HomeMy WebLinkAbout2021 Financial Statements Kneehill County
Financial Statements
For the year ended December 31, 2021
Kneehill County
Financial Statements
For the year ended December 31, 2021
Contents
Auditors' Report 1
Financial Statements
Consolidated Statement of Financial Position 3
Consolidated Statement of Operations 4
Consolidated Statement of Change in Net Financial Assets 5
Consolidated Statement of Cash Flows 6
Summary of Significant Accounting Policies 7 - 9
Notes to the Financial Statements 10-29
Independent Auditor’s Report
To the Reeve and Council of Kneehill County
Opinion
We have audited the consolidated financial statements of Kneehill County and its controlled or owned
organizations (the Group), which comprise the consolidated statement of financial position as at
December 31, 2021, and the consolidated statement of operations, consolidated statement of changes
in net financial assets, and consolidated statement of cash flows for the year then ended, and notes to
the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2021 and its consolidated
financial performance and its cash flows for the year then ended in accordance with Public Sector
Accounting Standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Group in accordance with
the ethical requirements that are relevant to our audit of the consolidated financial statements in
Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Public Sector Accounting Standards, 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.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Canadian generally accepted auditing standards will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
Tel: 403 342 2500
Fax: 403 343 3070
www.bdo.ca
BDO Canada LLP
179D Leva Avenue
Suite 100
Red Deer County AB T4E 1B9
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international
BDO network of independent member firms.
Independent Auditor’s Report, continued
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
Chartered Professional Accountants,
Red Deer, Alberta
April 26, 2022
Kneehill County
Statement of Financial Position
December 31 2021 2020
Financial assets
Cash and cash equivalents (Note 1)$6,560,055 $45,465,914
Short term investments (Note 2)46,000,000 -
Taxes receivable (Note 3)4,289,284 7,520,806
Accounts receivable (Note 4)5,531,033 5,414,854
Land held for resale 75,899 822,714
Investments (Note 5)269 269
62,456,540 59,224,557
Liabilities
Accounts payable and accrued liabilities 2,432,162 4,441,368
Employee benefit obligation (Note 6)965,504 1,252,941
Deposit liabilities 110,000 130,000
Deferred revenue (Note 7)4,917,383 5,687,453
Solid waste closure and post-closure liabilities (Note 8)594,503 470,965
Liability for contaminated sites (Note 9)397,400 397,400
9,416,952 12,380,127
Net financial assets 53,039,588 46,844,430
Non-financial assets
Tangible capital assets (Note 10)118,811,502 117,076,999
Inventory for consumption (Note 11)8,320,944 8,176,698
Prepaid expenses 238,532 246,670
127,370,978 125,500,367
Accumulated surplus (Note 13)$180,410,566 $172,344,797
Debenture debt limits (Note 20)
Contingencies (Note 21)
Commitments (Note 22)
The accompanying summary of significant accounting policies and notes are an integral part of these financial statements
3
Kneehill County
Statement of Operations
Budget
For the year ended December 31 2021 2021 2020
Revenue
Net municipal taxes (Note 15)$23,482,102 $23,532,008 $22,922,787
Government transfers for operating (Note 16)265,866 523,516 793,518
Sales and user fees 763,236 1,830,649 1,449,603
Rental revenue 154,010 141,770 145,558
Investment income 302,800 339,772 479,507
Penalties and costs on taxes 110,000 1,200,609 849,066
Fines and costs 15,000 13,274 9,291
Other 111,100 418,077 129,066
Local improvement tax 277,601 383,878 397,941
Gain on disposal of assets -1,029 -
Drilling licenses --156,557
Sales to other governments 126,148 133,109 126,099
25,607,863 28,517,691 27,458,993
Expenditures (Note 17)
Legislative 614,139 495,127 540,022
Administration and Assessment 5,283,576 4,676,322 7,905,685
Protective services 2,261,887 2,077,433 1,903,406
Transportation 13,856,356 11,890,436 12,446,776
Water and wastewater 2,983,553 3,006,211 2,772,048
Waste management 572,088 645,214 692,470
Public health and welfare 227,973 194,656 210,518
Planning and development 569,342 552,740 484,632
Economic/ Agricultural development 1,036,612 854,358 691,727
Parks, recreation and culture 1,093,438 848,897 896,143
Loss on disposal of tangible capital assets --130,388
28,498,964 25,241,394 28,673,815
Excess of revenue over
expenditures - before other (2,891,101)3,276,297 (1,214,822)
Other
Government transfers for capital (Note 16)4,309,951 4,789,472 1,390,991
Contributed assets --72,640
4,309,951 4,789,472 1,463,631
Excess of revenue over
expenditures 1,418,850 8,065,769 248,809
Accumulated surplus, beginning of year 172,344,797 172,344,797 172,095,988
Accumulated surplus, end of year $173,763,647 $180,410,566 $172,344,797
The accompanying summary of significant accounting policies and notes are an integral part of these financial statements
4
Kneehill County
Statement of Change in Net Financial Assets
Budget
For the year ended December 31 2021 2021 2020
Excess of revenue over
expenditures $1,418,850 $8,065,769 $248,809
Acquisition of tangible capital assets (12,870,182)(8,383,514)(11,504,342)
Amortization of tangible capital assets 6,108,691 6,108,691 6,079,963
Net (gain) loss on sale of tangible capital assets -(1,029)130,388
Proceeds on sale of tangible capital assets 100,000 541,349 1,078,127
Contributed assets --(72,640)
(5,242,641)6,331,266 (4,039,695)
Change in prepaid expenses -8,136 21,687
Purchase inventory for consumption (7,150,000)(2,980,450)(5,767,046)
Use inventory for consumption -2,836,206 3,219,508
Net change in net financial assets (12,392,641)6,195,158 (6,565,546)
Net financial assets, beginning of year 46,844,430 46,844,430 53,409,976
Net financial assets, end of year $34,451,789 $53,039,588 $46,844,430
The accompanying summary of significant accounting policies and notes are an integral part of these financial statements
5
Kneehill County
Statement of Cash Flows
For the year ended December 31 2021 2020
Operating transactions
Excess of revenue over expenditures $8,065,769 $248,809
Items not involving cash
Contributed assets -(72,640)
Amortization 6,108,691 6,079,963
Net loss (gain) on disposal of tangible capital assets (1,029)130,388
Changes in non-cash operating balances
Taxes receivable 3,231,522 (361,291)
Accounts receivable (116,179)(4,367,382)
Inventory held for resale 746,815 -
Prepaid expenses 8,138 21,688
Accounts payable and accrued liabilities (2,009,206)1,937,480
Inventory for consumption (144,246)(2,547,538)
Employee benefit obligation (287,437)430,448
Deposit liabilities (20,000)-
Deferred revenue (770,070)2,583,217
Solid waste closure and post closure liabilities 123,538 32,952
14,936,306 4,116,094
Capital transactions
Acquisition of tangible capital assets (8,383,514)(11,504,342)
Proceeds on sale of tangible capital assets 541,349 1,078,127
(7,842,165)(10,426,215)
Investing transactions
Purchase of short term investments (46,000,000)-
Net change in cash and cash equivalents (38,905,859)(6,310,121)
Cash and cash equivalents, beginning of year 45,465,914 51,776,035
Cash and cash equivalents, end of year $6,560,055 $45,465,914
Cash and cash equivalents is comprised of:
Cash and cash equivalents $6,560,055 $45,465,914
Less: restricted (Note 1)(688,965)(2,090,769)
$5,871,090 $43,375,145
The accompanying summary of significant accounting policies and notes are an integral part of these financial statements
6
Kneehill County
Summary of Significant Accounting Policies
December 31, 2021
Management's
Responsibility for the
Financial Statements The financial statements of the County are the responsibility of
management. They have been prepared in accordance with Canadian
generally accepted accounting principles established by the Public
Sector Accounting Board of the Chartered Professional Accountants of
Canada.
Basis of Consolidation The financial statement reflect the assets, liabilities, revenue and
expenses of all municipal organizations, committees and Boards which
are owned or controlled by the County and are, therefore, accountable
to the County Council for the administration of their financial affairs
and resources.
The schedule of taxes levied also includes operational requisitions for
educational, health, social and other external organizations that are
not part of the municipal reporting entity.
The statement excludes trust assets that are administered for the
benefit of external parties. Interdepartmental and organizational
transactions and balances are eliminated.
Cash and Cash
Equivalents Management considers all highly liquid investments with maturity of
three months or less at acquisition to be cash equivalents.
Investments Investments are recorded at cost unless there has been a decline in the
market value which is other than temporary in nature in which case the
investments are written down to market value.
Land Held for Resale Land held for resale is recorded at 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 physical assets under their respective function.
Inventory for
Consumption Inventories of materials and supplies for consumption are valued at the
lower of cost or replacement cost. 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
rentals.
Excess Collections and
Under-levies Excess collections arise from the difference between the actual levy
made to cover each requisition and the actual amount requisitioned. If
the actual levy exceeds the requisition, the excess collection is accrued
as a liability and as a reduction in property tax revenue. Requisition
tax rates in the subsequent year are adjusted for any excess
collections.
7
Kneehill County
Summary of Significant Accounting Policies
December 31, 2021
Tangible Capital
Assets Tangible capital assets are recorded at cost less accumulated
amortization. Cost includes all costs directly attributable to acquisition
or construction of the tangible capital asset including transportation
costs, installation costs, design and engineering fees, legal fees and site
preparation costs. Contributed tangible capital assets are recorded at
fair value at the time of the donation, with a corresponding amount
recorded as revenue. Amortization is recorded on a straight-line basis
over the estimated life of the tangible capital asset commencing once
the asset is available for productive use as follows:
Land improvements 10 to 20 years
Buildings 25 to 50 years
Engineered Structures
Water system 15 to 75 years
Wastewater system 25 to 60 years
Other engineered structures 6 to 100 years
Machinery, equipment and furnishings 5 to 45 years
Vehicles 5 to 20 years
Assets under construction are not amortized until the asset is available
for productive use.
Tangible capital assets received as contributions are recorded at fair
value at the date of receipt and are also recorded as revenue.
Leased Assets Leases entered into that transfer substantially all the benefits and risks
associated with ownership are recorded as the acquisition of a tangible
capital asset and the incurrence of an obligation. The asset is
amortized in a manner consistent with tangible capital assets owned by
the County, and the obligation, including interest thereon, is liquidated
over the term of the lease. All other leases are accounted for as
operating leases, and the rental costs are expensed as incurred.
Pension Expenditure The County's participates in a multi-employer defined benefit pension
plan. The plan is accounted for as a defined contribution plan.
Deferred Revenue Funds received for specific purposes which are externally restricted by
legislation, regulation or agreement and are not available for general
municipal purposes are accounted for as deferred revenue on the
statement of financial position. The revenue is recognized in the
statement of operations in the year in which it is used for the specified
purpose.
Government Transfers Government transfers, which include legislative grants, are recognized
in the financial statements in the period in which events giving rise to
the transfers occur, providing the transfers are authorized, any
eligibility criteria have been met, and reasonable estimates of the
amount can be made.
8
Kneehill County
Summary of Significant Accounting Policies
December 31, 2021
Revenue Recognition Taxes are recognized as revenue in the year they are levied.
Charges for sewer and water usage are recorded as user fees.
Connection fee revenues are recognized when the connection has been
established.
Conditional grant revenue is recognized to the extent the conditions
imposed on it have been fulfilled. Unconditional grant revenue is
recognized when monies are receivable.
Grants for the acquisition of tangible capital assets are recognized in
the period in which eligible expenditures are made.
Sales of service and other revenue is recognized on an accrual basis.
Landfill Closure and
Post Closure Liability Pursuant to 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 are 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 based on usage.
Liability for
Contaminated Sites A contaminated site is a site at which substances occur in
concentrations that exceed the maximum acceptable amounts under an
environmental standard. Sites that are currently in productive use are
only considered a contaminated site if an unexpected event results in
contamination. A liability for remediation of contaminated sites is
recognized when the organization is directly responsible or accepts
responsibility; it is expected that future economic benefits will be given
up; and a reasonable estimate of the amount can be made. The liability
includes all costs directly attributable to remediation activities
including post remediation operations, maintenance and monitoring.
The liability is recorded net of any expected recoveries.
Use of Estimates The preparation of financial statements in accordance with Canadian
public sector accounting standards requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from management's best estimates as additional
information becomes available in the future.
9
Kneehill County
Notes to Financial Statements
December 31, 2021
1.Cash and Cash Equivalents
2021 2020
Current account $6,560,055 $45,465,914
The County has an undrawn line of credit of $2,500,000 that is available should the need
arise. The line of credit bears interest at prime minus 0.75%.
Included in the above amounts are the following amounts received from the Government of
Canada and the Province of Alberta as conditional grants held exclusively for future
projects.
2021 2020
Municipal Sustainability Initiative - Capital 442,059 1,822,487
Emergency Management Preparedness 17,000 17,000
Municipal Operating Support Transfer -128,146
Fire Services Training 13,136 13,136
Other 110,000 110,000
STIP 106,770 -
$688,965 $2,090,769
2.Short-term Investments
2021 2020
Guaranteed investment certificates, bearing interest
at rates of 1.30% to 1.75% and maturing between
July of 2022 and January of 2024.$46,000,000 $-
10
Kneehill County
Notes to Financial Statements
December 31, 2021
3.Taxes Receivable
2021 2020
Current taxes and grants in place $3,769,779 $7,490,096
Non-current taxes and grants in place 4,599,833 4,072,659
Less: Allowance for doubtful accounts (4,080,328)(4,041,949)
$4,289,284 $7,520,806
4.Accounts Receivable
2021 2020
Trade receivables $5,360,729 $4,829,045
GST receivable 170,304 585,809
$5,531,033 $5,414,854
5.Investments
2021 2020
Alberta Capital Finance Shares, at cost $1 $1
Servus Credit Union Membership Shares, at cost 268 268
$269 $269
11
Kneehill County
Notes to Financial Statements
December 31, 2021
6. Employee Benefit Obligation
2021 2020
Accrued early retirement program $167,005 $272,956
Accrued vacation pay 298,323 342,349
Accrued sick leave benefit 500,176 637,636
$965,504 $1,252,941
The vacation and sick 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. The early
retirement program is an incentive for eligible employees to receive a percentage of their
salary should they choose to retire before turning 65. Only employees hired prior to January
1, 2007 who are at least 55 years old are eligible.
12
Kneehill County
Notes to Financial Statements
December 31, 2021
7.Deferred Revenue
Opening balance Contributions
received
Revenue
recognized
Ending balance
MSI Operating -145,213 (145,213)-
MSI Capital 4,083,525 2,901,676 (3,641,466)3,343,735
Gas Tax Fund 851,182 585,560 -1,436,742
Emergency
Management
Preparedness
17,000 -17,000
MOST 128,146 (128,146)-
Fire Services
Training
13,136 -13,136
MSP 594,464 -(594,464)-
STIP Bridges -660,312 (553,542)106,770
Agriculture -173,907 (173,907)-
Other -76,250 (76,250)-
$5,687,453 4,542,918 (5,312,988)$4,917,383
Grants
Under various grant agreements with the Government of Canada and the Province of
Alberta, the County is required to account for grants provided and to complete the projects
or program in accordance with standards detailed in the various agreements. If these
requirements are not adhered to, grants provided will become repayable to the source
government. Unexpended funds are repayable to the source government upon final
accounting. Funds are deferred until related expenditures under the specific grant
agreement have been incurred.
13
Kneehill County
Notes to Financial Statements
December 31, 2021
8. Landfill Closure and Post-Closure Liabilities
Solid waste closure and post-closure care requirements have been defined in accordance
with industry standards and include final covering and landscaping of the landfill, removal of
ground water and leachates, and ongoing environmental monitoring, site inspection and
maintenance. The estimated total liability is based on the sum of the discounted future
cash flows for close and postclosure activities for 25 years after closure using a discount rate
of 4.4% and assuming annual inflation of 3%.
The accrued liability portion is based on the cumulative capacity used at year end compared
to the estimated total landfill capacity. The total capacity of the site is estimated at 57,600
cubic metres. The existing landfill site is expected to reach capacity in (approximately)
2028. The County has not designated assets for settling closure and post closure liabilities.
2021
($)
2020
($)
Estimated closure costs 545,235 545,235
Estimated post-closure costs 470,780 470,780
Estimated total liability 1,016,015 1,016,015
Liability accrued (594,503)(470,965)
Balance of estimated cost to accrue 421,512 545,050
14
Kneehill County
Notes to Financial Statements
December 31, 2021
9. Liability for Contaminated Sites
The County has one site that falls under this standard.
This site was acquired through the tax recovery process. The contamination comes from an
underground storage tank plus additional possible contamination from the former bulk fuel
storage facility.
Costs to reclaim were estimated using the soil vapour extraction and air sparging technology
at an estimated cost of $397,400 over 3 years which includes costs to remove the tank,
install equipment and operate the equipment for 3 years. Costs to reclaim have not been
discounted.
15
Kneehill County
Notes to Financial Statements
December 31, 2021
10.Tangible Capital Assets
2021
Land Land
Improvements Buildings Engineered
Structures
Machinery and
Equipment Vehicles Work in
Progress Total
Cost, beginning of year $2,383,818 $3,297,328 $20,525,796 $168,843,742 $11,250,241 $10,474,749 $1,073,348 $217,849,022
Additions 230,552 278,074 6,982,935 143,431 189,595 558,927 8,383,514
Change in work in
progress ---659,704 -8,996 (668,700)-
Write-downs & disposals ---(663,404)(624,908)(384,626)(4,767)(1,677,705)
Cost, end of year $2,383,818 $3,527,880 $20,803,870 $175,822,977 $10,768,764 $10,288,714 $958,808 $224,554,831
Accumulated
amortization, beginning
of year $-$1,423,252 $4,838,719 $85,719,655 $4,068,675 $4,721,722 $-$100,772,023
Amortization -147,408 503,676 4,047,766 646,905 762,936 -6,108,691
Write-downs & disposals ---(572,668)(246,688)(318,029)-(1,137,385)
Accumulated
amortization, end of year $-$1,570,660 $5,342,395 $89,194,753 $4,468,892 $5,166,629 $-$105,743,329
Net carrying amount, end
of year $2,383,818 $1,957,220 $15,461,475 $86,628,224 $6,299,872 $5,122,085 $958,808 $118,811,502
14
Kneehill County
Notes to Financial Statements
December 31, 2021
10. Tangible Capital Assets (continued)
2020
Land Land
Improvements Buildings Engineered
Structures
Machinery and
Equipment Vehicles Work in
Progress Total
Cost, beginning of year $2,384,358 $3,222,452 $19,901,899 $160,513,977 $10,977,310 $8,724,258 $3,057,585 $208,781,839
Additions 56,118 249,885 6,030,853 790,318 3,379,838 -10,507,012
Change in work in progress 18,758 374,012 2,371,626 -253,070 (1,947,496)1,069,970
Write-downs & disposals (540)--(72,714)(517,387)(1,882,417)(36,741)(2,509,799)
Cost, end of year $2,383,818 $3,297,328 $20,525,796 $168,843,742 $11,250,241 $10,474,749 $1,073,348 $217,849,022
Accumulated amortization,
beginning of year $-$1,285,025 $4,355,752 $81,804,755 $3,547,827 $4,999,985 $-$95,993,344
Amortization 138,227 482,967 3,987,614 675,799 795,356 -6,079,963
Write-downs --(72,714)(154,951)(1,073,619)-(1,301,284)
Accumulated amortization,
end of year $-$1,423,252 $4,838,719 $85,719,655 $4,068,675 $4,721,722 $-$100,772,023
Net carrying amount, end
of year $2,383,818 $1,874,076 $15,687,077 $83,124,087 $7,181,566 $5,753,027 $1,073,348 $117,076,999
15
Kneehill County
Notes to Financial Statements
December 31, 2021
11. Inventory For Consumption
2021 2020
Gravel $7,901,877 $7,618,523
Other transportation amounts 258,821 378,824
General department 160,246 179,351
$8,320,944 $8,176,698
12.Equity in Tangible Capital Assets
2021 2020
Tangible capital assets $224,554,831 $217,849,022
Accumulated amortization (105,743,329)(100,772,023)
$118,811,502 $117,076,999
16
Kneehill County
Notes to Financial Statements
December 31, 2021
13.Accumulated Surplus
2021 2020
Equity in tangible capital assets (Note 12)$118,811,502 $117,076,999
Equity in other non-financial assets 8,559,476 8,423,368
Unrestricted surplus 3,437,969 2,132,804
130,808,947 127,633,171
Reserves
Operating Reserves:
Contingency 1,639,464 2,073,612
Information Technology 306,404 190,065
Joint Community Support -31,641
Doctor Recruitment -154,680
Gravel 1,849,528 2,443,738
Planning 142,679 142,679
Parks 816,007 832,621
Transitional Funds 636,112 866,664
Revenue Stabilization Reserve 4,168,914 2,407,829
9,559,108 9,143,529
Capital Reserves:
Capital Equipment Replacement 7,149,823 4,825,836
Buildings 1,682,956 1,244,500
Bridges 1,117,651 3,311,114
Roads 14,856,578 12,262,894
Water 3,929,625 3,545,083
Water Service Area 5,870,638 4,929,755
Environmental 1,950,541 1,955,393
Emergency Disaster 179,090 -
Hamlet Infrastructure 3,305,609 3,493,522
40,042,511 35,568,097
Total Reserves 49,601,619 44,711,626
$180,410,566 $172,344,797
The equity in tangible capital assets represents amounts already spent and invested in
infrastructure. Reserves represents funds set aside by bylaw or council resolution for
specific purposes.
17
Kneehill County
Notes to Financial Statements
December 31, 2021
14.Change in Accumulated Surplus
Unrestricted surplus Reserves
Equity in tangible
capital assets
Equity in other non-
financial assets 2021 2020
Balance, beginning of year $2,132,804 $44,711,626 $117,076,999 $8,423,368 $172,344,797 $172,095,988
Prior period adjustment $-$-$-$-$-$-
Balance, beginning of year
restated $2,132,804 $44,711,626 $117,076,999 $8,423,368 $172,344,797 $172,095,988
Excess of revenue over
expenses 7,929,661 --136,108 8,065,769 248,809
Net operating transfers to
restricted surplus (4,889,993)4,889,993 ----
Capital transfers from
restricted surplus ------
Acquisition of capital (8,383,514)-8,383,514 ---
Disposals and write-down of
assets 540,320 -(540,320)---
Amortization 6,108,691 -(6,108,691)---
Change in accumulated
surplus $1,305,165 $4,889,993 $1,734,503 $136,108 $8,065,769 $248,809
Balance, end of year $3,437,969 $49,601,619 $118,811,502 $8,559,476 $180,410,566 $172,344,797
18
Kneehill County
Notes to Financial Statements
December 31, 2021
15.Taxation - Net
Budget
2021 2021 2020
Taxation
Farmland $1,443,799 $1,443,859 $1,255,399
Residential 1,622,286 1,618,797 1,514,886
Commercial 791,209 822,542 754,218
Linear property 18,013,631 18,294,341 18,471,232
Designated Industrial 5,885,827 5,606,552 5,656,945
Minimum tax 43,960 47,924 47,403
Grants in lieu -1,077 1,012
Water area special tax (rural)85,000 86,605 85,122
Water area special tax (non residential)880,000 892,504 923,161
Recreation levy 49,889 50,549 54,573
28,815,601 28,864,750 28,763,951
Requisitions
Alberta School Foundation Fund 5,167,320 5,166,997 5,671,004
Kneehill Foundation 75,890 75,890 76,833
Designated Industrial Property 90,289 89,855 93,327
5,333,499 5,332,742 5,841,164
Available for general municipal purposes $23,482,102 $23,532,008 $22,922,787
16. Government Transfers
Budget
2021 2021 2020
Operating
Provincial government $265,866 $497,266 $791,556
Other local government -26,250 1,962
265,866 523,516 793,518
Capital
Provincial government 4,309,951 4,789,472 1,390,991
Total government transfers $4,575,817 $5,312,988 $2,184,509
19
Kneehill County
Notes to Financial Statements
December 31, 2021
17.Expenses by Object
Budget
2021 2021 2020
Salaries and wages $9,470,295 $8,773,819 $9,256,748
Contracted and general services 7,777,440 5,338,336 8,419,038
Materials, goods and utilities 3,833,108 3,827,418 3,155,359
Transfer to local agencies 1,167,335 586,212 482,567
Transfer to individuals and organizations 130,211 588,835 1,138,431
Operating bank fees 11,884 18,083 11,323
Amortization 6,108,691 6,108,691 6,079,962
Loss on sale of assets --130,387
$28,498,964 $25,241,394 $28,673,815
18. Municipal Employees Pension Plans
Local Authorities Pension Plan
Certain employees of the County are eligible to be members of the Local Authorities Pension
Plan (LAPP), a multi-employer pension plan which is covered by the Public Sector Pension
Plans Act. The Plan serves about 274,151 people and over 420 employers. It is financed by
employer and employee contributions and investment earnings of the LAPP Fund. The plan
provides defined pension benefits to employees based on their length of service and rates of
pay.
The County contributes to the Plan at a rate of 9.39% of pensionable earnings up to the
Canada Pension Plan Maximum Pensionable Earnings and 13.84% for the excess. Employees
contribute to the Plan at a rate of 8.39% of pensionable earnings up to the Canada Pension
Plan Maximum Pensionable Earnings and 12.84% for the excess.
Contributions for the year were:
2021 2020
Employer contributions $620,838 $651,446
Employee contributions 563,066 591,679
$1,183,904 $1,243,125
As this is a multi-employer pension plan, these contributions are the County's pension
benefit expense. No pension liability for this type of plan is included in the County's
financial statements. The most recent valuation as at December 31, 2020 indicates a
surplus of $4.9 million (2019 surplus - $7.9 million) for basic pension benefits. The actuary
does not attribute portions of the unfunded liability to individual employers.
20
Kneehill County
Notes to Financial Statements
December 31, 2021
19. Salary and Benefits Disclosure
Disclosure of salaries and benefits for municipal officials and designated officers as required
by Alberta Regulation 313/2000 is as follows:
Salary
Benefits &
Allowances
Total
2021
Total
2020
Division 1 (1 person)53,093 6,593 59,686 60,948
Division 2 (1 person)44,304 6,503 50,807 55,284
Division 3 (1 person)57,347 6,623 63,970 71,685
Division 4 (1 person)46,087 6,503 52,590 58,605
Division 5 (1 person)43,327 3,947 47,274 52,600
Division 6 (1 person)46,880 6,683 53,563 64,196
Division 7 (1 person)48,062 6,593 54,655 63,668
Chief Administration
Officer 228,944 40,382 269,326 221,072
Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria
and any other direct cash remuneration.
Benefits and allowances includes the employer's share of all employee benefits and
contributions or payments made on behalf of employees including pension, health care,
dental coverage, group life insurance, accidental disability and dismemberment, dental
coverage, vision coverage, professional memberships, tuition, travel, cell phone, car
allowances, and long and short term disability plans.
21
Kneehill County
Notes to Financial Statements
December 31, 2021
20.Debt Limits
Section 276(2) of the Municipal Government Act requires that debt and debt limits as
defined by Alberta Regulation 255/100 for the County be disclosed as follows:
2021 2020
Total debt limit $42,776,535 $41,188,489
Total debt 20,000,000 -
Total debt limit available 22,776,535 41,188,489
Debt servicing limit 7,129,423 6,864,748
Total debt servicing limit available 7,129,423 6,864,748
The debt limit is calculated at 1.5 times revenue of the County (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 which 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.
The County has provided a loan guarantee in the amount of $20,000,000 to the Town of
Trochu to support the potential building of Trochu Seniors Supportive Living Facility Project
in the Town of Trochu. In compliance with Section 268 of the Municipal Government Act,
the amount of the proposed loan guarantee does not cause the County to exceed it's debt
limit. If the Town of Trochu is unable to meet the terms of the loan the County will utilize
cash reserves or funds raised through taxation to honour the terms of the loan. Along with
other conditions the County's commitment to enter a guarantee shall be conditional on the
Town receiving firm financial capital grant commitments of at least $19,000,000 to
undertake the project. As of December 31, 2021 the conditions of the loan guarantee have
not been met.
21.Contingencies
The County is a member of the Alberta Local Municipal Insurance Exchange (Munix). Under
the terms of membership, the County could become liable for its proportionate share of any
claim losses in excess of the funds held by the exchange. Any liability incurred would be
accounted for as a current transaction in the year the losses are determined.
22
Kneehill County
Notes to Financial Statements
December 31, 2021
22. Commitments
Kneehill County has contracts for 2022 to provide peace officer and by-law enforcement
services at a cost recovery for the following Municipalities: Town of Three Hills, Village of
Linden, Village of Acme, Village of Carbon.
Kneehill County is managing partner of the Aqua 7 Regional Water Services Commission. The
current contract is from January 1, 2020 to December 31, 2022. The County will receive
$81,464 in those three years for fees to provide support services to the Commission.
Kneehill County is a partnering member of the Drumheller and District Solid Waste
Management Association. In 2021 Kneehill County paid requisition of $207,341.
Kneehill County extended their contract for assessment services until 2024. The total
financial commitment from 2021 to 2022 will be approximately $175,908.
Kneehill County is part of a Master Fire Protection Agreement with the following
Municipalities to provide fire protection services to rural residents in the County for 2021
inclusive, the total commitment is as follows:
2022
($)
2021
($)
Town of Three Hills 52,000 52,000
Town of Trochu 52,010 50,990
Village of Acme 44,571 43,697
Village of Carbon 44,518 43,645
Village of Linden 47,231 46,308
Kneehill County is part of a Recreation Agreement with the following Municipalities to
provide funding of recreaton programs and facilities in the County for 2021 inclusive, the
total commitment is as follows:
2022
($)
2021
($)
Town of Three Hills 120,000 120,000
Town of Trochu 52,020 51,000
Village of Acme 37,500 37,500
Village of Carbon 37,500 37,500
Village of Linden 40,000 40,000
23
Kneehill County
Notes to Financial Statements
December 31, 2021
23.Budget
The budget adopted by Council on February 23, 2021, was not prepared on a basis consistent
with that used to report actual results (Public Sector Accounting Standards). The budget
was prepared on a modified accrual basis while Public Sector Accounting Standards now
require a full accrual basis. The budget figures anticipated use of surpluses accumulated in
previous years to fund current year operation and capital activities. In addition, the budget
expensed all tangible capital asset expenditures rather than including amortization expense.
As a result, the budget figures presented in the statements of operations and change in net
financial assets represent the budget adopted by Council on February 23, 2021, with
adjustments as follows:
Budget
Amortization
Allocation
Budget per
Financial
Statements
Actual per
Financial
Statements
Revenues $25,607,863 -25,607,863 $28,517,691
Government transfers for capital 4,309,951 -4,309,951 4,789,472
Total revenues 29,917,814 -29,917,814 33,307,163
Legislative 614,139 -614,139 495,127
Administration 5,147,828 135,748 5,283,576 4,676,322
Protective services 1,955,615 306,272 2,261,887 2,077,433
Transportation 9,611,764 4,244,592 13,856,356 11,890,436
Water and Wastewater 1,995,245 988,308 2,983,553 3,006,211
Waste management 572,088 -572,088 645,214
Planning and development 569,342 -569,342 552,740
Parks, recreation and culture 826,220 267,218 1,093,438 848,897
Public health and welfare 129,820 98,153 227,973 194,656
Economic and agricultural
development services
968,212 68,400 1,036,612 854,358
Total Expenditures 22,390,273 6,108,691 28,498,964 25,241,394
Excess of revenues over
expenditures 7,527,541 (6,108,691)1,418,850 $8,065,769
Reconciling:
Payment of debentures ---
Proceeds on disposal of capital 100,000 -100,000
Capital expenditures (12,870,182)-(12,870,182)
Funded from reserves 8,560,231 8,560,231
Inter-fund transfers (3,317,590)-(3,317,590)
-(6,108,691)(6,108,691)
Add back non cash items:
Change in closure/ post-closure ---
Amortization -6,108,691 6,108,691
Net Revenue over Expenses $---
24
Kneehill County
Notes to Financial Statements
December 31, 2021
24. Segmented Information
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 kilometres 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 organized 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 the Alberta Agriculture Food and Rural
Development. The key priorities and goals of the department are to advise landowners
concerning 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.
Administration
The Administration Department focuses on the delivery of quality services to customers at a
reasonable cost. Along with meeting all of the financial reporting requirements, this
department 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, Information Technology and Human Resources. The goal of the
Administration team is the delivery of customer service in a friendly, courteous and helpful
manner guided by integrity and fairness.
25
Kneehill County
Notes to Financial Statements
December 31, 2021
24. Segmented Information (continued)
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 modern response equipment. Kneehill County support operating contracts
with each of the six urban fire departments in addition to major contributions emergency
response vehicles.
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 is also provided to other County departments such as
Planning and Operations.
Planning and Development
The Planning and Development department promotes the incorporation of progressive
planning and development practices into the organizations daily operations, along with
orderly development and land use practices benefiting 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 neighbouring municipalities, an Environmentally Significant Areas
Assessment and an Integrated Community Sustainability Plan. Long-term planning is
supported by the Municipal Development Plan and Land Use Bylaw which reflect the vision
and expectations of County residents.
Transportation
The Transportation department oversees many responsibilities including that of
construction, maintenance and dust control of roads. Kneehill County has over 200 bridge
crossing sites that are also maintained by this department. The 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 Transportation department also provides
services in five major hamlets located within our boundaries.
26
Kneehill County
Notes to Financial Statements
December 31, 2021
24. Segmented Information (continued)
Water, Wastewater and Waste Managements
Major infrastructure projects have taken place under the direction of Council in the area of
potable water distribution. As a member of the Aqua 7 Regional Water Services Commission,
the County has diligently worked to bring water to areas of the County where safe potable
water is not available through the traditional well systems. Major completion of these
distribution lines were 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
Water management Association, various transfer sites provide for the collection and
disbursement of solid waste.
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, Recreation and Culture
Under the direction of the Transportation department, the County 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 available 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) located within our urban centres in Kneehill County.
Public Health and Welfare
Kneehill County has taken on the financial responsibility for the facility costs of the Kneehill
Regional Medical Centre. In addition, the County controls operating expenses of 17
cemeteries, including the ground maintenance activities as provided within the Cemeteries
Act, Provincial Statues and County Policies.
The accounting policies of the segments are the same as those described in the summary of
significant accounting policies. In measuring and reporting segment revenue from
transactions with other segments, inter-segment transfers have been eliminated. The
revenues and expenses that are directly attributable to a particular segment are allocated
to that segment. Taxation revenue has been allocated to general government except where
specific tax revenues can be directly allocated to a service area.
27
Kneehill County
Notes to Financial Statements
December 31, 2021
24. Segmented Information (continued)
For the year ended
December 31
Protective
Services
Economic/
Agricultural
Development
Transportation
Services
Environmental
Services
Planning and
Development
Parks and
Recreation
Public Health
and Welfare
General
Government
2021
Total
Revenue
Taxation $2,178,415 $962,376 $10,001,242 $3,269,601 $684,140 $715,428 $118,691 5,602,114 $23,532,007
Government transfers for
operating -250,157 -----3,914,825 4,164,982
Government transfers for
capital --1,148,006 -----1,148,006
Sales and user fees 8,862 20,889 207,331 1,366,387 127,343 107,844 10,300 21,894 1,870,850
Investment income -------339,772 339,772
Fines and costs 13,274 --5,198 ---1,195,412 1,213,884
Rental revenue 22,851 -28,919 ---90,000 -141,770
Other 26,660 -17,282 437,957 ---412,964 894,863
Gain on disposal of assets 12,711 -(5,000)(4,767)-(6,357)-4,442 1,029
2,262,773 1,233,422 11,397,780 5,074,376 811,483 816,915 218,991 11,491,423 33,307,163
Expenses
Salaries and wages 764,791 355,911 3,659,893 907,637 476,076 270,050 56,994 2,282,467 8,773,819
Contracted and general
services 277,425 256,844 2,104,448 546,894 75,961 145,546 30,499 1,900,719 5,338,336
Materials, goods and utilities 253,572 169,704 1,881,502 1,157,864 703 50,354 9,009 304,710 3,827,418
Transfer to local agencies 475,373 ----62,018 -48,821 586,212
Transfers to individuals and
organizations --480,902 50,722 3,500 53,711 --588,835
Interest on long-term debt -------18,083 18,083
Amortization 306,272 68,400 4,244,592 988,308 -267,218 98,153 135,748 6,108,691
2,077,433 850,859 12,371,337 3,651,425 556,240 848,897 194,655 4,690,548 25,241,394
Net surplus (deficit)$185,340 $382,563 $(973,557)$1,422,951 $255,243 $(31,982)$24,336 $6,800,875 $8,065,769
28
Kneehill County
Notes to Financial Statements
December 31, 2021
24. Segmented Information (continued)
For the year ended
December 31
Protective
Services
Agricultural
Services
Transportation
Services
Environmental
Services
Planning and
Development
Parks and
Recreation
Public Health
and Welfare
General
Government
2020
Total
Revenue
Taxation $1,669,229 $612,484 $9,486,115 $2,509,948 $498,281 $647,831 $114,001 $7,384,898 $22,922,787
Government transfers for
operating -123,907 -----669,611 793,518
Government transfers for
capital --1,390,991 -----1,390,991
Sales and user fees 5,892 20,189 164,408 1,114,142 130,477 67,297 7,800 32,038 1,542,243
Investment income -------479,507 479,507
Fines and costs 9,291 --3,800 ---845,266 858,357
Rentals 22,271 -33,287 ---90,000 -145,558
Licences and permits -------156,557 156,557
Other 116,612 -8,200 474,816 ---33,478 633,106
1,823,295 756,580 11,083,001 4,102,706 628,758 715,128 211,801 9,601,355 28,922,624
Expenses
Salaries and wages 736,008 259,827 3,823,603 797,797 418,323 326,179 53,059 2,841,952 9,256,748
Contracted and general
services 252,318 228,977 2,910,394 565,590 65,285 167,023 49,494 4,179,957 8,419,038
Materials, goods and utilities 233,598 126,491 1,467,545 1,062,102 1,023 52,655 9,812 202,133 3,155,359
Transfer to local agencies 391,410 ----43,105 -48,052 482,567
Transfers to individuals and
organizations --1,027,498 50,722 6,500 53,711 --1,138,431
Interest on long-term debt -------11,323 11,323
Amortization 290,073 69,931 4,245,234 988,308 -253,471 98,153 134,792 6,079,962
(Gain)/Loss on sale of capital
assets 31,942 (11,599)120,952 (2,280)-(4,138)-(4,490)130,387
Other ---------
1,935,349 673,627 13,595,226 3,462,239 491,131 892,006 210,518 7,413,719 28,673,815
Net surplus (deficit)$(112,054)$82,953 $(2,512,225)$640,467 $137,627 $(176,878)$1,283 $2,187,636 $248,809
29
Kneehill County
Notes to Financial Statements
December 31, 2021
25. Uncertainty Due to COVID-19
The COVID-19 outbreak was declared a pandemic by the World Health Organization in March
2020 and has had a significant impact worldwide..
As the impacts of COVID-19 continue, there could be further impact on the County, its
residents, employees, suppliers and other third party business associates that could impact
the timing and amounts realized on the County’s assets and future ability to deliver services
and projects. At this time, the full potential impact of COVID-19 on the County is not known.
Although the disruption from the virus is expected to be temporary, given the dynamic
nature of these circumstances, the duration of disruption and the related financial impact
cannot be reasonably estimated at this time. The County’s ability to continue delivering non-
essential services and employ related staff will depend on the legislative mandates from the
various levels of government. The County will continue to focus on collecting receivables,
managing expenditures, and leveraging existing reserves and available credit facilities to
ensure it is able to continue providing essential services to its residents.
26. Comparative Figures
Wherever necessary, comparative figures have been reclassified to conform with current
year financial statement presentation.
27. Approval of Financial Statements
Council and Management approved these financial statements.
30