HomeMy WebLinkAbout2022 Financial Statements Kneehill County
Financial Statements
For the year ended December 31, 2022
Kneehill County
Financial Statements
For the year ended December 31, 2022
Contents
Auditors' Report 1
Financial Statements
Statement of Financial Position 3
Statement of Operations 4
Statement of Change in Net Financial Assets 5
Statement of Cash Flows 6
Summary of Significant Accounting Policies 7 - 9
Notes to the Financial Statements 10-29
I Tel: 403 342 2500 BDO Canada LLP
BDO Fax: 403 343 3070 Suite 100 179D Leva Avenue
www.bdo.ca Red Deer County AB T4E 1 B9
Canada
Independent Auditor's Report
To the Reeve and Council of Kneehill County
Opinion
We have audited the financial statements of Kneehill County, which comprise the statement of financial
position as at December 31, 2022, and the statement of operations, statement of changes in net financial
assets, and statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of the Entity as at December 31, 2022 and its 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 Entity in accordance with
the ethical requirements that are relevant to our audit of the 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 Financial Statements
Management is responsible for the preparation and fair presentation of these 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 financial statements, management is responsible for assessing the Entity'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 Entity or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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.
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 internatiional
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 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 Entity'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 Entity'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 Entity to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the 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 Entity to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the 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.
BOO Ga tad z UP
Chartered Professional Accountants,
Red Deer, Alberta
June 27, 2023
Kneehill County
Statement of Financial Position
December 31 2022 2021
Financial assets
Cash and cash equivalents (Note 1) $ 26,093,046 $ 6,560,055
Investments (Note 2) 41,898,411 46,000,269
Taxes receivable (Note 3) 1,024,081 4,289,284
Accounts receivable (Note 4) 3,862,215 5,531,033
Land held for resale 75,899 75,899
72,953,652 62,456,540
Liabilities
Accounts payable and accrued liabilities 2,035,020 2,432,162
Employee benefit obligation (Note 5) 835,077 965,504
Deposit liabilities 110,000 110,000
Deferred revenue (Note 6) 5,662,220 4,917,383
Solid waste closure and post-closure liabilities (Note 7) 551,741 594,503
Liability for contaminated sites (Note 9) 416,475 397,400
9,610,533 9,416,952
Net financial assets 63,343,119 53,039,588
Non-financial assets
Tangible capital assets (Note 9) 114,187,767 118,811,502
Inventory for consumption (Note 10) 8,396,169 8,320,944
Prepaid expenses 272,808 238,532
122,856,744 127,370,978
Accumulated surplus (Note 12) $ 186,199,863 $ 180,410,566
Debenture debt limits (Note 19)
Contingencies (Note 20)
Commitments (Note 21)
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 2022 2022 2021
Revenue
Net municipal taxes (Note 14) $ 24,063,622 $ 24,082,800 $ 23,532,008
Government transfers for operating (Note 15) 314,861 353,176 523,516
Sales and user fees 533,580 1,992,503 1,830,649
Rental revenue 145,846 139,600 141,770
Investment income 527,800 1,251,242 339,772
Penalties and costs on taxes 110,000 1,154,475 1,200,609
Fines and costs 17,000 5,752 13,274
Other 111,100 662,451 418,077
Local improvement tax 281,485 328,254 383,878
Sales to other governments 108,848 112,186 133,109
Gain/(loss) on disposal of assets - (2,326) 1,029
26,214,142 30,080,113 28,517,691
Expenditures (Note 16)
Legislative 1,106,301 971,565 495,127
Administration and Assessment 4,889,827 4,171,887 4,676,322
Protective services 2,461,341 2,176,622 2,077,433
Transportation 10,849,408 11,509,571 11,890,436
Water and wastewater 3,039,162 3,069,861 3,006,211
Waste management 615,387 526,492 645,214
Public health and welfare 220,517 191,317 194,656
Planning and development 567,429 547,609 552,740
Economic/ Agricultural development 1,057,068 716,955 854,358
Parks, recreation and culture 1,630,663 1,219,679 848,897
26,437,103 25,101,558 25,241,394
Excess (deficiency) of revenue over
expenditures - before other (222,961) 4,978,555 3,276,297
Other
Government transfers for capital (Note 15) 322,500 810,742 4,789,472
Excess of revenue over
expenditures 99,539 5,789,297 8,065,769
Accumulated surplus, beginning of year 180,410,566 180,410,566 172,344,797
Accumulated surplus, end of year $ 180,510,105 $ 186,199,863 $ 180,410,566
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 2022 2022 2021
Excess of revenue over
expenditures $ 99,539 $ 5,789,297 $ 8,065,769
Acquisition of tangible capital assets (4,408,833) (1,586,462) (8,383,514)
Amortization of tangible capital assets 6,042,158 6,042,158 6,108,691
Net (gain) loss on sale of tangible capital assets - 2,326 (1,029)
Proceeds on sale of tangible capital assets 100,000 85,388 541,349
Write-down on cost of tangible capital assets - 80,325 -
1,832,864 10,413,032 6,331,266
Change in prepaid expenses - (34,276) 8,136
Purchase inventory for consumption (1,503,450) (2,971,196) (2,980,450)
Use inventory for consumption - 2,895,971 2,836,206
Net change in net financial assets 329,414 10,303,531 6,195,158
Net financial assets, beginning of year 53,039,588 53,039,588 46,844,430
Net financial assets, end of year $ 53,369,002 $ 63,343,119 $ 53,039,588
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 2022 2021
Operating transactions
Excess of revenue over expenditures $ 5,789,297 $ 8,065,769
Items not involving cash
Amortization 6,042,158 6,108,691
Net loss (gain) on disposal of tangible capital assets 2,326 (1,029)
Write-down of tangible capital assets 80,325 -
Changes in non-cash operating balances
Taxes receivable 3,265,203 3,231,522
Accounts receivable 1,668,818 (116,179)
Inventory held for resale - 746,815
Prepaid expenses (34,273) 8,138
Accounts payable and accrued liabilities (397,142) (2,009,206)
Inventory for consumption (75,225) (144,246)
Employee benefit obligation (130,427) (287,437)
Deposit liabilities - (20,000)
Deferred revenue 744,837 (770,070)
Solid waste closure and post closure liabilities (42,762) 123,538
Liability for contaminated sites 19,075 -
16,932,210 14,936,306
Capital transactions
Acquisition of tangible capital assets (1,586,462) (8,383,514)
Proceeds on sale of tangible capital assets 85,389 541,349
(1,501,073) (7,842,165)
Investing transactions
(Purchase)/sale of short term investments 4,101,854 (46,000,000)
Net change in cash and cash equivalents 19,532,991 (38,905,859)
Cash and cash equivalents, beginning of year 6,560,055 45,465,914
Cash and cash equivalents, end of year $ 26,093,046 $ 6,560,055
Cash and cash equivalents is comprised of:
Cash and cash equivalents $ 26,093,046 $ 6,560,055
Less: restricted (Note 1) (2,986,024) (688,965)
$ 23,107,022 $ 5,871,090
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, 2022
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, 2022
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, 2022
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, 2022
1. Cash and Cash Equivalents
2022 2021
Current account $ 26,093,046 $ 6,560,055
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.
2022 2021
Municipal Sustainability Initiative - Capital 2,769,254 442,059
Emergency Management Preparedness - 17,000
Fire Services Training - 13,136
Other 110,000 110,000
STIP 106,770 106,770
$ 2,986,024 $ 688,965
2. Investments
2022 2021
Guaranteed investment certificates, bearing interest
at rates of 1.45% to 4.80% and maturing between
March of 2023 and January of 2024. $ 41,898,142 $ 46,000,000
Alberta Capital Finance shares, at cost 1 1
Servus Credit Union Membership shares, at cost 268 268
$ 41,898,411 $ 46,000,269
10
Kneehill County
Notes to Financial Statements
December 31, 2022
3. Taxes Receivable
2022 2021
Current taxes and grants in place $ 1,863,740 $ 3,769,779
Non-current taxes and grants in place (733,642) 4,599,833
Less: Allowance for doubtful accounts (106,017) (4,080,328)
$ 1,024,081 $ 4,289,284
4. Accounts Receivable
2022 2021
Trade receivables $ 3,712,976 $ 5,360,729
GST receivable 149,239 170,304
$ 3,862,215 $ 5,531,033
5. Employee Benefit Obligation
2022 2021
Accrued early retirement program $ 138,326 $ 167,005
Accrued vacation pay 244,134 298,323
Accrued sick leave benefit 452,617 500,176
$ 835,077 $ 965,504
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.
11
Kneehill County
Notes to Financial Statements
December 31, 2022
6. Deferred Revenue
Opening balance Contributions Revenue Ending balance
received recognized
MSI Capital 3,343,735 1,176,683 (574,481) 3,945,937
Gas Tax Fund 1,436,742 299,690 (126,919) 1,609,513
Emergency 17,000 (17,000) -
Management
Preparedness
Fire Services 13,136 (13,136) -
Training
STIP Bridges 106,770 - - 106,770
$ 4,917,383 1,476,373 (731,536) $ 5,662,220
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.
12
Kneehill County
Notes to Financial Statements
December 31, 2022
7. 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.
2022 2021
($) ($)
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 (551,741) (594,503)
Balance of estimated cost to accrue 464,274 421,512
13
Kneehill County
Notes to Financial Statements
December 31, 2022
8. 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 $416,475 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.
14
Kneehill County
Notes to Financial Statements
December 31, 2022
9. Tangible Capital Assets
2022
Land Land Buildings Engineered Machinery and Vehicles Work in Total
Improvements Structures Equipment Progress
Cost, beginning 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
Additions - 13,008 - 88,320 256,948 1,228,186 1,586,462
Change in work in
progress - - - 863,250 - 1,148,962 (2,012,212) -
Write-downs Et disposals _ - - (80,325) (61,944) (65,000) - (207,269)
Cost, end of year $ 2,383,818 $ 3 527 880 $ 20 816 878 $ 176 605 902 $ 10 795 140 $ 11 629 624 $ $ 225 934 024
, , , , , , , , , , 174,782 , ,
Accumulated
amortization, beginning $ - $ 1,570,660 $ 5,342,395 $ 89,194,753 $ 4,468,892 $ 5,166,629 $ - $ 105,743,329
of year
Amortization - 147,408 504,187 4,028,782 637,004 724,777 - 6,042,158
Write-downs Et disposals _ _ - - (4,130) (35,100) - (39,230)
Accumulated
amortization, end of year $ - $ 1,718,068 $ 5,846,582 $ 93,223,535 $ 5,101,766 $ 5,856,306 $ - $ 111,746,257
Net carrying amount, end
of year $ 2,383,818 $ 1,809,812 $ 14,970,296 $ 83,382,367 $ 5,693,374 $ 5,773,318 $ 174,782 $ 114,187,767
Kneehill County
Notes to Financial Statements
December 31, 2022
9. Tangible Capital Assets (continued)
2021
Land Land Buildings Engineered Machinery and Vehicles Work in Total
Improvements Structures Equipment Progress
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 Et 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 $ $ 224,554 831
, , , , , , , , , 958,808 ,
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 - - (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
Ui
Kneehill County
Notes to Financial Statements
December 31, 2022
10. Inventory For Consumption
2022 2021
Gravel $ 7,753,602 $ 7,901,877
Other transportation amounts 374,212 258,821
General department 268,355 160,246
$ 8,396,169 $ 8,320,944
11. Equity in Tangible Capital Assets
2022 2021
Tangible capital assets $ 225,934,024 $ 224,554,831
Accumulated amortization (111,746,257) (105,743,329)
$ 114,187,767 $ 118,811,502
16
Kneehill County
Notes to Financial Statements
December 31, 2022
12. Accumulated Surplus
2022 2021
Equity in tangible capital assets (Note 11) $ 114,187,767 $ 118,811,502
Equity in other non-financial assets 8,668,976 8,559,476
Unrestricted surplus 3,301,890 3,437,969
126,158,633 130,808,947
Reserves
Operating Reserves:
Contingency 1,606,646 1,639,464
Information Technology 267,366 306,404
Joint Community Support 44,707 -
Doctor Recruitment 120,133 -
Gravel 2,099,528 1,849,528
Infrastructure 850,000 -
Planning 142,679 142,679
Parks 802,999 816,007
Transitional Funds 636,112 636,112
Revenue Stabilization Reserve 6,978,680 4,168,914
13,548,850 9,559,108
Capital Reserves:
Capital Equipment Replacement 9,691,216 7,149,823
Buildings 2,072,704 1,682,956
Bridges 1,086,270 1,117,651
Roads 17,747,378 14,856,578
Water 4,232,000 3,929,625
Water Service Area 5,870,638 5,870,638
Environmental 1,950,541 1,950,541
Emergency Disaster 536,024 179,090
Hamlet Infrastructure 3,305,609 3,305,609
46,492,380 40,042,511
Total Reserves 60,041,230 49,601,619
$ 186,199,863 $ 180,410,566
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, 2022
13. Change in Accumulated Surplus
Equity in tangible Equity in other non-
Unrestricted surplus Reserves capital assets financial assets 2022 2021
Balance, beginning of year $ 3,437,969 $ 49 601 620 $ 118 811 502 $ 8 559 475 $ 180 410 566 $ 172 344 797
, , , , , , , , , , ,
Excess of revenue over
expenses 5,679,796 - - 109,501 5,789,297 8,065,769
Net operating transfers to
restricted surplus (10,439,610) 10,439,610 - - - -
Capital transfers from
restricted surplus - _ - - _ _
Acquisition of capital (1,586,462) - 1,586,462 - - -
Disposals and write-down of
assets 168,039 - (168,039) - - -
Amortization 6,042,158 - (6,042,158) - - -
Change in accumulated
surplus $ (136,079) $ 10,439,610 $ (4,623,735) $ 109,501 $ 5,789,297 $ 8,065,769
Balance, end of year $ 3,301,890 $ 60 041,230 $ 114,187,767 $ 8,668,976 $ 186,199,863 $ 180,410,566
Co
Kneehill County
Notes to Financial Statements
December 31, 2022
14. Taxation - Net
Budget
2022 2022 2021
Taxation
Farmland $ 1,678,820 $ 1,678,899 $ 1,443,859
Residential 1,747,652 1,789,959 1,618,797
Commercial 936,922 932,472 822,542
Linear property 19,253,023 19,236,839 18,294,341
Designated Industrial 5,848,052 5,835,814 5,606,552
Minimum tax 42,000 43,054 47,924
Grants in lieu 1,218 1,218 1,077
Water area special tax (rural) - - 86,605
Water area special tax (non residential) - - 892,504
Recreation levy 49,889 58,264 50,549
29,557,576 29,576,519 28,864,750
Requisitions
Alberta School Foundation Fund 5,328,562 5,330,803 5,166,997
Kneehill Foundation 75,578 75,708 75,890
Designated Industrial Property 89,814 87,208 89,855
5,493,954 5,493,719 5,332,742
Available for general municipal purposes $ 24,063,622 $ 24,082,800 $ 23,532,008
15. Government Transfers
Budget
2022 2022 2021
Operating
Provincial government $ 314,861 $ 349,256 $ 497,266
Other local government 3,500 3,920 26,250
318,361 353,176 523,516
Capital
Provincial government 322,500 810,742 4,789,472
Total government transfers $ 640,861 $ 1,163,918 $ 5,312,988
19
Kneehill County
Notes to Financial Statements
December 31, 2022
16. Expenses by Object
Budget
2022 2022 2021
Salaries and wages $ 9,718,300 $ 8,579,580 $ 8,773,819
Contracted and general services 5,367,931 5,087,519 5,338,336
Materials, goods and utilities 4,451,911 4,582,200 3,827,418
Transfer to local agencies 725,708 665,653 586,212
Transfer to individuals and organizations 112,211 110,534 588,835
Operating bank fees 18,884 14,095 18,083
Amortization 6,042,158 6,042,158 6,108,691
$ 26,437,103 $ 25,081,739 $ 25,241,394
17. 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:
2022 2021
Employer contributions $ 573,550 $ 620,838
Employee contributions 515,175 563,066
$ 1,088,725 $ 1,183,904
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, 2021 indicates a
surplus of $11.9 billion (2020 surplus - $4.9 billion) 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, 2022
18. 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:
Benefits It Total Total
Salary Allowances 2022 2021
Division 1 (1 person) 50,550 6,571 57,121 59,686
Division 2 (1 person) 39,013 6,260 45,273 50,807
Division 3 (1 person) 52,125 6,421 58,546 63,970
Division 4 (1 person) 43,075 6,331 49,406 52,590
Division 5 (1 person) 44,700 6,451 51,151 47,274
Division 6 (1 person) 47,300 6,751 54,051 53,563
Division 7 (1 person) 48,138 6,481 54,619 54,655
Chief Administration
Officer 220,848 52,103 272,951 269,326
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.
$27,000 of the CAO salary costs is paid by Aqua 7 for the Management Contract.
21
Kneehill County
Notes to Financial Statements
December 31, 2022
19. 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:
2022 2021
Total debt limit $45,123,659 $ 42,776,533
Total debt 20,000,000 20,000,000
Total debt limit available 25,123,659 22,776,533
Debt servicing limit 7,520,610 7,129,423
Total debt servicing limit available 7,520,610 7,129,423
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 its 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, 2022 the conditions of the loan guarantee have
not been met.
20. 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, 2022
21. Commitments
Kneehill County has contracts for 2023 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, 2023 to December 31, 2025. The County will receive
$86,450 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 2022 Kneehill County paid requisition of $207,341.
Kneehill County extended their contract for assessment services until 2024. The total
financial commitment from 2022 was $167,658 and is anticipated to be $192,795 in 2023.
Kneehill County is part of a Master Fire Protection Agreement with the following
Municipalities to provide fire protection services to rural residents in the County for 2021
inclusive, the total commitment is as follows:
2023 2022
($) ($)
Town of Three Hills 53,000 52,000
Town of Trochu 53,050 52,010
Village of Acme 45,462 44,571
Village of Carbon 44,518 44,518
Village of Linden 48,179 47,231
Kneehill County is part of a Recreation Agreement with the following Municipalities to
provide funding of recreation programs and facilities in the County for 2021 inclusive, the
total commitment is as follows:
2023 2022
($) ($)
Town of Three Hills 120,000 120,000
Town of Trochu 53,000 52,020
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, 2022
22. Budget
The budget adopted by Council on March 8, 2022, 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 March 8, 2022, with
adjustments as follows:
Budget per Actual per
Amortization Financial Financial
Budget Allocation Statements Statements
Revenues $ 26,215,406 - 26,215,406 $ 30,080,113
Government transfers for capital 322,500 - 322,500 810,742
Total revenues 26,537,906 - 26,537,906 30,890,855
Legislative 1,106,301 - 1,106,301 971,565
Administration 4,762,222 127,605 4,889,827 4,171,887
Protective services 2,052,947 408,394 2,461,341 2,176,622
Transportation 6,747,330 4,102,078 10,849,408 11,509,571
Water and Wastewater 2,063,346 975,816 3,039,162 3,069,861
Waste management 615,387 - 615,387 526,492
Planning and development 567,429 - 567,429 547,609
Parks, recreation and culture 1,368,951 261,712 1,630,663 1,219,679
Public health and welfare 122,364 98,153 220,517 191,317
Economic and agricultural 988,668 68,400 1,057,068 716,955
development services
Total Expenditures 20,394,945 6,042,158 26,437,103 25,101,558
Excess of revenues over
expenditures 6,142,961 (6,042,158) 100,803 $ 5,789,297
Reconciling:
Payment of debentures - - -
Proceeds on disposal of capital 100,000 - 100,000
Capital expenditures (4,406,330) - (4,406,330)
Funded from reserves
Inter-fund transfers (1,836,631) - (1,836,631)
- (6,042,158) (6,042,158)
Add back non cash items:
Change in closure/ post-closure - - -
Amortization - 6,042,158 6,042,158
Net Revenue over Expenses $ - - -
24
Kneehill County
Notes to Financial Statements
December 31, 2022
23. 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, 2022
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, 2022
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, 2022
23. Segmented Information (continued)
Economic/
For the year ended Protective Agricultural Transportation Environmental Planning and Parks and Public Health General 2022
December 31 Services Development Services Services Development Recreation and Welfare Government Total
Revenue
Taxation $ 913,433 $ 2,644,028 $ 9,303,365 $ 744,492 $ 508,301 $ 2,009,247 $ 27,334 7,932,601 $ 24,082,801
Government transfers for
operating 30,136 177,827 - - - - - 315,092 523,055
Government transfers for - - 66,382 - 574,481 640,863
capital
Sales and user fees 71,890 27,229 364,682 1,272,609 132,944 92,245 8,800 22,279 1,992,678
Investment income - - - - - - - 1,251,242 1,251,242
Fines and costs 5,752 - - 6,218 - - - 1,145,756 1,157,726
Rental revenue 23,208 - 26,392 - - - 90,000 - 139,600
Other 28,443 - 79,616 418,836 - - - 575,995 1,102,890
1,072,862 2,849,084 9,840,437 2,442,155 641,245 2,101,492 126,134 11,817,446 30,890,855
Expenses
Salaries and wages 778,906 339,770 3,467,750 1,027,509 470,045 304,323 47,698 2,143,579 8,579,580
Contracted and general
services 151,125 226,055 2,008,426 320,625 77,255 138,912 32,775 2,149,839 5,105,012
Materials, goods and utilities 294,283 75,969 2,146,953 1,198,560 310 198,151 12,691 655,283 4,582,200
Transfer to local agencies 543,914 - - - - 58,264 - 63,475 665,653
Transfers to individuals and - - - 50,722 5,500 54,312 - - 110,534
organizations
Interest on long-term debt - - - - - - - 14,095 14,095
Amortization 408,394 68,400 4,102,078 975,816 - 261,712 98,153 127,605 6,042,158
(Gain)/Loss on sale of capital
assets - - 2,326 - - - - - 2,326
2,176,622 710,194 11,727,533 3,573,232 553,110 1,015,674 191,317 5,153,876 25,101,558
Net surplus (deficit) $ (1,103,760) $ 2,138,890 $ (1,887,096) $ (1,131,077) $ 88,135 $ 1,085,818 $ (65,183) $ 6,663,570 $ 5,789,297
N
co
Kneehill County
Notes to Financial Statements
December 31, 2022
23. Segmented Information (continued)
2021
For the year ended Protective Agricultural Transportation Environmental Planning and Parks and Public Health General Total
December 31 Services Services Services Services Development Recreation and Welfare Government
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 - 250,157 - - - - - 3,914,825 4,164,982
operating
Government transfers for - - 1,148,006 1,148,006
capital
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
Rentals 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 277,425 256,844 2,104,448 546,894 75,961 145,546 30,499 1,900,719 5,338,336
services
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 - - 480,902 50,722 3,500 53,711 - - 588,835
organizations
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
Other - - - - - - - - -
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
N
so
Kneehill County
Notes to Financial Statements
December 31, 2022
24. Comparative Figures
Wherever necessary, comparative figures have been reclassified to conform with current
year financial statement presentation.
25. Approval of Financial Statements
Council and Management approved these financial statements.
30