City Auditor releases Hamilton Municipal Cemeteries Trust Funds Audit
HAMILTON, ON – The Office of the City Auditor presented a Hamilton Municipal Cemeteries Trust Funds Audit to evaluate processes that ensure effective administration of Hamilton Cemeteries Trust assets and compliance with regulatory requirements.
Key findings identified as part of the audit include:
- Non-compliance with fiduciary and regulatory requirements in the administration of Trust money.
- Shortfalls in funding due to principal not being put into the trust, including an estimated lost interest income of $214,000 from 2010-2021 which is to be used for maintenance and burial costs.
- Issues with financial reporting, specifically revenue recognition for prepaid. services and a long outstanding $1.2 million “Due from the City”.
- Cash handling deficiencies, including several fraud risks.
- Greater diligence and planning required for a scheduled software system conversion.
- Non-compliance with the Council-approved User Fee schedule.
- Lack of standard operating procedures.
- Use of securities lending for investment purposes which has not been Council-approved as a permitted type of investment.
The Office of the City Auditor made 17 recommendations to strengthen program governance, controls and financial reporting, which include:
- Review prior year financials to bring Cemeteries Trust amounts up to date and in compliance with the Funeral, Burial and Cremation Services Act (FBCSA), 2002.
- Correct identified revenue recognition and financial reporting issues.
- Improve oversight and involve the City’s Finance Division in annual regulatory reporting to the Bereavement Authority of Ontario (BAO) as provincial regulator.
- Charge fees in accordance with Council direction.
- Re-evaluate the timing of the cemeteries management system switchover.
- Address cash handling deficiencies.
Management has agreed with all 17 recommendations and provided responses outlining their plans and timelines to address the recommendations.
The scope of the audit was limited to the processes relevant to Trust management; it did not review the non-financial operational processes at the Cemeteries Administrative Office.
The Hamilton Municipal Cemeteries Trust Funds Audit stems from concerns brought to the Office of the City Auditor by the City’s Financial Planning, Administration & Policy Division regarding the accuracy and compliance of the amounts and processes related to Cemeteries Trusts reporting.
- The City of Hamilton operates 69 cemeteries throughout the city in compliance with the Funeral, Burial and Cremation Services Act (FBCSA), 2002.
- Hamilton Municipal Cemeteries is one of the largest municipal cemetery organizations in Canada and has been in operation for more than 150 years.
- The total recognized revenue for Hamilton Municipal Cemeteries in 2021 was $2.7 million.
- Cemeteries assets are in three separate trusts that total $21.6 million and are related to the management of cemetery property, services and supplies.
- Cemetery Care and Maintenance Trust Fund
- Cemetery Monument Care Trust Fund
- Pre-Need Assurance Trust Fund
- The City operates cemeteries in compliance with the FBCSA.
- The Bereavement Authority of Ontario (BAO) is a government delegated authority administering provisions of the FBCSA. All cemetery operators are required to report information related to their required trusts annually to the BAO.
The importance of maintaining sound stewardship over trusts cannot be overemphasized. In addition to all the regulatory requirements governing cemeteries management, there is added reputational complexity and risk. The process of navigating death and funerals is an exceptionally vulnerable one for individuals and families, and as such should be handled with exceptional care. The recommendations put forward in this audit are intended to strengthen the program administration, reporting and overall compliance.Charles Brown, City Auditor & Auditor General, Office of the City Auditor