Village of Morrin short $451,162 for operating

Written by ECA Review

Dear Editor,

Re:  Village of Morrin Financial Status

Due to circumstances beyond my control I find it necessary to relate to the Village residents the status of the Village’s financial affairs which will include numbers as well as some information regarding the activities of council and administration.

Since my election to office, October 2017, I have endeavoured to do my best to understand the financial position of the Village and act accordingly in decisions that, for the most part, involve finances.  

Council relies very much on input from the chief administrative officer (CAO) to provide the financial information to guide council to this end.  

However, after having given the CAO ample opportunity to do so, I must report that this is not happening.  

Council was led to believe from the CAO that the budget for an upcoming year could not be prepared until the auditor had prepared the financial statement for the prior year and that council’s duty was to annually approve the current budget as an interim budget.  

So, council dutifully did this for 2018 and 2019-year ends.

However, in 2018 council did ask the CAO to prepare bank reconciliation statements for presentation on a regular basis but that never materialized.  

Council then, which is not a requirement, passed a resolution for same.  

This, as well, did not and has not changed the status quo (i.e.)  to date council has not received a bank reconciliation statement from the CAO.

In January 2020, Deputy Mayor Edwards and myself attended a Municipal Affairs session in Big Valley, Alta.  

A portion of this session was a presentation by a Municipal Financial Consultant, Ms. Tamara Sloboda.  

We learned from her presentation of the financial peril that the Village was in.  

Subsequently, council engaged Ms. Sloboda to make this presentation at a Village council meeting so as to expose Councillor Wilton and CAO Plachner to the information Deputy Mayor Edwards and myself had learned.

When the Village budget was prepared there were some anomalies noted, so council engaged Ms. Sloboda to attend for a presentation and further to assist the CAO in a revision of the budget.  

This was accomplished and the budget was eventually passed June 22, 2020.  

It is important to note that this budget was passed without having an audited financial statement for the year ending 2019.  

As well, since that time, although Ms. Sloboda provided the Village with invaluable insight into the financial situation, Deputy Mayor Edwards and CAO Plachner have made unsubstantiated statements questioning the qualifications and integrity of Ms. Sloboda.

Extra Bookkeeping and Accounting: Just a side note for information. Deputy Mayor Edwards stated that she felt that outside assistance for the CAO would “encroach on the CAO’s job”.  

The auditor has charged the Village a total of $11,285 for four years, (2016, 2017, 2018, 2019) for extra bookkeeping and accounting.  

Does this extra bookkeeping and accounting work compromise the independence of the auditor?  

This then leads into my next point.  

The 2019 Financial Statement was held up due to the fact that Municipal Affairs had requested that adjustments be made in the grants going back as far as 2009 with regard to the grants not being in separate accounts and, as well, being used to subsidize operations.

The 2019 Financial Statement was held up due to the fact that Municipal Affairs had requested that adjustments be made in the grants going back as far as 2009 with regard to the grants not being in separate accounts and, as well, being used to subsidize operations.

When this was somewhat sorted out, the CAO and auditor took it upon themselves to submit the 2019 Financial Statement to Municipal Affairs without having first presented it to council for review.  

It appeared on the government website without council even seeing it.  This was brought to my attention by a Village ratepayer.

Throughout 2019 to date, I have tried to obtain bank reconciliation and budget to actuals from the CAO so council can be aware and approve of the Village’s financial position but to no avail.

A bylaw was prepared to engage a Designated Officer with the duties to obtain this information and report to council (the right of council to do this was challenged by Deputy Mayor Edwards and CAO Plachner, despite the fact that the MGA clearly outlines that a Designated Officer can be established for any purpose. 

But eventually this bylaw was defeated.  

Subsequent to that, council agreed to have the auditor provide the service that the Designated Officer would have performed.  The logic being to keep the work local, so to speak.  

However, to date, despite my requests, no information has been provided by the auditor nor the CAO. 

My frustration is that I have no support from by fellow councillors to this end.  

In a non-compliant (as per the Municipal Government Affairs Act (MGA) ) meeting held Sept. 25, 2020, Deputy Mayor Edwards and Councillor Wilton, made financial commitments despite having no knowledge of the financial position of the Village.  

I did not attend this meeting as I will not be a party to a meeting that is non-compliant.

Financial status

From the Audited Financial Statement Year Ending 2019 (AFS) – (on the Provincial website):

The total Accumulated Surplus: Restricted and Unrestricted = $338,886.  The same amount shows as Net Financial Assets.  There was $711,332 in 2018 and now there is $338,886.  

During 2019, over the course of 12 months, the Village lost accumulated surplus in the amount of $372.449.

The Deferred Revenue ($790,045) means the ‘received’ conditional grant funding that is to be available for capital projects (cash received from Government(s) but not spent as of the year ending December 2019). 

If the Deferred Revenue in the amount of $790,045 is set aside (as per the MGA, in a separate bank account) to be spent for capital projects only, probably means the Village is short on cash for operations by the difference (total Accumulated Surplus ($338,886) less Conditional Funding received but not spent ($790,045) equaling a negative $451,162.  

Although the Audited Financial Statements shows $1.3 million as ‘financial assets’, in fact, the Village is short by $451,162 for the operations as of the year ending Dec. 31, 2019.  

The deferred revenue ($790,045), 2020 Federal Gas Tax ($50,000) and 2020 MSI Allocation ($147,410) would have to be transferred from the General Account to separate accounts.  That would total $987,455.        

To the best of my knowledge, with information from the draft 2019 audited financial statement, the following would be a good indication of the current financial status.  

During 2019 there is reported Acquisition of Tangible Assets of $319,885.  However, this is not deducted from the MSI Year Ending Dec. 31, 2019.  

Is it because MSI documentation and MSI capital projects applications were not submitted through the MSIO system which is due every year by May 1st?  

Statements of Funding and Expenditures (SFE’s) for the 2019 program are due by May 1, 2020.  

Was MSI operating reported for the Village of Morrin by May 1st, 2020?  

The Acquisition of Tangible Capital Assets during 2019 equals $319,885.  However, this amount was not deducted from the deferred revenue (MSI Capital) of $790,045.  Because if it was deducted from $790,045 the amount available for MSI Capital would be $790,045 – $319,885= $470,115.  

In conclusion

In conclusion, as Mayor, I take responsibility for not making sure myself and council were more knowledgeable of the finances prior to the January 2019 “epiphany”.  

However, since that time my attempts to ‘get up to speed’ should not be impeded by administration and council.  

I point to the most recent Facebook postings by Deputy Mayor Edwards calling me a “bully” and a “dictator”.

I stand by the information presented here which I can support with documentation.

by Howard Helton, Morrin Mayor

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ECA Review