In the story 鈥楥ouncil approves controversial motion鈥� published in the Lakes District 亚洲天堂鈥� May 17 issue, 亚洲天堂 Lake councillors expressed concerns over an 鈥渦nusual鈥� financial transaction in the village鈥檚 financial statements. The statement in question was a loan in the amount of $80,000, which was approved by council on Nov. 10, 2015, to the Lakes District Family Enhancement Society (LDFES).

鈥淲e entered into an agreement with LDFES with the general provision that the village would act as the financial intermediary between the granting agencies and LDFES so that the funds could be passed on for the society鈥檚 use,鈥� explained Sheryl Worthing, chief administrative officer of the Village of 亚洲天堂 Lake.

Although LDEFS qualified to apply for the grant on its own, the organization used the village to apply for the grant.

鈥滻t was thought it would be a stronger application if it came from the village directly showing it had full support of the village council,鈥� explained Worthing. 鈥淚t shows solid council support when it comes directly from the local government.鈥�

However, the loan was provided to LDEFS before the grant funding was actually received by the municipality. To that, Worthing said the grant had already been approved by Northern Development Initiative Trust (NDIT) and that the village鈥檚 auditor was both notified and consulted about this transaction.

鈥淐ouncil approved the grant; therefore during discussions to approve the grant, the risk was assessed and deemed minimal,鈥� said Worthing. 鈥淎n agreement was put in place between the village and the LDFES based on recommendations from NDIT.鈥�

鈥淪taff monitored the progress of the project ensuring risk control,鈥� she added. 鈥淔urther, the NDIT accountability agreement states that the village must provide proof of payment to the LDFES before we [village] will be reimbursed; therefore there is always a minimal risk while meeting contract obligations.鈥�

Worthing said this was not the only time that the village provided funds to a non-profit organization before grant funding was actually received. 亚洲天堂 Lake councillor Michael Riis-Christianson said he feels that transactions of this type may expose the municipality to 鈥渦nacceptable levels of risk.鈥�

鈥淚f the municipality advances funds to a non-governmental organization for a grant project without receiving adequate surety, and that organization fails to complete the project or does not comply with the terms of its grant agreement with a funding agency, taxpayers could end up footing the bill or a portion thereof,鈥� he said.

The village鈥檚 auditor, Michael Mehr, was invited to a council meeting last week to answer questions about the village鈥檚 financial transactions. Mehr said the $80,000 loan to LDFES was easy to identify because it was reported separately in the village鈥檚 financial statements, an approach that he applied with the village.

鈥淭he separate disclosure was implemented by the village in the financial statements and appears to have resulted in a productive discussion relating to risk management and responsibilities to other parties,鈥� said Mehr.

鈥淪uch discussions increase the awareness of all interested parties and creates an environment for council to consider all perspectives in establishing village financial policies,鈥� he added.

What does the Income Tax Act state?

The Village of 亚洲天堂 Lake has been accepting donations on behalf of local non-profit organizations, issuing tax-deductible receipts, and then funnelling the donations to these organizations.

However, according to the Canada Revenue Agency, a municipality can accept donations, issue tax-deductible receipts and funnel funds to 鈥渜ualified donees鈥� such as registered charities.

Sheryl Worthing, chief administrative officer of the Village of 亚洲天堂 Lake, said the village has been providing these services to non-registered charities, but that the village is not in violation of the Income Tax Act.

Worthing said a municipality can accept donations and issue tax-deductible receipts to a non-registered charity as long as three conditions are met - having a clear understanding at the start of what the group will be doing with the money; monitoring the group鈥檚 actions throughout the project; receiving a report at the end that the group鈥檚 objectives have been met.

鈥淲e have met these conditions with the groups that we have worked with in the past; these are local groups that are doing work that either benefit a village asset, or doing projects that if they didn鈥檛 do it, the village would consider doing it ourselves,鈥� she said. 鈥淭herefore, we consider these groups to be doing village works, we appreciate them doing work for us, we help them however we can, and we monitor and review what they have done,鈥� she continued.