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HomeMy WebLinkAbout2006 Financial StatementsKneehill County Financial Statements For the year ended December 31, 2006 Contents Auditors' Report Financial Statements 2 Statement of Financial Position 3 Statement of Financial Activities - Operating Fund 4 Statement of Financial Activities - Capital Fund 5 Notes to Financial Statements 6-12 Schedule Schedule of Net Taxes for Municipal Purposes 1 Schedule of Functional Operating Expenditures 2 I BDO DIIriW 801 6 Avenue ada T213 3W2 Chartered Accountants nts Calgary Alberta Canada and Advisors Telephone: (403) 266-5608 Fax: (403) 233-7833 www.bdo.ca Auditors' Report To the Reeve, Council and Ratepayers Kneehill County We have audited the statement of financial position of Kneehill County as at December 31, 2006 and the statements of financial activities with change in fund balances for the year then ended. These financial statements are the responsibility of the municipal administration. 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 plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the municipal administration, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of Kneehill County as at December 31, 2006 and the results of its financial activities for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants Calgary, Alberta June 21, 2007 2 BDO Dunwoody LLP is a Limited Liability Partnership registered in Ontario Kneehill County Statement of Financial Position December 31 2006 2005 Assets Current Cash Temporary investments (Note 2) Taxes receivable Trade and other accounts receivable Inventories (Note 3) Prepaid expenses $ 848,038 14,125,378 321,245 2,471,826 1,291,490 184,685 19,242,662 $ 696,811 13,015,614 300,750 3,512,795 1,078, 755 141.623 18, 746, 348 Capital Assets (Note 4) Other Assets (Note 5) Tax Sale Trust Account Liabilities Current Accounts payable and accrued liabilities Vested sick leave benefits Deferred revenue (Note 6) Other current Trochu Recreation Trust Tax Sale Trust Account Municipal Equity Fund balances Operating Fund - Page 4 Capital Fund - Page 5 (Note 8) Reserves (Note 7) Equity in Capital Assets (Note 10) 25,500,119 22,950,798 122 2,301 331 331 $ 44743234 $ 41,699,778 $ 570,911 $ 1,373,955 313,694 289,930 2,257,725 1,265,542 21.902 16.332 3,164,232 2,945,759 16,653 22,236 331 331 3.181.216 2.968.326 5,772,982 (484,157) 10,773,074 25.500.119 41.562.018 $_44s 234 5,772,982 (417,481) 10,425,153 22.950.798 38.731.452 $ 41,699,778 On behalf of the Council: Reeve CAO The accompanying notes are an Integral part of these financial statements. 3 Kneehill County Statement of Financial Activities - Operating Fund For the year ended December 31 2006 2005 Property Taxes - Schedule 1 $ 13,031,780 $ 12,131,896 Requisition Transfers - Schedule 1 (4.089.760) (4.113.553) Net Taxes For Municipal Purposes 8,942,020 8.018.343 Revenue Government transfers 2,395,564 1,492,086 Interest and patronage dividends 522,379 316,548 Sales and user charges 852,271 826,943 Sales to other governments 4,438 5,100 Drilling licenses 141,397 147,391 Fees, licenses, permits and fines 141,490 111,790 Rentals 41,006 67,252 Insurance proceeds 2,854 25,982 Penalties and costs on taxes 50,331 22,133 Local government transfers 232,493 180,329 Local improvement charges 26,303 33,197 Other 198.214 102.680 4.608.740 3.331.431 Total Revenue 13,550,760 11.349.774 Expenditures Salaries, wages and benefits 3,708,087 3,120,374 Contracted and general services 3,621,854 1,663,143 Purchases from other governments 168,171 174,420 Materials, goods, supplies and utilities 2,130,546 2,323,359 Transfers to other governments 135,528 136,330 Transfers to local boards and agencies 36,853 28,885 Transfers to individuals and organizations 599,050 484,399 Bank charges and interest 1,861 1,090 Property taxes cancelled 266 - Other 5.811 51.775 Total Expenditures - Schedule 2 10.408.027 7.983.775 Excess of revenue over expenditures 3.142.733 3.365.999 Transfers from (to) other funds Net transfers from (to) capital fund (2,991,753) (2,272,043) Net transfers from (to) operating reserves (150.980) (1.058.2571 (3.142.733) (3.330.300) Net surplus from operations - 35,699 Operating Fund, beginning of year 6,772,982, 5.737.283 Operating Fund, end of year $..5 .6772 .982 5.772 982 The accompanying notes are an integral part of these financial statements. 4 Kneehill County Statement of Financial Activities - Capital Fund For the year ended December 31 2006 2005 Revenue Government transfers Proceeds from disposal of capital property Other $ 354,464 924,383 596 1.279.443 $ 2,241,202 450,958 2.692.160 Expenditures General Government Fire services Bylaws Enforcement Roads and Streets Water supply and distribution Agricultural Service Board Other Excess (deficiency) of revenue over expenditures Net inter-fund transfers Transfers from operating fund Transfers from (to) capital reserves Change in fund balances Capital Fund, beginning of year Capital Fund, end of year 351,681 10,586 54,126 2,703,098 842,754 98,502 80,182 4.140.929 122,415 444,934 30,858 901,868 3,722,471 45,013 5.267.559 (2,861,486) (2,575,399) 2,991,753 2,272,043 (196.943) (405.152) (66,676) (708,508) (417.481) 291,027 $ (484,15Z) $ (4,®, 481) The accompanying notes are an integral part of these financial statements. 5 Kneehill County Notes to Financial Statements December 31, 2006 1. Significant Accounting Policies The financial statements of Kneehill County are the representations of management prepared in accordance with generally accepted accounting principles for local governments established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by Kneehill County are as follows: (a) Reporting Entity The financial statements reflect the assets, liabilities, revenues and expenditures, and changes in fund balances of the reporting entity. This entity is comprised of all the organizations that are owned or controlled by the Municipality and are therefore accountable to the Council for the administration of their financial affairs and resources. The schedule of taxes levied also includes requisitions for education, health, social and other external organizations that are not part of the municipal reporting 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 the revenues. Funds from external parties and earnings thereon 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 the transfers are authorized, the municipality 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 . (c) Use of Estimates 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 liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the period. Where measurement uncertainty exists, the financial statements have been prepared within reasonable limits of materiality. Actual results could differ from those estimates. (d) Fund Accounting Management funds consist of the operating, capital and reserve funds. Transfers between funds are recorded as adjustments to the appropriate equity account. Proceeds from land sales are recorded as operating fund revenues. (e) Investments Investments are recorded at cost. When there has been a loss in value that is other than a temporary decline, the respective investment is written down to recognize the loss. 6 Kneehill County Notes to Financial Statements December 31, 2006 1. Significant Accounting Policies - (Continued) (f) Inventories Inventories of materials and supplies for consumption are valued at the lower of cost or net realizable value with cost determined by the average cost method. Inventory of gravel is as determined by perpetual records. Inventory of gravel is recorded in the accounts only to the extent of royalties and crushing costs incurred. Land held for resale is recorded at the lower of cost or net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping and leveling charges. Related development costs incurred to provide infrastructure such as water and wastewater services, roads, sidewalks and street lighting are recorded as capital assets under their respective function. (g) Capital Assets Capital assets are reported as expenditures in the period they are acquired. Capital assets are reported at cost except for donated assets which are reported at estimated fair value. Government contributions for the acquisition of capital assets are reported as capital revenue and do not reduce the related capital asset costs. Capital assets for government purposes are not depreciated. (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 the final clay cover, landscaping, as well as surface and ground water monitoring, leachate control, and visual inspection. At this time, no asset retirement obligations have been identified and, thus, no liability has been recorded. (i) Operating Fund Operating fund represents the amounts available to offset future operational revenue requirements (or the shortfall which will be financed from future operational revenues). 0) Capital Fund Capital fund represents the amounts available to finance (or the shortfall in financing available for) capital projects. (k) Reserve Fund Reserve fund represents the amounts set aside to finance future operating and capital expenditures. Reserves are established at the discretion of Council. Transfers to and/or from reserve funds are reflected as an adjustment to the respective fund. (1) Equity in Capital Assets Equity in capital assets represents the County's net investment in its capital assets after deducting the portion financed by third parties through debenture, bond and mortgage debts, long-term capital borrowings, capitalized leases and other capital liabilities which will be repaid by the municipality. 7 Kneehill County Notes to Financial Statements December 31, 2006 1. Significant Accounting Policies - (Continued) (m) Pension Expenditure The County participates in a multi-employer defined benefit pension plan. This plan is accounted for as a defined contribution plan. (n) Statement of Cash Flows A statement of cash flows has not been presented as the financial statements already adequately present the operating, financing and investing activities of the County. 2. Temporary Investments The temporary investments at December 31, 2006 are comprised of the following: 4.5% GIC, maturing January 19, 2007 $ 1,044,501 4.5% GIC, maturing January 28, 2007 4,029,096 4.5% GIC, maturing February 17, 2007 1,000,000 4.12% GIC, maturing March 1, 2007 7,051,781 4.5% GIC, maturing June 5, 2007 1,000.000 141125.378 3. Inventories 2006 2005 Gravel Other transportation amounts Other Land held for resale $ 844,433 $ 759,490 314,963 242,905 27,088 22,004 105.006 54.356 1291,4490 1,78.755 4. Capital Assets 2006 2005 Land held for own use $ 462,507 $ 462,507 Buildings 2,244,587 2,244,587 Engineering structures 7,951,996 7,064,766 Machinery and equipment 9,355,806 8,114,260 Vehicles and power equipment 5.485.223 5,064,678 $_25 9 $ 22,950,798 During the year, capital assets in the amount of $4,140,929 (2005 - $5,267,594) were acquired, and assets with an original cost of $1,591,607 (2005 - $865,121) were disposed of or written off. 5. Other Assets 2006 2005 Mt. Vernon Water Co-op Association Ltd. membership $ 1 $ 1 Alberta Municipal Financing Corporation, shares, at cost 121 120 Miscellaneous 2.180 $122 $2 301301 8 Kneehill County Notes to Financial Statements December 31, 2006 6. Deferred Revenue 2006 2005 Agricultural Services Board $ 2,929 $ - Alberta Municipal Infrastructure Program 1,985,188 1,120,217 Bonds - Planning 50,000 - Bonds - Transportation 210,000 - Municipal Sponsorship Grant - GIS project - 22,000 Public Health - F.C.S.S. - 3,711 Public Health - K.C.R.P. 9.608 119.614 2,257,725 $ 1.2§5.542 7. Reserves 2006 2005 Operating Reserves Contingency $ 7,589,128 $ 7,802,537 Administration 17,082 17,082 Transportation 1,815,623 1,500,623 Water 49,934 - Sewer 44,632 44,632 Garbage 113,853 113,853 FCSS 14,085 250 Kneehill Community Resource Program 47,294 40,080 Agricultural Service Board 70,922 79,922 Parks 36.738 49.335 9,799,291 9.648.314 Capital Reserves Torrington 53,800 53,800 Administration 6,543 156,543 Fire 225,660 225,660 Assessment 4,818 818 Water 57,745 57,745 Sewer - Linden North Phase 2 591,847 - Planning 13,525 12,429 Agricultural Service Board 19,845 19,844 Transportation - 225,000 Parks 25.000 973.783 776.839 10,7L3 .74 $ 10,425,153 8. Capital Fund The total shortfall for identified projects is being financed over the next 14 years through special local improvement levies. 9 Kneehill County Notes to Financial Statements December 31, 2006 9. Contingent Liabilities a) Kneehill County is from time to time a defendant in various actions seeking damages for actions by, and events occurring in the County. No provision has been made on the statement of financial position for the various lawsuits and legal claims filed against the County. It is the opinion of management that the County has minimal exposure to these actions or the potential liability will be fully covered by the insurance in place for such events. b) Kneehill County is a member of the Alberta Municipal Insurance Exchange (MUNiX). Under the terms of membership, Kneehill County could become liable for its proportionate share of any claim losses in excess of the funds held by the exchange. 10. Equity in Capital Assets 2006 2005 Acquisition of capital assets General Government Fire services Roads and Streets Water supply and distribution Bylaw enforcement Agricultural services board Parks Original cost of capital asset disposals Change in equity balance Equity balance, beginning of year Equity balance, end of year Represented by: Capital assets - Note 4 11. Local Authorities Pension Plan $ 351,681 $ 122,415 10,586 444,934 2,703,098 901,868 842,754 3,722,471 54,126 30,858 98,502 45,013 80.182 4,140,929 5,267,559 (1.591.608) (865.121) 2,549,321 4,402,438 22.950.798 18.548.360 .50$.226950 798 $.2.5 $ 25 500119 $.22a.950 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 7.75% of pensionable payroll up to the year's maximum pensionable earnings under the Canada Pension Plan (CPP) and 10.64% of pensionable earnings above this amount Total employer contributions by Kneehill County to the LAPP in 2006 were $162,335 (2005 - $111,679). Total current contributions by the employees of Kneehill County to the LAPP in 2006 were $142,853 (2005 - $97,572). At December 31, 2006, the Plan disclosed an actuarial deficiency of $746.7 million. 10 Kneehill County Notes to Financial Statements December 31, 2006 12. Salary and Benefits Disclosure Required disclosure of salaries and benefits for elected municipal officials, the chief administrative officer and designated officers, as required by Alberta Regulation 313/2000, is as follows: 2006 2005 Salary Benefits & & Fees allowances Total Total (1) (2) (3) Councillor/Division Division 1 $ 14,488 $ 3,284 $ 17,772 $ 20,826 Division 2 15,076 3,415 18,491 21,577 Division 3 13,903 3,340 17,243 20,068 Division 4 26,825 3,832 30,657 32,819 Division 5 16,726 3,457 20,183 23,875 Division 6 11,777 3,122 14,899 16,910 Division 7 14,768 3,334 18,102 21,439 County Administrator and other designated Officers Chief Administrative Officer $ 89,367 $ 16,232 $ 105,599 $ 113,901 Other Designated Officers 141,466 25,404 166,870 78,395 (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 and short term disability plans, professional memberships and tuition. (3) Benefits and allowances includes the employer's share of travel and car allowances. 13. Financial Instruments The County's financial instruments consist of cash, temporary investments, accounts receivable, investments, accounts payable and accrued liabilities, and deposit liabilities. It is management's opinion that the County is not exposed to significant interest or currency risks arising from these financial instruments. The County is subject to credit risk with respect to taxes and accounts receivable. Credit risk arises from the possibility that taxpayers and entities to which the County provides services may experience financial difficulty and be unable to fulfill their obligations. The large number and diversity of taxpayers and customers minimizes the credit risk. Unless otherwise noted, the fair value of these financial instruments approximates their carrying values. 11 Kneehill County Notes to Financial Statements December 31, 2006 14. Debt Limits 2006 2005 Section 276(2) of the Municipal Govemment Act requires that debt and service on debt limits as defined by Alberta Regulation 255/00 for the County be disclosed as follows: Total debt limit Total debt Amount of debt limit unused Debt servicing limit Debt servicing Amount of debt servicing limit unused $ 21,713,606 $ 17,716,493 21.7®13.606 7.6716 93 .17 $ 3,618,934 $ 2,952,749 $ 3618 9,34 $ 2,952,749 The debt limit is calculated at 1.5 times 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 Affairs to identify municipalities that could be at financial risk if further debt is acquired. The calculation taken alone does not represent the financial stability of the municipality. Rather, the financial statements must be interpreted as a whole. 15. Approval of Financial Statements Council and Management approved these financial statements. 16. Comparative Figures Certain comparative figures have been reclassified to conform with the current year's presentation. 12 Schedule 1 Kneehill County Schedule of Net Taxes For Municipal Purposes For the year ended December 31 2006 2005 Property Taxes Farmland Residential Commercial Linear property Machinery and equipment Railway Grants in lieu Special levy - Linden Phase 1 Special levy - Linden Phase 2 Less: Requisition transfers Alberta School Foundation Fund Kneehill Foundation Requisition adjustments $ 1,721,057 $ 2,024,132 1,810,161 1,871,028 878,039 874,135 6,182,233 5,847,067 1,760,804 1,497,495 13,208 14,835 2,938 3,204 71,493 - _ 591.847 13,031,780 12,131, 896 (4,082,110) (4,102,624) (7,650) (11,270) 341 (4.089.760) (4,113,553) Net taxes for municipal purposes 8,942,020 $ 8 0 1.14 Schedule 2 Kneehill County Schedule of Functional Operating Expenditures For the year ended December 31 2006 2005 Legislative $ 277,971 $ 186,896 General Administration 1,034,491 808,855 Other general Administration - Assessment 167,367 164,595 Fire protection 352,165 308,429 Disaster and Emergency Measures 240 67,662 Ambulance 193,316 210,130 Utility and Development 119,361 47,092 Bridge inspection 653,575 197,095 Transportation 5,349,436 4,086,950 Water supply and distribution 466,116 138,399 Sewer services 19,969 23,991 Waste management 276,398 301,175 Public Health - F.C.S.S. 330,887 319,190 - K. C. R. P. 203,796 204,420 - Parent Link 173,943 142,913 - Building Initiative 30,237 23,143 Cemetery 4,585 25,760 Planning and development 199,097 136,605 Agricultural Service Board 276,217 315,748 Parks and recreation 278.860 274.727 $ 1027 $ 7 983 775 14