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HomeMy WebLinkAbout2011 Financial StatementsKNEEHILL COUNTY FINANCIAL STATEMENTS DECEMBER 31, 2011 Kneehill County Consolidated Statement of Financial Position As at December 31 , 2011 FINANCIAL ASSETS Cash and temporary investments (Note 3) Receivables Taxes and grants in place of taxes (Note 4) Trade and other receivable s (Note 5) Other assets (Note 6) Trochu recreation trust Tax sa le trust Land held for resale LIABILITIES Accounts payable and accrued li abilities Deposit liabilities Deferred revenue (Note 7) Employee bene fit obligations (Note 8) Provis ion for landfill closure and postclosure costs (Note 9) Tax sale trust Trochu recreation trust Long term debt (Note 1 0) NET FINANCIAL ASSETS NON-FINANCIAL ASSETS Inventory for cons umption (Note 12) Tangible capital assets (Note 13) Prepaid expenses ACCUMULATED SURPLUS (Note 16) CONTINGENT LIABILITIES (NOTE 19) COMMIT TS (NOTE 20)- CAO 2011 2010 $ $ 20,978,213 23,714,842 370,468 335,467 3,229,350 7 ,475,245 122 122 10,235 7,235 75,900 75,894 24,664,288 31,608,805 1,455,025 4,322,162 81,205 76,000 788,199 200,341 551,357 510,566 88,792 75,426 10,235 7 ,235 18,270 12 ,153 12,173,091 14 ,385,646 15,166,175 19 ,589,529 9,498,113 12 ,019,276 4,290,184 3,028,224 101,779,420 91,750,794 157,464 156,013 106,227,069 94,935,031 115,725,181 I 06,954,307 AUDITORS' REPORT KNEEHILL COUNTY INDEX TO THE FINANCIAL STATEMENTS DECEMBER 31, 2011 CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES CONSOLIDATED STATEMENT OF CHANGES IN NET FINANCIAL ASSETS CONSOLIDATED STATEMENT OF CASH FLOW SCHEDULE 1-TANGIBLE CAPITAL ASSETS SCHEDULE 2-NET TAXES FOR MUNICIPAL PURPOSES SCHEDULE 3-SCHEDULE OF GOVERNMENT TRANSFERS SCHEDULE 4-CONSOLIDATED EXPENSES BY OBJECT SCHEDULE 5-CONSOLIDATED SCHEDULE OF SEGMENT DISCLOSURE NOTES TO FINANCIAL STATEMENTS I BDO Tel: 403 342 2500 Fax: 403 343 3070 www.bdo.ca BOO Canada LLP Mill ennium Centr e 600, 4909 · 49th Street Red Deer AB T 4N 1V1 Canada INDEPENDENT AUDITOR'S REPORT To the Reeve and Council of Kneehill County We have audited the accompanying consolidated financial statements of Kneehill County, which comprise the statement of financial position as at December 31, 2011, and the consolidated statements of financial activities, consolidated statement of changes in net financial assets and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the aud it to obta in reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements . The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Kneehill County as at December 31, 2011 and its results of operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Red Deer, Alberta April 24, 2012 Chartered Accountants BOO Canada LLP, a Canadian limited liability partnership, is a member of BOO International Li mited, a UK company limited by guarantee, and forms part of the i nternational BOO network of independent member firms. Kneehill County Consolidated Statement of Financial Activities For the year ended December 31, 20 II REVENUE Net municipal taxes (Schedule 2) User fe es and sales of goods Sales to other governments Drilling licenses Fees, licen ses, permits, fines Interest and patronage dividends Rentals Penalties and interest on taxes Provincial govern ment transfers (Schedule 3) Local government trans fers (Schedule 3) Local improvement charges Gain on sa le of capital assets Other EXPENSES Legislative Administration Assessment Fire services and safety program Enforcement Disaster services Ambulance Transportation Bridges Water supply and distribution Sewer Garbage and recyci ing Community support services Health services and cemetery Planning Agricultural se rvices board Parks, recreation and culture Loss on disposa l of assets Other EXCESS OF REVENUES OVER EXPENSES-BEFORE OTHER Budget $ 18 ,0 62 ,724 699,330 24,000 80,000 160,650 180,000 45,700 60,000 I ,678,819 319,790 524,500 446,100 22,281,613 359,500 1,812,119 235,330 857,703 357,161 3,000 13,241,124 507,337 2,012,256 126 ,5 13 390,748 90 7,077 70,949 334,250 474,483 590,754 22,280,304 1,309 2011 2010 $ $ 18,040,145 18 ,29 8,7 04 813,044 970,379 80,810 45 ,367 168,045 292,161 173,428 224,469 243,256 212,249 65,768 56,468 73,450 74,851 1,709,132 3,909,876 304,587 318,994 697,998 499,409 535,798 78,402 22,905,460 24,981,329 320,457 268,676 1,541,509 1,580,690 268,259 225,464 846,491 766,202 358,727 313,740 2,654 10,587 20,470 9 ,129,978 7,990,237 417,182 659,080 1,957,253 1,706,249 121,906 109 ,944 421,320 397,205 888,060 872,727 32,632 88,087 246,856 333,320 476,900 409,87 1 664,023 623,707 340,950 919,471 272,259 134,056 18,307,415 17,429,783 4,598,045 7,551,546 Kneehill County Consolidated Statement of Financial Activities For the year ended December 31, 2011 EXCESS OF REVENUES OVER EXPENSES-BEFORE OTHER (Cont'd) OTHER Provincial capital transfers Federal capital transfers Local government capital transfers Contributed assets Transfers to local governments for capital Other EXCESS (SHORTFALL) OF REVENUE OVER EXPENSES ACCUM. SURPLUS, BEG. OF YEAR ACCUM. SURPLUS, END OF YEAR Budget $ 1,309 4,250,000 4,251 ,309 106,954,3 07 111,205,616 2011 $ 4,598,045 3,867,746 155,038 151,772 (5,500) 3,773 8,770,874 106,954,307 115,725,181 2010 $ 7,551,546 5,981,678 2 ,847,990 1,000 291,485 16,673 ,699 90,280,608 I 06,954,3 07 Kneehill County Consolidated Statement of Changes in Net Financial Assets For the year ended December 31 , 20 11 Budget 2011 2010 $ $ $ EXCESS (SHORTFALL) OR REVENUE OVER EXPENSES 4,251,309 8,770,874 16,673,699 Acquisition of tangible capital assets ( 14,654, 700) (15,743,748) (23 ,061 ,995) Contributed assets (151,772) (291 ,485) Proceeds on disposal oftangible capital assets 909,000 870,120 1,258 ,263 Am01tization of tangible capital assets 4 ,655,827 4,655,827 4 ,268,324 (Gain) lo ss on disposal of tangible capital assets 340,950 919,471 (9,089,873) (10,028,624) ( 16,907 ,422) Acquisition of supplies inventory ( 4,322,650) ( 4,235,078) (3 ,006, 158) Acquisition of prepaid assets 160,000 (153,065) (167 ,204) Use of supplies inventories 2,492,000 2,973,116 2,643,777 Use of prepaid as sets 160,000 151,614 182,578 (1 ,51 0 ,650) (1 ,263 ,414) (347,007) INCREASE IN NET FINANCIAL ASSETS (6,349,214) (2,521,163) (580,730) NET FINANCIAL ASSETS, BEG OF YEAR 12,019,276 12,019,276 12,600,006 NET FINANCIAL ASSETS, END OF YEAR 5,670,062 9,498,113 12,019,276 Kneehill County Consolidated Statement of Cashflows For the year ended December 3 I , 20 II NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES: OPERATING Excess (defic iency) of revenues over expenditures Non-cash items included in excess(deficiency) of revenue over expenses: Contributed assets Amortization of tangible capital assets (Gain) lo ss on disposal of tangible capital assets Non-cash charges to operations (net change): Decrease (i ncrease) in taxes and grants in place of taxes Decrease (increase) in trade and other receivables Decrease (increase) in other assets Decrease (increase) in inventory for consumption Decrease (increase) in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in deposit liabilities Increase (decrease) in employee benefit obligations Increase (decrease) in provision for landfill closure/postclosure Increase (decrease) in deferred revenue Cash provided by (applied to) operating transactions CAPITAL Acquisition of tangible capital assets Sale of tangible capital assets Cash provided by (applied to) capital transactions INVESTING Decrease (increase) in restricted cash and temp. in vestments Cash provided by (applied to) investing transactions FINANCING Long-term debt issued Long-term debt repaid Cash provided by (applied to) financing transactions CHANGE IN CASH AND EQUIVALENTS IN THE YEAR 2011 $ 8,770,874 (151,772) 4,655,827 340,950 (35,001) 4,245,894 6,110 (1 ,261 ,960) (1,452) (2,867' 137) 5,205 40,792 13,366 587,857 14,349,553 (15,743,748) 870,120 (14,873,628) (2,212,554) (2,212,554) (2,736,629) 2010 $ 16,673,699 (291,485) 4,268,3 24 919,471 (19,859) (5,249,718) 13 ,940 (362,400) 15,374 981 ,023 (109,000) 48,986 9 ,426 (2,593,982) 14 ,303 ,799 (23,061 ,995) 1,258,263 (21,803 ,732) 6,300,000 (1,552,653) 4,747,347 (2 ,752,586) Kneehill County Consolidated Statement of Cashflows For the year ended December 31, 20 II CHANGE IN CASH AND EQUIVALENTS IN THE YEAR CASH AND CASH EQUIVALENTS AT BEG.OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR 2011 $ (2,736,629) 23,714,842 20,978,213 2010 $ (2,752,586) 26,467,428 23 ,714,842 Kneehill County Schedule 1 -Tangible Capital Assets For the year ende d December 3 1. 20 II Land Land Buildings Engineered Machinery & Vehicles 2011 2010 Imerovement s Structures Eguipment $ $ COST: BALANCE, BEGINNING OF YEAR 1,369,507 1,347,832 5 ,514,346 I 30.024.704 8 ,640,831 7.259,366 154,156,586 135 ,125 ,232 Acquisition of tangible capi ta l assets 7.660 50,535 4,744,213 16,126.439 1.943,245 927.161 23,799,253 18.999,68 1 Disposal of tangible capi tal asset s (49.652) -(493 ,001 ) ( 1.945 '722) (569,600) (3,057,974) (4 ,322,127) Work in progress addition s - - -- - 161 ,555 161,555 4 ,828,799 Work in progress disposals --(2,3 19,929) (5,745,359) --(8,065,288) (475 ,0 00) BALANCE. END OF YEAR 1,377,167 1,348,7 15 7.93 8.630 139 ,9 12 ,783 8,638 ,354 7 ,778,483 166,994,133 154, I 56,585 ACCUMULATED AMORTIZATION: BALANCE. BEGINNIN G OF YEAR 689.67 1 1.6 19.872 54.352.038 2,7 10,935 3,033,275 62,405,790 60.281.841 Annual amortization 42.69 1 178.595 3.370,229 491 ,576 572,736 4,655,827 4,268,324 Accumulated amorti zation on dispos al (44,045) (457,11 6) (954,902) (390,840) (1 ,846,904) (2,144,374) BALANCE, END OF YE AR 688,3 16 1,798,467 57,265 ,150 2,247,609 3,2 15,17 1 ____§214,712 62,405 ,79 1 NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS 1,377,167 660,399 6,140,164 82,647,634 6,390,745 4 ,563 ,313 101,779,420 91.750.794 2010 NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS 1,369,507 658 ,161 3 ,894 ,474 75,672,666 5,929,895 4,226,092 91 ,7 50,794 Kneehill County Schedule 2 -Net Taxes for Municipal Purposes For the year ended December 31 , 2011 TAXATION Farmland Residential Commercial Linear property Machinery and equipment Railway Minimum tax Grants in lieu Local improvement tax (rural) Local improvement tax (non residential) REQUISITIONS Alberta School Foundation Fund K.neehill Foundation NET MUNICIPAL TAXES Budget $ 1,384 ,889 2,390,406 1,613,616 12 ,870,349 4 ,032 ,193 13,386 11 ,124 2,643 77 ,323 1,111 ,661 23 ,507,590 5,432,866 12,000 18 ,062,724 2011 $ 1,392,430 2,392,516 1,588,231 12,884,121 4,028,047 13,394 2,634 72,987 1,110,547 23,484,907 5,432,689 12,073 18,040,145 2010 $ 1,371 ,886 2 ,293 ,951 1,666,651 12 ,744,117 4,034,109 13 ,749 11,044 2,890 73,989 1,123,977 23 ,336,363 5,029,682 7,977 18 ,298,704 Kneehill County Schedule 3 -Schedule of Government Transfers For the year ended December 31, 20 11 TRANSFERS FOR OPERATING Provincial government Other local governments TRANSFERS FOR CAPITAL Provincial government Local government Federal government Budget $ 1,678,819 319,790 1,998,609 4 ,2 50 ,000 4 ,250,000 6,248,609 2011 $ 1,709,132 304,587 2,013,718 3,867,746 155,038 4,022,784 6,036,502 2010 $ 3,909,876 318,994 4,228,870 5,981 ,678 1,000 2,847,990 8 ,830,668 13 ,059,538 Kneehill County Schedule 4-Consolidated Expenses by Object For the year ended December 31, 2011 Budget 2011 2010 $ $ $ CONSOLIDATED EXPENSES BY OBJECT Salaries, wages and benefits 5,775,822 5,299,902 4 ,939,490 Contracted and general services 6 ,311 ,488 2,112,035 I ,993 ,363 Purchases from other governments 250 ,314 274,456 248 ,306 Materials, goods, supplies and utilities 3 ,658 ,123 3,926,683 3,448,239 Transfer to other governments 290,736 288,036 281 ,439 Transfers to individuals and organizations 544,659 604,581 566,751 Bank charges and interest 6,000 1,398 1,054 Interest on debenture 509,011 505,840 498 ,158 Amortization expense 4,655,827 4,655,827 4,268 ,324 Loss on disposal of assets 340,950 919,471 Property taxes cancelled 4,000 208 4,990 Other 274,325 297,500 260,198 22,280,304 18,307,415 17 ,429 ,783 Kneehill Co un ty Schedule 5 -Consolidated Schedule of Segment Disclosure Fo r the year ended December 3 1, 20 II Genera l Protective Operations Environmental Social, Health P lanning & Agricultural Parks & 2011 Government Serv ices (Roads/Bridges) Services Community Development Services Recreation Total Revenues : Taxation 2,979,975 1,252 ,585 8,736,449 2,277,876 1,155,882 312,586 555,163 769,629 18,040,145 Sales of serv ice s and fees 40,320 80,861 203 ,436 462,343 7,650 33 ,291 23,036 42,916 893,854 Government transfers 252,878 -678,446 697,998 865,168 -208,427 8,800 2 ,7 11,716 Licen ses, permits, and fin es 241 ,495 11 4.339 30,838 2,289 25 ,000 59 ,00 1 7 ,730 -480,691 Penalti es and interest 243 ,256 ------243,256 Other 12 ,580 445,700 17 ,282 14,79 8 39 ,150 5 ,556 73 1 -535,798 3,770,504 1,893 ,485 9 ,666,451 3,455,303 2,092,850 410,434 795 ,086 82 1,345 22 ,905,460 Expenses: Salaries, wages and benefits 1,3 10,059 410,728 2 ,172 ,773 460,151 492,894 205,400 227,452 20,443 5,299,9 02 Contracted and ge neral services 50 1,432 222.8 16 794,696 306,928 159.541 40,105 34,968 51 ,548 2,112,035 Purchases from other g overnments 56,032 2 18.424 --- --274,456 Materials. goods. supplies and utilities 15 3 ,203 137.223 2.974,67 1 442,180 27,696 1,350 176,004 14,356 3,926,683 Transfer to other governments 43,189 -5,218 - - -239,629 288,036 Transfers to indi viduals and organizations 4 ,508 -7,000 78 ,567 232,69 1 - -281 ,814 604,581 Ba nk charges and interest 580 -8 18 - ---1,398 Interest o n debenture --505,840 ----505,840 Am01ti zation expense 49,139 218 ,680 3,597,202 688 ,230 7,869 -38,477 56,231 4,655,827 Loss on disposa l o f assets (427) (2,389) 296,836 2,062 - - 34,9 17 9,952 340,950 Property taxes cancell ed 208 -- -- --208 Other 284 ,134 -13,366 --- -297,500 2,402 ,058 1,205 ,482 9,843 ,995 2,502 ,541 92 0,692 246,856 511 ,817 673 ,974 18,307,415 Net surplus (deficit) 1,368,447 688,004 (177,544) 952,762 1,172,159 163 ,579 283,269 147,37 1 4,598,045 For the year ended December 31, 2011 1. Significant Accounting Policies Kneehill County Notes to Financial Statements The financial statements of Kneehill County ("the County") are the representations of management prepared in accordance with Canadian generally accepted accounting principles for local governments established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Significant aspects of accounting policies adopted by the Cow1ty are as follows : (a) Repmiing Entity The financial statements reflect the assets , liabilities, revenues and expenses, changes in fund balances and changes in cash flows of the reporting entity. The financial statements include all organizations that are accountable for the administration of their financial affairs and resources to the County and are controlled by the County. The schedule of taxes levied also includes requisitions for education , health and social, and other external organizations that are not part of the municipal repo1ting entity. The statements exclude trust assets that are administered for the benefit of external parties. Interdepartmental and organizational transactions and balances are eliminated. (b) Basis of Accounting Revenues are accounted for in the period in which the transactions or events occurred that gave rise to revenues. Funds from external parties and earnings thereon that are restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified. Government transfers are recognized in the financial statements as revenues in the period that the events giving rise to the transfer occurred , providing that the transfers are authorized, the County has met any eligibility criteria, and reasonable estimates of the amounts can be made . Expenditures are recognized in the period the goods and services are acquired and a liability is incurred or transfers are due. For the year ended December 31, 2011 1. Significant Accounting Policies c) Use ofEstimates Kneehill County Notes to Financial Statements The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabil ities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Where measurement uncertainty exists , the financial statements hav e been prepared with reasonable limits of materiality. Actual results cou ld differ from those estimates. (d) Temporary Investments Temporary investments are recorded at cost and represent short-term bank deposits with original maturities of 90 days or less. The short-term bank deposits earned interest at rates from 0.5% to 1.25% per annum. (e) Investments Investments are recorded at cost and represent short-term bank notes and deposits that have effective interest rates of 1.25% to 2.55% and mature in less than one year but after 90 days. (f) Inventories For Consumption Inventories of materials and supplies for consumption are values at the lower of cost or replacement value with cost determined by weighted average cost method. Inventory of gravel is maintained by perpetual records and is recorded in the accounts to the extent of royalties, land costs, crushing costs incurred, hauling and equipment rental costs. Land held for resale is recorded at the lower of cost or net realizable value. Co st includes costs for acquisition and improvements required to prepare the land for servicing such as clearing, stripping , and level ing charges . Related development costs incurred to provide infrastructure such as water and waste water services , roads , sidewalks and street lighting are recorded as tangible capital assets under their respective function. For the year ended December 31, 2011 1. Significant Accounting Policies (g) Pension Expenditure Kneehill County Notes to Financial Statements The County participates in a multi-employer defined benefit pension plan. The plan is accounted for as a defined contribution plan. (h) Landfill Closure and Post-Closure Liability Pursuant to the Alberta Environmental Protection and Enhancement Act, the County is required to fund the closure of its landfill site and provide for post-closure care of the facility . Closure and post-closure activities include, but not limited to, final clay cover, landscaping, as well as surface and ground water monitoring, leachate control and visual inspection. The requirement is being provided for over the estimate of the remaining life of the landfill site ba sed on usage. (i) Government Transfers Govemment transfers are the transfer of assets from senior levels of government that are not the result of an exchange transaction, are not expected to be repaid in the future , or as a result of a direct financial return. Government transfers are recognized in the financial statements as revenue in the period m which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates of the amount can be determined. G) Requisition Over-levy and Under-levy Over-levies and under-levies arise from the dif ference between the actual prope1ty tax levy made to cover each requisition and the actual amount requisitioned. If the actual levy e xceeds the requisition , the over-levy is accrued as a liability and prope1ty tax is reduced . Where the actual levy is less than the requisition amount, the under-levy is accrued a s a receivable and as property tax revenue. Requisition tax rates in the subsequent year are adjusted for any over-levies or under-levies of the prior year. For the year ended December 31,2011 1. Significant Accounting Policies (k) Non-financial Assets Kneehill County Notes to Financial Statements Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the normal course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the consolidated Change in Net Financial Assets for the year. (i) Tangible Capital Assets Tangible capital assets are recorded at cost which includes all amow1ts that are directly attributable to the acquisition, construction , development, or betterment of the asset. The cost , less residual value, of the tangible capital assets is amortized on a straight-line basis over the estimated useful life, in years, as follows: Land improvements Buildings Engineered structures: Water system Wastewater system Other engineered structures Machinery and equipment Vehicles 10-20 25-50 15-75 25-60 6-100 5-45 5-20 Assets under con struction are not an1ortized until the asset is available for productive use. (ii) Contributions ofTangible Capital A ssets Tangible capital assets received as contributions are recorded at fair value at the date of receipt and are also recorded as revenues. For the year ended December 31, 2011 1. Significant Accounting Policies (iii) Leases Kneehill County Notes to Financial Statements Leases are classified as capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as capital leases. All other leases are accounted for as operating leases and the relating lease payments are charged to expenses a s incurred. (iv) Inventories Inventories held for consumption are valued at the lower of cost or replacement value with cost determined by weighted average cost method. 2. Compliance to Budget Requirements The legislative requirements for the Financial Plan (Budget) are that cash inflows for the period must be equal to cash outflows. Cash inflows and outflows could include such items as: debt proceeds and debt payments, transfers to and from reserves, and asset sale proceeds. These items are not recognized as revenues or expenses in the Consolidated Statement of Operations , as they do not meet the definition in the public sector accounting standard requirements. The legislation does not require (but does preclude) the funding of the ca sh items as liability accruals or amortization to provide for future cash requirements, thus , there is no requirement to include them in the budget. However, these items are recognized in the Consolidated Statement of Operations as an expense. The financial items included in the legislative budget and Public Sector Accounting Handbook Statement is different. The purpose of this note is to explain the difference between the two requirements and demonstrate how the requirements for a balanced budget have been met. Kneehill County Notes to Financial Statements For the year ended December 3 I , 20 II 2. Compliance to Budget Requirements Financial Plan Am01tization Reclass Capital Fiscal Plan Per By-Law Allocation Expenditures Financial Stmts. Actual Revenue Net taxes for municipal purposes 18 ,062,724 18,062,724 18,040,145 Government transfers 1,678,819 1,678,819 1,709,132 Interest and patronage dividend s 180,000 180,000 243,256 Sales and us er charges 699,330 699,330 813,044 Sales to governments and agencies 24,000 24,000 80,810 Drilling licenses 80 ,000 80 ,000 168,045 Fees, lic enses, permits, fines 160 ,650 160 ,650 173,428 Rentals 45,700 45,700 65,768 Penalities and in terest 60,000 60,000 73,450 Lo ca l government transfers 319,790 319,790 304,587 Local improvement charges 524 ,500 524,500 697,998 Gain on sale of assets Other 446,100 446,100 535,798 Total revenue 22,281,613 22,281,613 22,905,460 Expenses Legis lative 359,5 00 359,500 320,457 Administration 1,762 ,980 49,139 1,812,119 1,541,509 Assess ment 235,33 0 235,330 268,259 Fire services and safety program 673 ,674 184,029 857,703 846,491 Enforcement 322,510 34,65 1 357,161 358,727 Disaster services 3,000 3,000 2,654 Ambulance Transportation 10 ,603,359 3,275,255 (637 ,490) 13,241,124 9,129,978 Bridges 928 ,5 44 321,947 (743,1 55) 507,337 417,182 Water I ,363,461 648 ,795 2,012,256 1,957,253 Sewer 94,797 31,716 126,513 121,906 Waste disposal and recycling 383,030 7,718 390,748 421,320 Community support services 907,077 907 ,077 888,060 Health services and cemeteries 63,080 7,869 70,949 32,632 Planning 334,250 334,250 246,856 Agriculural serv ices board 436,006 38,477 474,483 476,900 Parks, recreation, and culture 534,523 56,23 1 590,754 664,023 Loss on disposal of assets 340,950 Other 272,259 Total expenses 19 ,005,121 4,655 ,827 (l ,3 80 ,644) 22,280,304 18,307,415 Excess of revenue over expenses before other 3,276,492 ( 4,655 ,827) 1,380,644 1,309 4,598,045 Excess of revenue over expenses before other Other: Provincial capital transfers Federal capital transfers Local government capital trans fers Contributed assets Transfers to local governments Other Excess of revenue over expenses Reconciling: Debenture debt Sale of assets Capital expenditures Contributed Assets Interfund transfers Debt repayment Add back non cash item s: Amortization Loss on disposal of assets Kneehill County Notes to Financial Statements Financial Plan Amortization Reclass Capital Fiscal Plan Per By-Law Allocation Expenditures Financial Stmts. 3,276,492 ( 4,655 ,827) 1,380,644 1,309 4,250,000 4 ,250,000 7,526,492 (4,655,827) 1,380,644 4,251,309 4 ,000,000 4,000,000 909,000 909,000 ( 14,654, 700) (1 ,380,644) (16 ,0 35,3 44) 4,431 ,762 4 ,43 1,762 (2,2 12,554) (2,212,5 54) ( 4,655,827) Actual 4,598,045 3,867,746 155,038 151,772 (5,500) 3,773 8,770,874 870,120 (15,749,249) (151,772) 3,441,510 (2,212,554) (5,03 1,071) 4,655,827 340,950 (34,294) For the year ended December 31, 2011 3. Cash and Temporary Investments Cash Kneehill County Notes to Financial Statements 2011 ($) 20,978,213 20,978,213 2010 ($) 23 ,714,842 23 ,714,842 A line of credit of $3,000,000 is available to the County should the need arise at a floating rate of prime rate minus 0.75% Included in cash and temporary investments is $788,199 (2010-$200,341) received from the Province of Alberta restricted for future projects (Note 7). 4. Taxes Receivable 2011 ($) Current taxes and grants in place of taxes 274,945 Tax arrears and grants in place of taxes 151,263 426,208 Less: Allowance for doubtful tax accounts (55,740) 370,468 5. Trade and Other Accounts Receivable 2010 ($) 232,2 80 148,082 380,362 (44,895) 335,467 2011 2010 ($) ($) Provincial and Federal grants 2,270,066 6 ,118,816 GST Receivable 291,613 591 ,152 Trade and other 667,671 765 ,277 3,229,350 7,475 ,2 45 Kneehill County Notes to Financial Statements For the year ended Decem be r 31, 2011 6. Other Assets Alberta Capital Finance Shares, at cost Servus Credit Union Membership Share, at cost 7. Deferred Revenue Federal Gas Tax Funds Municipal Sustainability Initiative KCRP -Golden Hills School FCSS PLC Public Health-CBI 8. Employee Benefit Obligations Accrued sick benefits Accrued vacation 2011 ($) 2011 ($) 121 1 122 581,598 174,685 23,000 768 1,338 6,810 788,199 2011 ($) 358,006 ] 93,351 551,357 The vacation and s ick benefits liability is comprised of vacation and sick days credits that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to these benefits within the next budget year. 2010 ($) 2010 ($) 121 122 174,685 23,000 2,656 200,341 20 10 ($) 341 ,806 168,760 510,566 For the year ended December 31 , 2011 9. Provision For Landfill Closure and Postclosure Costs Kneehill County Notes to Financial Statements Alberta environmental law requires closure and postclosure care of landfill sites, which includes final covering and landscaping, pumping of ground water and leachates from the site, and ongoing environmental monitoring, site inspections and maintenance. The estimated total liability is based on the sum of discounted future cash flows for closure and postclosure activities for 25 years after closure using a discount rate of 4.4% and assuming annual inflation of 3%. The accrued liability portion is based on the cumulative capacity used at year end compared to the estimated total landfill capacity. The total capacity of the site is estimated at 47,520 cubic metres. The existing landfill site is expected to reach capacity in (approximately) the year 2030. The County has not designated assets for settling closure and post closure liabilities. Estimated clos ure costs Estimated post-closure costs Estimated total liability Estimated capacity remaining Portion of liability remaining to be recognized Estimated capacity used Accrued liability portion 2011 ($) 92,951 120,129 213,080 58.33% 124,288 41.67% 88,792 2010 ($) 78,000 110,000 188 ,000 62.66% 112,574 37.34% 75,426 Kneehill County Notes to Financial Statements For the year ended December 31,2011 10. Long Term Debt Total tax supported debentures 2011 ($) 12,173,091 The current portion oflong-term debt amounts to $2,288 ,333 (2010 -$2,212,554) Principle and interest repayment are as follows : Principal Interest ($) ($) 2012 2,288,333 433,233 2013 2,366,894 354,652 2014 2,448,343 273,222 2015 1,857,328 188,769 After 3,212,193 214,381 12 ,173 ,091 1,464,257 Debentme debt is repayable to Alberta Capital Finance Authority: 2010 ($) 14,385,646 Total ($) 2 ,721 ,566 2 ,721 ,546 2,721,565 2 ,046,097 3,426,574 13,637,348 Debenture one, issued June 16, 2008, in the amount of $11 million, repayable semi atmually at a fixed interest rate 4.3859%, matming June 16 , 2018 . Debenture two, issued Jw1e15 , 2010, in the amount of $6.3 million, repayable semi annually at a fixed interest rate of2.575%, matming June 15 ,2015. Debentme debt is issued on the credit and secmity of Knee hill County at large. Interest on debenture debt amounted to $509,011 (2010 = $498,158) For the year ended December 3 1, 20 11 11. Debt Limits Kneehill County Notes to Financial Statements Section 276(2) of the Municipal Government Act requires that debt and service on debt limits as defined by Alberta Regulation 255/00 for the County be disclosed as follows: 2011 2010 ($) ($) Total debt limit 33,549,360 33,222,807 Total debt 12,173,091 14,385,646 Amount of debt limit unused 21,376,268 18,837,161 Debt servicing limit 5,591,560 5,537,135 Debt servicing 2,721,566 2,010,8 12 Amount of debt servicin g limit unused 2,869,994 3 ,526,323 The debt limit is calculated at 1.5 times the revenue of the Municipality (as defined in Alberta Regulation 255/00) and the debt service limit is calculated at 0.25 times such revenue. Incurring debt beyond these limitations requires approval by the Minister of Municipal Affairs . These thresholds are guidelines used by Alberta Municipal Mfairs to identify municipalities that could be at finanica l risk if further debt is acquired. The calculation alone does not represent the financial stabi li ty of the municipality. Rather, the fmancial statements must be interpreted as a whole. 12. Inventory For Consumption 2011 2010 ($) ($) Gravel 3,861,335 2,658 ,63 1 Other transportation amounts 350,107 295,209 Other 78,742 74 ,384 4,290,184 3,028,224 For the year ended December 31, 201 1 13. Tangible Capital Assets Net Book Value Land Land improvements Buildings Engineered Structures Water Sewer Towers Dams Transp011ation Bridges Road s Machinery and equipment Vehicles 14. Equity In Non Financial Assets Tangible capital assets Accumulated amortization Inventory of supplies Prepaid expenses Long term debt Kneehill County Notes to Financial Statements 2011 2010 ($) ($) 1,377,167 1,3 69,5 07 660,399 658,161 6,140,164 3,894,474 43,553,132 36,262,676 557,107 560,5 47 213,279 228,394 94,787 98,907 15,789 18 ,946 9,119,048 8,7 19,917 29,094,492 29,783,278 6,390,745 5 ,929,895 4,563,313 4,226,092 101,779,420 91 ,750 ,794 2011 2010 ($) ($) 166,994,133 154,156 ,5 85 (65,214,712) (62,405 ,791) 4,290,1 84 3 ,028 ,224 157,464 156 ,0 13 (12,173,091) (14 ,385,646) 94,053,977 80,549 ,3 85 Kneehill County Notes to Financial Statements For the year ended Dece mber 3 1, 20 11 15. Reserves Tr ansfers Transfers 2010 In Out 2011 Ouerating Reserves {in $) Contingency 751 ,376 47,500 131,240 667,636 Information Technology 143,944 78,246 60,337 161,853 Joint Community Summit 52,275 20,000 20,000 52,275 Doctor Recruitment 118 ,522 175 ,410 203,672 90,260 Fuel Stabilization 390,788 145,756 245,032 Gravel 3,590,303 3,590,303 Family & Community Suppo11 Services 53,598 19,317 72,915 Kneehill Community Resource Program 41,043 3,471 44,514 Parent Link Program 121 121 Cemeteries 17 ,974 20,000 1,100 36,874 Planning 17,7 12 8,851 26,563 Parks 28 ,963 25,000 7,840 46,123 Special Projects 13,550 29,650 43,200 5,220,169 4 27,445 569,945 5,077,669 Cauital Reserves (in $) Capital Equipment Replacement 1,003 ,620 2,352,119 3,046,222 309,517 Buildings 4,402,548 1,305,228 3,097,320 Bridges 85 3,290 320,000 42,215 1,131,075 Roads 3,149,900 465,000 138 ,374 3,476,526 Water 183 ,088 183,088 Water Service Area 8,468 ,9 15 3,976,037 6,230,308 6,214,644 Sewer 194,632 28,276 166,356 Environmental 4 13 ,853 413,853 R ecreation and Leisure Funding 6 1,744 61,744 Medical 445 ,700 445,700 18,731,590 7,558,856 10,852,367 15,438,079 Total Reserves 23,951,759 7,986 ,3 01 11 ,422,3 12 20,515,748 For the year ended December 31, 2011 16. Accumulated Equity Residual Equity Equity in Non Financial Assets (Note 14) Reserves (Note 15) 17. Salary and Benefits Disclosure No. of Salary & Co unci 11 or/Division Persons Fees Division 1 1 28,928 Division 2 1 35,210 Division 3 1 23,893 Division 4 1 25,932 Division 5 1 46 ,030 Division 6 1 24,688 Division 7 1 30,294 Chief Administrative Officer 1 164,263 Other Designated Officers 3 252,731 Kneehill County Notes to Financial Statements Benefits & Allowances 4,126 4,126 4,126 4,126 4,126 3,572 4,126 22,069 34,696 2011 ($) 1,155,456 94,053,977 20,515,748 115,725,181 2011 Total 33,054 39,336 28,019 30,058 50,156 28,260 34,420 186,333 287,426 No. of Persons 1 1 1 1 1 1 1 3 2010 ($) 2 ,453,163 80,549 ,385 23 ,951,759 106,954,307 2010 Total 23,715 34,663 21,445 24,694 36,948 23 ,5 89 29,545 165 ,476 243,744 (1) Salary includes regular base pay, bonuses, overtime, lump sum payments , gross honoraria, and any other direct cash remuneration. (2) Employer's share of all employee benefits and contributions or payments made on behalf of employees including pension, health care, dental coverage, vision coverage, group life insurance, accidental disability and dismemberment insurance, long term and shmt term disability plans, professional memberships and tuition. (3) Benefits and allowances includes the employer's share of travel, cell phone and car allowances. For the year ended December 31 , 2011 18. Local Authorities Pension Plan Kneehill County Notes to Financial Statements Employees of Kneehill County participate in the Local Authorities Pension Plan (LAPP) which is administered in compliance with the Public Sector Pension Plans Act. The Plan is financed by employer and employee contributions and by investment earnings of the LAPP Fund. Kneehill County is required to make current service contributions to the Plan of 9.49% of pensionable payroll up the the year's maximum pensionable earnings under the Canada Pension Plan (CPP) and 13 .13% of pensionable earnings above this amount. Employees of the County are required to make current service contributions of 8.49% of pensionable salary up to the year's maximum salary and 12 .13% on pensionable salary above this amount. Total employer contributions by Kneehill County to LAPP in 2011 were $315,685 ($287 ,401 in 2010). Total current contributions by the employees ofKneehill County to LAPP in2011 were $285,110 ($258,151 in 2010). At December 31 ,2010 the Plan disclosed an actuarial deficiency of $4.6 billion. 19. Contingent Liabilities (a) Kneehill County has been named in a law suit relating to a private company contractor and sub contractor for which the private company is seeking damages for. No provision has been made on the statement of financial position. It is the opinion of management that the County has minimal exposure to these actions or the potential liability will be fully recovered by insurance in place for such events. (b) The County is a member of Alberta Municipal Insurance Exchange (MUNIX). Under the terms of membership, Knee hill County could be liable for its proportinate share of any claim losses in excess of the funds held by the exchange. Kneehill County Notes to Financial Statements For the year ended D ecember 31 , 2011 20. Commitments (a) Kneehill County is part of a Master Fire Protection Agreement with the following Municipalities to provide fire protection services to rural residents in the County from 2012 to 2014 inclusive. The County's 2012 commitment is indexed by the cost ofliving index as established by the Province of Alberta for October of the previous calendar year: 2012 2011 ($) ($) Town of Three Hills 47,891 46 ,313 Town of Trochu 30,622 29 ,385 Village of Acme 39,310 38 ,015 Village of Carbon 39,310 38 ,015 Village of Linden 42,527 41,127 (b) Kneehill County has contracts for 2012 to provide p eace officer and by-law enforcement services at a cost recovery for the following Municipalities: Town ofThree Hills Village of Munson Village of Acme Village of Linden Village of Carbon Town OfTrochu (c) In 2010, Kneehill County became the managing prutner ofthe Kneehill Regional Water Service Commission for a three year term. The County receives $20,000 administration fees to provide support services to the Commission. (d) Kneehill County has committed resources in 2011 to the Sunnyslope Water Service Area projects, which includes upgrades to the reservoir, and distribution lines for the re sidents of that area. The total estimated cost is approximately $8.5 million. The project is also being financially supported through the Provincial Grants under Alberta Municipal Water and Wastewater Program as well as Municipal Sustainability Initiative. The project will finish in 201 2 . (e) Kneehill County is a partnering member of the Drumheller and District Solid Waste Management Association. In 2011 , Kneehill County paid requisition of $186,856 and is expected to pay $186,961 in 2012. For the year ended December 31, 2011 Kneehill County Notes to Financial Statements 21. Segmented Information for Annual Financial Reports General Situated in the heart of central Alberta, Kneehill County is a progressive rural municipality comprised of approximately 815,000 acres of land and 2 ,000 kilometers of developed roads. Agriculture remains the backbone of the local economy, complemented by a strong oil and gas industry. Kneehill County is first and foremost a rural community that values safety and good government for their citizens. Responsible development is encouraged that supports our resource-based economy, while at the same time investing in and enhancing infrastructure and services to citizens. Our municipality continues to promote environmental responsibility, prosperity, and positive relationships with citizens, private sector and government partners. A wide range of services are provided by departments and for management purposes, their operations and activities are organi zed and reported by fund. Certain departments that have been separately disclosed in the segmented information, along with the services they provide, are as follows: Agriculture Services The Agriculture Services Department focuses on the need to maintain agricultural production and profitability with an emphasis on helping farmers help themselves. It involves the participation of ratepayers and the cooperation of Alberta Agriculture Food and Rural Development. The key priorities and goals of the department are to advise landowners conceming proper land utilization with a view of improving their economic well being . Priorities include advising landowners of effective methods to control weeds, diseases , insects and predators along with the prevention of soil and water degradation. Corporate and Financial Services The Corporate and Financial Services Department focus es on the delivery of quality services to customers at a reasonable cost. Along with meeting all of the financial reporting requirements, this depatiment is also instrumental in ensuring legislative requirements are met associated with assessment and taxation. Additional support services initiated by this department include GPS , Records management, Infom1ation Technology and Human Resources . The goal of the Corporate Services team is the delivery of customer service in a friendly, courteous and helpful manner guided by integrity and fairness. Protective Services Kneehill County's Protective Services Section includes that of both Fire Services and Enforcement (Peace Officer) Services. Fire Services provides emergency fire protection and preventative services that mitigate loss of life and property with professionally trained volunteers and modem response equipment. Kneehill County support operating contracts with each of the six urban fire departments in addition to major contributions emergency response vehicles. For the year ended December 31, 2011 Kneehill County Notes to Financial Statements 21. Segmented Information for Annual Financial Reports (Continued) Emergency preparedness planning is also led by Kneehill County through the implementation of a regional with all urban centres within our boundaries . Kneehill County identified a need for protection of municipal infrastructure and the need to enhance public safety. Our Peace Officers enhance some services provided by the local RCMP in addition to the protection of municipal infrastructure and enforcement of municipal bylaws. Enforcement assistance i s also provided to other County departments such as Planning and Operations . Planning and Development The P lanning and Development Department promotes the incorporation of progressive planning and development practices into the organizations dail y operations, a long with orderly development and land use practices benefitting residents and minimizing conflicting uses. These practices centre around environmental stewardship, the notion of shared responsibilities in a global community, quality, livable communities and public participation. Recent initiatives of the department include the development of Inter-municipal Development Plans with neighboring municipalities, an Environmentally Significant Areas Assessment and an Integrated Community Sustainabi lity Plan. Long-term planning i s suppmted the Municipal Development Plan and Land Use Bylaw which reflect the vision and expectations of County residents. Operations The Operations Department oversees many responsibilities including that of construction, maintenance and dust control of roads. Kneehill County has over 200 bridge cr ossing sites that are also maintained by this department. T he oil and gas sector along with the development of large feedlots and new grain elevators have had significant impacts on the growth of the County and the resulting effects on our transportation corridors . In addition to the rural transportation routes, the Operations Department also provides services in five major hamlets located within our boundaries. Environmental, Water, Wastewater Major infrastructure projects have taken place under the direction of Council in the area of potable water distribution. As a member of the Kneehill Regional Water Commission, the County has diligently worked to bring water to areas of the County where safe potable water is not availabl e through the traditional well systems . Major completion of these distribution lines i s e xpected to be completed in 2012. Other water distribution systems located throughout the County are also part of this operation. The wastewater needs of our local hamlets are also met by this department. As a member of the Drumheller and District Solid Waste Management Association, various transfer sites provide for the collection and disbursement of solid waste. For the year ended December 31, 2011 Kneehill County Notes to Financial Statements 21. Segmented Information for Annual Financial Reports Expansion to handle various recyclables at these stations along with initiatives in the areas of agricultural plastic recycling have also been facilitated through this relationship. Parks and Recreation Under the direction of the Operations Department, the Co unty is responsible for the maintenance and operation of various municipal parks and campgrounds. Enhancements over the past several years have increased the level of services availabl e at various locations. A Recreation Master Plan completed several years ago was the basis for the development of both major annual operating and capital contributions towards the various recreational facilities (arenas, swimming pools) lo cated within our urban centres in Kneehill County. Social and Community Services Kneehill Regional FCSS is partnership between the Province and the six municipalities located within the boundaries of Knee hill County. An elected officials board sets the direction for the program and makes the funding decisions for preventative based programs. Other programs that are administered under the FCSS Director include the Kneehill Community Resource Program, Parent Link Program and Community Building Initiatives. Services provided care for and strengthen the quality of life for all citizens, through volunteering, consulting and providing services to meet needs where they exist. 22. Comparative Figures Some of the comparative figures have been reclassified to conform to the cunent year's presentation. 23. Approval of Financial Statements Council and Management have approved these financial statements.