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Home My WebLink About2004 Financial StatementsKneehill County Financial Statements For the year ended December 31, 2004 Contents Auditors' Report Financial Statements 2 Balance Sheet 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 1 J ,M in w At"k 0 O BDO DUriWO 801 - 6 Avenue Chartered Accountants nts Calgary Alberta Canada JBD da UP 3W2 and Advisors Telephone: (403) 266-5608 Fax: (403) 233-7833 Driving growth www.bdo.ca Auditors' Report I To the Reeve, Council and Ratepayers Kneehill County We have audited the balance sheet of the Kneehill County as at December 31, 2004 and the statement of municipal equity and operating fund activities for the year then ended. These financial statements are the responsibility of the County's 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 administration, as well as evaluating the overall financial statement presentation. 0 0 v 0 In our opinion, these financial statements present fairly, in all material respects, the financial position of Kneehill County as at December 31, 2004 and the results of its financial activities for the year then ended in accordance with accounting principles for municipal governments established by the Canadian Institute of Chartered Accountants as described in Note 1. Chartered Accountants Calgary, Alberta June 29, 2005 2 BDO Dunwoody LLP is a Limited Liability Partnership registered in Ontario A E ~ Kneehill County Balance Sheet > December 31 2004 2003 Assets Current Cash $ 2,803,817 $ 291,257 Term deposits 9,500,000 13,000,000 Taxes receivable 318,351 366,754 Trade and other accounts receivable 2,290,108 1,137,298 Inventories (Note 2) 989,774 1,325,211 Prepaid expenses 148,751 169.138 16,050,801 16, 289, 658 Capital assets (Note 3) 18,548,360 17,815,054 Other assets (Note 4) 1,121 1,141 Tax Sale Trust Account 331 331 $ 34,600,613 $ 34.106.184 Liabilities Current Accounts payable and accrued liabilities $ 657,073 $ 750,361 Vested sick leave benefits 258,391 243,945 Deferred revenue (Note 5) 146,406 16.470 Tax Sale Trust Account Municipal Equity 1,061,870 1,010,776 331 331 1,062,201 1.011.107 Operating Fund - Page 4 5,737,283 5,732,799 Capital Fund - Page 5 291,027 - Equity in Capital Assets (Note 15) 18,548,360 17,815,054 Reserves (Note 6) 8,961,742 9.547.224 33,538,412 33.095.077 $ 34,600,613 $ 34.106.184 On hal f the Council: Reeve Municipal Administrator B' The acco panying notes are an integral part of these financial statements. 3 Kneehiil County Statement of Financial Activities - Operating Fund i1w For the year ended December 31 Budget 2004 2003 (Unaudited) Property Taxes Requisition Transfers Net Taxes For Municipal Purposes - Schedule 1 $ 10,592,070 $ 10,605,745 $ 10,400,787 (4,127,623) (4,127,422) (4,068,985) 6,464,447 6,478,323 6,331,802 Revenue Government transfers 2,776,858 3,187,612 1,998,530 Interest and patronage dividends 304,500 281,066 386,765 Sales and user charges 204,700 242,264 314,732 Drilling licenses 40,000 59,948 53,888 Fees, licenses, permits and fines 41,700 56,171 68,107 Rentals 13,000 40,036 32,287 Insurance proceeds - 812 1,725 Penalties and costs on taxes 40,650 49,197 47,125 Local government transfers - 167,492 159,509 Local improvement charges 33,197 33,197 34,609 Other 40.128 111,601 50.025 3.4 4,733 4,229,396 3,147,302 Total Revenue 9,959,180 10,707,719 9.479.104 Expenditures Salaries, wages and benefits 2,896,507 2,629,932 2,446,814 Contracted and general services 4,828,289 4,630,779 3,300,339 Purchases from other governments 47,011 34,074 70,523 Materials, goods, supplies and utilities 2,184,450 2,064,360 2,082,785 Transfers to other governments 135,319 135,315 129,975 Transfers to local boards and agencies 149,278 147,694 40,034 Transfers to individuals and organizations 358,690 314,616 324,310 Bank charges and interest 500 1,529 593 Property taxes cancelled 30,000 10,160 10,953 Other 34,901 - Total Expenditures - Schedule 2 10,630,044 10,003,360 8,406.326 Excess (deficiency) of revenue over expenditures (670.864) 704,359 1.072.778 Transfers from (to) other funds Net transfers to capital fund (1,212,950) (1,227,075) (922,504) Net transfers from (to) operating reserves 1.889.752 676.802 527,200 (699,875) (146.199) (1,068,703) Net surplus from operations 5,938 4,484 4,075 Fund innin ear O eratin be of - 799 5 732 724 5 728 g p g , g y , , . . Operating Fund, end of year $ - $ 5,737,283 $ 5,732,799 I ' The accompanying notes are an integral part of these financial statements. 4 A%ft > Kneehill County Statement of Financial Activities - Capital Fund For the year ended December 31 Budget 2004 2003 (Unaudited) Revenue Government transfers $ 102,400 $ 93,910 $ 260,662 Proceeds from disposal of capital property 19,200 182,804 233,523 Insurance proceeds - 5,316 l 121.600 276.714 499.501 Expenditures General Government 82,000 56,962 40,658 Fire services 453,000 496,850 414,356 Roads and Streets 678,000 607,195 855,862 Water supply and distribution 110,000 94,064 38,866 Land use planning Agricultural Service Board 500 18,350 - 15,773 608 56,214 Other 200 1.341.850 1.271.044 1.406, 564 Excess (deficiency) of revenue over expenditures (1,220,250) (994,330) (907,063) Net inter-fund transfers Transfers from operating fund 1,212,950 1,227,075 922,504 Transfers from (to) capital reserves 153.600 58.282 (15.441) Change in fund balance 146,300 291,027 - Capital fund, beginning of year - - - Capital fund, end of year $ 146.300 $ 291.027 $ - The accompanying notes are an integral part of these financial statements. 5 JBDO Kneehill County Notes to Financial Statements December 31, 2004 1. Significant Accounting Policies am The financial statements of Kneehill County are the representations of management prepared in accordance with local government accounting standards established by the Public Sector Accounting and Auditing Board of the Canadian Institute of Chartered Accountants. Significant aspects of the 09 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) 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. (c) Basis of Accounting The basis of accounting followed in the financial statement presentation includes revenues recognized in the period in which the transactions or events occurred that gave rise to the revenues and expenditures recognized in the period the goods and services are acquired and a liability is incurred or transfers are due, with the exception of pension expenditures as disclosed in Note 1(e). (d) Government Transfers 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, any eligibility criteria have been met by the municipality, and reasonable estimates of the amounts can be made. (e) Pension Expenditure The County participates in a multi-employer defined benefit pension plan. This plan is accounted for as a defined contribution plan. (f) Investments Investments are recorded at cost. 0 1 6 J,BDO r - Kneehill County Notes to Financial Statements December 31, 2004 1. Significant Accounting Policies -(Continued) (g) 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. 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. (h) 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. (i) Reserves for Future Expenditures Reserves are established at the discretion of Council to set aside funds for future operating and capital expenditures. Transfers to and/or from reserves are reflected as an adjustment to the respective fund. Q) Equity in Capital Assets Equity in capital assets represents the County's net investment in capital assets after deducting any long-term or other capital liabilities. (k) 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 revenue and expenditure 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. (1) 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. 1 JBDO on 1 December 31, 2004 2. Inventories Kneehill County Notes to Financial Statements 2004 2003 Gravel $ 675,368 $ 999,235 Other transportation amounts 241,909 259,199 Other 56,003 50,283 Land held for resale 16.494 16.494 $ 989,774 $ 1.325.211 3 C l A it t 2004 2003 . ap a sse s Land held for own use $ 437,507 $ 437,507 Buildings 2,225,585 2,084,189 Engineering structures 3,400,364 3,306,300 Minor machinery and equipment 818,205 818,205 Major machinery and equipment 7,259,032 7,014,920 Vehicles and power equipment 4,407,667 4.153.933 $ 18.548,360 $ 17.815.054 During the year, capital assets in the amount of $1,270,844 (2003 - $1,406,564) were acquired, and assets with an original cost of $537,538 (2003 - 409,597) were disposed of or written off. 4. Other Assets 2004 2003 Three Hills Water Waste Pipeline $ 1,000 $ 1,000 Deposits - 20 Alberta Municipal Financing Corporation, shares, at cost 120 120 Mt. Vernon Water Co-op Association Ltd. membership 1 1 $ 1,121 $ 1.141 5. Deferred Revenue 2004 2003 Public Health - K.C.R.P. $ 5,240 $ - Public Health - F.C.S.S. - 16,470 Transportation 50,000 - Disaster Services - Flood 19,545 - ' Prepaid property taxes 70,631 Tax certificates 915 Assessment appeal fees 75 - ' $ 146.406 $ 16.470 I 8 !w Kneehill County Notes to Financial Statements December 31, 2004 6. Reserves 2004 2003 0 E Operating reserves Contingency $ 7,833,395 $ 7,813,673 Administration 39,513 20,000 Assessment 16,000 - Fire 5,355 - Transportation 369,979 1,257,080 Sewer 25,000 - Garbage 145,000 - FCSS 5,861 - Kneehill Community Resource Program 20,030 4,501 Agricultural Service Board 89,921 22,000 Parks 40,000 8,590,054 9.117.254 Capital Reserves Torrington 53,800 53,800 Administration 6,543 - Fire 229,485 180,280 Ambulance - 113,830 Water 57,745 57,745 Planning 11,929 12,129 Agricultural Service Board 12,186 12.186 371,688 429.970 $ 8,961,742 $ 9.547.224 7. Contingent Liabilities 1 1 1 0 1 1 9 a) Kneehill County is from time to time a defendant in various actions seeking damages for actions by, and events occurring in, the County. It is the opinion of management that the exposure to any 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. JBDO Kneehill County Notes to Financial Statements December 31, 2004 8. 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: 2004 2003 Salary Benefits & & Fees allowances Total Total (1) (2) (3) Councillor/Division Holsworth, Brian -1 $ 18,751 $ 3,125 $ 21,876 $ 16,954 Calhoun, Carol -2 20,484 3,217 23,701 20,476 Wittstock, Jerry - 3 17,126 3,045 20,171 17,285 Woods, Murray -4 28,949 3,570 32,519 21,221 Crawford, Vern -5 20,482 3,185 23,667 17,938 Hoppins, Ken -6 28,153 3,498 31,651 26,233 Knievel, Ken -7 21,088 3,175 24,263 16,854 County Administrator and other designated Officers Kiviaho, Gene $ 90,471 $ 14,068 $ 104,539 $ 94,419 Other - designated officers 98,294 11,080 109,374 - O 1 Salary includes regular base PaY> bonuses overtime lump sum payments, gross honoraria and any other direct cash remuneration. (2) Employer's Ioyer' p 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. IBDO i 10 Kneehill County Notes to Financial Statements December 31, 2004 9. Debt Limits 2004 2003 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: Total debt limit Total debt $ 16,403,300 $ 14,602,166 Amount of debt limit unused Debt servicing limit Debt servicing Amount of debt servicing limit unused 16.403.300 $ 14.602.166 $ 2,733,884 $ 2,433,694 $ 2.733,884 $ 2.433.694 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. 10. Comparative Figures Certain comparative figures have been reclassified to conform with the current year's presentation. 11. Local Authorities Pension Plan Employees of Kneehill County participate in the Local Authorities Pension Plan (LAPP), which is one of the plans covered by the Alberta Public Sector Pension Plans Act. The LAPP serves about 133,000 people and 389 employers. The LAPP is financed by employer and employee contributions and investment earnings of the LAPP Fund. Contributions for current service are recorded as expenditures in the year in which they become due. Kneehill County is required to make current service contributions to the LAPP of 5.525% of pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension Plan and 7.4% on pensionable earnings above this amount. Employees of the County are required to make current service contributions of 4.525% of pensionable salary up to the year's maximum pensionable salary and 6.4% on pensionable salary above this amount. ' Total current service contributions by Kneehill County to the LAPP in 2004 were $95,768 (2003 - $78,439). Total current service contributions by the employees of Kneehill County to the Local Authorities Pension Plan in 2004 were $81,878 (2003 - $64,873). At December 31, 2003, the Plan disclosed an actuarial deficiency of $ 1.411 billion. 1 11 JBDO Kneehill County Notes to Financial Statements December 31, 2004 12, Approval of Financial Statements Council and Management approved these financial statements. w 13, Financial Instruments The County's financial instruments consist of various assets and liabilities. It is management's opinion that the County is not exposed to significant interest, currency or credit risk arising from these financial statements. Unless otherwise noted, the fair value of these financial instruments approximates their carrying values. 14. Budget Amounts The 2004 budget for Kneehill County was approved by Council and has been reported in the financial statements for information purposes only. These budget amounts have not been audited. 15. Equity in Capital Assets Acquisition of capital assets General Government Fire services Roads and Streets Water supply and distribution Land use planning Agricultural services board Original cost of capital asset disposals Change in equity balance Equity balance, beginning of year Equity balance, end of year 2004 2003 $ 56,962 $ 40,658 496,850 414,356 607,195 855,862 94,064 38,866 - 608 15,773 56.214 1,270,844 1,406,564 (537,538) (409.597) 733,306 996,967 17,815,054 16,818,087 $ 18,548,360 $ 17,815,054 Represented by: Capital assets - Note 3 $ 18,548,360 $ 17,815.054 I JBDO 1 12 "M w 0 Schedule 1 Kneehiil County Schedule of Net Taxes For Municipal Purposes For the year ended December 31 Budget 2004 2003 (Unaudited) Property Taxes Farmland Residential Commercial Linear property Machinery and equipment Railway Grants in lieu Less: Requisition transfers $ 2,031,743 $ 1,971,681 $ 1,982,658 1,820, 791 1,734,109 1,776, 381 685,883 770,187 747,003 4,875,354 4,989,272 4,756,444 1,159,020 1,122,712 1,119,485 15,259 14,677 14,887 4.020 3,107 3.929 10, 592, 070 10,605,745 10.400.787 Alberta School Foundation Fund (4,108,707) (4,108,506) (4,049,914) Kneehill Foundation (18,916) (18,916) (19,071) (4,127.623) 14,127,422) (4,068.985) Net taxes for municipal purposes $ 6.464.447 6,478,323 $ 6,3312 0 13 JBDO Schedule 2 Kneehill County Schedule of Functional Operating Expenditures For the year ended December 31 Budget 2004 2003 (Unaudited) Legislative $ 211,200 $ 174,567 $ 176,956 General Administration 839,235 802,345 734,203 w Other general Administration - Assessment 110,414 114,084 89,778 Fire protection 260,580 222,500 238,472 Disaster and Emergency Measures 6,000 347,702 5,938 Ambulance 140,789 140,459 143,616 Utility and Development 30,100 15,741 9,620 Bridge inspection 245,200 362,718 114,767 Transportation 6,899,424 6,352,779 5,347,994 Water supply and distribution 78,150 72,882 92,485 Sewer services 74,500 16,371 56,069 Waste management 392,474 251,623 230,737 Public Health - F.C.S.S. 312,668 311,650 333,478 - K.C.R.P. 205,550 203,296 198,562 Cemetery 22,900 25,267 23,750 Planning and development 149,085 123,605 115,554 Agricultural Service Board 372,500 224,509 269,492 d recreation k P 275 279 238.262 224.855 s an ar . $ 10.630.044 $ 10.003,360 $ 8.406.326 0 t 1 JBDO 1 14