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Appendix “C” THIS IS EXHIBIT ....c........TO THE AFFIDAVIT SWORN BEFORE ME THIS... LI DAY A ckmmlsslonec,

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  • Appendix C

    THIS IS EXHIBIT ....c........TO THE

    AFFIDAVITSWORN BEFORE ME

    THIS... LI DAYA ckmmlsslonec,

  • October 17, 2014

    PR1VATEQONFIDENTIAL

    Finance CornniitOntario ProvincilPo1ice Association119 Ferris Lane :Barrie, Ontario L4M:2Yi,\

    Dear Committee Mcmbers

    In connection with our audit of the accounts of Ontario Provincial Police Association (the Association) for theyear ended August 31, 2014, we rciewcd internal controls, information systems and financial reporting of theAssociation. Canadian generally aceptcd auditing standards (GAAS) requires that we communicate thefollowing information to you in relation tlhe audit.

    EVALUATION OF INTERNAL CONTROLS.Audits include a review and evaluation of the sstcLu of inten,al controls to assist in determining the level ofreliance that may or should be placed on the sstejn assessing the nature and extent of audit procedures to beundertaken.

    During the course of our audit, we encountered the following specific matters and recommendations we wish tobring to your attention:

    Back up for Expense Reports and Visa StatementsDuring our testing of internal controls and year end procedure floted instances where there was a lack of backup to support employee expense claims as well as Visa statcmeOt. Ibis could lead to items being reimbursed thatwere not actually incurred, personal expenses of the cardholder bbiiiaid by the Association, or expenses beingcoded incorrectly due to lack of support.

    4 RecommendationWe recommend back up receipts be required for all expense claims as well s Visa statements..1 ian agcun en! ResponseManagement agrees that there is a lack of support to substantiate employee and Board cnsc and Visa claims andwill continue to be diligent in gathering sueh information.

    Investment PollcvDuring our year end procedures, we noted the Associations investment policy is vague andb not specify whichtype of investments are acceptable.

    Recoin ineiidaUonWe recommend a more specific investment policy be developed and implemented in order to protect Management,[he Board, and Members of the Association. All investment decisions should be approved by the Board ofDirectors/Finance Committee prior to execution.

    Monagem em ResponseManagement agrees and will review the investment policy.

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    AccrualsDuring our year end procedures, we noted some accrued receivables and accrued liabilities had not been updatedfrom the prior year. Incorrect monthly accruals may result in inaceruate internal monthly financial statements.

    RecoimnendarionWe recommend\Managcment calculate accrual amounts either on a monthly basis or prior to our year end audit.Powell Joncs-iiassist with the adjustment to this process.

    Management RespisHistorically theajiitrs have adjusted the year end balances accordingly. Management agrees to change theprocess to ensure lass auditor entries at year end. Powell Jones and management have discussed sending one ofour audit staff to govt the year end working papers before the end of the calendar year to ensure consistentmethodologies are used ,-.

    V.

    CUnrcolvcd Itenm From Prior YearRecording oflnvestment lncom/EcnsesDuring our year end procedures, we noted not all income and management fees were being recorded on a monthlybasis. As it is not being recorded, tle earned income or loss can not be considered by management as it is notreflected in the internal monthly 1inaneia1,st,tements.

    :7

    RecoinmendarionWe recommend recording all investment nnc and management fees presented on monthly investmentstatements on a month to month basis.

    Management ResponseIn the prior year Management had agreed to review thjibeess with the assistance of Powell Jones, and to discussfurther the most effective method to record the investiti and limit the number of adjusting entries. The meetingwith Powell Jones did not occur during the year so no a4hisent to the procedures occured. Management willreview the process this year when the meeting with Powell Joris o,ecurs.

    SIGNIFICANT ACCOUNTING PRINCIPLES AND POLIESManagement is responsible for the appropriate selection and ppiiUpn of accounting policies. Our role is toreview the appropriateness and application as part of our audit. Theccounting policies used by the Associationare described in Note 2. Accounting Policies, in the financial statemens.

    MATERIALITYIn accordance with the generally accepted auditing standard requirements e-i reporting that the final overallmateriality used in the current year was $100,000.

    SIGNIFICANT UNUSUAL TRANSACTIONS V -During our audit we noted some unusual transactions entered into by the Assoeiatioitha3,would like to bring toyour attention. Firstly. a deposit of $13.128 was made for a property located at On ble Beach in Nassau,Bahamas. To our knowledge, the AssThiion is committed to purchasing such property whicbis estimated to cost$1,563,000 USD.

    Secondly, the Association invested in lOt) class A shares of New Providence Income Fud Ltd., a foreigninvestment of the Cayman islands. The transaction occurred on August 28, 2014 and required a cash outflow of

    $100,015. 4j/4 G V/1j / UNCORRECTED MISSTATEMENTSj In the course of our audit, we have aggregated uncorrected financial statement misstatements which have been

    presented to Management. Pursuant to GAAS we are required to request that such misstatements be corrected.Management has declined and has deemed the effects of these misstatements to be immaterial, both individually

    V -

    and

    in aggregate, to the financial statements taken as a whole. therefore no adjustments have been made.

    i3

  • -3-

    ACCOUNTING ESTIMATESManagei-nent is responsible for the accounting estimates included in financial statements. Estimates and the relatedjudncnLs and assumptions arc based on Managements knowledge of the organization and past experience aboutcurrent and future events.

    DiSAGREEMENTS WITH MANAGEMENTWe are rcqiro communicate any disagreements with Management, whether or not, resolved, about matters thatare individuIlyr ia, aggregate significant to thc Associations finanCial statements or auditors report.

    We arc pleased tif,rni you that we had no disagreements with Management during the course of our audit.

    ILLEGAL ACTS, Fk.kLJD, INTENTIONAL MISSTATEMENTS AND ERRORSDuring our audit cngcmcnt:we did not idcnti any illegal acts, acts of fraud, misappropriations of assets,misrepresentations. intcndhl thisstatements or enors. which were not otherwise reported to you.

    RELATED PARTY TRNSCFIONSDuring our audit, we condict various tests and procedures to identify transactions considered to involve relatedparties.

    All related party transactions that were dentjficd during the audit have been represented by Management to havebeen disclosed in the notes to the financflttcmcnts. recorded in accordance with Canadian accounting standardsfor not-for-profit organizations, and have bee e1ewed with you.

    Management has advised that no related party tranqcIpns have occurred. Management is required to advise us if itis aware of or suspects any related party transactis hac occurred, which have not been disclosed in the financialstatements.

    /

    DiFFICULTIES ENCOUNTERED DURING THE AUDITWe encountered no significant difficulties during our audit tlihuld be brought to ihe attention of the Board ofDirectors.

    We shall be pleased to discuss with you further any matters mcntiorc&bove, at your convenience.

    The primary purpose of our examination is to enable us to form an opinion-oil the financial statements of OntarioProvincial Police Association for the year ended August 31, 2014. We rcviwed and tested the Associationsfinancial systems and related accounting conti-ols to the extent we consideredecessary to evaluate the systems.Our evaluation with respect to these financial systems was not designed for the put os of expressing an opinionon internal accounting control, and it would not. necessarily disclose all weaknesses i1he-systems.

    This communication is prepared solely for the information of management and is not incded for any otherpurpose. We accept no responsibility to a third party who uses this communication.

    Yours InilyPowell Jones LLP

    Gregory N. FergusonGNF!md