The Cobourg 2022 operations budget was released on Friday October 22, 2021. This, along with the accelerated budget review/approval schedule, are a welcome improvement over past budget timetables.
There is a serious problem however. The 2021 YTD actual comparative data are as at October 19, 2021 and do not represent a full year of operation’s activity. Granted, the actual data can only be up to the publication day (Oct 19), but the provided numbers are largely useless for budget comparative purposes. This significantly hinders Council’s ability to properly evaluate staff’s proposed budget and fulfil its statutory oversight mandate.
A possible means to mitigate the problem is to follow the best practices of many private sector firms.
A full year’s comparative data is provided and consists of a mix of actual (10 months) plus estimates for the remaining few months. The estimates are based on known revenues (property taxes, grants, user fees, Northam) and expenses (payroll, debt service, open contracts) as well as prior year’s actual activity in the “missing” few months.
In Cobourg’s case, four categories account for about 89% of the revenue:
- Property taxes 43%
- User fees 34%
- Northam 8%
- Grants 4%
Three categories account for about 83% of the expenses:
- Payroll 50%
- Contracts 18%
- Materials 15%
This makes it reasonably easy to estimate the revenue and expenses for the missing months. The result is 12 months of prior year comparative data that is almost as good as a full year of “actual” data (often within a few percent).
As a former auditor (KPMG) and corporate controller, I know that submitting a budget to the board of directors with a partial year of comparative data would not be received well (career limiting perhaps).
Cobourg is a $60M organization and should operate as such. Deficiencies, such as this, that disrespect Council should not be tolerated.
I suggest the following modification to the budget schedule. This will allow the “missing” prior year comparative data to be updated to the budget so that a full 12 months of prior year “actual” data can be provided.
Revised 2022 Review Budget Schedule
- Staff presentations Nov 9-10. No change.
- Full “YTD” prior year comparative data update released Nov 22.
- Public Submissions: Nov 8 move to Nov 25. This allows the public time to examine staff’s presentations and be able to offer comment. As well, the 2021 “comparative YTD” will have been updated to the budget.
- Council “line by line” analysis Nov 25-26 moved to Dec 1-2. This allows Council time to evaluate the proposed budget against the “full YTD” prior year data.
- Council approval Dec 13 moved to Dec 20. While delayed a week, Council will still be able to finalize the budget before the beginning of the new fiscal year.
Towards improved fiscal management and transparency,