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Kneehill County
Financial Statements
For the year ended December 31, 2003
Contents
Auditors' Report 2
Financial Statements
Balance Sheet 3
Statement of Municipal Equity 4
Statement of Operating Activities 5
Notes to Financial Statements 6-12
Schedule
Schedule of Net Taxes for Municipal Purposes 1
Schedule of Functional Operating Expenditures 1
Schedule of Functional Capital Asset Expenditures 1
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C' BDO Dunwoody LLP
J Chartered Accountants
and Consultants
Driving Growth
1900, 801 - 6 Avenue S W.
Calgary Alberta Canada T2P 3W2
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 balance sheet of the Kneehill County as at December 31, 2003 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.
In our opinion, these financial statements present fairly, in all material respects, the financial position of
Kneehill County as at December 31, 2003 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
March 5, 2004
2 BDO Dunwoody LLP is a Limited Liability Partnership registered in Ontario
Kneehill County
Balance Sheet
December 31 2003 2002
Assets
Current
Cash
Term deposits
Taxes receivable
Trade and other accounts receivable
Inventories (Note 2)
Prepaid expenses
Capital assets (Note 3)
Other assets (Note 4)
$ 291,257
$ 218,969
13,000,000
13,600,000
366,754
318,435
1,137,298
258,455
1,325,211
1,139,462
169.138
59,256
16,289,658 15,594,577
17,815,054 16,818,087
1,141 12,141
Tax Sale Trust Account 331 331
$ 34,106,184 $ 32,425,136
Liabilities
Current
Accounts payable and accrued liabilities
Vested sick leave benefits
Deferred revenue (Note 5)
$ 750,361 $ 238,934
243,945 218,029
16,470 35.447
1,010,776 492,410
Tax Sale Trust Account
Municipal Equity
331 331
1,011,107 492,741
Accumulated Surplus 5,732,799
5,728,724
Equity in Capital Assets 17,815,054
16,818,087
Reserves (Note 6) 9,547,224
9,385,584
33,095,077
31,932,395
$ 34,106,184
$ 32,425,136
On behalf of the Council:
Reeve
Municipal Administrator
l'i '~-l JBDO
The accompanying notes are an integral part of these financial statements.
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C-41) ~wd Kneehill County
Statement of Municipal Equity
For the year ended December 31 2003 2002
Statement of Accumulated Surplus
Balance, beginning of year
Transfer from equity in capital assets
$ 5,728,724 $ 5,708,292
12,254
Net surplus from operations
Balance, end of year
Balance, beginning of year
Add (deduct):
Proceeds from sale of capital assets
Insurance proceeds
Provincial capital grants
Local government transfers
Net transfers from operating fund
Development levies
Net transfers to capital reserves
Original cost of capital asset disposals
Transfer to accumulated surplus
Balance, end of year
4,075 8,178
$ 5,732,799 $ 5,728,724
Statement of Equity in Capital Assets
$ 16,818,087 $ 16,754,855
233,523
201,434
5,316
-
243,828
-
16,834
-
922,504
522,339
-
14,000
(15,441)
(133,487)
(409,597)
(528,800)
(12,254)
996,967
63,232
$ 17,815,054
$ 16.818,087
Statement of Reserves
Operating
Balance, beginning of year
Add:
Net transfers from operating fund
Balance, end of year
Capital
Balance, beginning of year
$ 8,971,055 $ 7,590,679
146,199 1,380,376
9,117,254 8,971,055
414,529 281,042
Add:
Net transfers from capital fund 15,441 133,487
Balance, end of year 429,970 414,529
Total Reserves $ 9,547,224 $ 9,385,584
DThe accompanying notes are an integral part of these financial statements.
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Kneehill County
Statement of Operating Activities
For the year ended December 31 Budget 2003 2002
(Unaudited)
Property Taxes
Requisition Transfers
Net Taxes For Municipal Purposes - Schedule 1
$ 10,333,831 $ 10,400,787 $ 10,192,613
(4,068,985) (4,068,985) (3,889,853)
6,264,846 6,331,802 6,302,760
Revenue
Provincial government transfers
1,698,669
1,998,530
1,113,485
Interest and patronage dividends
304,707
386,765
302,374
Sales to other governments
12,585
12,631
11,525
Sales and user charges
165,425
302,101
252,102
Drilling licenses
40,000
53,888
46,550
Fees, licenses, permits and fines
30,700
68,107
37,435
Rentals
22,500
32,287
25,445
Insurance proceeds
-
1,725
15,277
Penalties and costs on taxes
40,500
47,125
79,496
Local government transfers
158,567
159,509
125,633
Local improvement charges
34,609
34,609
34,614
Other
45,650
50,025
30,443
2,553,912
3,147,302
2,074,379
Total Revenue
8,818,758
9,479,104
8,377,139
Expenditures
Salaries, wages and benefits
21506,383
2,446,814
2,194,074
Contracted and general services
4,241,902
3,300,339
2,358,337
Purchases from other governments
103,720
70,523
130,215
Materials, goods, supplies and utilities
1,761,057
2,082,785
1,362,550
Transfers to other governments
130,000
129,975
130,009
Transfers to local boards and agencies
49,851
40,034
37,904
Transfers to individuals and organizations
333,137
324,310
214,786
Bank charges and interest
2,350
593
2,686
Property taxes cancelled
50,000
10,953
35,656
Other
-
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Total Expenditures - Schedule 2
9,178,400
8,406,326
6,466,246
Excess (deficiency) of revenue over expenditures
(359,642)
1,072,778
1,910,893
Transfers from (to) other funds
Net transfers to capital fund
Net transfers from (to) operating reserves
(892,321) (922,504) (522,339)
1,256,000 (146,199) (1,380,376)
363,679 (1,068,703) (1,902,715)
Net surplus from operations $ 4,037 $ 4,075 $ 8,178
The accompanying notes are an integral part of these financial statements. I 5
Kneehill County
Notes to Financial Statements
December 31, 2003
1. Significant Accounting Policies
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
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.
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Kneehill County
Notes to Financial Statements
December 31, 2003
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.
0) 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.
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Kneehill County
Notes to Financial Statements
December 31, 2003
2. Inventories 2003 2002
Gravel
Other transportation amounts
Other
Land held for resale
$ 999,235 $ 827,550
259,199 263,594
50,283 31,824
16,494 16.494
$ 1,325,211 $ 1.1 39,462
3. Capital Assets
2003 2002
Land held for own use
$ 437,507 $
437,507
Buildings
2,084,189
2,084,189
Engineering structures
3,306,300
3,267,434
Minor machinery and equipment
818,205
771,644
Major machinery and equipment
7,014,920
6,917,123
Vehicles and power equipment
4,153,933
3,340.190
$ 17.815,054 $
16,818.087
During the year, capital assets in the amount of $1,406,564 (2002 - $604,286) were a
cquired, and
assets with an original cost of $409,597 (2002 - 528
,800) were disposed of or written off.
4. Other Assets
2003 2002
Three Hills Water Waste Pipeline
Deposits
Alberta Municipal Financing Corporation, shares, at cost
Mt. Vernon Water Co-op Association Ltd. membership
5. Deferred Revenue
Public Health - F.C.S.S.
1,000
1,000
20
11,020
120
120
1
1
$ 1,141 $ 12.141
2003 2002
$ 16,470 $ 35,447
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Kneehill County
Notes to Financial Statements
December 31, 2003
6. Reserves 2003 2002
Operating reserves
Contingency $ 7,813,673 $ 7,948,673
Administration 20,000 45,000
Disaster Services - 6,000
Transportation 1,257,080 948,640
Kneehill Community Resource Program 4,501 22,742
Agricultural Services Board 22,000 -
$ 9,117,254 $ 8,971,055
Capital reserves
Torrington
$ 53,800 $
53,300
Administration
-
4,000
Fire
180,279
214,487
Ambulance
113,830
113,830
Water
57,745
16,783
Planning
12,130
12,129
Agricultural Services Board
12,186
-
429,970
414,529
$ 9,547,224 $
9,385,584
7. 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. 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.
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Kneehill County
Notes to Financial Statements
December 31, 2003
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 3132000, is as follows:
2003 2002
Salary
Benefits &
& Fees
allowances
Total
Total
(1)
(2) (3)
Councilor/Division
Holsworth, Brian
- 1
$ 13,920
$ 3,034
$ 16,954
$ 20,279
Calhoun, Carol
-2
17,360
3,116
20,476
20,504
Wittstock, Jerry
-3
14,240
3,045
17,285
19,197
Woods, Murray
-4
18,000
3,221
21,221
24,622
Crawford, Vern
-5
14,880
3,058
17,938
18,906
Hoppins, Ken
-6
22,800
3,433
26,233
27,529
Knievel, Ken
-7
13,840
3,014
16,854
19,084
County Administrator
Kiviaho, Gene $ 82,078 $ 12,341 $ 94,419 $ 37,980
(1) Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria and
any other direct cash remuneration.
(2) Employers 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 employers share of travel and car allowances.
~BDo
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-AWV Kneehill County
Notes to Financial Statements
December 31, 2003
Debt Limits
2003 2002
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
$ 14,602,166 $ 12,888,860
Amount of debt limit unused
Debt servicing limit
Debt servicing
Amount of debt servicing limit unused
$ 14,602,166 $ 12,888.860
$ 2,433,694 $ 2,148,143
$ 2,433,694 $ 2,148,143
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
covered by the Public Sector Pension Plans Act. The Plan serves about 133,000 people and 389
employers. It is financed by employer and employee contributions and investment earnings of the
LAPP Fund.
Kneehill County is required to make current service contributions to the Plan of 5.025% of pensionable
earnings up to the Canada Pension Plan Year's Maximum Pensionable Earnings and 6.9% for the
excess.
Total current service contributions by Kneehill County to the Local Authorities Pension Plan in 2003
were $67,880 (2002 - $62,150). Total current service contributions by the employees of Kneehill
County to the Local Authorities Pension Plan in 2003 were $78,262 (2002 - $52,246).
At December 31, 2002, the Plan disclosed an actuarial surplus of $635 million.
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Kneehill County
Notes to Financial Statements
December 31, 2003
12. Approval of Financial Statements
Council and Management approved these financial statements.
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 2003 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.
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Schedule 1
Kneehill County
Schedule of Net Taxes For Municipal Purposes
For the year ended December 31 Budget 2003 2002
(Unaudited)
Property Taxes
Farmland
Residential
Commercial
Linear property
Machinery and equipment
Railway
Grants in lieu
$ 1,982,286 $ 1,982,658 $ 2,010,612
1,776,381
1,776,381
1,625,819
669,154
747,003
694,715
4,756,443
4,756,444
4,647,761
1,130,751
1,119,485
1,194,998
14,887
14,887
14,871
3.929
3.929
3,837
10,333,831 10,400,787 10,192,613
Less: Requisition transfers
Alberta School Foundation Fund
(4,049,914)
(4,049,914)
(3,870,770)
Kneehill Foundation
(19,071)
(19,071)
(19,083)
(4,068,985)
(4,068,985)
(3,889,853)
Net taxes for municipal purposes
$ 6,264,846
$ 6,331,802
$ 6,302,760
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ON 0%
Schedule 2
Kneehill County
Schedule of Functional Operating Expenditures
For the year ended December 31
Budget
(Unaudited)
2003
2002
Legislative
$ 221,200 $
176,956 $
192,719
Administrative
889,003
823,981
732,644
Fire protection
241,950
238,472
209,368
Disaster services
6,000
5,938
2,223
Ambulance
138,448
143,616
88,881
Utility and Development
27,300
9,620
24,728
Bridge inspection
245,745
114,767
88,425
Transportation
5,879,850
5,347,994
3,818,697
Water supply and distribution
87,115
92,485
52,726
Sewer services
74,845
56,069
39,255
Waste management
252,950
230,737
225,009
Public Health - F.C.S.S.
328,769
333,478
259,028
- K.C.R.P.
199,100
198,562
152,001
Cemetery
22,000
23,750
19,841
Planning and development
108,000
115,554
91,402
Agricultural services
219,250
269,492
283,164
Parks and recreation
236.875
224,855
186.135
$ 9,178,400 $ 8,406,326 $ 6,466,246
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Schedule 3
Kneehill County
Schedule of Functional Capital Asset Expenditures
For the year ended December 31 Budget 2003 2002
(Unaudited)
Administrative $ 39,300 $ 40,658 $ 99,352
Fire protection 293,492 414,356 -
Water supply and distribution 125,000 38,866 2,080
Agricultural services 83,400 56,214 -
Parks and recreation - - 26,374
Transportation 796,500 855,862 476,480
Planning - 608 -
$ 1,337,692 $ 1,406,564 $ 604,286
J310
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