Staff Report #1 – 2019 Draft Auditors’ Report

Staff Report #1

April 29, 2020

To All Commissioners

Re: 2019 Draft Auditors’ Report


That the Commission APPROVE the Draft 2019 Auditors’ Report and Financial Statements as set out in Enclosure I.


As set out in their report, KPMG express an unqualified opinion that the financial statements present fairly, in all material respects, the financial position of the Commission as at December 31, 2019 and the results of its operations for the year then ended. The unqualified opinion of the Commission’s Auditors is a reflection of the quality of the Commission’s systems for financial reporting and control.

There are four required financial statements to be presented: a statement of financial position; a statement of operations; a statement of changes in net financial assets; and a statement of cash flows.

The statement of financial position highlights four key areas that together describe the financial position of a government:

  • The cash resources of the entity.
  • The net debt position as calculated as the difference between financial assets and liabilities. Net debt representing future revenues required to pay for past transactions.
  • The non-financial assets that are normally held for service provision such as tangible capital assets, noting the presentation of tangible capital assets is predicated upon the adopted administrative policy.
  • The accumulated surplus/deficit (or in private sector terms, retained earnings) as there are no shareholder contributions or distributions.

Each of the three remaining financial statements illustrate changes in each of the key areas presented on the statement of financial position.

The statement of operations reports the net favourable or unfavourable performance from operations during the accounting period. The statement displays the cost of services provided, the revenues recognized in the period and the difference between them.

The statement of change in net financial assets reports the extent of change in investment/make-up of the Commission’s assets.

The statement of cash flow reports changes in cash and cash equivalents resulting from operations and shows how a government financed its activities during the period and met its cash requirements. It is noteworthy that the statement of operation requires budget information to be presented on the same basis as the actual figures are presented.

As part of an audit engagement, any events that may impact the financial statements or the organization on an ongoing basis must be noted as a subsequent event and contingencies within the notes to the financial statements. Subsequent to December 31, 2019, the COVID-19 outbreak was declared a pandemic by the World Health Organization and has had a significant financial, market and social dislocating impact. The impacts to date on London Transit including the suspension of fare collection to allow for social distancing and the significant reductions in service due to lower service demand and reduced availability of Operator labour are included in the note.


I – 2019 Draft Financial Statements

II – Audit Findings Report for the Year Ended December 31, 2019 (for Commissioners only)

Recommended by:

E.P. (Ted) Graham, Manager of Accounting

Mike Gregor, Director of Finance

Concurred in by:

Kelly S. Paleczny, General Manager