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HomeMy WebLinkAbout2008 Financial StatementsKneehill County Financial Statements For the year ended December 31, 2008 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 7-15 Schedule 1 2 Kneehill County Statement of Financial Position December 31 Assets Financial Assets 2008 2007 Cash and temporary investments (Note 2) $ 16,342,005 $ 15,669,578 Taxes and grants in place of taxes receivable (Note 3) 271,199 468,879 Trade and other accounts receivable 2,331,196 3,806,654 Investments (Note 4) 12,000,000 - Prepaid expenses 172,092 191,995 Other assets (Note 7) 121 122 Tax Sale Trust Account 7,235 9.750 31.123.848 20.146.978 Physical Assets Inventories for consumption (Note 5) 2,263,324 1,392,484 Capital assets (Note 6) 37.035.792 28.047.548 39,299.116 29.440.032 Liabilities and Municipal Equity Liabilities $ 70.4® $ 4987 Accounts payable and accrued liabilities $ 3,122,541 $ 1,556,789 Deferred revenue (Note 8) 2,786,948 2,383,315 Debenture debt (Note 9) 10,555,909 - Trochu Recreation Trust (Note 2e) 18,102 15,394 Tax Sale Trust Account 7,235 9,750 Other - 5.247 16.490.735 3.970.495 Municipal Equity Fund Balances Operating Fund - Page 4 5,817,718 5,793,092 Capital Fund - Page 5 (Note 11) (429,556) (484,157) Reserves (Note 10) 22,064,184 12,260,032 Equity in Physical Assets (Note 12) 26,479.883 28.047.548 53,932,229 45.616.515 $ 70,422,964 $ 49587010 Contingencies (Note 13) On behalf of the Council: Reeve CAO The accompanying notes are an integral part of these financial statements. 3 Kneehill County Statement of Operating Fund Financial Activities and Change in Fund Balance For the year ended December 31 2008 Budget 2008 2007 (unaudited) Revenue Net municipal taxes - Schedule 1 Government transfers Interest and patronage dividends Sales and user charges Sales to other governments Drilling licenses Fees, licenses, permits and fines Rentals Insurance proceeds Penalties and costs on taxes Local government transfers Local improvement charges Other Total Revenue Expenditures Salaries, wages and benefits Contracted and general services Purchases from other governments Materials, goods, supplies and utilities Transfers to other governments Transfers to local boards and agencies Transfers to individuals and organizations Bank charges and interest Property taxes cancelled Other Total Expenditures - Schedule 2 Excess of revenue over expenditures Transfers from (to) other funds Net transfers to capital fund Net transfers from (to) operating reserves Net surplus from operations Operating Fund, beginning of year Operating Fund, end of year $ 16,167,072 $ 16,288,303 $ 12,983,562 3,289,054 3,989,463 5,990,459 405,000 629,259 550,998 443,970 877,362 686,794 - 11,201 230 75,000 218,432 103,824 131,350 243,856 252,433 39,300 31,734 38,268 - 6,542 9,415 82,000 51,194 81,228 202,520 223,615 212,687 80,000 81,666 87,055 105.108 194.304 208.125 21.020.374 22.846.931 21.205.078 4,839,857 4,551,635 4,493,875 5,016,348 4,679,648 8,070,472 224,400 231,475 153,759 3,871,305 3,304,950 3,078,580 239,099 218,598 188,280 38,000 38,327 36,853 1,285,446 609,459 619,594 1,000 269,656 8,998 500 240 - 128.849 85.093 5.295 15.644.804 13.989.081 16.655.706 5.375.570 8.857.850 4.549.372 (5,351,694) (7,018,806) (5,222,359) (23.876) (1.814.418) 693.097 (5.375.570) (8.833.224) (4.529.262) 24,626 20,110 5.793.092 5.791092 5.772.982 $ 5~ 79.310. $ 5,817,718 $ 5793,092 The accompanying notes are an integral part of these financial statements. 4 Kneehill County Statement of Capital Fund Financial Activities and Change in Balance For the year ended December 31 2008 Budget 2008 2007 Revenue Government transfers Proceeds from disposal of capital property Other Expenditures General Government Fire services Bylaw Enforcement Roads and Streets Water supply and distribution Agricultural Services Board Other $ 1,714,205 $ 1,104,486 $ 267,777 638,000 678,012 345,903 - 6.116 2.352.205 1.788.614 613.680 - 574,166 70,238 42,000 57,296 999,452 - 28,704 46,407 1,451, 500 1,898,203 1,574,967 26,185,500 8,407,750 798,633 16,000 21,101 67,922 62.000 331.774 98.365 27,757,000 11.318.994 3.655.984 Deficiency of revenues over expenditures Capital financing and net inter-fund transfers Transfers from operating fund Transfers to capital reserves Capital debt issued Capital debt repaid Change in fund balances Capital Fund, beginning of year Capital Fund, end of year (25.404.795) (9,530.380) (3.042.304) 5,351,694 7,018,806 5,222,359 (8,395,390) (7,989,734) (2,180,055) 17,300,000 11,000,000 - - (444.091) - 14.256.304 9,584,981 3.042.304 (11,148,491) 54,601 - (484,157) (484.157) (484.157) The accompanying notes are an integral part of these financial statements. 5 Kneehill County Statement of Changes in Cash Flows For the year ended December 31 Cash flows from operating activities Excess (deficiency) of revenue over expenditures Operating fund Capital fund Changes in non-cash working capital balances Decrease (increase) in taxes and grants in place of taxes Decrease (increase) in trade and other receivables Increase in inventories Decrease (increase) in prepaid expenses Decrease in other assets Increase in accounts payable and accrued liabilities Decrease in vested sick leave benefits Increase in deferred revenue Increase (decrease) in other liabilities Cash flows from financing activities Long-term debt issued Long-term debt repaid Purchase of investments 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 2008 2007 $ 8,857,850 $ 4,549,372 (9,530.380) (3.042.304) (672,530) 1,507,068 197,680 (147,634) 1,474,893 (1,334,828) (870,840) (100,994) 19,904 (7,310) 1 - 1,565,750 728,954 - (56,768) 403,633 125,589 (1,973) (17.915) 2,116,518 696.162 11,000,000 - (444,091) - (12,000.000) (1,444.091) 672,427 696,162 15.669.578 14.973.416 $ 16,342,005 $ 15,669,578 $ 4,342,005 $ 15,669,578 12.000.000 $ 16,342,005 $ 15,669,578 The accompanying notes are an integral part of these financial statements. 6 s Kneehill County Notes to Financial Statements December 31, 2008 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 Entitv The financial statements reflect the assets, liabilities, revenues and expenditures, changes in fund balances and changes in cash flows 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 or transfers are due. (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) Cash Cash includes cash at hand and in the bank. Cash includes externally restricted amounts of $18,102 (2007- $15,394) in respect of the Trochu recreation trust. 7 0% - 1W Kneehill County Notes to Financial Statements December 31, 2008 1. Significant Accounting Policies - (Continued) (f) Temporary Investments Temporary investments are recorded at cost and represent short-term bank deposits with original maturities of three months or less. The short-term bank deposits earn interest at a rate of 2.0% per annum. (g) Investments Investments are recorded at cost and represent short-term bank notes and deposits that have an effective interest rates of 2.0% to 2.07% and mature in less than one year but after 90 days. (h) Inventories Inventories of materials and supplies for consumption are valued at the lower of cost or replacement 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. (i) Capital Assets Capital assets are reported as expenditures in the period they are acquired. Capital assets are reported at cost except for donated assets which are reported at estimated fair value. Government contributions for the acquisition of capital assets are reported as capital revenue and do not reduce the related capital asset costs. Capital assets for government purposes are not depreciated. (j) 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). (k) Capital Fund Capital fund represents the amounts available to finance (or the shortfall in financing available for) capital projects. (1) 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. 8 Kneehill County Notes to Financial Statements December 31, 2008 1. Significant Accounting Policies - (Continued) (m) 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. (n) Pension Expenditure The County participates in a multi-employer defined benefit pension plan. This plan is accounted for as a defined contribution plan. (o) Tangible Capital Assets Section 3150 - Tangible Capital Assets of the Public Sector Accounting Handbook comes into effect on January 1, 2009. During 2008, 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, 2009. 2. Cash and Temporary Investments Cash $ 4,342,005 $ 15,669,578 Temporary investments 12.000.000 - $..16 6 $ 15,669,578 3. Taxes and Grants in Place of Taxes Receivable 2008 2007 Current taxes and grants in place of taxes $ 219,688 $ 306,768 Tax arrears and grants in place of taxes 73.886 162.111 293,574 468,879 Less: allowance for doubtful accounts (22.3751 - $271.199 $4.6 8 8 7.9 4. Investments 2008 2007 Cost Market Cost Market Short-term notes and $ 12,000,000 $ 12,000,000 $ - $ - deposits 9 Kneehill County Notes to Financial Statements December 31, 2008 5. Inventories 2008 2007 Gravel $ 1,863,160 $ 974,631 Other transportation amounts 245,990 278,617 Other 78,280 75,342 Land held for resale 75.894 63.894 $ 22263,324 39 484 ..1 6. Physical Assets 2008 2007 Land held for own use $ 1,143,059 $ 465,895 Buildings 2,602,694 2,244,587 Engineering structures 17,120,822 8,845,095 Machinery and equipment 9,674,837 9,871,838 Vehicles 6.494.380 6,620.133 $ .370 .35.792 $ 28604.7548 7. Other Assets 2008 2007 Mt. Vernon Water Co-op Association Ltd. membership $ - $ 1 Alberta Capital Finance Authority, shares, at cost 121 121 $ 121 $ 122 8. Deferred Revenue 2008 2007 Alberta Municipal Infrastructure Program $ 920,807 $ 1,403,437 Bonds - Planning - 50,000 Bonds - Transportation 205,000 210,000 Emergency Management Program Grant - 4,500 Municipal Sponsorship Grant - 41,595 Municipal Sustainability Initiative 1,578,231 662,080 Other 7 65 F.C.S.S. 14,524 - Public Health - C.B.I. 3,731 11,638 Street Improvements Program 64.648 - $ 2.786.948 $ 2,383,31 10 Kneehill County Notes to Financial Statements December 31, 2008 9. Debenture Debt 2008 2007 Tax supported debentures $ 10,555,909 $ The current portion of long-term debt amounts to $917,611 (2007 - $nil) Principal and interest repayments are as follows: Principal Interest 2009 $ 917,611 $ 453,019 2010 958,298 412,332 2011 1,000,788 369,842 2012 1,045,163 325,467 2013 1,091,506 279,124 Thereafter 5.542.543 625.293 $ 10 555 909 $ 22 4 Total $ 1,370,630 1,370,630 1,370,630 1,370,630 1,370,630 6.167.836 $ 1320e> 986 Debenture debt is repayable to the Alberta Municipal Financing Corporation and bears interest at a fixed rate of 4.3859% per annum, before Provincial subsidy, and matures on June 16, 2018. For qualifying debentures, the Province of Alberta rebates 60% of interest in excess of 8%, 9% and 11 % to a maximum annual rat of 12.5%, depending on the date borrowed. Debenture debt is issued on the credit and security of Kneehill County at large. Interest on debenture debt amounted to $269,656 (2007 - $nil) Total cash payments for interest in 2008 were $250,630 (2007 - $nil). 10. Reserves Operating Reserves Contingency Information Technology Administration Joint Community Summit Doctor Recruitment Bridges Transportation Water Sewer Garbage FCSS Kneehill Community Resource Program Planning Agricultural Service Board Parks 2007 Transfers in Transfers out 2008 $ 6,593,256 $ 1,241,151 $ - $ 7,834,407 159,327 73,480 70,919 161,888 143,782 - - 143,782 - 51,700 7,000 44,700 - 57,301 2,361 54,940 - 407,000 - 407,000 1,815,623 - - 1,815,623 49,934 - - 49,934 44,632 - - 44,632 113,853 - - 113,853 25,658 17,690 - 43,348 47,274 1,363 - 48,637 5,195 37,577 - 42,772 70,922 5,000 - 75,922 36.738 18775 16.339 39.174 9.106.194 1.911.037 96.619 10.920.612 11 Kneehill County Notes to Financial Statements December 31, 2008 10. Reserves -continued 2007 Transfers in Transfers out 2008 Capital Reserves Administration 6,543 70,250 - 76,793 Assessment 4,818 - - 4,818 Capital Equipment Replacement 611,276 1,407,400 982,342 1,036,334 Building Reserve - 800,000 451,433 348,567 Bridge 380,600 - 380,600 - Water 57,745 - 35,321 22,424 WSA 934,686 14,063,139 7,490,534 7,507,291 Planning 13,525 - - 13,525 Agricultural Service Board 19,845 - - 19,845 Gravel 1,071,000 1,500,000 510,825 2,060,175 Torrington 53.800 - - 53,800 3.153.838 17.840.789 9,851,055 11,143,572 $12 260 032032 $19 7~ 5~1 826 $.9 9~ 47~ $ 22 064184 11. Capital Fund The total shortfall for identified projects is being financed over the next 12 years through special local improvement levies. 12. Equity in Physical Assets 2008 2007 Acquisition of physical assets General Government $ 574,166 $ 70,238 Fire services 57,296 999,452 Roads and Streets 1,898,203 1,574,965 Water supply and distribution 8,407,750 798,633 Bylaw enforcement 28,703 46,407 Agricultural services board 21,101 67,922 Parks 16,255 98,110 Cemetery 255 11,003,474 3,655,982 Original cost of physical asset disposals (2,015,230) (1,108,553) Capital financing Capital debt issued (11,000,000) - Capital debt repaid 444,091 - Change in equity balance (1,567,665) 2,547,429 Equity balance, beginning of year 28,047,548, 25.500.119 Equity balance, end of year $.26 .479.883 $ 2828 047 548548 Represented by: Physical assets - Note 6 $ 37,035,792 $ 28,047,548 Debenture debt - Note 9 (10,555,909) $ 26.479.883 $ 28,047,548 12 Kneehill County Notes to Financial Statements December 31, 2008 13. 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) The 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 operates several gravel pits to supply raw materials used in the ongoing maintenance of roads. The County is responsible for the costs of reclaiming the gravel pits at the end of production in accordance with provincial legislation. As of the reporting date, these costs are not determinable. (d) Pursuant to the Alberta Environmental Protection and Enhancement Act, the County is required to fund the closure of its landfill site and transfer stations and provide for post-closure care of the facility. Closure and post-closure activities include the final clay cover, landscaping, as well as surface and ground water monitoring, leachate control, and visual inspection. As of the reporting date, these costs are not determinable. 14. 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 5.525% of pensionable payroll up to the year's maximum pensionable earnings under the Canada Pension Plan (CPP) and 7.4% of pensionable earnings above this amount. Employees of the County are required to make current service contributions of 4.4525% of pensionable salary up to the year's maximum pensionable salary and 6.4% on pensionable salary above this amount. Total employer contributions by Kneehill County to the LAPP in 2008 were $210,282 (2007 - $188,556). Total current contributions by the employees of Kneehill County to the LAPP in 2008 were $189,282 (2007 - $166,980). At December 31, 2007, the Plan disclosed an actuarial deficiency of $1.18 billion. 13 Kneehill County Notes to Financial Statements December 31, 2008 15. 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: 2008 2007 Salary Benefits & & Fees allowances Total Total (1) (2) (3) Councillor/Division Division 1 $ 24,105 $ 3,488 $ 27,593 $ 20,488 Division 2 30,521 3,488 34,009 23,877 Division 3 15,393 3,488 18,881 19,328 Division 4 18,429 3,488 21,917 31,337 Division 5 25,641 3,488 29,129 24,005 Division 6 19,023 3,488 22,511 17,681 Division 7 21,538 3,488 25,026 20,697 County Administrator and other designated Officers Chief Administrative Officer $ 117,815 $ 15,463 $ 133,278 $ 123,387 Other Designated Officers 144,521 20,198 164,719 156,253 (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. 16. 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 fulfil their obligations. The large number and diversity of taxpayers and customers minimizes the credit risk. 14 Kneehill County Notes to Financial Statements December 31, 2008 16. Financial Instruments - (Continued) 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. 17. Debt Limits 2008 2007 Section 276(2) of the Municipal Government Act requires that debt and service on debt limits as defined by Alberta Regulation 255100 for the County be disclosed as follows: Total debt limit $ 35,296,589 $ 32,326,472 Total debt 10.555.909 Amount of debt limit unused 24,740.680 $ 32,326,472 Debt servicing limit $ 5,882,765 $ 5,387,745 - Debt servicing 1,370,630 Amount of debt servicing limit unused $ 4.512.135 $ 57 745 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. 18. Approval of Financial Statements Council and Management have approved these financial statements. 19. Comparative Figures Certain comparative figures have been reclassified to conform with the current year's presentation. 15 Schedule 1 Kneehill County Schedule of Net Taxes For Municipal Purposes For the year ended December 31 2008 Budget 2008 2007 (unaudited) Property Taxes Farmland Residential Commercial Linear property Machinery and equipment Railway Grants in lieu Special levy - Service Connection Linden North Phase 1 Special levy - Water Service Area $ 1,472,167 $ 1,479,786 $ 1,620,017 2,098,214 2,119,971 1,923,519 1,369,008 1,381,809 1,201, 811 10,730,405 10,756,717 8,900,836 3,979,989 4,006,861 2,734,855 12,995 12,910 13,764 2,705 2,613 2,797 35,100 57,632 66,759 1,001,670 1,002,913 770,204 20,702,253 20.821.212 17,234,562 Less: Requisition Transfers Alberta School Foundation Fund Kneehill Foundation Net taxes for municipal purposes (4,527,381) (4,525,109) (4,243,200) (7,800) (7.800) (7,800) (4,535,181) (4,532.909) (4251,000) $ 16167072 67072 $.16 ,88.303 $ 12.983.562 16 Schedule 2 Kneehill County Schedule of Functional Operating Expenditures For the year ended December 31 Budget 2008 2008 2007 (unaudited) Legislative $ 250,672 $ 269,225 $ 219,224 General Administration 2,317,170 1,344,510 1,183,428 Other general Administration - Assessment 255,709 194,792 228,894 Fire protection 489,922 417,919 398,919 Disaster and Emergency Measures 9,000 2,875 2,378 Ambulance 309,386 314,793 243,627 Utility and Development 244,018 178,683 179,785 Bridge inspection 1,163,550 1,227,931 611,931 Transportation 7,430,720 7,098,134 11,232,358 Water supply and distribution 712,943 734,858 337,429 Sewer services 86,483 49,543 44,377 Waste management 364,492 312,045 306,679 Public Health - F.C.S.S. 857,857 849,575 809,775 Cemetery 11,697 5,816 7,971 Planning and development 336,182 264,917 221,631 Agricultural Services Board 409,127 342,180 292,594 Parks and recreation 395.876 381.285 334.706 $ 15 $ 13,989,081 $ 16,655,7706 17