Dear Editor,
I would just like to comment on the controversy surrounding the appointment of a person to the position of Chief Financial Officer for the Municipality without having a recognized accounting designation. I must admit that I too was surprised that a person with little or no formal accounting training was hired for this position. If the position did not require an accounting designation as a pre-requisite, and the CAO knew it, the ad should not have said so. Many other qualified candidates may have applied.
However, to be fair, let me point out there are two important tasks for a person in this position.
The first is the preparation of the annual budget for the municipality. The approval of this budget is one of the most important functions of our elected councillors as it not only establishes the financial goals for the town, the tax rates and user fees to be imposed, but also the expenses that will be incurred to provide services necessary for the operation of the town. It also establishes any new funding requirements for new programs and services being offered to the residents and how the existing services and any new services are to be financed.
Each department manager and other organizations funded wholly or in part by public funds, including the library and museum, must submit a budget for the coming year showing all revenues and expenses to be incurred and the amount to be supported from the public purse. This exercise does not require a professional accountant, but an understanding of the current operations of the respective departments and any new programs or services to be offered and any new funding opportunities available.
The other important aspect is the actual preparation of the Financial Statements including, but not limited to, the Statement of Operations, which shows the actual revenues and expenditures incurred as compared to budget throughout the year. The other is the Statement of Financial Position, which shows the assets, liabilities and fund balances at the year end and any significant accounting policies and Generally Accepted Accounting Practices (GAAP) as they relate to a Municipality. These statements also list any notes to the financial statements, providing further explanation for a better understanding of the statements for the user. These are the statements that are audited by the auditors who are professional accountants trained in doing audits of public and private organizations—they generally do not spend a lot of time auditing the budget.
This is where some formal training in accounting such as an accounting designation would be helpful, not only in preparing these statements correctly but communicating intelligently with the auditors as well.
An accounting designation takes at least five years to obtain and covers a broad range of subjects in preparing the accountant for either working for a company, public practice or specialty accounting such as income tax and auditing.
Because the financial statements for the town are very specific and limited to the municipality alone it is not something that, in my view, over time, and with the proper training and mentorship, cannot be learned by someone who is willing to spend the time and energy necessary to gain this knowledge.
I would suggest that before we get too excited about the ability of the current Director of Finance to perform these functions we give her the chance to go through the budgeting process, which is fast approaching, go through an audit, which is also only a few months away, and judge her performance and the judgement of our CAO on actual experience.
If the budget preparation is unacceptable and the audit a disaster, then is the time to bring out the hangman, maybe two of them.
Jack Templeton CPA, CGA
Jasper, Alta.
