The Corporation of the Town of Hanover Financial Statements For the year ended December 31, 2006

Transcription

1 The Corporation of the Town of Hanover Financial Statements For the year ended

2 The Corporation of the Town of Hanover Financial Statements For the year ended Contents The Corporation of the Town of Hanover Auditors Report 1 Consolidated Statement of Financial Position 2 Consolidated Statement of Financial Activities 3 Consolidated Statement of Changes in Financial Position 4 Summary of Significant Accounting Policies 5-7 Notes to Consolidated Financial Statements 8-17 Schedule of Consolidated Current Fund Activities 18 Schedule of Consolidated Capital Fund Activities 19 Schedule of Consolidated Reserves and Reserve Funds 20 The Corporation of the Town of Hanover Trust Funds Auditors Report 21 Balance Sheet 22 Statement of Continuity 23 Notes to Financial Statements 24 The Corporation of the Town of Hanover Public Library Board Auditors Report 25 Statement of Financial Position 26 Statement of Financial Activities 27 Notes to Financial Statements The Corporation of the Town of Hanover Downtown Improvement Area Auditors Report 33 Statement of Financial Position 34 Statement of Financial Activities 35 Notes to Financial Statements The Hanover/Walkerton Landfill Site Auditors Report 38 Statement of Financial Position 39 Statement of Financial Activities 40 Notes to Financial Statements 41-43

3 BDO Dunwoody LLP Chartered Accountants and Advisors th Street Hanover Ontario, Canada N4N 1R2 Telephone: (519) Telefax: (519) Auditors Report To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Town of Hanover We have audited the consolidated statement of financial position of The Corporation of the Town of Hanover as at, the consolidated statement of financial activities, and the consolidated statement of changes in financial position for the year then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of The Corporation of the Town of Hanover as at, and the results of its financial activities and changes in financial position for the year then ended in accordance with Canadian generally accepted accounting principles. BDO DUNWOODY LLP Chartered Accountants, Licensed Public Accountants Hanover, Ontario April 25,

4 Consolidated Statement of Financial Position December Financial Assets Cash (Note 1) $ 2,786,155 $ 3,187,307 Portfolio investments (Note 2) 2,414,937 1,411,784 Taxes receivable 582, ,280 Water and sewage charges receivable 351, ,526 Grants and subsidies receivable 342, ,796 Other receivables 355, ,012 Inventory for resale 157, ,442 Loans receivable (Note 3) 1,335,083 1,335,083 Long-term investments (Note 4) 2,756,742 2,756,742 Liabilities 11,083,613 10,131,972 Accounts payable and accrued liabilities $ 1,144,173 $ 1,068,452 Deferred revenue (Note 5) 1,381, ,240 Long-term debt (Note 6) 3,013,934 3,164,874 Landfill site closure and post-closure care liability (Note 7) 509, ,050 Employee future benefits liability (Note 8) 723, ,619 6,771,546 6,034,235 Net Financial Assets $ 4,312,067 $ 4,097,737 Commitments and Contingencies (Note 15) Municipal Position Current fund (Note 9 & Page 18) $ 571,363 $ 398,107 Reserves and reserve funds (Note 10 & Page 20) 7,478,000 7,506,123 8,049,363 7,904,230 Amounts to be recovered (Note 11) (3,737,296) (3,806,493) $ 4,312,067 $ 4,097,737 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 2

5 Consolidated Statement of Financial Activities For the year ended December Budget Actual Actual Revenue Taxation $ 3,881,417 $ 3,956,319 $ 3,766,221 Government grants 1,780,368 1,732,277 1,319,538 Ontario Lottery Corporation 736, , ,987 Municipal contributions 359, , ,745 Water and sewer charges 1,799,514 1,635,926 1,582,149 User fees and service charges 1,271,740 1,508,644 1,171,836 Investment income 200, , ,744 Donations 8,000 39,326 50,279 Other (Note 12) 401, , ,419 10,439,039 10,812,271 9,685,918 Expenditures Current (Note 13) General government 703, , ,607 Protection to persons and property 2,646,600 2,683,444 2,639,380 Transportation services 630, , ,402 Transit 509, , ,297 Environmental services 1,724,416 1,607,255 1,567,102 Health services 321, , ,428 Recreation and cultural services 1,928,800 2,307,466 1,827,027 Planning and development 118, , ,625 Employee future benefits not funded - 81,743 63,453 8,582,911 8,917,857 8,256,321 Capital General government 24,800 26,228 40,084 Protection to persons and property 88,500 58, ,939 Transportation services 1,109,000 1,051, ,975 Environmental services 1,139, , ,693 Health services 64,000 50,974 18,137 Recreational and cultural services 228, , ,285 Planning and development ,017 2,654,200 1,680,084 1,429,130 Total expenditures 11,237,111 10,597,941 9,685,451 Net revenue (expenditure) for the year (798,072) 214, Change in amounts to be recovered (Note 11) (151,000) (69,197) (81,836) Change in fund balances for the year $ (949,072) 145,133 (81,369) The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 3

6 Consolidated Statement of Changes in Financial Position For the year ended December Cash provided by (used in) Operating activities Net revenue (expenditure) for the year $ 214,330 $ 467 Items not involving cash: Increase in taxes receivable (235,716) (2,776) Decrease (increase) in accounts receivable (132,986) 125,473 Decrease in inventory for resale 19,062 29,655 Increase (decrease) in accounts payable 75,721 57,367 Increase (decrease) in deferred revenue 54,766 44,144 Increase in landfill closure and post-closure care liability 32,950 47,100 Increase in employee future benefits liability 81,743 63, , ,883 Investing activities Increase in portfolio investments (1,003,153) (1,411,784) Financing activities Repayment of long-term debt (150,940) (145,289) Net change in cash and cash equivalents (1,044,223) (1,192,190) Cash and cash equivalents, beginning of year 2,567,713 3,759,903 Cash and cash equivalents, end of year $ 1,523,490 $ 2,567,713 Represented by: Unrestricted cash (Note 1) $ 1,523,490 $ 2,567,713 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 4

7 Summary of Significant Accounting Policies Basis of Accounting The consolidated financial statements of The Corporation of the Town of Hanover are the representation of management prepared in accordance with accounting principles established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants as prescribed by the Ministry of Municipal Affairs and Housing. The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from management s best estimates as additional information becomes available in the future. Revenues and expenditures are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. The consolidated statement of financial position reflects the financial assets and liabilities of the municipality. Financial assets are those assets which could provide resources to discharge existing liabilities or finance future operations. Municipal position represents the financial position of the municipality, and is the difference between its assets and liabilities. Basis of Consolidation The consolidated statements reflect the assets, liabilities, revenues and expenditures of the current fund, capital fund, reserves and reserve funds of all municipal organizations, committees, and boards which are owned or controlled by Council. All interfund assets, liabilities, revenues and expenditures have been eliminated on consolidation. The following boards and municipal enterprises owned or controlled by Council have been consolidated: Hanover Police Services Board Hanover Cemetery Board Hanover Public Library Board Hanover Downtown Improvement Area 5

8 Summary of Significant Accounting Policies A government partnership exists where the municipality has shared control over the board or entity. The municipality's pro-rata share of the assets, liabilities, revenues and expenditures are reflected in the financial statements using the proportionate consolidation method. The municipality's proportionate interest of the following government partnerships are reflected in the consolidated financial statements: Saugeen Municipal Airport 25.9% ( %) Hanover/Walkerton Landfill Site 50% Temporary Investments Inventory Portfolio and Long-term Investments Capital Assets Deferred Revenue Landfill Site Closure and Post-Closure Care Employee Future Benefits Temporary investments are recorded at the lower of cost and market value. Inventory of goods held for resale are recorded at the lower of cost and net realizable value. Cost is determined on the average cost basis. Portfolio and long-term investments are recorded at cost. The historical cost and accumulated amortization of capital assets are not recorded for municipal purposes. Capital assets are reported as an expenditure on the consolidated statement of financial activities in the period of acquisition. Revenue restricted by legislation, regulation or agreement and not available for general municipal purposes is reported as deferred revenue on the consolidated statement of financial position. The revenue is reported on the consolidated statement of financial activities in the year in which it is used for the specified purpose. Landfill site closure and post-closure care costs are recognized over the operating life of the landfill, based on capacity used. The liability is recorded at its discounted value, based on the average long-term borrowing rate of the municipality. The municipality pays post-employment benefits to eligible employees on retirement. The benefits earned are recognized over the service life of the employees using the projected benefit method and management s best estimate of salary escalation, benefit costs, and retirement ages of employees. Defined contribution plan accounting is applied to the municipality s multi-employer defined benefit pension plan. 6

9 Summary of Significant Accounting Policies Amounts to be Recovered Cash and Cash Equivalents County and School Boards Trust Funds Amounts to be recovered are reported in the municipal position on the consolidated statement of financial position. The balance represents the outstanding principal portion of unmatured long-term liabilities, liabilities not yet due, and other future expenditures not yet levied on the ratepayers. Cash and cash equivalents consist of cash on hand, bank balances, and investments in money market instruments with maturities of three months or less. The municipality collects taxation revenue on behalf of the school boards and the County of Grey. The taxation, other revenues, expenditures, assets and liabilities with respect to the operations of the school boards and the County of Grey are not reflected in these financial statements. Funds held in trust by the municipality, and their related operations, are not included in these financial statements. The financial position and activity of the trust fund are reported separately on the trust fund balance sheet and statement of continuity. 7

10 Notes to Consolidated Financial Statements 1. Cash Cash consists of bank deposits at an interest rate of prime less 1.75%, subject to a capping formula, payable monthly. Included in cash is $1,262,665 (2005 $619,594), the use of which is externally restricted by legislation or agreement. 2. Portfolio Investments Carrying value $ 2,414,937 $ 1,411,784 Market value $ 2,401,575 $ 1,395,248 Portfolio investments consist of corporate and government debt securities with an effective interest rate of 3.5% ( %), maturing in Interest is paid monthly or semi-annually. Interest income on the above of $80,163 ( $21,111) is included in investment income reported on the consolidated statement of financial activities. 3. Loans Receivable Note receivable, Westario Power Inc., 5.47%, interest only payable quarterly $ 1,335,083 $ 1,335,083 The note receivable from Westario Power Inc. is due on demand in accordance with the terms set out in the shareholders agreement. The Town of Hanover is a shareholder of the parent corporation, Westario Power Holdings Inc. Interest income on the loan receivable of $73,029 ( $73,029) is included in investment income reported on the consolidated statement of financial activities. 8

11 Notes to Consolidated Financial Statements 4. Long-Term Investments Westario Power Holdings Inc. 1,509 common shares $ 2,756,742 $ 2,756,742 Dividend income on the above shares of $55,329 ( $53,585) is included in investment income reported on the consolidated statement of financial activities. The municipality owns 15.09% of the outstanding shares of Westario Power Holdings Inc., a private company incorporated under the laws of the Province of Ontario. The fair value of these shares is not practicable to determine in the absence of published market quotations. 5. Deferred Revenue Obligatory Reserve Funds Water capital $ 711,946 $ 359,698 Waste Water capital 449, ,450 Provincial Gasoline Tax Funding 106,158 43,221 Federal Gasoline Tax Funding 55,221 67,198 Federal Public Transit Funding 6,464-1,329, ,567 Unrestricted Deferred revenue 51,835 21,673 $ 1,381,077 $ 683,240 9

12 Notes to Consolidated Financial Statements 5. Deferred Revenue (cont d) The net change during the year in the obligatory reserve fund balances is made up of the following: Balance, beginning of year Restricted funds received Interest earned Revenue recognized Balance, end of year Water $ 359,698 $ 337,249 $ 14,999 $ - $ 711,946 Waste Water 191, ,237 8, ,453 Provincial Gasoline Tax Funding 43, ,360 3,936 (198,359) 106,158 Federal Gasoline Tax Funding 67,198 66,971 2,122 (81,070) 55,221 Federal Public Transit Funding - 6, ,464 Total $ 661,567 $ 917,206 $ 29,898 $ (279,429) $ 1,329,242 10

13 Notes to Consolidated Financial Statements 6. Long-Term Debt The balance of long-term debt reported on the consolidated statement of financial position is made up of the following: Term loan payable, 3.886%, repayable $17,371 principal and interest monthly, due March 2009 $ 2,617,382 $ 2,721,883 Term loan payable, 3.886%, repayable $5,237 principal and interest monthly, due March , ,991 $ 3,013,934 $ 3,164,874 Principal payments required on the long-term debt for the next five years are as follows: Year Amount 2007 $ 156, , ,694,130 $ 3,013, Landfill Site Closure and Post-Closure Care Liability The Hanover/Walkerton Landfill Site closure and post-closure care requirements are defined in accordance with industry standards and include final covering and landscaping of the landfill, removal of ground water and leachates, and ongoing environmental monitoring, site inspection and maintenance. These costs will be incurred when the Hanover/Walkerton Landfill Site stops accepting waste, with the post-closure care expected to continue for an additional 20 years. The total future closure and post-closure care costs are estimated to be $1,300,000, with the Town of Hanover s share being $650,000. At, the Town of Hanover has recognized a liability of $509,000. This represents the town s 50% share of 87% of the present value of the total estimated costs, and is based on a total capacity of 506,000 cubic metres and a discount rate of 6%. The balance of the town s share of the liability of $141,000 will be accrued as the remaining capacity of 93,980 cubic metres is utilized, which is expected to be over the next 4 years. Management s estimate for the site closure and post-closure care liability is subject to measurement uncertainty. The estimate is based on assumptions contained in the engineer s closure report dated April 1994, and updated by an engineer s letter of March 2007 for the passage of time, actual use of the landfill site, and costs. Actual results could differ significantly from those estimates because of the uncertainty related to future cost estimates, future use of the landfill site, etc. 11

14 Notes to Consolidated Financial Statements 7. Landfill Site Closure and Post-Closure Care Liability (cont d) The site closure and post-closure care liability has been funded and a sufficient cash level is being maintained to settle the estimated liability. 8. Employee Future Benefits Liability Pension Plan The municipality makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf of 61 ( ) members of its staff. This 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 OMERS expense included in the statement of financial activities for 2006 is $239,080 ( $199,158). At the end of 2006, OMERS reported an actuarial funding deficit of $2.4 billion ( $2.8 billion deficit). Retirement and Other Benefits The municipality is a Schedule 2 employer under the Workplace Safety and Insurance Act (WSIB), and is liable for reimbursing WSIB for all costs relating to claims by its employees. The municipality also provides retirement benefits to eligible employees consisting of a severance benefit or the continuation of health benefits. This plan was amended during 2006, which increased the number of employees eligible for these benefits. The accrued benefit liability at December 31 includes the following components: Accrued benefit obligation WSIB $ 56,054 $ 27,972 Retirement benefit 764, , , ,221 Recoverable (97,299) (108,602) Accrued benefit liability $ 723,362 $ 641,619 The accrued benefit obligations are based on actuarial valuations performed using the projected benefit method, prorated on services. The most recent actuarial reports were prepared as at December 31, Total benefit payments on behalf of retirees during the year were $63,884 ( $31,145). The plans are unfunded and require no contributions from the employees. The actuarial valuations are based on a number of assumptions about future events, such as inflation rates, interest rates, medical inflation rates, wage increases, and employee turnover and mortality. The assumptions used reflect the municipality s best estimates. A discount rate of 6% was assumed to determine the accrued benefit obligation, along with a compensation increase rate of 4%, a 5% annual rate increase in dental premium rates, and a 10% increase in health premium rates for 2005 scaling down over 15 years to 5% in

15 Notes to Consolidated Financial Statements 8. Employee Future Benefits Liability (cont d) The total expense related to post-employment benefits other than pensions and WSIB includes the following components: Current period benefit cost $ 79,787 $ 59,070 Plan amendment cost 26, ,653 59,070 Interest cost 38,974 35,528 Total expense for the year $ 145,627 $ 94, Current Fund The current fund balance reported on the consolidated statement of financial position is comprised of the following: General operations $ 408,709 $ 344,068 Waterworks 54,055 34,049 Sanitary sewer system 108,364 (3,463) Public Library Board (9,632) 2,018 Downtown Improvement Area 4,691 1,315 Saugeen Municipal Airport (8,166) (13,646) Hanover / Walkerton Landfill Site 13,342 33,766 $ 571,363 $ 398,107 13

16 Notes to Consolidated Financial Statements 10. Reserves and Reserve Funds Reserves set aside for specific purpose by Council: Working capital $ 265,338 $ 265,338 Insurance 80,323 74,508 General government 137, ,633 Fire 1,105 25,000 Police 96,447 70,698 Transportation 96,427 - Parking 96,700 98,259 Airport 12,310 16,214 Sewage plant 176, ,953 Waterworks 1,797,856 1,914,387 Cemetery 15,740 33,530 Health Services (Medical Clinic) 5,640 5,640 Recreation and culture 166, ,617 Westario Power proceeds, set aside in note for future use 883, ,881 3,831,478 3,995,658 Reserve funds set aside for specific purpose by Council: Lot levies 277, ,734 Parkland 1,614 - Landfill 610, ,989 Westario Power proceeds, set aside in shares for future use 2,756,742 2,756,742 3,646,522 3,510,465 $ 7,478,000 $ 7,506, Amounts to be Recovered The balance of the amounts to be recovered reported on the consolidated statement of financial position is comprised of the following: Long-term debt $ 3,013,934 $ 3,164,874 Employee future benefits liability 723, ,619 $ 3,737,296 $ 3,806,493 14

17 Notes to Consolidated Financial Statements 11. Amounts to be Recovered (cont d) The net change during the year in the amounts to be recovered is made up of the following: Principal payments on long-term debt $ (150,940) $ (145,289) Increase in employee future benefits liability 81,743 63,453 Decrease in amounts to be recovered for the year $ (69,197) $ (81,836) 12. Other Income Penalties and interest on taxes $ 53,114 $ 48,876 Sale of land and other assets 27,140 70,527 Rents 302, ,840 Other 48,676 62,176 $ 431,433 $ 472, Expenditures by Object Total expenditures of the current fund reported on the consolidated statement of financial activities are classified by object as follows: Salaries, wages, and employee benefits $ 5,276,396 $ 4,812,512 Materials, services, rents and financial expenditures 2,964,084 2,754,112 Interest on long-term debt 120, ,004 Contributions to other organizations 557, ,693 $ 8,917,857 $ 8,256,321 15

18 Notes to Consolidated Financial Statements 14. Government Partnerships The following summarizes the financial position and activities of the municipal joint boards. The Town of Hanover s pro-rata share of these amounts has been reported in the financial statements using the proportionate consolidation method. Saugeen Municipal Airport Hanover / Walkerton Landfill Site Financial Assets Cash and temporary investments $ - $ 2,233,774 Accounts receivable 31,058 69,270 Other assets 24,644 - $ 55,702 $ 2,303,044 Liabilities Accounts payable $ 39,696 $ 37,856 Closure and post-closure care liability - 1,018,000 39,696 1,055,856 Board Position Current fund (31,541) 26,684 Reserves and reserve funds 47,547 1,220,504 $ 55,702 $ 2,303,044 Revenue Contributions from Town of Hanover $ 19,116 $ - Other 138, ,127 Expenditures Current (142,029) (327,767) Capital (6,613) (51,681) Net revenue for the year $ 8,477 $ 195, Commitments and Contingencies i) The Town of Hanover owns property which has undergone a preliminary site review. The site review identified potential environmental issues which may require future remediation. The cost of this clean up has not been accrued in these financial statements as the amount, if any, cannot be reasonably estimated at this time. ii) The Town of Hanover has guaranteed a demand instalment bank loan of the Hanover, Bentinck and Brant Agricultural Society up to the maximum amount of $650,000. A balance of $215,000 was outstanding at ($425,000 at December 31, 2005). 16

19 Notes to Consolidated Financial Statements 15. Commitments and Contingencies (cont d) iii) The Town of Hanover and the Municipality of Brockton are in the process of obtaining approval to expand the Hanover landfill site. The Terms of Reference for Environmental Assessment (ToR) has been submitted to and approved by the Ministry of Environment. The ToR sets out the environmental studies and consultation that the Municipalities will undertake to support their application under the Environmental Assessment Act. These studies are expected to be completed during 2007 and 2008 at an estimated cost of $735,000. No provision for these costs has been recorded in the financial statements at. 16. Budget Amounts Budget amounts are reported on the consolidated statement of financial activities for comparative purposes. The budget amounts for the Town of Hanover are as approved by council and have been restated to conform to the basis of presentation of the revenues and expenditures on the consolidated statement of financial activities. The budget figures have not been audited. 17. Operations of School Boards and the County of Grey During the year, the following taxation revenue was raised and remitted to the school boards and County of Grey: School boards $ 2,594,727 $ 2,529,002 County of Grey 2,318,399 2,261,891 $ 4,913,126 $ 4,790, Trust Funds Trust funds administered by the municipality have not been included in the consolidated statement of financial position nor have their operations been included in the consolidated statement of financial activities. At, the trust fund balances are as follows: Cemetery Pre-Need Assurance Fund $ 101,084 $ 94,843 Cemetery Care and Maintenance Fund 291, ,674 $ 393,044 $ 376,517 17

20 Schedule of Consolidated Current Fund Activities For the year ended December Budget Actual Actual Revenue Taxation 3,881,417 $ 3,956,319 $ 3,766,221 Government grants 1,323,755 1,294,845 1,254,538 Ontario Lottery Corporation grant 736, , ,987 Municipal contributions 359, , ,745 Water and sewer charges 1,799,514 1,635,926 1,582,149 User fees and service charges 1,159,740 1,451,501 1,171,836 Investment income 200, , ,106 Donations 7,000 32,226 18,463 Other 401, , ,938 9,868,926 10,267,141 9,499,983 Expenditures General government 703, , ,607 Protection to persons and property 2,646,600 2,683,444 2,639,380 Transportation services 630, , ,402 Transit 509, , ,297 Environmental services 1,724,416 1,607,255 1,567,102 Health and social services 321, , ,428 Recreation and cultural services 1,928,800 2,307,466 1,827,027 Planning and development 118, , ,625 Post employment benefits - 81,743 63,453 8,582,911 8,917,857 8,256,321 Net revenue for the year 1,286,015 1,349,284 1,243,662 Financing and transfers Principal payments on long-term debt (151,000) (150,940) (145,289) Increase in post-employment benefits liability - 81,743 63,453 Contributions from (to) capital fund (1,187,200) (841,189) (1,094,988) Contributions from (to) reserves and reserve funds (364,566) (265,642) (120,419) (1,702,766) (1,176,028) (1,297,243) Change in fund balance for the year (416,751) 173,256 (53,581) Current fund, beginning of the year 416, , ,688 Current fund, end of the year $ - $ 571,363 $ 398,107 18

21 Schedule of Consolidated Capital Fund Activities For the year ended December Budget Actual Actual Revenue Government grants $ 456,613 $ 437,432 $ 65,000 User fees and service charges 112,000 48,643 Donations 1,000 7,100 31,816 Other , , , ,297 Expenditures General government 24,800 26,228 40,084 Protection to persons and property 88,500 58, ,939 Transportation services 1,109,000 1,051, ,975 Environmental services 1,139, , ,693 Health services 64,000 50,974 18,137 Recreational and cultural services 228, , ,285 Planning and development ,017 2,654,200 1,680,084 1,429,130 Net revenue (expenditure) for the year (2,084,087) (1,186,409) (1,287,833) Financing and transfers Contributions from current fund 1,187, ,189 1,094,988 Contributions from reserves and reserve funds 896, , ,845 2,084,087 1,186,409 1,287,833 Capital fund, end of the year $ - $ $ - 19

22 Schedule of Consolidated Reserves and Reserve Funds For the year ended December Budget Actual Actual Revenue Investment income $ - $ 42,955 $ 30,638 Lot levies - 7,000 14,000 Parking-in-lieu - 1,500 - Net revenue for the year - 51,455 44,638 Transfers from (to) other funds Transfers from (to) current fund 364, , ,419 Transfers from (to) capital fund (896,887) (345,220) (192,845) (532,321) (79,578) (72,426) Change in balances for the year (532,321) (28,123) (27,788) Reserves and reserve funds, beginning of the year 7,489,908 7,506,123 7,533,911 Reserves and reserve funds, end of the year $ 6,957,587 $ 7,478,000 $ 7,506,123 20

23 BDO Dunwoody LLP Chartered Accountants and Advisors th Street Hanover Ontario, Canada N4N 1R2 Telephone: (519) Telefax: (519) Auditors Report To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Town of Hanover We have audited the balance sheet of the trust funds of The Corporation of the Town of Hanover as at and the statement of continuity of the trust funds for the year then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the trust funds of The Corporation of the Town of Hanover as at, and the continuity of the trust funds for the year then ended in accordance with Canadian generally accepted accounting principles. BDO DUNWOODY LLP Chartered Accountants, Licensed Public Accountants Hanover, Ontario April 25,

24 Trust Funds Balance Sheet December Assets Cemetery Cemetery Pre-Need Care and Assurance Maintenance Total Total Current assets Cash $ 25,982 $ 71,017 $ 96,999 $ 81,022 Portfolio investments (Note 2) 75, , , ,784 Accounts receivable ,345 Liabilities and Fund Balances $ 101,344 $ 296,772 $ 398,116 $ 381,151 Accounts payable $ 260 $ 4,812 $ 5,072 $ 4,634 Fund balance 101, , , ,517 $ 101,344 $ 296,772 $ 398,116 $ 381,151 The accompanying notes are an integral part of these financial statements. 22

25 Trust Funds Statement of Continuity For the year ended December Cemetery Cemetery Pre-Need Care and Assurance Maintenance Total Total Balance, beginning of year $ 94,843 $ 281,674 $ 376,517 $ 354,273 Capital receipts Interest earned 3,276 9,597 12,873 10,864 Perpetual care - 10,286 10,286 13,660 Prepaid needs 6,800-6,800 12,000 10,076 19,883 29,959 36,524 Expenditures Transfers to Town of Hanover 3,835 9,597 13,432 14,280 Balance, end of year $ 101,084 $ 291,960 $ 393,044 $ 376,517 The accompanying notes are an integral part of these financial statements. 23

26 Trust Funds Notes to Financial Statements 1. Accounting Policies Basis of Accounting These financial statements are the representation of management prepared in accordance with accounting policies established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants as prescribed by the Ministry of Municipal Affairs and Housing. The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from management s best estimates as additional information becomes available in the future. Revenues and expenditures are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. Basis of Consolidation Portfolio Investments These trust funds have not been consolidated with the financial statements of the Town of Hanover. Portfolio investments are recorded at cost. 2. Portfolio Investments Portfolio investments are comprised of corporate and government debt securities with an effective interest rate of 3.2%, maturing in Interest is payable monthly or semi-annually. The investments have a market value of $297,635 at the end of the year. 24

27 BDO Dunwoody LLP Chartered Accountants and Advisors th Street Hanover Ontario, Canada N4N 1R2 Telephone: (519) Telefax: (519) Auditors Report To the Library Board Members, Members of Council, Inhabitants and Ratepayers of The Corporation of the Town of Hanover We have audited the statement of financial position of The Corporation of the Town of Hanover Public Library Board as at and the statement of financial activities for the year then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of The Corporation of the Town of Hanover Public Library Board as at, and the results of its financial activities for the year then ended in accordance with Canadian generally accepted accounting principles. BDO DUNWOODY LLP Chartered Accountants, Licensed Public Accountants Hanover, Ontario April 25,

28 Public Library Board Statement of Financial Position December (Restated - see Note 8) Financial Assets Cash (Note 2) $ 71,567 $ 36,734 Other current assets 248 2,122 71,815 38,856 Liabilities Accounts payable and accrued liabilities 22,382 13,436 Deferred revenue (Note 3) 8,904 9,192 Due to Town of Hanover 34,661 7,010 Employee future benefits (Note 4) - 19,500 65,947 29,638 Net Financial Assets $ 5,868 $ (10,282) Board Position (Note 5) Current fund $ (9,632) $ 2,018 Reserves 15,500 7,200 5,868 9,218 Amounts to be recovered (Note 6) - (19,500) $ 5,868 $ (10,282) The accompanying notes are an integral part of these financial statements. 26

29 Public Library Board Statement of Financial Activities For the year ended December Budget Actual Actual (Restated - see Note 8) Revenue Grants Province of Ontario $ 14,300 $ 14,313 $ 14,313 Province of Ontario one-time grant - 10,500 - Government of Canada 4,000 2,946 1,501 Deferred grant recognized ,169 Town of Hanover 396, , ,606 Other Fees, service charges and donations 16,900 16,890 31,458 Interest income 1,100 2,822 1, , , ,116 Expenditures Current Administration 9,400 8,179 5,973 Audio-visual 6,000 5,975 6,099 Book and periodical purchases 39,800 38,361 36,030 Computer 13,400 7,322 8,070 Insurance and utilities 30,500 27,712 26,450 Material processing 1,600 1,496 1,406 Professional and computer services 3,500 3,900 3,407 Repairs and maintenance 20,800 22,777 20,820 Supplies and office 10,000 11,216 9,756 Telephone 1,600 1,539 1,607 Wages and benefits 290, , , , , ,892 Capital 15,400 17,600 6, , , ,859 Net revenue (expenditure) for the year (9,218) 16,150 21,257 Change in amounts to be recovered (Note 6) - (19,500) 2,000 Change in fund balances for the year (9,218) (3,350) 23,257 Fund balances, beginning of year 9,218 9,218 (14,039) Fund balances, end of year $ - $ 5,868 $ (9,218) The accompanying notes are an integral part of these financial statements. 27

30 Public Library Board Notes to Financial Statements 1. Accounting Policies Basis of Accounting These financial statements are the representation of management prepared in accordance with accounting principles established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants as prescribed by the Ministry of Municipal Affairs and Housing. The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from management s best estimates as additional information becomes available in the future. Revenues and expenditures are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. The statement of financial position reflects the financial assets and liabilities of the library board. Financial assets are those assets which could provide resources to discharge existing liabilities or finance future operations. Board position represents the financial position of the board, and is the difference between its assets and liabilities. Basis of Consolidation Temporary Investments Capital Assets The Friends of the Library is a volunteer organization affiliated with the Hanover Public Library Board and is engaged in a wide range of services for the betterment of the library. The organization periodically transfers funds to the library. The operations of the organization have not been reflected in these financial statements except to the extent that funds have been received. Temporary investments are recorded at the lower of cost and market value. The historical cost and accumulated amortization of capital assets are not recorded for municipal purposes. Capital assets are reported as an expenditure on the statement of financial activities in the period of acquisition. 28

31 Public Library Board Notes to Financial Statements 1. Accounting Policies (cont d) Employee Future Benefits The municipality pays post-employment benefits to eligible employees on retirement. The benefits earned are recognized over the service life of the employees using the projected benefit method and management s best estimate of salary escalation, benefit costs, and retirement ages of employees. Defined contribution plan accounting is applied to the municipality s multi-employer defined benefit pension plan. 2. Cash Cash consists of bank deposits at an interest rate of prime less 1.75%, subject to a capping formula, payable monthly. 3. Deferred Revenue Deferred revenue, beginning of year $ 9,192 $ 6,361 Contributions received - 4,000 Revenue recognized (288) (1,169) Deferred revenue, end of year $ 8,904 $ 9, Employee Future Benefits Liability Pension Plan The municipality makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf of 4 members of the public library staff. This 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 OMERS expense included in the statement of financial activities for 2006 is $9,644 ( $8,877). At the end of 2006, OMERS reported an actuarial funding deficit of $2.4 billion ( $2.8 billion deficit). 29

32 Public Library Board Notes to Financial Statements 4. Employee Future Benefits Liability (cont d) Retirement and Other Benefits The municipality also provides retirement benefits to eligible employees consisting of a severance benefit or the continuation of health benefits. The accrued benefit liability at December 31 includes the following components: Accrued benefit liability, beginning of year $ 19,500 $ 17,500 Expense for the year 2,125 2,000 Payments to employees (21,625) - Accrued benefit liability, end of year $ - $ 19,500 The accrued benefit obligation is based on an actuarial valuation performed using the projected benefit method, prorated on services. The most recent actuarial report was prepared as at December 31, The plans are unfunded and require no contributions from the employees. The actuarial valuations are based on a number of assumptions about future events, such as inflation rates, interest rates, medical inflation rates, wage increases, and employee turnover and mortality. The assumptions used reflect the municipality s best estimates. A discount rate of 6% was assumed to determine the accrued benefit obligation, along with a compensation increase rate of 4%, a 5% annual rate increase in dental premium rates, and a 10% increase in health premium rates for 2005 scaling down over 15 years to 5% in

33 Public Library Board Notes to Financial Statements 5. Board Position Reserves Capital Fund Current Fund Total 2006 Total 2005 Balance, beginning of year $ 7,200 $ - $ 2,018 $ 9,218 $ (14,039) Change in fund balances for the year - (2,200) (1,150) (3,350) 23,257 Transfers between funds 8,300 2,200 (10,500) - - Balance, end of year $ 15,500 $ - $ (9,632) $ 5,868 $ 9, Amounts to be Recovered The balance of the amounts to be recovered reported on the statement of financial position is comprised of the liability for employee future benefits. The net change during the year is made up of the following: (Restated - see Note 8) Balance, beginning of year as restated (Note 8) $ 19,500 $ 17,500 Increase (decrease) in employee future benefits liability (19,500) 2,000 Balance, end of year $ - $ 19, Statement of Changes in Financial Position A statement of changes in financial position has not been presented in these financial statements since the cash flow information is readily apparent from other financial statements. 31

34 Public Library Board Notes to Financial Statements 8. Prior Period Adjustment A prior period adjustment of $17,500 has been made to reflect the liability for employee future benefits as at December 31, 2004 which had not been recorded. The opening amounts to be recovered and the comparative amounts for 2005 have been restated to reflect this correction. 32

35 BDO Dunwoody LLP Chartered Accountants and Advisors th Street Hanover Ontario, Canada N4N 1R2 Telephone: (519) Telefax: (519) Auditors Report To the Downtown Improvement Area Board Members, Members of Council, Inhabitants and Ratepayers of The Corporation of the Town of Hanover We have audited the statement of financial position of The Corporation of The Town of Hanover Downtown Improvement Area as at and the statement of financial activities for the year then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of The Corporation of the Town of Hanover Downtown Improvement Area as at, and the results of its financial activities for the year then ended in accordance with Canadian generally accepted accounting principles. BDO DUNWOODY LLP Chartered Accountants, Licensed Public Accountants Hanover, Ontario April 25,

36 Downtown Improvement Area Statement of Financial Position December Financial Assets Cash (Note 2) $ 106,224 $ 104,518 Accounts receivable 383 1,136 Liabilities 106, ,654 Accounts payable 5,216 6,080 Net Financial Assets $ 101,391 $ 99,574 Board Position (Note 3) Current fund $ 4,691 $ 1,315 Reserve 96,700 98,259 $ 101,391 $ 99,574 The accompanying notes are an integral part of these financial statements. 34

37 Downtown Improvement Area Statement of Financial Activities For the year ended December Budget Actual Actual Revenue Taxation $ 26,227 $ 27,323 $ 24,690 Interest income 2,700 3,838 2,663 28,927 31,161 27,353 Expenditures Current Administration 2,000 1,229 1,631 Physical development and maintenance 12,800 11,358 12,750 Professional services 2,100 2,200 2,028 Promotional activities 14,900 14,557 14,265 31,800 29,344 30,674 Net revenue (expenditure) for the year (2,873) 1,817 (3,321) Fund balances, beginning of year 99,574 99, ,895 Fund balances, end of year $ 96,701 $ 101,391 $ 99,574 The accompanying notes are an integral part of these financial statements. 35

38 Downtown Improvement Area Notes to Financial Statements 1. Accounting Policies Basis of Accounting These financial statements are the representation of management prepared in accordance with accounting principles established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants as prescribed by the Ministry of Municipal Affairs and Housing. The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from management s best estimates as additional information becomes available in the future. Revenues and expenditures are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. The statement of financial position reflects the financial assets and liabilities of the board. Financial assets are those assets which could provide resources to discharge existing liabilities or finance future operations. Board position represents the financial position of the board, and is the difference between its assets and liabilities. Temporary Investments Capital Assets Temporary investments are recorded at the lower of cost and market value. The historical cost and accumulated amortization of capital assets are not recorded for municipal purposes. Capital assets are reported as an expenditure on the statement of financial activities in the period of acquisition. 36

39 Downtown Improvement Area Notes to Financial Statements 2. Cash Cash consists of bank deposits at an interest rate of prime less 1.75%, subject to a capping formula, payable monthly. 3. Board Position Current Fund Reserve Total 2006 Total 2005 Balance, beginning of year $ 1,315 $ 98,259 $ 99,574 $ 102,895 Net revenue (expenditure) for the year 1,817-1,817 (3,321) Transfers between funds 1,559 (1,559) - - Balance, end of year $ 4,691 $ 96,700 $ 101,391 $ 99, Statement of Changes in Financial Position A statement of changes in financial position has not been presented in these financial statements since the cash flow information is readily apparent from other financial statements. 37

40 BDO Dunwoody LLP Chartered Accountants and Advisors th Street Hanover Ontario, Canada N4N 1R2 Telephone: (519) Telefax: (519) Auditors Report To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Town of Hanover and The Corporation of the Municipality of Brockton We have audited the statement of financial position of The Hanover/Walkerton Landfill Site as at and the statement of financial activities for the year then ended. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Hanover/Walkerton Landfill Site as at, and the results of its financial activities for the year then ended in accordance with Canadian generally accepted accounting principles. BDO DUNWOODY LLP Chartered Accountants, Licensed Public Accountants Hanover, Ontario April 5,