Financial Report for the year ended December 31, 2013

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1 City of St. Catharines Financial Report for the year ended December 31, 2013 Financial Management Services

2 THE CORPORATION OF THE CITY OF ST. CATHARINES, ONTARIO FINANCIAL STATEMENTS TO THE YEAR ENDED DECEMBER 31, 2013 City of St. Catharines Consolidated Statements Port Dalhousie Business Association St. Catharines Downtown Association St. Catharines Public Library St. Catharines Transit Commission St. Catharines Paratransit System Niagara District Airport Commission

62 ST. CATHARINES PUBLIC LIBRARY BOARD Financial Statements December 31, 2013

ST. CATHARINES PUBLIC LIBRARY BOARD Financial Statements December 31, 2013 Table of Contents Page Independent Auditors' Report 1-2 Statement of Financial Position 3 Statement of Operations and

63 ST. CATHARINES PUBLIC LIBRARY BOARD Financial Statements December 31, 2013 Table of Contents Page Independent Auditors' Report 1-2 Statement of Financial Position 3 Statement of Operations and Accumulated Surplus 4 Statement of Cash Flows 5 Statement of Change in Net Financial Assets 6 Notes to Financial Statements 7-12 Schedule of Tangible Capital Assets 13 Schedule of Trust Fund Activities 14 Schedule of Other Revenue 15 Schedule of Expenses 16

64 INDEPENDENT AUDITORS' REPORT To the Board Members of the St. Catharines Public Library Board, Members of Council, Inhabitants and Ratepayers of The Corporation of the City of St. Catharines We have audited the accompanying financial statements of the St. Catharines Public Library Board, which comprise the statement of financial position as at December 31, 2013, and the statements of operations and accumulated surplus, cash flows and change in net financial assets for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian 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. Auditors' Responsibility 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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1

65 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion In common with many non-profit organizations, the Board derives part of its revenue in the Endowment and Trust Fund from the general public in the form of donations and fundraising, the completeness of which is not susceptible of satisfactory audit verification. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of the Board and we were not able to determine whether any adjustments might be necessary to donations revenue, trust funds and financial assets. Qualified Opinion In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of the St. Catharines Public Library Board as at December 31, 2013, and the results of its operations, cash flows and change in net financial assets for the year then ended in accordance with Canadian public sector accounting standards. St. Catharines, Ontario May 12, 2014 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNTANTS LLP LICENSED PUBLIC ACCOUNTANTS 2

67 ST. CATHARINES PUBLIC LIBRARY BOARD STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS for the year ended December 31, 2013 (Unaudited) Budget Actual Actual $ $ $ Revenues Municipal contribution - City of St. Catharines 5,195,200 5,343,000 5,195,200 Province of Ontario regular grant 228, , ,616 Special grants 12,267 36,978 Other 205, , ,133 5,629,100 5,833,799 5,735,927 Expenses Salaries, wages and payroll taxes 3,892,400 3,597,296 3,576,418 Library materials 145, , ,807 Occupancy 468, , ,737 General and administration 219, , ,483 Interest 63,608 77,199 Amortization 858, ,072 4,725,685 5,340,896 5,385,716 Annual Surplus 903, , ,211 Accumulated Surplus, Beginning of Year 9,333,126 9,333,126 8,982,915 Accumulated Surplus, End of Year 10,236,541 9,826,029 9,333,126 See accompanying notes 4

68 ST. CATHARINES PUBLIC LIBRARY BOARD STATEMENT OF CASH FLOWS for the year ended December 31, $ $ Operations Annual surplus 492, ,211 Uses Increase in accounts receivable (6,927) (110) Increase in prepaid expenses (11,936) (34,322) Decrease in accounts payable and accrued liabilities (27,286) (96,951) Decrease in deferred income (11,231) (46,149) (142,614) Sources Increase in deferred income 7,934 Increase in post-employment benefits 6,710 28,880 14,644 28,880 Non-cash charges to operations Amortization of tangible capital assets 858, ,072 Net change in cash from operations 1,319,614 1,092,549 Investing Increase in investments (61,943) (13,870) Capital Acquisition of tangible capital assets (899,070) (1,381,100) Financing Long-term debt repaid (62,422) (60,116) Increase (Decrease) in Cash Position 296,179 (362,537) Cash Position, Beginning of Year 2,714,968 3,077,505 Cash Position, End of Year 3,011,147 2,714,968 See accompanying notes 5

69 ST. CATHARINES PUBLIC LIBRARY BOARD STATEMENT OF CHANGE IN NET FINANCIAL ASSETS for the year ended December 31, $ $ Annual Surplus 492, ,211 Acquisition of Tangible Capital Assets (899,070) (1,381,100) Amortization of Tangible Capital Assets 858, ,072 Change in Prepaid Expenses (11,936) (34,322) Increase (Decrease) in Net Financial Assets 440,113 (209,139) Net Financial Assets, Beginning of Year 1,452,305 1,661,444 Net Financial Assets, End of Year 1,892,418 1,452,305 See accompanying notes 6

70 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, 2013 Organization The St. Catharines Public Library Board (the "Board") was established in January, 1888 pursuant to City of St. Catharines By-law #615 and operates four branches within St. Catharines, Ontario. The branches are known as Dr. Huq Family, William Hamilton Merritt, Centennial and Port Dalhousie. 1. Significant Accounting Policies The financial statements of the Board are the representations of management prepared in accordance with Canadian public sector accounting standards as recommended by the Public Sector Accounting Board ("PSAB") of the Canadian Professional Accountants of Canada. Significant aspects of the accounting policies adopted by the Board are as follows: Accrual accounting The accrual method of reporting revenue and expenses has been used. Investments Investments are carried at fair market value. Non-financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course of operations. Tangible capital assets Tangible capital assets are recorded at historical cost. Cost includes all directly attributable expenditures in the acquisition, construction, development and/or betterment of the asset required to install the asset at the location. Amortization is recorded to reflect the cost, net of anticipated residual value, associated with the use of the asset in providing services on a straight-line basis over the estimated useful life of the asset. Additions during the year are amortized from the month of acquisition. Disposals are amortized until the month of disposition. Gains and/or losses on the disposal of an asset are recorded on the statement of operations and accumulated surplus as "gain/loss on disposal of assets". The historical cost of works of art or historical treasures have not been assigned to these assets nor disclosed in the financial statements. Asset Class Buildings Building improvements Collection Furniture and equipment Information technology Period years years - 7 years years years 7

71 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued Deferred revenue Funds received for specific purposes are accounted for as deferred income until the Board discharges the obligation which lead to the receipt of the funds. Post-employment benefits The Board pays certain medical, dental and life insurance benefits on behalf of its retired employees. The Board recognizes these post-retirement costs in the period in which the employees render their services. See note 4. Use of estimates The preparation of the financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 2. Cash The total balance of cash is comprised of the following: $ $ Cash - operating 2,991,866 2,677,510 Cash - trust funds 19,281 37,458 3,011,147 2,714, Investments The total balance of investments is comprised of the following: $ $ Investments - operating fund 224, ,559 Investments - trust funds 846, ,208 1,070,710 1,008, Post-Employment Benefits $ $ Vacation pay 49,518 58,942 Post-retirement benefits 315, , , ,005 8

72 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Post-Employment Benefits - continued Vacation Pay As at December 31, 2013 employees of the St. Catharines Public Library Board have accumulated vacation credits in the amount of $ 49,518 ( $ 58,942). These credits must be used within the next fiscal year. Post-Retirement Benefits The St. Catharines Public Library Board pays certain medical, dental and life insurance benefits on behalf of its retired employees. The accrued benefit liability was determined by actuarial valuation using a discount of 4.25% ( %). Defined Benefit Plan Information $ $ Employee benefit plan assets Employee benefit plan liabilities 315, ,063 Employee benefit plan deficit 315, , $ $ Accrued benefit obligation, beginning of year 299, ,381 Expense for the year 20,355 22,508 Amortization of actuarial loss (gain) (2,606) 656 Benefits paid during the year (1,615) (6,482) Accrued benefit obligation, end of year 315, ,063 As a result of an actuarial valuation conducted in 2014 for the year ending December 31, 2013, it was determined that an actuarial gain of $ 32,598 existed. This amount is being amortized over the expected average remaining service life of the employee group, which in this case, is 11 years or $ 2,606 per annum. The unamortized value remaining is $ 26,058. The actual obligation is $ 289,139. The main actuarial assumptions employed for the valuation are as follows: General Inflation - Future general inflation levels, as measured by changes in the Consumer Price Index ("CPI"), were assumed at 2% in 2013 and thereafter. Salary Levels - Future salary and wage levels were assumed to increase at 2.0% per annum for the year 2010 through 2015 and 3.30% thereafter. Medical Costs - Medical costs were assumed to increase at a rate of 7%, graded down to 6.70% in 2014, 6.40% in 2015, 6.10% in 2016, 5.80% in 2017, 5.50% in 2018, 5.20% in 2019, 4.90% in 2020, and 4.60% in 2021 and each year thereafter. Dental Costs - Dental costs were assumed to increase at a rate of 4.6% and each year thereafter. 9

73 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Long-Term Liabilities (a) The balance of long-term liabilities reported on the "Statement of Financial Position" is as follows: $ $ Long-term liabilities incurred by the Board which bear interest at 3.8% 1,499,212 1,561,634 (b) Principal payments due over the next five years and thereafter are as follows: $ , , , , ,349 Thereafter 1,149,293 (c) Interest expense on long-term liabilities amounted to $ 63,608 ( $ 77,199) for the year. 6. Accumulated Surplus $ $ Invested in tangible capital assets 7,848,363 7,807,509 Operating fund 89,800 94,700 Reserve funds 2,886,436 2,525,891 Trust funds Architects Nevada tickets 3,715 3,694 Endowment and trust 860, , , ,665 Amount to be recovered - post-employment benefits (364,715) (358,005) Amount to be recovered - long-term liabilities (1,499,212) (1,561,634) 9,826,029 9,333,126 10

74 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Trust Funds Architects fund This fund has been allocated for the purchase of architectural material through an agreement with the Niagara Society of Architects. The funds along with accumulated interest are maintained in a separate bank account at the TD Canada Trust. Endowment and trust fund This fund has been allocated by the Board for the future improvement of collections and access to collections, provision of library support programs and purchase of equipment, furniture and such other capital projects to improve library service above and beyond that normally funded by provincial or municipal funds. These funds along with accumulated interest and donations are held in a separate bank account at TD Canada Trust and in an investment account at Scotia McLeod. Nevada tickets fund This fund has been allocated by the Board for the same purpose as the Endowment and Trust fund as detailed above. These funds along with accumulated interest are maintained in a separate bank account at TD Canada Trust. 8. Long-Term Leases Dr. Huq Family Library Branch As at December 31, 2013, the lease for the Dr. Huq Family Library Branch with the City of St. Catharines is still being negotiated. William Hamilton Merritt Branch The Board is currently committed to the following minimum lease payments for the next three years: $ , , ,956 The Board is also obligated to pay a proportionate share of operating costs and property taxes. Centennial Public Library The lease with the City of St. Catharines, for a nominal amount, expires December 31, Port Dalhousie Branch Rent is paid on a yearly basis to the City of St. Catharines in the amount of $ 600 with no set date of expiry. 11

75 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Pension Agreements The Board makes contributions to the Ontario Municipal Employees Retirement System ("OMERS"), which is a multi-employer plan, on behalf of 65 members of its staff. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for 2013 was $ 190,401 ( $ 172,999) for current service and is included as an expenditure in the statement of operations and accumulated surplus. 10. Economic Dependence The Board receives a significant portion of its revenues for operations from the following sources: 11. Accounting Change City of St. Catharines Province of Ontario The Board retroactively restated certain prior year figures noted below. Tangible capital assets was restated due to errors in the capitalization of certain book and audio purchases via a leasing program where the items were returned to the vendor after one year's use. There was no effect on the operating fund balance as at January 1, 2012 or December 31, The net effect on annual surplus for the year ending December 31, 2012 was a change from $ 368,162 to $ 350,211. As Previously Reported As Restated $ $ Financial Assets Tangible capital assets 7,928,149 7,807,509 Accumulated Surplus Invested in tangible capital assets 7,928,149 7,807,509 Statement of Operations and Accumulated Surplus - Expenses Library materials 141, ,807 Amortization 883, ,072 Statement of Cash Flows Amortization of tangible capital assets 883, ,072 Acquisition of tangible capital assets (1,426,338) (1,381,100) Statement of Change in Net Financial Assets Amortization of tangible capital assets 883, ,072 Acquisition of tangible capital assets (1,426,338) (1,381,100) 12

76 ST. CATHARINES PUBLIC LIBRARY BOARD SCHEDULE OF TANGIBLE CAPITAL ASSETS Schedule 1 for the year ended December 31, 2013 Cost Accumulated Amortization Balance, Balance, Balance, Balance, Net Beginning of End of Beginning of End of Book Year Additions Disposals Year Year Amortization Disposals Year Value $ $ $ $ $ $ $ $ $ Land 25,138 25,138 25,138 Buildings 7,128,200 7,128,200 2,484,892 84,775 2,569,667 4,558,533 Building improvements 208, , ,555 16,497 8,747 25, ,311 Collection 4,903, , ,845 4,861,335 2,390, , ,845 2,380,087 2,481,248 Furniture and equipment 561,121 26, , ,281 24, , ,687 IT equipment 484,997 26,266 22, , ,251 40,566 22, ,560 64,446 December 31, ,311, , ,102 13,478,189 5,503, , ,102 5,629,826 7,848,363 Land 25,138 25,138 25,138 Buildings 5,002,200 2,126,000 7,128,200 2,398,287 86,605 2,484,892 4,643,308 Building improvements 130,723 77, ,307 10,870 5,627 16, ,810 Collection 5,526, ,858 1,369,181 4,903,458 3,061, ,977 1,369,181 2,390,791 2,512,667 Furniture and equipment 410, , , ,736 19, , ,840 IT equipment 479,919 41,489 36, , ,344 46,318 36, ,251 78,746 Work in progress 1,760,000 1,760,000 December 31, ,335,713 3,141,100 3,165,592 13,311,221 6,053, ,072 1,405,592 5,503,712 7,807,509 See accompanying notes 13

77 ST. CATHARINES PUBLIC LIBRARY BOARD SCHEDULE OF TRUST FUND ACTIVITIES Schedule 2 for the year ended December 31, 2013 Nevada Endowment Tickets Architects and Trust Fund Fund Fund Total Total $ $ $ $ $ Revenues Book revenue 10,158 10,158 11,807 Donations 23,482 23,482 16,244 Interest ,640 12,662 11, ,280 46,302 39,519 Expenditures Library materials 5,610 5,610 5,161 Net Change in Trust Fund ,670 40,692 34,358 Trust Fund, Beginning of Year 3, , , ,307 Trust Fund, End of Year 3, , , ,665 See accompanying notes 14

78 ST. CATHARINES PUBLIC LIBRARY BOARD SCHEDULE OF OTHER REVENUE Schedule 3 for the year ended December 31, 2013 (Unaudited) Budget Actual Actual $ $ $ Fines and memberships 129, , ,667 Interest 23,000 45,475 45,070 Photocopying 5,700 4,203 4,303 Programming fees 8,300 8,379 9,482 Sundry 39,300 47,186 70,560 Donations 23,482 16,244 Book revenue 10,158 11, , , ,133 See accompanying notes 15

79 ST. CATHARINES PUBLIC LIBRARY BOARD SCHEDULE OF EXPENSES Schedule 4 for the year ended December 31, 2013 (Unaudited) Budget Actual Actual $ $ $ Salaries, Wages and Payroll Taxes Library and clerical 3,043,900 2,847,961 2,809,457 Maintenance 176, , ,718 Payroll taxes 672, , ,243 3,892,400 3,597,296 3,576,418 Library Materials Audio 808 Binding 13,400 12,076 10,349 Books 36,917 38,242 Microfilm 8,425 8,528 7,910 Periodicals 94,460 94,347 97,343 Processing 28,800 20,852 25,967 Visual 6,996 6, , , ,807 Occupancy Communications 43,000 36,209 40,781 Insurance 32,900 28,291 31,237 Rent and taxes 72,000 58,044 83,922 Repairs and maintenance 137, , ,958 Security 14,600 15,120 14,580 Utilities 169, , , , , ,737 General and Administration Audio visual supplies 4,200 2, Catalogue support system service Data processing 6,700 9,466 6,700 Equipment rental 7,800 5,799 6,842 Equipment repairs and maintenance 83,800 73,646 83,853 Library supplies 30,000 31,133 30,351 Printing and stationary 3,400 4,012 1,709 Professional fees 20,000 11,559 12,723 Programming 10,600 10,567 9,373 Sundry 12,500 18,299 17,367 Training and development 13,500 10,744 12,727 Transportation and postage 26,500 26,239 26, , , ,483 See accompanying notes 16

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THE CORPORATION OF THE CITY OF ST. CATHARINES, ONTARIO FINANCIAL STATEMENTS TO THE YEAR ENDED DECEMBER 31, 2016

THE CORPORATION OF THE CITY OF ST. CATHARINES, ONTARIO FINANCIAL STATEMENTS TO THE YEAR ENDED DECEMBER 31, 2016 City of St. Catharines Consolidated Statements Port Dalhousie Business Association St. Catharines