Year-end audit shows councillors not at fault: mayor

While the Town of Fort Frances may had ended 2002 with a deficit of $1.81 million, a year-end audit by BDO Dunwoody revealed at last night’s council meeting proved councillors can’t be held responsible for the budget snafu.
“Councillors have been taking abuse, which they shouldn’t be,” remarked Mayor Glenn Witherspoon after the presentation by accountants Jock Spence and John Evans.
“To say we’re not financially responsible to the taxpayers just isn’t true,” he added, noting rumours around town—and even words from the mouths of some candidates running in November’s municipal election—may have been to the contrary.
“This council has done an excellent job,” said Mayor Witherspoon. “But because of the mismanagement of a few former town employees, this council has had to take the brunt of the blow.”
Mayor Witherspoon added he felt that before the bookkeeping mistakes made this past year, the town had been doing very well, with “second-to-none” accomplishments in recent years—such as the new arena, water treatment facility, waterfront, and more—to show for it.
He added the town even had a reserve of almost $7 million at the end of 2002.
“To set things straight, this report states there isn’t money missing, right? Because that’s what the word is out on the streets,” Coun. Dave Bourgeault asked of Evans.
“There’s no indication there’s missing funds,” Evans confirmed.
Couns. Sharon Tibbs and Struchan Gilson asked Evans if there was any way councillors could have known that those transactions that were, for instance, reported as revenues and not expenditures, or vice-versa, ever took place.
To which Evans replied “no,” adding such examples stressed the need for regular financial reports for management and council so they could see each and every transaction.
Furthermore, Spence even said the “municipality is still in good shape,” adding that even if it “pays everything off” in 2003, including millions of dollars in debentures for the La Verendrye Parkway, sewer work, and Front Street, the town still would have about $1 million left in reserves.
Spence and Evans also presented council with a letter of management, in which numerous recommendations are made for the town to heed in the forthcoming year and beyond.
As mentioned above, Evans told the town to ensure “budget control procedures” were in place, such as regular financial reports with clearly delineated revenues and expenditures.
He said the town should form and run an “effective audit body” on its own, ensure it clearly makes a distinction between actual revenues, projected revenues, and deferred revenues, better maintain accounts receivable, and allow less leeway with overdue accounts.
The audit showed a shortfall of $1.81-million in 2002—the result of over-projected revenues (including a projected $550,000 surplus from 2001 that did not exist), $450,000 that was reported as such but in fact not transferred from reserves, and under-estimated operating costs.
At its Sept. 8 meeting, council passed a recommendation to transfer $1.81 million from reserve funds to finance this year-end deficit.
The town already has started to put the auditors’ suggestions into practice.
Looking to prevent any more surprises this year, town management and administration have since gone over the books for 2003—up to Aug. 30—and discovered further shortfalls, including, as reported at a meeting last Tuesday afternoon, almost $800,000 considered an “unreconciled amount that could lead to a deficit,” said treasurer Peggy Dupuis.
The committee of the whole will further discuss the 2003 budget today at 4:30 p.m. downstairs at the Civic Centre.
As briefly mentioned at last Tuesday’s meeting, issues that still need to be discussed include if the town will use its reserves to pay off debt, or borrow money, and if so, how the town will rebuild its reserves (user fee hikes, increased taxes, etc.)