Bill 202 – Municipal
Government
Amendment Act
(Municipal Auditor
General)
Recommendation:
That Administration make a submission,
based on the July 7, 2009, Deputy City
Manager’s Office report 2009DCM048, to
the Standing Committee on Community
Services of the Legislative Assembly of
Alberta.
Report Summary
The report offers an overview of Bill
202 – Municipal Government
Amendment Act (Municipal Auditor
General), and recommends key
points to be included in a City of
Edmonton submission to the
Standing Committee on Community
Services of the Legislative Assembly
of Alberta.
Report
Bill 202 Overview
Bill 202 – a Private Members Bill
sponsored by MLA Art Johnston – would
establish a Municipal Auditor General,
reporting to the Minister of Municipal
Affairs. The Municipal Auditor General's
powers and duties would include:
 conducting random audits of
municipalities
 making recommendations to
municipalities respecting their
financial statements and any system
or program related to their
disbursement of public money


making recommendations to the
Minister regarding municipalities’
annual financial statements and
financial information returns
performing additional duties and
functions that are conferred by the
regulations or that are assigned by
the Minister
The stated aims and purported benefits
of this Private Members Bill, as outlined
in the Alberta Legislature by the Bill’s
sponsor, are as follows:
Bill 202 would:
 “create a mechanism for Albertans to
determine whether they are
receiving fair value for their business
and property taxes”
 ensure “the recommendations from
the municipal auditor general would
be made available to the public as
soon as possible”
The City of Edmonton is invited to make
a written submission on this Bill to the
Standing Committee on Community
Services of the Legislative Assembly of
Alberta by July 31, 2009.
Analysis
As outlined in Attachment 1, the City of
Edmonton’s internal audit process, led
by the Office of the City Auditor, already
has a duty to ensure that:
 Edmontonians receive value for their
business and property taxes, by
evaluating the efficiency and
effectiveness of City operations
 City Auditor recommendations for
change to City processes or
programs are publicly disclosed
City Auditor recommendations to
Council’s Audit Committee are made
ROUTING – City Council | DELEGATION – J. Tustian/B. Hlus
WRITTEN BY – M. WIspinski | July 7, 2009 – Deputy City Manager’s Office 2009DCM048
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Bill 202 – Municipal Government Amendment Act (Municipal Auditor General)
within the parameters set out in the
Municipal Government Act (MGA).
to interfere with or diminish municipal
autonomy.
City of Edmonton Administration
processes for reporting to the Province
meet provincial requirements under the
MGA. Public disclosure of City Council’s
operating and capital investment
decisions effectively reinforce the
transparency of the City’s use of
taxpayer dollars.
Finally, Bill 202 does not address
whether implementation will result in
new or added costs for municipalities to
align their current audit functions with
new reporting or auditing processes or
to comply with Municipal Auditor
General recommendations for changes
to City programs or services. The City of
Edmonton would not support paying for
costs arising from the adoption of this
legislation.
Bill 202 is silent on how a Municipal
Auditor General would add value to – or
impact – municipalities with a welldeveloped internal and external audit
function, such as the City of Edmonton.
It is also silent on whether or how new
Municipal Auditor General reporting
requirements would be aligned with
existing national financial statement
reporting standards as established
through the Public Sector Accounting
Board, and independent external audit
reporting processes also set nationally
by the Canadian Institute of Chartered
Accountants. National comparability is
important for financial benchmarking
across municipalities.
It is not clear whether or how this
legislation would impact the City’s nonfinancial performance measurement.
The creation of a Municipal Auditor
General through Bill 202, therefore, may
duplicate what are already accountable
and transparent City of Edmonton
auditing and reporting processes.
Establishing a new Municipal Auditor
General position – which would have the
power to oversee City of Edmonton
business and, by extension, the
decisions of Council – has the potential
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Submission Summary
The observations outlined above –
with respect to duplication, municipal
autonomy and costs of
implementation – will form the
substance of the City’s submission.
The submission will also include
Attachment 1 – Overview of City of
Edmonton’s Audit Function – as an
attachment and will indicate that the City
would be prepared to make a verbal
presentation if the Standing Committee
made such a request.
Bill 202 Consultation & Submission
Process
In March 2009, Bill 202 – Municipal
Government Amendment Act (Municipal
Auditor General), 2009 received first
reading in the Legislative Assembly of
Alberta and was referred to the Standing
Committee on Community Services.
On June 26, the City of Edmonton
received formal notice that the Standing
Committee on Community Services is
inviting written submissions on this
Private Members Bill, to be received by
the Committee no later than
July 31, 2009.
Bill 202 – Municipal Government Amendment Act (Municipal Auditor General)
The Committee may invite specific
groups and individuals making written
submissions to appear before the
committee to make an oral presentation.
Administration will work with the
Mayor’s Office to finalize the City
submission – and, if requested by the
Standing Committee on Community
Services, an oral presentation –
based on City Council’s approval of
the substance of this report.
Legal Implications
Under sections 280 and 281 of the
MGA, a municipality must appoint one
or more auditors to report to Council on
the annual financial statements and
financial information returns of the City.
This function is performed by the
External Auditor, and will not change
with Bill 202.
In addition to the external auditor, the
City has created the Office of the City
Auditor to provide an internal audit
function. The Office conducts audits
and investigations to strengthen
municipal operations and address
opportunities for improvement. The City
of Edmonton also has an Audit
Committee comprised of Councillors
and citizens, one of whom must have an
accounting designation.
The proposed duties of the Municipal
Auditor General under Bill 202 duplicate
many of the functions of the City's
auditing structure.
Focus Area

Ensure Edmonton’s Financial
Stability
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Justification of Recommendation
Bill 202 appears to duplicate, rather than
add value to, the City’s auditing function
and it may diminish municipal autonomy.
Attachments
1. Overview of City of Edmonton’s
Internal Audit Function
2. Bill 202 – Municipal Government
Amendment Act (Municipal Auditor
General), 2009
Others Reviewing this Report
 A. B. Maurer, City Manager
 D. Wiun, City Auditor
 D. H. Edey, General Manager,
Corporate Services Department
Attachment 1
Overview of City of Edmonton’s Internal Audit Function
To support the Province of Alberta’s review of Bill 202: Municipal Government
(Municipal Auditor General) Amendment Act, 2009, the City of Edmonton submits the
following information indicating how its internal audit function (the Office of the City
Auditor) serves the citizens of Edmonton.
City Auditor a Designated Officer
Pursuant to section 203 of the Municipal Government Act, Edmonton’s City Council in
2000 proactively established the City Auditor position as a designated officer for the
purpose of internal auditing. The City Auditor’s powers, duties and functions are detailed
in City of Edmonton Bylaw 12424, City Auditor Bylaw. The City Auditor is independent
of City Administration and is accountable to City Council through Audit Committee for
the exercise of all powers, duties and functions delegated to the City Auditor.
The City Auditor Bylaw (Bylaw) provides the necessary authority to conduct audits and
investigations of any City operation. The Bylaw also ensures that the City Auditor has
unrestricted access to all information that is required during the conduct of any project
and to all City-owned and/or operated facilities. The Bylaw ensures the City Auditor’s
recommendations are acted upon by requiring the City Manager to submit action plans
to strengthen municipal operations and address any opportunities for improvement. The
City Auditor provides periodic reports to the Audit Committee on the Administration’s
progress toward implementing all outstanding recommendations.
The City Auditor follows the International Standards for the Professional Practice of
Internal Auditing. These standards are the internationally accepted criteria by which the
operations of internal audit departments around the world are evaluated and measured.
The Bylaw requires that an external peer review be conducted of the City Auditor’s
practice at least once every five years. The City Auditor’s practices were confirmed to
comply with the standards in 2006.
Audits identified independently and prioritized by risk
Each year, the City Auditor independently evaluates potential audit projects in light of
the level of risk that they pose to the City. From that evaluation, the City Auditor
develops an Annual Work Plan that is presented to Audit Committee for input and
feedback, then to City Council for approval. Items can be added to the City Auditor’s
Annual Work Plan independently by the City Auditor or by City Council as a whole.
Audit process risk based
Because audit resources are scarce, the City Auditor utilizes a risk-based evaluation
process to ensure audits are focused on the highest risks faced by the area under
review. The City Auditor completes an objective assessment of each selected business
unit or process to focus the audit on the areas having the greatest potential to positively
impact City services.
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Report: 2009DCM048 Attachment 1
Attachment 1
The City Auditor provides audit services for all City operations. These services are
varied and wide-reaching from full comprehensive audits of City operating areas to very
specific investigations of fraud or misconduct. The City has the right to audit all financial
and related records associated with contracts with organizations that provide services to
the City and organizations that receive grants or tax supported funding to support their
operations.
Comprehensive audits (also called value-for-money audits) assess the efficiency and
effectiveness of a business unit and determine whether citizens receive best value for
their tax dollar. These audits also evaluate compliance against legislated requirements
or City policies, directives or procedures to assess whether the established system of
internal controls is operating effectively. Whenever possible, the City Auditor
benchmarks Edmonton’s performance against other cities to promote the sharing and
utilization of best practices to improve municipal services.
The City Auditor also provides proactive control-related advice to the City Administration
to support the identification and implementation of sound internal controls as new
processes and systems are being designed.
The City Auditor is also responsible for the operation of the City’s fraud and misconduct
hotline and ensures that all hotline reports are reviewed and investigated as
appropriate. Being independent, the City Auditor provides City staff with an additional
channel to report suspected incidences of fraud or misconduct. The City Auditor
provides periodic reports on hotline activity to the City’s Audit Committee and City
Council.
Public accountability and transparency assured
The City of Edmonton is responsible to provide its citizens with appropriate services in a
cost-effective manner. The activities of the City Auditor enhance accountability through
open and transparent practices. The City Auditor maintains a webpage on the City of
Edmonton’s public website to provide citizens with in-depth analysis of the City’s
practices. The City Auditor posts the Annual Workplan on his webpage so citizens know
the audits proposed for the upcoming year. As the audits are completed, the reports are
distributed to all members of City Council, Audit Committee and the Administration and
are made available to the public on the City Auditor’s webpage. Presentations of the
reports are made at public Audit Committee/City Council meetings. As stated earlier,
these reports include the Administration’s action plans to address City Auditor
recommendations to improve City operations.
City Council’s Audit Committee is also responsible to review and analyze the City’s
financial statements and make recommendations to City Council regarding the External
Auditor’s audited financial statements as well as the appointment, reappointment, or
dismissal of the external auditor. These reviews and recommendations to City Council
are also conducted in public meetings to reinforce the transparency and accountability
for the City’s financial reporting.
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Report: 2009DCM048 Attachment 1
Attachment 1
The City of Edmonton modified Bylaw 12300, Procedures and Committees Bylaw, in
2009 to enhance its Audit Committee by adding two external members, one of which is
required to have financial expertise. Council recently appointed these two members and
both of them have significant financial expertise and audit committee experience.
Public accountability exists in Edmonton
The City of Edmonton believes that its current structure in which the City Auditor is
independent of the Administration and reports to City Council through Audit Committee
provides the City with an even higher degree of oversight, accountability, and
transparency than that envisioned in the proposed legislation. The City of Edmonton is
already providing its citizens with open and transparent evaluations of the effectiveness
and efficiency of City operations through the auspices of the Office of the City Auditor.
In summary, the City of Edmonton believes that its existing internal audit structure goes
well beyond the goals of the proposed legislation. The City of Edmonton encourages the
Government to recognize Edmonton’s proactive position as it considers Bill 202:
Municipal Government (Municipal Auditor General) Amendment Act, 2009.
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Report: 2009DCM048 Attachment 1
Attachment 2
Bill 202 – Municipal Government Amendment Act (Municipal Auditor General),
2009
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