or rates are being used can be quickly checked by talking to the right individuals or looking up reports). (30 MARKS)

3. How are you ensuring transparency has been achieved? (Hint: look at the reporting requirements of Development Charges Act, Union Contracts). 30 (MARKS)