The URL can be used to link to this page

Home My WebLink About2007 Financial StatementsKneehill County Financial Statements For the year ended December 31, 2007 Auditors' Report Financial Statements Statement of Financial Position Statement of Financial Activities - Operating Fund Statement of Financial Activities - Capital Fund Statement of Changes in Financial Position Notes to Financial Statements Schedule of Net Taxes for Municipal Purposes Schedule of Functional Operating Expenditures Contents 2 3 4 5 6 7-13 Schedule 1 2 IBDO BDO Dunwoody 1900, 801 6 Avenue a Chartered Accountants nts Calgary Alberta Canada T2P 3W2 and Advisors Telephone: (403) 266-5608 Fax: (403) 233-7833 www.bdo.ca Auditors' Report To the Reeve, Council and Ratepayers Kneehill County We have audited the statement of financial position of Kneehill County as at December 31, 2007 and the statements of financial activities and changes in financial position for the year then ended. These financial statements are the responsibility of the municipal administration. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, An audit also includes assessing the accounting principles used and significant estimates made by the municipal administration, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of Kneehill County as at December 31, 2007 and the results of its financial activities and the changes in its financial position for the year then ended in accordance with Canadian generally accepted accounting principles. " Chartered Accountants Calgary, Alberta April 4, 2008 BDO Dunwoody LLP is a Limited Liability Partnership registered in Ontario p Kneehill County Statement of Financial Position December 31 Assets 2007 2006 Current Cash Temporary investments Taxes receivable Trade and other accounts receivable Inventories (Note 2) Prepaid expenses Physical Assets (Note 3) Other Assets (Note 4) $ 15,669,578 $ 848,038 - 14,125,378 468,879 321,245 3,806,654 2,471,826 1,392,484 1,291,490 191,995 184.685 21, 529, 590 19, 242, 662 28,047,548 25,500,119 122 122 Tax Sale Trust Account 9,750 331 $ 49,5® $ 44,743,234 Liabilities Current Accounts payable and accrued liabilities Vested sick leave benefits Deferred revenue (Note 5) Other current Trochu Recreation Trust Tax Sale Trust Account Municipal Equity Fund balances Operating Fund - Page 4 Capital Fund - Page 5 (Note 7) Reserves (Note 6) Equity in Physical Assets (Note 9) $ 1,299,863 $ 570,911 256,926 313,694 2,383,315 2,257,725 5,247 21.902 3,945,351 3,164,232 15,394 16,653 9,750 331 3,970,495 3,181.216 5,793,092 5,772,982 (484,157) (484,157) 12,260, 032 10,773,074 28,047,548 25,500,119 45,616,515 41,562,018 $ 49,587,010 $ 44,743,234 On behalf of the Council: X M Reeve CA The accompanying notes are an integral part of these financial statements. 3 ! Kneehill County Statement of Financial Activities - Operating Fund For the year ended December 31 2007 2006 Property Taxes - Schedule 1 $ 17,234,562 $ 13,031,780 Requisition Transfers - Schedule 1 (4,251,000) (4.089.760) Net Taxes For Municipal Purposes 12,983,662 8.942.020 Revenue Government transfers 5,990,459 2,395,564 Interest and patronage dividends 550,998 522,379 Sales and user charges 686,794 852,271 Sales to other governments 230 4,438 Drilling licenses 103,824 141,397 Fees, licenses, permits and fines 252,433 141,490 Rentals 38,268 41,006 Insurance proceeds 9,415 2,854 Penalties and costs on taxes 81,228 50,331 Local government transfers 212,687 232,493 Local improvement charges 87,055 26,303 Other 208,125 198.214 8,221,516 4,608.740 Total Revenue 21,205,078 13.550.760 Expenditures Salaries, wages and benefits 4,493,875 3,708,087 Contracted and general services 8,070,472 3,621,854 Purchases from other governments 153,759 168,171 Materials, goods, supplies and utilities 3,078,580 2,130,546 Transfers to other governments 188,280 135,528 Transfers to local boards and agencies 36,853 36,853 Transfers to individuals and organizations 619,594 599,050 Bank charges and interest 8,998 1,861 Property taxes cancelled - 266 Other 5,295, 5.811 Total Expenditures - Schedule 2 16,655,706 10.408.027 Excess of revenue over expenditures 4,649,372, 3.142.733 Transfers from (to) other funds Net transfers to capital fund (5,222,359) (2,991,753) Net transfers from (to) operating reserves 693,097 (150.980) (4,529,262) (3.142.733) Net surplus from operations 20,110 - Operating Fund, beginning of year 5,772,982 5.772.982 Operating Fund, end of year $ 51793,092 $ 5772 982 The accompanying notes are an integral part of these financial statements. 4 Kneehill County Statement of Financial Activities - Capital Fund For the year ended December 31 Revenue 2007 2006 Government transfers $ 267,777 $ 354,464 Proceeds from disposal of capital property 345,903 924,383 Other 596 613,680 1.279.443 Expenditures General Government 70,238 351,681 Fire services 999,452 10,586 Bylaw Enforcement 46,407 54,126 Roads and Streets 1,574,967 2,703,098 Water supply and distribution 798,633 842,754 Agricultural Services Board 67,922 98,502 Other 98.365 80.182 3,655,984 4.140.929 Deficiency of revenues over expenditures (3,042,304) (2,861,486) Net inter-fund transfers Transfers from operating fund 5,222,359 2,991,753 Transfers to capital reserves (2,180,055) 5196.943) 3,042,304 2,794,810 Change in fund balances - (66,676) Capital Fund, beginning of year (484,157) (417,481) Capital Fund, end of year $ (4) The accompanying notes are an integral part of these financial statements. 5 t"" 1 I"'ll Kneehill County Statement of Changes in Financial Position For the year ended December 31 2007 2006 Cash flows from operating activities Excess (deficiency) of revenue over expenditures Operating fund Capital fund Changes in non-cash working capital balances Increase in taxes and grants in place of taxes Decrease (increase) in trade and other receivables Increase in inventories Increase in prepaid expenses Decrease in other assets Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in vested sick leave benefits Increase in deferred revenue Decrease in other liabilities Increase in cash and equivalents, during the year Cash and equivalents, beginning of year Cash and equivalents, end of year Represented by: Cash Temporary investments $ 4,549,372 $ 3,142,733 _ (3,042.304) (2,861.486) 1,507,068 281,247 (147,634) (20,495) (1,334,828) 1,040,969 (100,994) (212,735) (7,310) (43,062) - 2,179 728,954 (803,045) (56,768) 23,764 125,589 992,184 (17.915) (15) 696.162 1.260.991 696,162 1,260,991 14,973,416 13.712.425 $ 15,669,578 $ 14,973,416 $ 15,669,578 $ 848,038 14.125.378 $ 15,669,578 $ 14,973,416 The accompanying notes are an integral part of these financial statements. 6 lqw Kneehill County Notes to Financial Statements December 31, 2007 1. Significant Accounting Policies The financial statements of Kneehill County (the "County") are the representations of management prepared in accordance with generally accepted accounting principles for local governments established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by Kneehill County are as follows: (a) Reporting Entity The financial statements reflect the assets, liabilities, revenues and expenditures, and changes in fund balances of the reporting entity. The financial statements include all organizations that are accountable for the administration of their financial affairs and resources to the County and are controlled by the County. The schedule of taxes levied also includes requisitions for education, health, social and other external organizations that are not part of the municipal reporting entity. The statements exclude trust assets that are administered for the benefit of external parties. Interdepartmental and organizational transactions and balances are eliminated. (b) Basis of Accounting Revenues are accounted for in the period in which the transactions or events occurred that gave rise to the revenues. Funds from external parties and earnings thereon that are restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified. Government transfers are recognized in the financial statements as revenues in the period that the events giving rise to the transfer occurred, providing the transfers are authorized, the County has met any eligibility criteria, and reasonable estimates of the amounts can be made. Expenditures are recognized in the period the goods and services are acquired and a liability is incurred . (c) Use of Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the period. Where measurement uncertainty exists, the financial statements have been prepared within reasonable limits of materiality. Actual results could differ from those estimates. (d) Fund Accounting Management funds consist of the operating, capital and reserve funds. Transfers between funds are recorded as adjustments to the appropriate equity account. Proceeds from land sales are recorded as operating fund revenues. (e) Investments Investments are recorded at cost. When there has been a loss in value that is other than a temporary decline, the respective investment is written down to recognize the loss. 7 Kneehill County Notes to Financial Statements December 31, 2007 1. Significant Accounting Policies - (Continued) (f) I nventories Inventories of materials and supplies for consumption are valued at the lower of cost or net realizable value with cost determined by the average cost method. Inventory of gravel is as determined by perpetual records. Inventory of gravel is recorded in the accounts only to the extent of royalties and crushing costs incurred. Land held for resale is recorded at the lower of cost or net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping and leveling charges. Related development costs incurred to provide infrastructure such as water and wastewater services, roads, sidewalks and street lighting are recorded as physical assets under their respective function. (g) Physical Assets Physical assets are reported as expenditures in the period they are acquired. Physical assets are reported at cost except for donated assets which are reported at estimated fair value. Government contributions for the acquisition of physical assets are reported as capital revenue and do not reduce the related physical asset costs. Physical assets for government purposes are not depreciated. (h) Operating Fund Operating fund represents the amounts available to offset future operational revenue requirements (or the shortfall which will be financed from future operational revenues). (i) Capital Fund Capital fund represents the amounts available to finance (or the shortfall in financing available for) capital projects. 0) Reserve Fund Reserve fund represents the amounts set aside to finance future operating and capital expenditures. Reserves are established at the discretion of Council. Transfers to and/or from reserve funds are reflected as an adjustment to the respective fund. (k) Equity in Physical Assets Equity in physical assets represents the County's net investment in its physical assets after deducting the portion financed by third parties through debenture, bond and mortgage debts, long-term capital borrowings, capitalized leases and other capital liabilities which will be repaid by the County. 8 ~A Kneehill County Notes to Financial Statements December 31, 2007 1. Significant Accounting Policies - (Continued) (1) Pension Expenditure The County participates in a multi-employer defined benefit pension plan. This plan is accounted for as a defined contribution plan. (m) Tangible capital assets Section 3150 - Tangible Capital Assets of the Public Sector Accounting Handbook comes into effect on January 1, 2009. During 2007, Kneehill County continued working towards compliance with the new accounting recommendations for tangible capital assets. A complete listing of assets and values for land, buildings, machinery & equipment, engineering structures and vehicles is currently underway and is expected to be completed by December 31, 2008. 2. Inventories 2007 2006 Gravel $ 974,631 $ 844,433 Other transportation amounts 278,617 314,963 Other 75,342 27,088 Land held for resale 63.894 105.006 $ 1 $ 11291490490 3. Physical Assets 2007 2006 Land held for own use $ 465,895 $ 462,507 Buildings 2,244,587 2,244,587 Engineering structures 8,845,095 7,951,996 Machinery and equipment 9,871,838 9,355,806 Vehicles and power equipment 6.620.133 5.485.223 $ 28 $ w25,500119 4. Other Assets 2007 2006 Mt. Vernon Water Co-op Association Ltd. membership $ 1 $ 1 Alberta Municipal Financing Corporation, shares, at cost 121 121 $ 122 $ 122 9 Kneehill County Notes to Financial Statements December 31, 2007 5. Deferred Revenue . 2007 2006 Agricultural Services Board $ - $ 2,929 Alberta Municipal Infrastructure Program 1,403,437 1,985,188 Bonds - Planning 50,000 50,000 Bonds - Transportation 210,000 210,000 Emergency Management Program Grant 4,500 - Municipal Sponsorship Grant 41,595 - Municipal Sustainability Initiative 662,080 - Other 65 - Public Health - C.B.I. 11.638 9.608 $ 2~ 3~ $ 2 25 6. Reserves 2006 Transfers in Transfers out 2007 Operating Reserves Contingency $ 7,589,128 $ - $ 995,872 $ 6,593,256 Information Technology - 159,327 - 159,327 Administration 17,082 126,700 - 143,782 Transportation 1,815,623 - - 1,815,623 Water 49,934 - - 49,934 Sewer 44,632 - - 44,632 Garbage 113,853 - - 113,853 FCSS 14,085 11,573 - 25,658 Kneehill Community Resource Program 47,294 - 20 47,274 Planning - 5,195 - 5,195 Agricultural Service Board 70,922 - - 70,922 Parks 36.738 - - 36.738 9.799.291 302.795 995.892 9.106.194 Capital Reserves Administration 6,543 - - 6,543 Assessment 4,818 - - 4,818 Capital Equipment Replacement - 2,524,683 1,913,407 611,276 Fire 225,660 - 225,660 - Bridge - 380,600 - 380,600 Water 57,745 - - 57,745 WSA - Linden North Phase 2 591,847 770,204 427,365 934,686 Planning 13,525 - - 13,525 Agricultural Service Board 19,845 - - 19,845 Gravel - 1,071,000 - 1,071,000 Torrington 53.800 - - 53.800 973.783 4.746.487 2.566.432 3.153.838 $10.773.074 $ 55 04~9~282 $ 33 562,324 $12.2~60,03~2 7. Capital Fund The total shortfall for identified projects is being financed over the next 14 years through special local improvement levies. 10 r A Kneehill County Notes to Financial Statements December 31, 2007 8. Contingent Liabilities a) Kneehill County is from time to time a defendant in various actions seeking damages for actions by, and events occurring in the County. No provision has been made on the statement of financial position for the various lawsuits and legal claims filed against the County. It is the opinion of management that the County has minimal exposure to these actions or the potential liability will be fully covered by the insurance in place for such events. b) Kneehill County is a member of the Alberta Municipal Insurance Exchange (MUNIX). Under the terms of membership, Kneehill County could become liable for its proportionate share of any claim losses in excess of the funds held by the exchange. c) Kneehill County is responsible for environmental reclamation costs of gravel sites. The related costs are not reasonably determinable at year end and management believes such potential liability would not have a material effect on these financial statements. In 2008, the County will assess the future site restoration liability and account accordingly. 9. Equity in Physical Assets Acquisition of physical assets General Government Fire services Roads and Streets Water supply and distribution Bylaw enforcement Agricultural services board Parks Cemetery Original cost of physical asset disposals Change in equity balance Equity balance, beginning of year Equity balance, end of year Represented by: Physical assets - Note 3 2007 2006 $ 70,238 999,452 1,574,965 798,633 46,407 67,922 98,110 255 3,655,982 (1.108,553) $ 351,681 10,586 2,703,098 842,754 54,126 98,502 80,182 4,140,929 (1.591.608) 2,547,429 2,549,321 25,500,119 22.950.798 $ 28.047.548 $ 25,500,119 $ 28~ $ 25,.500.119 10. Local Authorities Pension Plan Employees of Kneehill County participate in the Local Authorities Pension Plan (LAPP), which is administered in compliance with the Public Sector Pension Plans Act. The Plan is financed by employer and employee contributions and by investment earnings of the LAPP Fund. Kneehill County is required to make current service contributions to the Plan of 7.75% of pensionable payroll up to the year's maximum pensionable earnings under the Canada Pension Plan (CPP) and 10.64% of pensionable earnings above this amount. Total employer contributions by Kneehill County to the LAPP in 2007 were $188,556 (2006 - $162,335). Total current contributions by the employees of Kneehill County to the LAPP in 2007 were $166,980 (2006 - $142,853). At December 31, 2007, the Plan disclosed an actuarial deficiency of $1.18 billion. 11 0 Kneehill County • Notes to Financial Statements l December 31, 2007 11. Salary and Benefits Disclosure Required disclosure of salaries and benefits for elected municipal officials, the chief administrative officer and designated officers, as required by Alberta Regulation 313/2000, is as follows: 2007 2006 Salary Benefits & & Fees allowances Total Total (1) (2) (3) Councillor/Division Division 1 $ 15,776 $ 4,712 $ 20,488 $ 17,772 Division 2 19,420 4,457 23,877 18,491 Division 3 14,826 4,502 19,328 17,243 Division 4 26,768 4,569 31,337 30,657 Division 5 19,526 4,479 24,005 20,183 Division 6 13,269 4,412 17,681 14,899 Division 7 16,023 4,674 20,697 18,102 County Administrator and other designated Officers Chief Administrative Officer $ 109,033 $ 14,354 $ 123,387 $ 105,599 Other Designated Officers 137,787 18,466 156,253 166,870 (1) Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria and any other direct cash remuneration. (2) Employer's share of all employee benefits and contributions or payments made on behalf of employees including pension, health care, dental coverage, vision coverage, group life insurance, accidental disability and dismemberment insurance, long and short term disability plans, professional memberships and tuition. (3) Benefits and allowances includes the employer's share of travel, cell phone and car allowances. 12. Financial Instruments The County's financial instruments consist of cash, temporary investments, accounts receivable, investments, accounts payable and accrued liabilities, vested sick leave benefits and deferred revenue. It is management's opinion that the County is not exposed to significant interest or currency risks arising from these financial instruments. The County is subject to credit risk with respect to taxes and accounts receivable. Credit risk arises from the possibility that taxpayers and entities to which the County provides services may experience financial difficulty and be unable to fulfill their obligations. The large number and diversity of taxpayers and customers minimizes the credit risk. The County is exposed to concentration of credit risk, as all cash is held in one financial institution thereby exposing the County to the risk of this institution. Unless otherwise noted, the fair value of these financial instruments approximates their carrying values. 12 Kneehill County • Notes to Financial Statements Y December 31, 2007 13. Debt Limits 2007 2006 Section 276(2) of the Municipal Government Act requires that debt and service on debt limits as defined by Alberta Regulation 255/00 for the County be disclosed as follows: Total debt limit Total debt Amount of debt limit unused Debt servicing limit Debt servicing Amount of debt servicing limit unused $ 32,326,472 $ 21,713,606 32,326.472 $ 21.713.606 $ 5,387,745 $ 3,618,934 $ 5,387,745 $ 3 68,934 The debt limit is calculated at 1.5 times revenue of the municipality (as defined in Alberta Regulation 255/00) and the debt service limit is calculated at 0.25 times such revenue. Incurring debt beyond these limitations requires approval by the Minister of Municipal Affairs. These thresholds are guidelines used by Alberta Municipal Affairs to identify municipalities that could be at financial risk if further debt is acquired. The calculation taken alone does not represent the financial stability of the municipality. Rather, the financial statements must be interpreted as a whole. 14. Approval of Financial Statements Council and Management have approved these financial statements. 15. Comparative Figures Certain comparative figures have been reclassified to conform with the current year's presentation. 13 Schedule 1 Kneehill County Schedule of Net Taxes For Municipal Purposes For the year ended December 31 2007 2006 Property Taxes Farmland $ 1,620,017 $ 1,721,057 Residential 1,923,519 1,810,161 Commercial 1,201,811 878,039 Linear property 8,900,836 6,182,233 Machinery and equipment 2,734,855 1,760,804 Railway 13,764 13,208 Grants in lieu 2,797 2,938 Special levy - Service Connection Fee Linden North Phase 1 66,759 71,493 Special levy - Water Service Area 770.204 591,847 17,234,562 13,031,780 Less: Requisition transfers Alberta School Foundation Fund (4,243,200) (4,082,110) Kneehill Foundation (7,800) (7,650) Requisition adjustments - (4.251.000) (4,089,7601 Net taxes for municipal purposes $ 12,983,662 $ 8.942,020 14 low Schedule 2 Kneehill County Schedule of Functional Operating Expenditures For the year ended December 31 2007 2006 Legislative $ 219,224 $ 277,971 General Administration 1,183,429 1,034,491 Other general Administration - Assessment 228,894 167,367 Fire protection 398,919 352,165 Disaster and Emergency Measures 2,378 240 Ambulance 243,627 193,316 Utility and Development 179,785 119,361 Bridge inspection 611,931 653,575 Transportation 11,232,358 5,349,436 Water supply and distribution 337,429 466,116 Sewer services 44,377 19,969 Waste management 306,679 276,398 Public Health - F.C.S.S. 809,774 293,490 - K. C. R. P. - 223,375 - Parent Link - 209,691 - Building Initiative - 12,307 Cemetery 7,971 4,585 Planning and development 221,631 199,097 Agricultural Services Board 292,594 276,217 Parks and recreation 334,706 278.860 $ 16,655.706 $ 1010 408 ,027,027 15