What the CA report says

The North Bay-Mattawa Conservation Authority's debt is $5.4 million.

Here is a report prepared by Murray Green, vice-president of Nipissing University, Ellen Howard, comptroller of the Ontario Northland Transportation Commission and Martin Hunka, vice-president of finance for J.S. Redpath Ltd.
which looks at the financial situation of the North Bay-Mattawa Conservation Authority and how the debt was accumulated.

The report was released at the NBMCA board meeting Wednesday night:


OBJECTIVES

The committee was formed in response to a request by the Board of Directors of the North Bay Mattawa Conservation Authority (the “Authority”) to look at the source of their financial difficulties, to examine their current financial status and to make recommendations on how they might move forward.

As a volunteer committee, we were motivated to provide the assistance requested based on our belief that the Authority provides essential community services to North Bay and the surrounding region.

REPORT

The committee worked with staff, management and the Board of Directors of the Authority to produce the final report.

The committee has not performed a forensic audit of and accordingly does not express an opinion on the financial information referred to in this report. The committee will not comment on the work performed by the external auditors nor will it provide an opinion on the ability of the current or past management or Board of Directors of the Authority.

It is understood that this report is to be used solely for the Board of Directors of the Authority in its governance decisions related to the Authority’s operations. This report is not to be distributed to any person not a member of the Board of Directors of the Authority.

APPROACH

The committee relied on audited financial statements and copies of contracts with various agencies as provided by management.

Certain general ledger accounts were assessed for appropriate allocation specific to the scope of our review. In particular we looked at the operating accounts for Chippewa Creek and Jack Pine Hill. In addition, we looked at the capital accounts for Jack Pine Hill and the Interpretive Centre.

The period of our analysis covered January 1, 1996 to December 31, 2003.

HISTORY

The opening balance for January 1, 1996 was a deficit of $143,000. This was an accumulated position after 24 years of operation and the completion of numerous projects within that time period.

The $4.4 million deficit stated in the audited financial statements as at December 31, 2003 is primarily derived from the opening deficit position plus deficits incurred from the Chippewa Creek Flood, Erosion and Parkway Project, Jack Pine Hill operating, Jack Pine Hill capital and the Interpretive Centre capital. A summary of the deficit position is as follows:
DEFICIT ANALYSIS ($000)

Opening Deficit January 1, 1996 (143)

Chippewa Creek (595)

Jack Pine Hill Operating (1,136)

Jack Pine Hill Capital Cost 4,568

Revenue 2,051 (2,517)

Interpretive Centre Capital Cost 3,392

Revenue 1,499 (1,893)

Total deficit (6,284)

Add back:

Various project and operational surpluses 1,850

Accumulated Deficit December 31, 2003 (4,434)

ACTUAL TO BUDGET ANALYSIS ($000)

The budget for two capital projects was submitted to the Northern Ontario Heritage Fund Corporation (“Heritage Fund”) with balanced revenue and cost estimates. The following analysis shows the actual revenue and expense compared to the original budgets.

Actual Budget Unfavorable
Variance
Jack Pine Hill Capital

Expense 4,568 3,390 (1,178)
Revenue 2,051 3,390 (1,339)

(2,517)
Interpretive Centre

Expense 3,392 2,921 (471)
Revenue 1,499 2,921 (1,422)

(1,893)


CURRENT DEBT STATUS ($000)

The current debt for the Authority shows under Fund Balances on the Balance Sheet of the December 31, 2003 audited financial statements and is made up of the following:

Bank Loan 3,200
Heritage Fund Loan 661
NECO Loan 139

Net long term liabilities 4,000

Add: Working Capital Deficit _ 434

Accumulated deficit per financial statements 4,434

Heritage Fund Demand Loan Due 2009 1,040 (see note below)

Total Debt outstanding 5,474


Note - The additional $1.04 million debt from the Heritage Fund was recognized as revenue in the December 31, 1998 financial statements. The committee’s review of the funding agreement with the Heritage fund shows that this is in fact a loan from the Heritage Fund and the full balance is payable on demand after December 2009.