Council receives 2022 consolidated financial statements after auditors report clean opinion; cash position, systems issues discussed

The Town of Deep River council received the municipality’s 2022 consolidated financial statements and management letter on June 5, after external auditors said the statements presented fairly in all material respects.

"In our opinion the consolidated financial statements present fairly in all material respects the financial position of the corporation of the Town of Deep River as of December 31st, 2022," auditor Rod Sinclair told council during a detailed review of the statements and notes.

The auditors summarized key balances and trends: the town’s accumulated surplus is roughly $24.9 million; net debt increased to about $8.9 million; and cash on hand fell substantially (to about $3.1 million) as the town financed about $3.8 million of tangible capital purchases, including a water tower, largely from operating cash rather than new debt. The statements show an operating deficit for 2022 of about $723,000, a figure Sinclair said is amplified by roughly $2 million in non-cash amortization included in expenses.

Why it matters: the cash drawdown and timing of receipts can create short-term liquidity pressure even when long-lived assets and reserves increase. Sinclair noted some provincial financial indicators flag elevated risk for certain ratios, while other measures (tangible capital growth, reserve increases) are positive.

Council pressed auditors and staff for detail. Councillor Myers asked whether the capital-funded cash decline and the operating deficit represented an ongoing problem; the auditors and the town treasurer said the picture is influenced by timing (including about $1.1 million received in January 2023 that improved cash after year-end) and by accounting for amortization. The treasurer explained that financing choices for the water tower and other projects — paying from operating cash rather than issuing debt — were a major factor in the 2022 cash position.

The audit’s management letter flagged two recurring operational issues: turnover in the finance team (several changes in the treasurer role) and difficulties caused by a phased implementation of a new financial system. The letter recommended orderly transfers between reserve bank accounts, strengthened bank reconciliations and closer controls on rate-setting and permit fee recording. Town staff told council many of the specific transfers and reconciliations have since been completed.

Council voted to receive the auditors’ consolidated financial statements, the cemetery audit and the management letter by voice vote; the motion carried.

Next steps: staff and council said they will continue implementing management-letter recommendations and monitoring cash and reserve policies as part of 2024 operations.