Corporation of the. City of Pembroke. Consolidated Financial Statements. For the Year Ended December 31,2016. CHARTERCD PHOFEHeiONAL Abcduntantb

Transcription

1 Corporation of the City of Pembroke Consolidated Financial Statements For the Year Ended December 31,2016 TTDTR! CHARTERCD PHOFEHeiONAL Abcduntantb

2 MANAGEMENT REPORT Management's Responsibility for the Consolidated Financial Statements The accompanying consolldated financial statements of the Corporation of the City of Pembroke are the responsibility of the City's management and have been prepared in compliance with legislation, and in accordance with generally accepted accounting principles established by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada. A summary of the significant accounting policies are described In Note 1 to the consolidated financial statements. The preparation of the consolidated financial statements necessarily involves the use of estimates based on management's judgement, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. City management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded, transactions are properly authorized and recorded in compliance with legislative and regulatory requirements and reliable financial information is available on a timely basis for preparation of the consolidated financial statements. These systems are monitored and evaluated by management. The Finance Committee meets with management and the external auditors to review the consolidated financial statements and discuss any significant reporting or internal control matters prior to the Council's approval of the consolidated financial statements. The consolidated financial statements have been audited by Dean ~ Sinclair, Chartered Professional Accountants, independent external auditors appointed by the City. The accompanying Auditors' Report outlines their responsibilities, the scope of their examination and their opinion on the City's consolidated financial statements. Mayor U Treasurer August

3 Corporation of the City of Pembroke Consolidated Financial Statements INDEX2016 Independent Auditors' Report Consolidated Statement of Financial Position Consolidated Statement of Operations Consolidated Statement of Change in Net Financial Assets Consolidated Statement of Cash Flows Consolidated Schedule of Continuity of Reserves Schedule 1 Consolidated Schedule of Continuity of Reserve Funds Schedule 2 Consolidated Schedule of Deferred Revenue Obligatory Schedule 3 Consolidated Schedule of Tangible Capital Assets Schedule 4 Consolidated Schedule of Accumulated Surplus Schedule 5 Consolidated Schedule of Segmented Disclosure Schedule 6 Notes to the Consolidated Financial Statements Local Boards Financial Statements (a) (b) (c) Pembroke Public Library Board Pembroke Business Improvement Area The Parking Authority of the City of Pembroke ]D)]EA.P^~ iri^d«a.im Chartered PRDFEaBioNAL Adoduntantb

4 Dean Sinclaim Chartered Prdfessidnal Accduntantj HiNCKS Street Pembroke, Ontario KSA 4N7 Telephone: 6 i 373S3 1 S3 Facsimile: B69 vmw.deansinclair.com Independent Auditors' Report To the Members of Council, Inhabitants and Ratepayers of the Corporation of the City of Pembroke We have audited the accompanying consolidated financial statements of the CORPORATION OF THE ClTV OF Pembroke which comprise the consolidated statement of financial position as at December 31, 2016 and the consolidated statements of operations, change in net financial assets and cash flows 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 consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation of the City ofpembroke as at December 31,2016 and the results of its operations, change in net financial assets and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. # CPA Chartered Professional Accountants Licensed Public Accountants Pembroke, Ontario August 15, 2017 CHARTERED PROFESSIONAL ACCOUNTANTS

5 Corporation of the City of Pembroke Consolidated Statement of Financial Position As At December 31, 2016 Financial assets Cash (Note 2) Investments (Note 3) Taxes receivable Water and sewer receivables Accounts receivable Inventories for resale Investment in municipal electric utilities (Note 4) $22,975, ,385 2,212, ,484 2,241,282 34,576 11,955,859 $18,084, ,101 2,603, ,274 1,463,059 30,428 12,051,156 $40,508,591 $35,204,877 Liabilities Accounts payable and accrued liabilities Deferred revenue general Deferred revenue obligatory (Schedule 3) Long term liabilities (Note 5) Employee benefits and post employment liabilities (Note 6) Landfill closure and postclosure liabilities (Note 8) $ 4,619,833 59, ,664 18,374,766 2,027, ,797 $ 2,003,519 51, ,338 18,778,973 1,989, ,838 26,364,632 23,897,918 Net financial assets 14,143,959 11,306,959 Nonfinancial assets Tangible capital assets net (Schedule 4) Prepaid expenses 105,039,510 52, ,067,571 77, ,091, ,144,635 Accumulated surplus (Schedule 5) $119,235,753 $113,451,594 See accompanying notes and schedules. 2. Chartered Prdfeobional Acoduntantb

6 912,118 (95,297) 20,924 (930,393) Corporation of the City of Pembroke Consolidated Statement of Operations For the Year Ended December 31, Budget Actual Actual (Note 14) Revenues Taxation and payments in lieu $22,287,886 $21,934,174 $21,836,168 User charges 10,800,206 11,025,411 10,995,193 Government transfers 4,084,242 4,860,910 2,615,932 Investment income 711, , ,893 Penalties and interest 260, , ,534 Deferred revenue earned Schedule 3 1,004,611 Investment in municipal electric utilities 268,407 Contributed tangible capital assets 123,638 Gain (loss) on disposal/sale of assets 26,207 Other 447, , ,197 38,592,028 39,270,025 38,269,780 Expenses General government 3,438,779 2,753,161 2,546,346 Protection to persons and property 7,710,952 7,776,443 8,227,170 Transportation services 3,682,983 4,898,215 5,014,391 Environmental services 6,939,734 9,302,366 9,349,202 Health services 1,226,575 1,220,655 1,194,745 Social and family services 2,714,487 2,778,596 2,715,046 Recreation and cultural services 3,410,110 4,264,786 3,803,290 Planning and development 537, , ,117 29,660,870 33,485,866 33,477,307 Annual surplus 8,931,158 5,784,159 4,792,473 Accumulated surplus, beginning of year 113,451, ,451, ,659,121 Accumulated surplus, end of year $122,382,752 $119,235,753 $113,451,594 See accompanying notes and schedules. 3. Chartered PRDFcaaioNAL Aocduntantb

7 Corporation of the City of Pembroke Consolidated Statement of Change in Net Financial Assets For the Year Ended December 31, Budget Actual Actual (Note 14) Annual surplus $ 8,931,158 $ 5,784,159 $ 4,792,473 Amortization of tangible capital assets Acquisition of tangible capital assets Contributed tangible capital assets Loss (gain) on sale of tangible capital assets Proceeds on sale of tangible capital assets Change in prepaid expenses (15,153,690) 4,972,624 (9,102,111) (20,924) 930, ,079 24,780 4,946,995 (4,717,625) (123,638) (26,207) 115,603 (24,207) INCREASE (DECREASE) IN NET FINANCIAL ASSETS (6,222,532) 2,837,000 4,963,394 Net financial assets, beginning of year 11,306,959 11,306,959 6,343,565 Net financial assets, end of year $ 5,084,427 $14,143,959 $11,306,959 See accompanying notes and schedules. 4. I3EA.M~@IMdL.A.EM chartered prqfebbional. AocauNXANra

8 Corporation of the City of Pembroke Consolidated Statement of Cash Flows For the Year Ended December 31, 2016 Cash from (used in) operating activities Annual surplus Adjustments for item not affecting cash Amortization of tangible capital assets Loss (gain) on disposal of capital assets Contributed (donated) tangible capital assets Changes in noncash working capital $ 5,784,159 $ 4,792,473 4,972, ,393 (20,924) 4,946,995 (26,207) (123,638) Taxes receivable 391,159 (291,994) Water and sewer receivables 74,790 (52,451) Accounts receivable (778,223) 852,732 Inventories for resale (4,148) 4,280 Prepaid expenses 24,780 (24,207) Accounts payable and accrued liabilities 2,616,314 (2,312,016) Deferred revenue general 8,283 5,512 Deferred revenue obligatory 158,326 21,750 Employee benefits and post employment liabilities 38,039 (96,234) Landfill closure and post closure liabilities 49,959 31,552 14,245,531 7,728,547 Cash from (used in) financing activities Proceeds from long term liabilities issued 1,098,162 4,900,150 Payments on long term liabilities (1,502,369) (1,263,209) (404,207) 3,636,941 Cash from (used in) investing activities Investments (191,284) (31,017) Investment in municipal electric utilities 95,297 (268,407) (95,987) (299,424) Cash from (used in) capital activities Proceeds from sale of tangible assets 248, ,603 Purchase of tangible assets (9,102,111) (4,717,625) (8,854,032) (4,602,022) Increase in cash 4,891,305 6,464,042 Cash, beginning of year 18,084,282 11,620,240 Cash, end of year $22,975,587 $18,084,282 See accompanying notes and schedules. 5. Chartered PROFEasiDNAL Adcduntantb

9 378, ,487 95, , , ,487 95, , , , , ,647 18,943 Corporation of the City of Pembroke Consolidated Schedule of Continuity of Reserves For the Year Ended December 31, 2016 Schedule 1 Balance Revenues Transfers Balance Beginning Interest From To To End of of Year Earned Operations Other Total Operations Capital Other Total Year Reserves 452,166 Protection services $ 368,122 $ $ 172,000 $ $ 172,000 $ 65,000 $ $ $ 65,000 $ 475,122 Transportation services 551, , ,763 Waterworks 2,419, ,647 2,238,664 Pollution control projects 144, , ,039 Working funds 452,166 Waste Management 1,705,231 12, , , ,662 2,047,125 Other current purposes 459, ,118 Other capital purposes 107,612 18, ,669 6,208,453 12,489 1,718,312 1,730, ,644 1,173,983 1,703,627 6,235,627 Reserve funds (Schedule 2) 8,089,062 91, ,814 _ 14,331 1,365,000 1,379,331 7,516,445 Total reserves and reserve funds $14,297,515 $104,389 $2,433,126 $ $2,537,515 $ 543,975 $2,538,983 $ $3,082,958 $13,752, See accompanying notes and schedules.

10 8, ,000 1,100,000 4,370 Corporation of the City of Pembroke Consolidated Statement of Continuity of Reserve Funds For the Year Ended December 31, 2016 Schedule 2 Balance Revenues Transfers Balance Interest Beginning on From To To End of of Year Investments Operations Other Total Operations Capital Other Total Year Reserve Funds Sick leave, disability $ 269,197 $ 3,096 $ 15,049 $ $ 18,145 S $ $ $ $ 287,342 Parking revenues 135,268 1,555 14,261 15, ,084 Water purification 4,455,970 51, , ,244 15,000 4,667,214 Airport capital and contingencies 97,795 8,211 4, ,636 Pollution control 1,652,525 19, , ,005 9, , ,961 1,711,569 Other current purposes 1, ,973 Other capital purposes 1,476,357 16, , ,270 1,100, ,627 $8,089,062 $ 91,900 $ 714,814 $ $ 806,714 $ 14,331 $1,365,000 $ $1,379,331 $7,516, See accompanying notes and schedules.

11 Corporation of the City of Pembroke Consolidated Schedule of Deferred Revenue Obligatory For the Year Ended December 31, 2016 SCHEDULE 3 Balance Revenues Transfers Balance Beginning of Year Interest on Investments From Other Operations Government Transfers Total To Operations To Capital Other Total End of Year Development charges Cash in lieu of parkland Gasoline Tax Province Gasoline Tax Federal $ 445,558 37, ,854 23,400 $ 5, , $ 70,230 6,400 $ $ 111, ,180 $ 75,354 6, , ,449 $ 11, ,000 S 139,172 10, ,508 S $ 150,610 $370,302 10,000 34, , , , ,341 $ 768,338 $ 8,836 $ 76,630 $ $ 984,978 $1,070,444 $ 131,438 $ 780,680 S $912,118 $926, See accompanying notes and schedules.

12 3,223, ,024,876 94,852,753 Corporation of the City of Pembroke Consolidated Schedule of Tangible Capital Assets For the Year Ended December 31,2016 Schedule 4 By Asset Class General Infrastructure Totals Land Land Improve ments Buildings & Improve ments Vehicles Equipment Cultural and Historical Land Plants & Facilities Roads Underground Networks and Other Assets Under Construction Cost Balance, beginning of year Add; additions during year Less: disposals during year 5 2,615,719 2 (2) 5 5,015,888 56,535 (208,700) 523,375, ,923 (1,449,168) 52,989, ,921 (209,820) 5 5,153, ,187 (402,201) $ 122, , ,082, ,911,443 4,295,432 (1,143,492) 544,848,875 2,587,056 (329,772) 5 480,970 1,483,979 $194,512,383 9,123,035 (3,743,155) 5191,418,400 4,841,263 (1,747,280) Balance, end of year 2,615,719 4,863,723 22,151,506 2,995,291 5,010, , ,895 44,082,838 68,063,383 47,106,159 1,964, ,892, ,512,383 Accumulated Amortization Balance, beginning of year Add: amortization during the year Less: reduction on disposals 3,101, ,018 (40,278) 9,447, ,532 (562,028) 1,470, ,969 (143,822) 3,294, ,129 (373,293) 19,656,736 1,368,140 39,386,862 1,564,306 (1,118,170) 16,086, ,530 (327,092) 92,444,812 4,972,624 (2,564,683) 89,155,701 4,946,995 (1,657,884) Balance, end of year 9,386,622 1,478,754 3,217,827 39,832,998 16,687, ,444,812 Net book value of tangible capital assets 5 2,615, ,640, ,764,884 $ 1,516, ,792, ,638 $ 915,895 $23,057, ,230, ,418, ,964,949 $105,039, ,067,571 Bv Functional Classification Planning and Development General Government Police Fire Roads Other Transpor tation Water Supply Storm Sewer Sanitary Sewer Recreation Waste Disposal Cost Balance, beginning of year Add: additions during year Less: disposals during year 5 15, ,607, ,889 (464,417) $ 8,293,166 28,775 (1,432,956) $2,046, ,080 (35,087) $72,919,498 6,131,219 (1,484,901) $ 3,051,825 5, ,186,296 1,332,690 (28,121) $11,236, ,293 $38,211, ,602 (4,180) $16,013,918 89,729 (152,068) $ 5,930, ,898 (141,425) $194,512,383 9,123,035 (3,743,155) 5191,418,400 4,841,263 (1,747,280) Balance, end of year 15,387 3,503,333 6,888,985 2,187,354 77,565,816 3,057,685 34,490,865 11,810,040 38,402,484 15,951,579 6,018, ,892, ,512,383 Accumulated Amortization Balance, beginning of year 8,426 Add: amortization during the year 2,198 Less: reduction on disposals 1,198,617 59,086 (45,796) 1,028, ,828 (773,790) 631,623 98,722 (32,457) 42,134,866 1,885,684 (1,459,578) 1,378,175 81,638 16,681, ,964 (28,121) 2,909, ,910,678 1,167,872 (1,500) 10,473, ,848 (148,014) 2,089, ,801 (75,427) 92,444,812 4,972,624 (2,564,683) 89,155,701 4,946,995 (1,657,884) Balance, end of year 10,624 1,211, , ,888 42,560,972 1,459,813 17,311,739 3,110,163 15,077,050 10,747,476 2,177,468 94,852,753 92,444,812 Net book value of tangible capital assets 5 4,763 $2,291,426 $ 6,401,332 $ 1,489,466 $35,004,844 $ 1,597, ,179,126 $ 8,699,877 $23,325,434 $5,204,103 $3,841,267 $105,039,510 $102,067, See accompanying notes and schedules.

13 Corporation of the City of Pembroke Consolidated Schedule of Accumulated Surplus For the Year Ended December 31, 2016 Schedule 5 Reserve Funds Schedule 2 Sick leave, disability $ 287,342 $ 269,197 Parking revenues 151, ,268 Water purification 4,667,214 4,455,970 Airport capital and contingencies 101,636 97,795 Pollution control 1,711,569 1,652,525 Other current purposes 1,973 1,950 Other capital purposes 595,627 1,476,357 Total 7,516,445 8,089,062 Reserves Schedule 1 Protection services 475, ,122 Transportation services 342, ,827 Waterworks 2,238,664 2,419,824 Pollution control projects 144,553 Working funds 452, ,166 Waste management 2,047,125 1,705,231 Other current purposes 459, ,118 Other capital purposes 220, ,612 Total 6,235,627 6,208,453 Total Reserves and reserve Funds 13,752,072 14,297,515 Surpluses Invested in tangible capital assets 94,951,436 86,993,754 General revenue fund 1,000,623 2,485,490 Landfill operations board (40,343) (80,425) Equity in municipal electric utilities 11,955,859 12,051,156 Unfunded Employment benefits and post employment liabilities (2,027,097) (1,989,058) Landfill closure and postclosure liabilities (356,797) (306,838) Total surpluses 105,483,681 99,154,079 Accumulated Surplus $119,235,753 $113,451,594 See accompanying notes and schedules. 10. I^EANSINCILAIM Chartered PRDFEaeioNAi. Accduntants

14 S S (95.297) , ( ) CORPORATION OF THE CITY OF PEMBROKE Consolidated Schedule of Segmented Disclosure For the Year Ended December 31,2016 Schedule 6 General Protection to Transportation Environmental Health Social and Family Recreation and Planning and Totals Government Persons and Properti Services Services Services Services Cultural Services Development Operations Revenue Taxation and payments in lieu S $ $ S $ S S $ User charges Government transfers Investment income Penalties and interest ,534 Deferred revenue eamedschedule.t 11, , ,611 investment in municipal electric utiltie (95.297) 268,407 Donated tangible capital assets Gain (loss) on disposal of assets ( ) ( ) ( ) Other Expenses Salaries.wages and employee benefits , , Interest on long term liabilities Materials Contracted Services Rents & Financial expenses External transfers Amortization InterFunctional Adjustments ( ) (19.950) ( ) ,307 Net Revenues $ $ ( ) $ ( ) S $ ( ) $ ( ) $ ( ) S ( ) $ S The accompanying notes are an integral part of this financial statement.

15 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31,2016 The City of Pembroke is an incorporated municipality in the Province of Ontario. Its operations are guided by the provisions of provincial statutes such as the Municipal Act, Municipal Affairs Act and related legislation. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of the Corporation of the City of Pembroke are the representations of management prepared in accordance with local government accounting standards established by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada. Reporting Entity (a) The consolidated financial statements reflect the assets, liabilities, revenues and expenditures of the City and include the activities of all committees of Council and the following boards which are under the control of Council: Pembroke Public Library Board Pembroke Business Improvement Area The Parking Authority of the City of Pembroke The municipality is also a member of two noncontrolled joint local boards which are accounted for using the proportionate consolidation method whereby the municipality's proportionate share of revenues, expenditures, assets and liabilities are included in the accounts after elimination of the proportionate share of interentity transactions: Proportionate Share Ottawa Valley Waste Management Board 28.43% Pembroke and Area Airport Commission 21.74% The City accounts for its ownership interest in municipal electric utilities by the modified equity method. Under the modified equity basis, the electric utilities accounting policies are not adjusted to conform to those of the City, and interorganizational transactions and balances are not eliminated. (b) Accounting for School Board Transactions The taxation, other revenues, expenditures, assets and liabilities with respect to the operations of the school boards are not reflected in these financial statements. 12. Chartered Profebbidnai. Aodduntantb

16 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, SUMMARY OF ACCOUNTING POLICIES (cont'd) Basis of Accounting (a) Accrual Basis of Accounting The financial statements have been prepared using the accrual basis of accounting. The accrual basis of accounting recognizes revenues in the period in which transactions or events occurred that gave rise to the revenues; expenditures are recognized in the period the goods and services are acquired and a liability is incurred or transfers are due. (b) Revenue Recognition Property tax billings are prepared by the Municipality based on an assessment roll prepared by the Municipal Property Assessment Corporation ("MPAC"), an agency of the Ontario government. Any supplementary billing adjustments made necessary by assessment appeals submitted by the ratepayers and changes to assessed value reflecting new construction are recognized in the year they are determined. User charges and fees are recognized as revenue in the year the goods and services are provided. Investment income is recognized as it is earned. Investment income earned on federal gas tax reserve funds is recorded as deferred revenue and included in Municipal revenues in the year that they are applied to qualifying capital expenditures. Government transfers are recognized as revenue in the year in which the events giving rise to the transfer occur, providing the transfers are authorized, any eligible criteria have been met, and reasonable estimates of the amounts can be made. (c) Cash Cash is defined as cash on hand, cash on deposit and short term deposits with a maturity date of less than 90 days, net of cheques outstanding at the reporting date. (d) Inventories for Resale Inventories for resale are valued at the lower of cost and net realizable value with cost determined on a firstin, firstout basis. (e) NonFinancial Assets Nonfinancial 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. The change in nonfinancial assets during the year, together with the excess of revenues over expenses, provided the Change in Net Financial Assets for the year. 13. B3lEA.I^'^ SI^<ClLA.]IM chartered PRDFEBBIDNAL Accduntanto

17 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, SUMMARY OF ACCOUNTING POLICIES (cont'd) (e) NonFinancial Assets (cont'd) Tangible Capital Assets Tangible capital assets are recorded at cost, which includes all amounts that are directly attributable to the acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets are amortized on a straightline basis over their estimated useful lives as follows: Assets Useful LifeYears Land improvements 1050 Buildings and improvements 1050 Vehicles 525 Equipment 545 Plants and facilities 2080 Roads 1540 Underground and other networks Landfill sites are amortized using the units of production method based upon capacity used during the year. Annual amortization is prorated by month in the year of acquisition and in the year of disposal. Assets under construction are not amortized until the asset is in service. The City has a capitalization threshold so that individual tangible capital assets of lesser value are expensed, unless they are pooled because, collectively, they have significant value, or for operational reasons. Certain assets have been assigned a nominal value of one Canadian dollar because of the difficulty of determining a tenable valuation. The most significant such assets are the City's road allowances and most City lands. Contributions of Tangible Caoital Assets Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and are also recorded as revenue. Similarly, transfers of assets to third parties are recorded as an expense equal to the net book value of the asset as of the date of transfer. Leases Leases are classified as capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as capital leases. All other leases are accounted for as operating leases and the related lease payments are charged to expenses as incurred. 14. IDEAMSlNClLAIM CHARTERED PROrEBBIDNAL ACBQUNTANTB

18 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, SUMMARY OF ACCOUNTING POLICIES (cont'd) (f) Pension and Employee Benefits The City expenses its contributions to the Ontario Municipal Employees Retirement System ("OMERS"), a multiemployer public sector pension fund, when contributions are due. Employee benefits include vacation entitlement, sick leave benefits and certain post employment benefits. Vacation entitlements and sick leave benefits are accrued as entitlements are earned. Other post employment benefits are subject to actuarial valuations and are accrued in accordance with the projected benefit method, prorated on service and management's best estimate of salary escalation and retirement ages of employees. Any actuarial gains and losses related to past service of employees are amortized over the expected average remaining service life of the employee groups. (g) Deferred Revenue Obligatory Revenue restricted by legislation, regulation or agreement and not available for general municipal purposes is reported as deferred revenue obligatory on the consolidated statement of financial position. The revenue is reported on the consolidated statement of operations in the year in which it is used for the specified purpose. (h) Use of Estimates The preparation of consolidated financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Due to the inherent uncertainty in making estimates, actual results could differ from these estimates. Management makes accounting estimates when determining the estimated useful life of the Corporation's tangible capital assets, its allowance for doubtful accounts, the carrying value of its inventory, the accrued liabilities for employee benefits and solid waste landfill closure and postclosure care. Actual results could differ from those estimates. (i) Investments Investments are measured at amortized 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. Investment premiums and discounts are amortized over the term of the respective investments. (j) Contaminated Sites Liability Contaminated sites are a result of contamination being introduced into air, soil, water or sediment of a chemical, organic or radioactive material or live organism that exceeds an environmental standard. The liability is recorded net of any expected recoveries. A liability for remediation of a contaminated site is recognized when a site is not in productive use and is management's estimate of the cost of postremediation including operation, maintenance and monitoring. 2. CASH Cash of $8,443,109 (2015 $8,857,400) has been restricted to support obligatory funds, reserves and deferred revenueobligatory. 15. IDEAMSlNClLAIM Chartered Profebsidnal Abcduntantb

19 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, INVESTMENTS Money market funds and high interest savings $ 29,087 $ 29,433 Fixed income securities 661, ,668 $ 690,385 $ 499,101 The fixed income securities have effective interest rates of 1.85% to 4.8% with maturity dates from November 14,2017 to March 5,2040. Fair market value of fixed income securities at December 31,2016 is $673,949 (2015 $479,543). The investments are held by the Ottawa Valley Waste Management Board $619,980 (2015 $428,305) and Pembroke and Area Airport Commission $70,405 (2015 $70,796). 4. INVESTMENT IN MUNICIPAL ELECTRIC UTILITIES In November 1998, the Energy Competition Act, 1998 (Bill 35) was enacted to restructure the Ontario electricity industry and introduce competition in the electricity market. As a result of changes set out in the Act, the City acquired shares and debt of Ottawa River Power Corporation and Ottawa River Energy Solutions Inc. which are the successors to Pembroke Hydro Electric Commission, Beachburg Hydro System, Township of Killaloe, Hagarty & Richards Hydro Electric Commission and the Town of Mississippi Mills Public Utilities Commission. The City's investment is comprised of the following: Ottawa River Ottawa River Power Energy Corporation Solutions Inc. Total Total % and 7.25% promissory notes, due May 1,2022, $4,364,000 $ 233,287 $ 4,597,287 $4,597, % share of equity as at December 31, ,052,041 1,306,531 7,358,572 7,453,869 $10,416,041 $ 1,539,818 $11,955,859 $12,051,156 During the year the City of Pembroke received promissory note interest of $275,408 (2015 $316,390) from Ottawa River Power Corporation and $16,913 (2015 $16,913) from Ottawa River Energy Solutions Inc. and dividend payments of $191,798 (2015 $195,500) from Ottawa River Power Corporation and $45,953 (2015 $48,545) from Ottawa River Energy Solutions Inc. 16. Chartered prdfebbionai. aodduntanto

20 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, INVESTMENT IN MUNICIPAL ELECTRIC UTILITIES (cont'd) Additional information in regard to the City's investment in municipal electrical utilities is presented below. The City owns 78.38% of the issued shares of both corporations. Ottawa River Power Corporation Financial Position Current assets Restricted cash and cash equivalents Property, plant and equipment Other noncurrent assets Regulatory assets $ 9,332,340 80,497 10,402,726 1,007, ,648 $ 6,903,057 70,691 9,112, ,633 1,914,289 Total assets 21,314,857 18,720,963 Current liabilities Long term liabilities Regulatory liabilities 6,207,637 6,272,189 1,113,621 3,108,796 6,152,249 1,523,084 Total liabilities 13,593,447 10,784,129 Net assets $ 7,721,410 $ 7,936,834 Financial Activities Service revenues (net of cost of sales) Operating expenses Amount in lieu of income taxes $ 4,089,302 3,956,696 70,030 $ 4,565,665 3,944, ,124 Net revenue for the year $ 62,576 $ 471, EIA^~SII^(C]LA.E1R OHARTEHED PROFEaaiONAL Aocquntantb

21 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, INVESTMENT IN MUNICIPAL ELECTRIC UTILITIES (cont'd) Ottawa River Energy Solutions Inc. Financial Position Current assets Equipment $ 1,542,562 1,393,027 $ 1,139,272 1,330,812 Total assets 2,935,589 2,470,084 Current liabilities Long term liabilities Future income tax liability 235,755 1,005,590 27, , ,177 34,496 Total liabilities 1,268, ,005 Net assets $ 1,666,919 $ 1,573,079 Financial Activities Revenues Expenses Amount in lieu of income taxes $ 1,193, ,951 52,820 $ 1,508,830 1,244,632 70,047 Net revenue for the year $ 143,840 $ 194, Chartered Profebsidnal Aodduntantb

22 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, LONG TERM LIABILITIES The balance of long term liabilities reported on the Consolidated Statement of Financial Position is made up of the following: City of Pembroke share of debentures issued by the Corporation of the Township of Laurentian Valley for capital costs of the Ottawa Valley Waste Management Board, maturing in 2022, payable in annual instalments of $164,300 and with interest payable semiannually at 7.23% per annum $ 985,800 $ 1,150,100 City of Pembroke share of debentures issued by the Corporation of the Township of Laurentian Valley for capital costs of the Ottawa Valley Waste Management Board, maturing in 2020, payable in semiannual instalments of $6,336 including interest at 1.8% per annum 48,954 60,333 Serial debentures payable, maturing in 2026, payable in semiannual instalments of $390,101 plus interest at 4.74% per annum 7,802,020 8,582,222 Serial debentures payable, maturing in 2020, payable in semiannual instalments of $50,000 plus interest at 3.78% per annum 400, ,000 Serial debentures payable, maturing in 2042, payable in semiannual instalments of $69,022 plus interest at 3.66% per annum 3,589,121 3,727,165 Serial debentures payable, maturing in 2045, payable in semiannual instalments of $80,664 plus interest at 3.44% per annum 4,597,826 4,759, % promissory note payable to Ottawa River Energy Solutions, payable in blended monthly payments of $ 15,767, due December ,691 City of Pembroke share of capital lease of the Ottawa Valley Waste Management Board, due 2020, payable in monthly instalments of $2,735 including interest at 4.45% per annum 106,354 _ $18,374,766 $18,778, EAN~^INC]LAIM CHARTERED PRDFEaSIDNAI. ACCDUNTANXa

23 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, LONG TERM LIABILITIES (cont'd) Principal payments are due on long term liabilities as follows: 2017 $ 1,538, ,547, ,556, ,549, ,428,489 Thereafter $ The long term liabilities issued in the name of the municipality have been approved by bylaw. The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs and Housing. Total interest charges for City long term liabilities reported in the Consolidated Statement of Operations are $826,000 (2015 $775,150). 6. EMPLOYEE BENEFITS AND POST EMPLOYMENT LIABILITIES Postemployment benefits $ 1,296,910 $ 1,301,942 Accrued vacation pay 443, ,582 Sick leave 286, ,534 $ 2,027,097 $ 1,989,058 (a) Sick Leave Benefits Under the sick leave benefit plans, unused sick leave can accumulate and employees may become entitled to a cash payment when they leave the municipality's employment. No payments were made to employees who left the municipality's employment during the current year. Reserves in the amount of $287,342 (2015 $269,197) have been established to provide for these liabilities and are reported on the Consolidated Statement of Financial Position. (b) Post Employment Benefits The Municipality has defined benefit plans providing various postretirement extended health and dental benefits. The liability and expense for postretirement extended health and dental benefits were determined by an actuarial valuation performed as at December 31, IDIEAN~@INCI.AIM Chartered PRarEBaioNAL Agoduntanto

24 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, 2016 EMPLOYEE BENEFITS AND POST EMPLOYMENT LIABILITIES (cont'd) Information about the City's benefit plan is as follows: Accrued benefit liability Accrued benefit liability, beginning of year Current service cost Interest Benefits paid during the year Amortization of experience (gain) loss $ 1,301,942 53,306 38,232 (77,000) (19,570) $ 1,303,276 51,429 37,629 (70,000) (20,392) Accrued benefit liability, end of year $ 1,296,910 $ 1,301,942 Reconciliation of accrued beneflt obligation Accrued benefit obligation, beginning of year Benefits accrued during year Benefits paid during year Interest on accrued benefit obligation during year 1,059,280 53,306 (77,000) 38,232 $ 1,040,222 51,429 (70,000) 37,629 Accrued benefit obligation, end of year $ 1,073,818 $ 1,059,280 Discount rate Assumed health care trend rate Assumed dental trend rate 3.1 % 10.0 % 4.0 % 3.65% 10.0% 4.0% CONTAMINATED SITES LIABILITY The City has adopted PS3260 Liability for Contaminated Sites. The City did not identify any financial liabilities in 2016 (2015 Nil) as a result of this standard. 21. IOEA1N~SEBJCZ.iA.IM Chartered PROFEssiaNAU AccauNTANxa

25 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, LANDFILL CLOSURE AND POSTCLOSURE LIABILITIES The Ottawa Valley Waste Management Board has assumed liability for closure and post closure costs of a landfill site. These financial statements recognize a liability for the City of Pembroke's estimated proportionate share of these costs to the extent that the site has been used to date. Usage is measured as cumulative capacity used versus total estimated capacity available. Since costs are expected to be incurred in the future, they have been discounted at 5.23% which is the Board's average longterm borrowing rate, net of 2% inflation. The existing landfill site is expected to reach capacity in approximately the year Estimated closure and post closure costs and related information as at December 31,2016 are summarized as follows; City of Pembroke City of Pembroke Total Share Total Share Expected total expenditures $ 6,564,800 $ 1,866,373 $ 6,426,800 $ 1,817,499 Amount remaining to be recognized (5,309,800) (1,509,576) (5,341,800) (1,510,661) Liability to date $ 1,255,000 $ 356,797 $ 1,085,000 $ 306,838 Remaining capacity of site in cubic metres Remaining useful life of site in years Years of post closure care The Board has designated investments of $2,180,725 for settling closure and postclosure liabilities. 9. EXPENDITURES BY OBJECT The Consolidated Statement of Operations presents the consolidated expenditures by function. The following classifies those same expenditures by object. Salaries, wages and employee benefits $11,546,864 $11,112,538 Interest on long term liabilities 826, ,150 Transfers to external organizations 5,671,862 5,442,214 Materials, contracted services, rents and financial expenses 10,468,516 11,200,410 Amortization 4,972,624 4,946,995 $33,485,866 $33,477, chartered PRaFESBIDNAl. ADOOUNTANra

26 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, PENSION AGREEMENT The Corporation of the City of Pembroke, on behalf of its eligible employees, is a participant in the Ontario Municipal Employees Retirement System (OMERS). OMERS is a defined benefit pension plan, fully funded by equal contributions from participating employers and employees, and by the investment earnings of the OMERS Fund. OMERS pensions are calculated using a defined benefit formula, taking into account length of service and average annual wage that is designed to integrate with the pension payable from the Canada Pension Plan. Because OMERS is a multiemployer pension plan. The Corporation of the City of Pembroke does not recognize any share of the pension plan deficit of $2.3 billion (2015 $5.3 billion) based on the total fair market value of the plans's assets, as this is a joint responsibility of all Ontario municipalities and their employees. The amount contributed to OMERS for 2016 was $716,793 (2015 $696,165) for current service and is included as an expenditure on the Consolidated Statement of Operations. At December 31, 2016 there is no liability for past service under this agreement. 11. FINANCIAL INSTRUMENTS The Municipality's financial instruments consist of cash, investments, taxes receivable, water and sewer receivables, accounts receivable, accounts payable and accrued liabilities and long term liabilities. The fair value of these financial instruments is approximately equal to their carrying value. It is management's opinion that the Municipality is not exposed to significant interest or currency risks arising from these financial instruments. The City is subject to credit risk with respect to taxes receivable, water and sewer receivables and accounts receivable. Credit risk arises from the possibility that taxpayers and entities to which the City provides services may experience financial difficulty and be unable to fulfill their obligations. It is management's opinion that the large number and diversity of taxpayers and users minimizes the credit risk. 12. CONTRACTUAL OBLIGATIONS AND COMMITMENTS The City has a contract with the Ontario Provincial Police (GPP) for policing services. The contract cost for 2016 was $4,181,313. The contract expires December 31, The City has a contract for the collection and transportation of garbage, recyclable material, source separated organics and yard waste effective April 1,2015 and expiring March 28,2025. The cost for 2016 was $815,221. The City is committed to a construction contract in the amount of $4,639,045 plus HST as at December 31, CONTINGENT LIABILITIES The nature of municipal activities is such that there may be litigation pending or in prospect at any time. Management believes that the City has valid defences and appropriate insurance coverages in place. In the event any claims are successful, management believes that such claims are not expected to have a material effect on the City's financial position. Any adjustments, arising from these matters, will be recorded in future years. 23. IDlEANglNClLAIM Chartered PRorEBstoNAL Abcduntanto

27 Corporation of the City of Pembroke Notes to the Consolidated Financial Statements For the Year Ended December 31, BUDGET FIGURES The operating budget approved by City Council for 2016 is reflected on the Consolidated Statement of Operations. The budgets established for capital investment in tangible capital assets are on a projectoriented basis, the costs of which may be carried out over one or more years and, therefore, may not be comparable with current year's actual expenditure amounts. As well, the City does not in some cases include tangible capital asset amounts in the annual budget as they do not require immediate funding. Budget figures have been reclassified for the purposes of these financial statements to comply with PSAB reporting requirements and are unaudited. 15. SEGMENTED DISCLOSURES The City of Pembroke provides a range of services to its ratepayers. For each segment as reported in Schedule 6, revenues and expenses represent amounts that are directly attributable to the segment. Amounts not directly attributable to a segment are reported in general government. The accounting policies used in these segments are consistent with those followed in the preparation of the financial statements as disclosed in Note A1V~^ lv(nir^a M CHARTERED PRDFCBaiDNAL ACCDUNTANTa

28 Pembroke Public Library Board Financial Statements For the Year Ended December 31, 2016 chartered PRDFCBSiaNAl. ACCDUNTANTB

29 Dean~ Sinclair Chartered Prdfessidnal Accduntant! 21 1 HiNCKS STReer FEMBRQKe, ONTARIO KBA 4N7 TEUEPHONE: e FACSIHIt.e: fi Independent Auditors' Report To the Board Members, Members of Council, Inhabitants and Ratepayers of the Corporation of the City of Pembroke We have audited the accompanying financial statements of PEMBROKE PUBLIC LIBRARY Board, which comprise the statement of financial position as at December 31,2016 and the statement of operations, statement of changes in accumulated surplus (deficit), statement of changes in net financial assets and statement of cash flows 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' judgement, 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 auditor considers 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of PEMBROKE Public Library Board as at December 31, 2016 and the results of its operations and the changes in its net financial assets and cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants Licensed Public Accountants Pembroke, Ontario April 20,2017 # CPA CHARTERED PROFESSIONAL ACCOUNTANTS

30 Pembroke Public Library Board statement of Financial Position As At December 31,2016 Financial Assets Cash Cash held by City of Pembroke Grants and other receivables $ ,353 $ ,408 64,526 38, ,354 Financial Liabilities Accounts payable and accrued liabilities Payable to the City of Pembroke Deferred revenues (Note 2) 100,287 45,777 16,326 27,526 20, ,390 48,195 Net financial assets $ (123,650) $ 72,159 NonFinancial Assets Tangible capital assets net (Schedule 1) Prepaid expenses $ 133,866 8,990 $ 191,521 5, , ,374 Accumulated Surplus (Deficit) Invested in tangible capital assets Operating fund Reserve for capital and contingencies 133,866 (175,429) 60, ,521 10,300 67,712 $ 19,206 $ 269,533 The accompanying notes are an integral part of this financial statement. 2. Z5EA.Bi~SlBrCLA.Z5i chartered PROFEBBIONAL Adoduntantb

31 12,000 (24,200) Pembroke Public Library Board Statement of Changes in Accumulated Surplus (Deficit) For the Year Ended December 31, 2016 Invested in Tangible Capital Assets Reserve for Capital and Contingencies Operating Fund Total Total Balance, beginning of year Annual surplus (deficit) $ 191,521 (81,855) $ 67,712 (18,943) $ 10,300 (149,529) $ 269,533 (250,327) $ 234,794 34,739 Transfers (12,000) Invested in tangible capital assets 24,200 Balance, end of year $ 133,866 $ 60,769 $ (175,429) $ 19,206 $ 269,533 The accompanying notes are an integral part of this financial statement.