independent Auditors Report Consolidated Statement of Financial Position Consolidated Statement of Operations...

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1 NORTHERN SUNRISE COUNTY CONSOLIDATED FINANCIALSTATEMENTS FOR THE YEAR ENDEDDECEMBER 31, 2016 Table of Contents: Management Responsibility for Financial Statements independent Auditors Report Consolidated Statement of Financial Position Consolidated Statement of Operations Consolidated Statement of Change in Net Financial Assets... 5 Consolidated Statement of Cash Flows Schedule of Changes in Accumulated Surplus Schedule of Tangible Capital Assets Schedule of Government Transfers Schedule of Property Taxes Levied Consolidated Schedule of Expenses by Object.....1O... Consolidated Schedule of Segment Disclosure Notes to the Consolidated Financial Statements

2 MANAGEMENTRESPONSIBILITYFOR FINANCIALSTATEMENTS To the Reeve and Council of Northern Sunrise County: Management is responsible for the preparation and presentation of the accompanying consolidated financial statements, including responsibility for significant accounting judgments and estimates in accordance with Canadian generally accepted accounting principles. This responsibility includes selecting appropriate accounting principles and methods and making decisions affecting the measurement of transactions in which objective judgment is required. in discharging its responsibilities for the integrity and fairness of the consolidated financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and financial records are properly maintained to provide reliable information forthe preparation offinancial statements. The Council is composed entirely of Councilors who are neither management nor employees of the County. The Council is responsible for overseeing management in the performance of its financial reporting responsibilities and for approving the financial information included in the financial statements. The council fulfils these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and external auditors. Council is responsible for the appointment of the County's external auditors. MNP LLP, an independent firm of Chartered Accountants, is appointed by the Council to audit the consolidated financial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with, both the Council and management to discuss their audit findings. April 25, 2017 jll/l /Vl'l'll Chief l"" ll/ Administrative Officer «l

3 LLP Auditors Report To the Reeve and Council of Northern Sunrise County We have audited the accompanying consolidated?nancial statements of Northern Sunrise County, which comprise the statement of?nancial position as at December 31, 2016, and the statements of?nancial activities, change in net?nancial assets and cash?ows for the year then ended, and a summary of signi?cant accounting policies and other explanatory information. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated?nancial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated?nancial 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?nancial 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?nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated?nancial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the consolidated?nancial 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?nancial statements in order to design audit procedures that are appropriate inthe circumstances, but not forthe 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?nancial statements. We believe that the audit evidence we have obtained is suf?cient and appropriate our audit opinion. to provide a basis for Opinion In our opinion, the consolidated?nancial statements present fairly, in all material respects, the?nancial position of Northern Sunrise County as at December 31, 2016, the results of its operations, change in net?nancial assets and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. MM Peace River, Alberta April 25, 2017 Chartered Professional Accountants PF3)g[M,g,é.- - SEt ENDENY HRMS Aou. ACCOUNTING > CONSULTING > TAX BE5TEMpLOyER THAVENUE, PEACE RWERAB, T88 15 P: Z52 F: S8 MNP.ca

4 land NORTHERN SUNRISE COUNTY CONSOLIDATEDSTATEMENT OF FINANCIALPOSITION Forthe year ended December 31, 2016 FinancialAssets Cash andterm deposits Note2 5 1,996,179 $ 16,554,787 Accountsreceivable Taxes Note3 2,542,165 1,172,422 Trade and other Note4 5,956,360 5,188,739 Duefromassociated companies Note5 902,543 1,749,239 Recoverabledebenturedebt Note8 1,550,000 1,650,000 Landheldforresale 6,425 12,845 Investments Note6 58,162,562 41,930,815 Total FinancialAssets 71,116,234 68,258,847 Liabilities Accountspayableand accrued liabilities $ 6,295, ,441,934 Depositspayable 210, ,381 Deferredrevenue Note7-349,566 PostcIosure liability 1,869,141 1,652,576 Long-Termdebt Note8 13,066,987 14,307,453 Total Liabilities 21,442,266 19,962,910 Net FinancialAssets 49,673,968 48,295,937 Non-FinancialAssets Engineeringstructures $ 144,629,779 $ 138,618,122 Accum.amort. eng. structures - ($2,551,784) (57,705,770) Buildings 25,309,865 18,229,506 Accumȧmort. - buildings (2,094,536) (1,747,098) Machinery8 equipment 7,435,473 6,353,011 Accum.amort. machinery&equipment - (4,028,975) (3,481,803) Land 3,031,235 3,031,235 Accum.amort. (152,921) (152,921) Vehicles 4,578,258 4,573,024 Accum.amort. vehicles - (2,482,236) (2,125,721) Landimprovements 8,246,016 6,205,817 Accum.amort.- landimprovements 1,284,733 1,014,125 Tangiblecapitalassets Note10 120,634, ,783,277 Tangible capitalassets of Peace Regional WasteManagementCompany Note11 2,166,849 2,920,577 Tangiblecapitalassets of NEWWater Ltd Note11 17,074,099 17,296,632 Inventories Note12 506, ,418 Prepaidexpenses Note13 261, , ,643, ,857,580 Accumulated Surplus Note15 $ 190,317, ,153,516 See ac ompan_ying,n0i,es\to the financial statements " W j(, r\/\tww/vxci/i Reeve Chief Administrative Officer

5 (144,021) NORTHERN SUNRISE COUNTY CONSOLIDATEDSTATEMENT OF OPERATIONS For the year ended December 31, Budget Revenues Property taxation $ 37,346,355 $ 37,578,163 $ 39,427,994 Less: school requisitions (6,335,535) (6,804,633) (6,441,056) Less: housing requisitions (724,625) (736,308) (658,028) Net municipal taxation 30,286,195 30,037,222 32,328,910 User fees and sale of goods 1,276,150 1,269,699 3,845,400 Peace Regional Waste Management Company 1,337,186 1,412,157 1,804,148 NEW Water Ltd 290, , ,619 Government transfers for operating 363, , ,009 Investment income 450,000 1,138,099 1,180,196 Fines penalties and costs of taxes 155, , ,492 Development levies, licenses and permits 38,800-2,450 Sale of tangible capital assets - 7, ,312 Total Revenues 34,197,191 35,055,076 40,187,536 Expenses Operating Legislative and administration 8,971,358 8,528,567 5,728,655 Peace Regional Waste Management Company 2,140,286 2,139,996 2,910,500 NEW Water Ltd 476, , ,191 Protective services 633, , ,576 Transportation services 10,791,765 10,775,779 10,141,518 Water and wastewater 1,703,690 1,303,653 1,889,196 Waste management 42,300 39,180 43,704 Family and community support services 686, , ,194 Planning and development services 515, , ,686 Agricultural service board 1,403,531 1,267,806 1,162,818 Recreation and culture 1,374, ,393 1,271,915 Total Operating Expenses 28,739,477 27,410,021 25,339,954 Excess of Revenues over Expenses, Before Other 5,457,713 7,645,055 14,847,582 Other Donated assets 222,666 Government transfers for capital 1,427,200 2,662,536 1,831,187 Excess of Revenues over Expenses 6,884,913 10,163,569 16,901,435 Accumulated Surplus at Beginning of Year 180,153, ,153, ,252,081 Accumulated Surplus at End of Year $ 187,038,429 $190,317,085 $ 180,153,516 See accompanying notes to the financial statements

6 7,250 (7,250) 249,676 89,366 NORTHERN SUNRISE COUNTY CONSOLIDATEDSTATEMENT OF CHANGEIN NET FINANCIALASSETS For the year ended December 31, Bud_get Excess of Revenues over Expenses (Expenses over Revenues) $ 6,724,809 $ 10,163,569 $ 16,901,435 Add: Acquisition of tangible capital assets (17,531,154) (16,371,053) (17,322,930) Transfer of tangible capital assets to NEW Water - Proceeds on disposal of tangible capital assets 894,016 Amortization of tangible capital assets 6,807,143 7,496,149 7,069,964 Gain on disposal of tangible capital assets (82,363) (10,724,011) (8,874,904) (9,441,312) Acquisition of supplies inventories - (138,731) (672,391) Acquisition of prepaid assets - (261,704) (252,386) Use of supplies inventories - 240, ,527 Use of prepaid assets 163,853 (233,397) (Decrease) Increase in Net Financial Assets (3,999,203) 1,378,031 7,226,726 Net Financial Assets, Beginning of Year 48,295,937 48,295,937 41,069,211 Net Financial Assets, End of Year 33 44,296,734 $ 49,673,968 $ 48,295,937 See accompanying notes to the financial statements

7 NORTHERN SUNRISE COUNTY CONSOLIDATEDSTATEMENT OF CASH FLOWS For the year ended December 31,2016 Operating activities Annual Surplus $10,163,569 $16,901,435 Noncashchanges to operations: Amortization of tangible capital assets 7,496,149 7,069,964 Gain on disposal of tangible capital assets (7,250) (82,363) Donation of tangible capital assets received (72,011) (222,667) Non-cash charges to operations (net change) Increase in taxes receivable (1,369,743) (433,554) Decrease (increase) in trade and other receivables (667,621) 1,671,059 Decrease (increase) in due from associated companies 846,697 (161,156) Decrease in land held for resale 6,420 Decrease (increase) in inventories 101,394 (144,864) Increase in prepaids (12,028) (88,533) Increase in accounts payable and accrued liabilities 2,853, ,740 Decrease in deposit liabilities (1,093) (22,522) Increase (decrease) in post-closure liability 216, ,050 Increase in deferred revenue (349,566) 656 Change in cash and cash equivalents from operating activities 19,205,397 24,971,245 Capital Acquisitions of tangible capital assets (16,299,041) (17,100,263) Sale of tangible capital assets 7, ,016 Cash used in capital transactions (16,291,791) (16,206,247 Investing Activities Decrease (increase) in restricted cash and temporary investments - (1,000) Decrease (increase) in investments (16,231,748) )10,587,029) Net Cash used for Investments (16,231,748) 10,588,029) Financing Principal repayment on longtermdebt (1,240,466) 1,199,592) Net Cash used for Financing (1,240,466) 1,199,592) Decrease in Cash and Cash Equivalents (14,558,608) (3,022,623) Cash and Cash Equivalents, Opening Balance 16,554,787 19,577,410 Cash and Cash Equivalents, Closing Balance $ 1,996,179 $ 16,554,787 Cash and cash equivalents are comprised of: Cash and temporary investments 1,996,179 16,554,787 Less: restricted portion of cash and temporary investments - Cash and Cash Equivalents $ 1,996,179 $ 16,554,787 See accompanying notes to the financial statements

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10 - - NORTHERN SUNRISE COUNTY SCHEDULEOF GOVERNMENTTRANSFERS For the year ended December 31, 2016 Budget TRANSFERS FOR OPERATING Provincial Government ,760 $ 476,109 $ 394, , , ,009 TRANSFERS FOR CAPITAL Provincial Government 1,427,200 Federal Government 2,662,536 1,831,187 Other Local Governments - 1,427,200 2,662,536 1,831,187 TOTAL GOVERNMENT TRANSFERS $ 1,790,960 $ 3,138,645 $ 2,225,196 See accompanying notes to the financial statements

11 180,025 NORTHERN SUNRISE COUNTY SCHEDULEOF PROPERTY TAXES LEVIED For the year ended December 31, 2016 Budget Taxation Real property taxes 8; 8,264,570 $ 8,356,684 $ 8,213,639 Linear property taxes 29,081,785 29,041,454 31,092,049 Grants in place of property taxes 122,305 Local improvement taxes Total taxes and grants in place 37,346,355 37,578,163 39,427,994 Requisitions Schools 6,335,535 6,804,633 6,441,056 Seniors Foundation 724, , ,028 7,060,160 7,540,941 7,099,084 jj. Net taxes available for general municipal operations $ 30,286,195 $ 30,037,222 $ 32,328,910 SCHEDULEOF EXPENDITURESBYOBJECT For the year ended December 31, 2016 Budget Expenditures by Object Salaries, wages and benefits $ 6,875,562 $ 6,954,889 $ 6,777,694 Contracted and general services 5,450,691 4,106,078 4,440,095 Purchases from other governments 147,600 86, ,029 Materials, goods, supplies and utilities 3,095,770 2,437,429 2,672,560 Transfers to individuals and organizations 5,739,140 5,783,728 3,146,104 Interest on long term debt 465, , ,459 Cost of inventory sold Provision for reclamation 158, , ,050 Amortization of tangible capital assets 6,807,143 7,496,149 7,069,965 Totalexpenditures $ 28,739,477 $ 27,554,042 $ 25,339,954 e?_ See accompanying notes to the financial statements

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13 NORTHERN SUNRISE COUNTY NOTESTO THE FINANCIALSTATEMENTS For the year ended December 31, SIGNIFICANTACCOUNTING POLICIES The consolidated financial statements of Northern Sunrise County ("County ) are the representations of management prepared in accordance with Canadian public sector accounting standards as prescribed by the Public Sector Accounting Board (PSAB)ofthe Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the County are as follows: Reporting Entity The consolidated financial statements reflect the assets, liabilities, revenues and expenditures, changes in fund balances and change in financial position of the reporting entity. This entity is comprised of the municipal operations plus all of the organizations that are owned or controlled by the municipality and are, therefore, accountable to the County Council for the administration of their financial affairs and resources. The schedule of taxes levied also includes requisitions for education, health, social and other external organizations that are not part ofthe municipal reporting entity. The statements are administered for the benefit of external organizational transactions and balances are eliminated. parties. Interdepartmental and The statements include the County's proportionate share in the Peace Regional Waste Management Company and NEW Water Ltd. (see Notes 20 and 21). Basis of Accounting Revenues are accounted for in the period in which the transactions or events occurred that gave rise to the revenues. Funds from external parties and earnings thereon restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified. Government transfers are recognized in the financial statements as revenues in the period that the events giving rise to the transfer occurred, providing the transfers are authorized, the municipality has met any eligibility criteria, and reasonable estimates of the amounts can be made. Expenditures are recognized in the period the goods and services are acquired and a liability is incurred or transfers are due, with the exception of pension expenditures as disclosed in Note (1m) Use of Estimates The preparation of financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditure during the period. Where measurement uncertainty exists, the financial statements have been prepared within reasonable limits of materiality. Actual results could differ from those estimates. d) Investments Investments are recorded at amortized cost. Investment premiums and discounts are amortized on the net present value basis over the term of the respective investments. 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. 12

14 NORTHERN SUNRISE COUNTY NOTESTO THE FINANCIALSTATEMENTS For the year ended December 31, SIGNIFICANT ACCOUNTING POLICIES (continued) 6) Inventories Inventories of materials and supplies for consumption are valued at the lower of cost or net realizable value with cost determined by the average cost method. Land held for resale is recorded at the lower of cost or net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping and leveling charges. Related development costs incurred to provide infrastructure such as water and wastewater services, roads, sidewalks and street lighting are recorded as physical assets under their respective function. Tangible Capital Assets Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value of the tangible capital assets is amortized on a straightline basis over the estimated life as follows: YEARS Engineering structures Buildings 50 Machinery and equipment 4-20 Land (gravel pits) 20 Land improvements Vehicles 5 One-half of the annual amortization is charged in the year of acquisition and in the year of disposal. Assets under construction are not amortized until the asset is available for productive use. Requisition Over-Levy and Under-Levy Overelevies and undervlevies arise from the difference between the actual property tax levy made to cover each requisition and the actual amount requisitioned. Ifthe actual levy exceeds the requisition, the over~levy is accrued as a liability and property tax revenue is reduced. Where the actual levy is less than the requisition amount, the under-levy is accrued as a receivable and as property tax revenue. Requisition tax rates in the subsequent year are adjusted for any over or underleviesof the prior year. Contributions of Tangible Capital Assets Tangible capital assets received as contributions are recorded at fair market value at the date of receipt and also are recorded as revenue. Non-Financial Assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current fiscal year and are not intended for sale in the normal course of operations. The change in non-financial assets during the year, together with the excess of revenue over expenses, provides the consolidated Change in Net financial Assets (Debt) for the year. 13

15 NORTHERN SUNRISE COUNTY NOTES TO THE FINANCIALSTATEMENTS For the year ended December 31, SIGNIFICANT ACCOUNTINGPOLICIES(continued) I) Government Transfers Government transfers are transfers of assets from senior levels of government that are not the result of an exchange transaction, are not expected to be repaid in the future, or the result of a direct financial return. Government transfers are recognized in the financial statements as revenue in the period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates ofthe amounts can be determined. I<) Equity in Capital Assets Equity in capital assets represents the County's net investment in its capital assets, after deducting the portion financed by third parties through debenture, bond, and mortgage debts, long term capital borrowings, capitalized leases, and other capital liabilities which will be repaid by the County. Allowances for Operating and Physical Assets Allowances for asset valuations are netted against the related asset and are segregated between operating and capital purposes. Increases in allowances are recorded as expenditures while decreases in allowances are recorded as revenues in the respective operating and capital fund. Pension Expenditure The County participates in a multiemp oyer defined benefit pension plan. This plan is accounted for as a defined contribution plan (see Note 18). Liabilities for Contaminated Sites 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. The County has identified no sites where the reasonable expectation of a liability existing exceeds the amount of expected recovery. 14

16 $4,841,406) $349,566) NORTHERN SUNRISE COUNTY NOTESTO THE FINANCIALSTATEMENTS For the year ended December 31, CASHAND TEMPORARY INVESTMENTS Cash $ 660,274 $ 10,241,209 Portionofjoint use bank account 1,335,898 1,122,606 Temporaryinvestments 7 5,190,972 $ 1,996,179 $ 16,554,787 Temporary investments include short term deposits with original maturities of three months or less. Council has designated funds of$1,400,000 (2015 replacement and capital projects. included in the above amounts for equipment Included in cash and temporary investments are restricted ~ amounts of $192,147 (2015 received from various governments and unexpended loan proceeds. These amounts must be expended according to the terms ofthe agreements under which the amounts were received. The joint use bank account is held with the Town of Peace River for intermunicipal projects. Both parties have contributed equal funds and $95,000 of County contributed funds was expended in 2016 (2015 $384,478). 3. TAXESRECEIVABLE Currenttaxes receivable $ 2,091,498 $ 728,315 Non-currentaxes receivable 1,981,985 1,577,239 Less allowancefordoubtfulaccounts (1,531,318) (1,133,132) $ 2,542,165$ 1,172,422 15

17 two $58,138,807(2015 $2,001,109) $39,720). 1.65% NORTHERN SUNRISE COUNTY NOTES TO THE FINANCIALSTATEMENTS For the year ended December 31, TRADEAND OTHER RECEIVABLES Goodsand ServicesTax receivable $ 348,770 $ 404,898 Accruedinterest receivable 2,158,402 1,767,662 Trade receivables 1,895,898 1,655,550 Grantsreceivable 1,491,384 1,252,124 Utilitiesreceivable 221, ,169 Less allowancesfordoubtfulaccounts (159,959) (135,664) $ 5,956,360 $ 5,188,739 DUE FROM ASSOCIATED COMPANIES During the year, Northern Sunrise County charged the Peace Regional Waste Management Company and NEW Water Ltd. administration and consulting fees in the normal course of operations at the fair market value exchange amount of $41,700 (2015 As at December 31, 2016, the net amount due from the Landfill Authority was $27,760 (2015 and from NEW Water Ltd. was $1,330,022 (2015 $906,693). The Landfill Authority and NEW Water Ltd. operate independent of the County. The Landfill Authority is controlled by a seven member Board of which the County has appointed three of the seven members. NEW Water Ltd. is controlled by a nine member Board of which the County has appointed three of the nine members. 6. INVESTMENTS Fixedincome securities (market value $43,077,714)) - $ 55,862,602 $ 41,230,909 Mutualfunds (held at market value) 2,041,643 0 Fixedincome securities held by Peace RegionalWaste ManagementCompany 258, ,886 AlbertaMunicipalFinancialCorporationClass B common shares shares, at cost $ 58,162,562 $ 41,930,815 Securities have effective interest rates of 1.40% to 5.45% (2015 to 5.45%) and maturity dates from July 11, 2017 to July 12, Council has designated investments of $55,862,602 (2015 $41,230,909) included in the above amounts for capital replacement and capital projects. 16

18 $528,459). $ NORTHERN SUNRISE COUNTY NOTES TO THE FINANCIALSTATEMENTS Forthe year ended December 31, DEFERREDREVENUE Deferredrevenues of NewWater Ltd ,566 $ - $ 349,566 The use of these funds is restricted to eligible projects, as approved under the funding agreements. These unexpended funds are supported by cash and temporary investments (Note 2) 8. LONGTERM DEBT Tax supported debentures ~ - 35 Self supported debentures 13,066,987 14,307,453 The current portion of the long term debt amounts to $ 1,240,466 ( $1,199,592) Principal and interest payments for each of the next 5 years to maturity are as follows: $ 13,066,987 $ 14,307,453 Principal Interest Total ,282, ,219 1,720, ,326, ,235 1,718, ,372, ,561 1,716, ,419, ,007 1,713, ,469, ,953 1,712,107 To maturity 6,195, ,641 6,711,166 $ 13,066,987 $ 2,224,616 $ 15,291,602 Debenture debt is repayable to Alberta Municipal Financing Corporation and bears interest at rates ranging from 3.488% to 4.614% per annum, before Provincial subsidy, and mature in periods 2022 through In 2012, the County received a Green Municipal Fund Loan from the Federation of Canadian Municipalities for the NEW Water Ltd., water treatment plant in the amount of $2,000,000. The Loan is repayable at a fixed principal amount of $100,000 per year plus interest equal to the higher of (A) the average GoC (10) year benchmark minus one point five percent (1.5%) and (B) two percent (2.0%) per annum. The GMF Loan represents The Village of Nampa's contribution to the project and is repayable to the County on an annual basis equal to the principal and interest payments calculated from the FCM. The Debenture debt is issued on the credit and security of the County at large. Interest expense on long term debt was $472,277 (2015 interest in 2016 were $ 481,594 (2015 $529,553). The County's total cash payments for 17

19 NORTHERN SUNRISE COUNTY NOTESTO THE FINANCIALSTATEMENTS For the year ended December 31, DEBT LIMITS Section 276(2) of the Municipal Government Act requires that debt and debt limits as defined by Alberta Regulation 255/00for the County be disclosed as follows: Total debt limit $ 52,571,740 $ 60,007,835 Total debt (excluding recoverable from another municipality) 11,516,987 12,657,453 Debt limitremaining 41,054,753 47,350,383 Service on debt limit 8,761,957 10,001,306 Service on debt 1,720,099 1,722,160 Service on debt limitremaining $ 7,041,858 $ 8,279,146 The debt limit is calculated at 1.5 times revenue of the municipality (as defined in Alberta Regulation 255/00) and the debt service limit is calculated at 0.25 times such revenue. incurring debt beyond these limitations requires approval by the Minister of Municipal Affairs. These thresholds are guidelines used by Alberta Municipal Affairs to identify municipalities that could be at financial risk if further debt is acquired. The calculation taken alone does not represent the financial stability of the municipality. Rather, the financial statements must be interpreted as a whole. 10. TANGIBLE CAPITAL ASSETS Engineeringstructures 3% 82,077,995 $ 80,912,352 Buildings 23,214,329 16,482,408 Machineryand equipment 3,406,498 2,871,208 Land 2,878,314 2,878,314 Land Improvements 6,961,283 5,191,692 Vehicles 2,096,022 2,447,303 $ 120,634,441$ 110,783,277 18

20 NORTHERN SUNRISE COUNTY NOTESTO THE FINANCIALSTATEMENTS For the year ended December 31, TANGIBLECAPITAL ASSETS OF PEACEREGIONALWASTE MANAGEMENTCOMPANY Engineering structures 8% 533,544 $ 1,058,341 Buildings 830, ,357 Machineryand equipment 474, ,258 Land 27,857 27,857 Land Improvements 241, ,094 Vehicles 58,485 75,670 $ 2,166,849 $ 2,920,577 TANGIBLE CAPITAL ASSETSOF NEW WATER LTD. Engineeringstructures S 16,893,251 $ 17,111,248 Machineryand equipment 12,063 16,428 Land 161, ,727 Land Improvements 7,057 7,229 $ 17,074,099 $ 17,296, INVENTORIESFOR CONSUMPTION Municipalinventories consist of the following: Gravel and road materials 51% 336,481 $ 491,362 Publicworks 169, ,056 $ 506,024 $ 607, PREPAID EXPENSES Generalprepaid expenses ,704 $ 249,676 19

21 NORTHERN SUNRISE COUNTY NOTES TO THE FINANCIALSTATEMENTS For the year ended December 31, EQUITYIN TANGIBLE CAPITALASSETS Tangiblecapitalassets (Schedule1) $ 193,229,626$ 177,010,715 Tangiblecapitalassets ofpeaceregionalwastemanagementcompany(note11) 9,371,291 9,367,590 Tangiblecapitalassets of NewWaterLtd.(Note11) 18,489,515 18,412,188 Accumulatedamortization(Schedule1) (72,595,185) (66,227,438) Accumulatedamortizationof PeaceRegionalWaste ManagementCompany(Note11) (7,204,442) (6,447,013) AccumulatedamortizationofNewWater Ltd.(Note11) (1,415,416) (1,115,556) Long termdebt (10,110,885) (11,052,187) $ 129,764, ,948,298 Debt totaling $2,956,101 (2015 ~ $3,255,265) related to the Sunrise Gateway Business Park and the Federation of Canadian Municipalities is not included in the Equity in Tangible Capital Assets as the funds were not used for the acquisition of tangible capital assets owned by the County. 15. ACCUMULATED SURPLUS Unrestrictedsurplus $ 4,841,035 $ 15,783,336 Restrictedsurplus Generalcapital 10,204,773 9,056,968 Administration 3,148,046 2,727,970 AgriculturalService Board 1,397,031 1,332,215 Communityservices 93,272 73,272 Communityhall 2,208,847 1,882,204 Fire protection 713, ,597 Peace RegionalWaste ManagementCompany 254, ,213 Recreation 761, ,990 Roads constructionprojects - 22,370,193 14,918,760 Roads equipment - 3,231,698 2,613,450 Waste management - - Water and wastewater 11,327,817 10,626,243 55,711,546 44,421,882 Equityin tangiblecapital assets 129,764, ,948,298 Total accumulated surplus $ 190,317,085$ 180,153,516 20

22 NORTHERN SUNRISE COUNTY NOTES TO THE FINANCIALSTATEMENTS For the year ended December 31, SALARYAND BENEFITS DISCLOSURE Disclosures of salaries and benefits for municipal officials, the chief administrative officer and designated officers as required by Alberta Regulation 313/2000is as follows: Salary Benefits Total Salary Bene?ts Total Co0ncillorWard6-Reeve 5 94,644 $ 29,534 S 424,478 $ 82, , ,752 Councillor Ward4-Deputy Reeve 79,945 49,446 99,364 75, ,236 Councillor Ward2 90,454 27, ,757 95, ,492 Counci4lorWard3 60,454 44,377 74,626 66,654 45,307 84,956 CouncillorWard4 62,204 46,627 80,626 66,046 46, ,643 Councillor Ward5 56,526 6,044 66,540 54,450 5,503 59, ,248 $ 447,274 $ 560, , , ,733 CliieiAdmin.0liicer-Peleriliorrias S 490, ,775 $ 226, , ,445 $ 240,295 Assessor-Designaiedoliicer S 460, , , , , ,642 Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria and any other direct cash remuneration. Benefits include employer's share of all employee benefits and contributions or payments made on behalf of employees including pension, health care, dental coverage, vision coverage, group life insurance, accidental disability and dismemberment insurance, long and short term disability plans, professional memberships and tuition. Benefits figures also include the Employer's share of the costs of additional taxable benefits including special leave with pay, financial planning services, retirement planning services, concessionary loans, travel allowances, car allowances and club memberships. 21

23 $618,162). NORTHERN SUNRISE COUNTY NOTESTO THE FINANCIALSTATEMENTS For the year ended December 31, CONTINGENTLIABILITY Northern Sunrise County is a member of a reciprocal insurance exchange (GENESIS)to cover its liability insurance needs. GENESISwas previously referred to as Jubilee Reciprocal Insurance Exchange (JRIE). A Statement of Claim was filed in 2004 by some of the previous subscribers of JRIE. The statement of claim requests the return of surplus funds in the amount of $3,820,516. Under the terms of the membership, the County could become liable for its proportionate share of any claim losses in excess of the funds held by the exchange. Any liability incurred would be accounted for as a current transaction in the year the losses are determined. 18. LOCALAUTHORITIES PENSION PLAN Employees of the County participate in the Local Authorities Pension Plan (LAPP),which is one of the plans covered by the Public Sector Pension Plans Act. The Plan serves about 214,000 people and 428 employers. The LAPPis financed by employer and employee contributions and investment earnings of the LAPPfund. Contributions for current service are recorded as expenditures in the year in which become due. The County is required to make current service contributions to the LAPP of 11.39% of pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension Plan and 15.84% on the pensionable earnings above this amount. Employees ofthe County are required to make service contributions of 10.39% of pensionable salary up to the year's maximum pensionable salary and 14.84% on pensionable salary above this amount. Total current service contributions by the County to the LAPP in 2016 were $531,777 (2015 Total current service contributions by the employees of the County to the LAPP in 2016 were $490,731 (2015 $570,602). At December 31, 2015, the LAPPdisclosed an actuarial deficiency of $923.4 million. 19. FINANCIALINSTRUMENTS The County's financial instruments consist of cash and term deposits, accounts receivable, accounts payable, accrued liabilities and long term debt. It is management's opinion that the County is not exposed to significant interest or currency risks arising from these financial instruments. The County is subject to credit risk with respect to taxes and grants in place of taxes receivables and trade and other receivables. Credit risk arises from the possibility that taxpayers and entities to which the County provides services may experience financial difficulty and be unable to fulfill their obligations. The large number and diversity oftaxpayers and customers minimizes the credit risk. Unless otherwise noted, the carrying value of the financial instrument approximates fair value. 22

24 NORTHERN SUNRISE COUNTY NOTES TO THE FINANCIALSTATEMENTS For the year ended December 31, CONSOLIDATIONOF PEACEREGIONAL WASTE MANAGEMENT COMPANY Consolidated into the County's financial statements are their proportionate share of the assets, liabilities and financial activity of Peace Regional Waste Management Company. Ownership is determined by the number of shares issued to the Directors of the Company. Northern Sunrise County contributes 3 of the 7 Directors to the Board and this ratio determines the County s proportionate share. The amounts consolidated into the County's financial statements are as follows: Cash and cash equivalents 623,895 $ 540,059 Trade and other receivables 801, ,400 Due from other governments (11,897) (857,619) Investments 258, ,886 Total Financial Assets 1,671,436 $ 1,150,727 Accounts payable and accrued liabilities 446,729 $ 147,533 Post«cIosure liability 1,869,141 1,652,576 Total Liabilities 2,315,870 $ 1,800,109 Tangible capital assets 2,166,849 $ 2,920,577 Inventoryfor consumption - Prepaid Expenses 17,507 11,761 Total NonFinancia Assets 2,184,356 $ 2,932,338 Municipaltippage 160,738 $ 267,232 Recycling 36,461 26,250 Industrialtippage 1,192,317 1,480,266 Other 5,727 5,395 Return on investments 16,914 25,005 Total Revenues $ 1,412,156 $ 1,804,148 Salaries, wages and benefits $ 670,308 $ 838,076 Contracted services 333, ,042 Materials, goods and utilities 180, ,213 Provisionfor reclamation 216, ,050 Provisionfor bad debts (14,471) Amortizationof tangiblecapital assets 757,429 1,130,614 Total Expenses $ 2,157,868 $ 2,927,523 Related party transactions eliminatedon consolidation: Administration fees S 17,871 S 17,023 23

25 NORTHERN SUNRISE COUNTY NOTESTO THE FINANCIALSTATEMENTS For the year ended December 31, CONSOLIDATIONOF NEW WATER LTD. Consolidated into the County s financial statements are their proportionate share of the assets, liabilities and financial activity of New Water Ltd. Ownership is determined by the number of shares issued to the Directors of the Company. Northern Sunrise County contributes 3 of the 9 Directors to the Board and this ratio determines the County s proportionate share The amounts consolidated into the County s financial statements are as follows: Cash and cash equivalents 226,086 $ 348,477 Trade and other receivables 74,733 96,900 Due from other governments (443,341) (300,944) Total Financial Assets (142,521) SB 144,433 Accounts payable and accrued liabilities 24,873 $ 7,585 Deferredrevenue 349,566 Total Liabilities 24,873 $ 357,151 Tangible capital assets 17,074,099 $ 17,296,632 Inventoryfor consumption - - Total Non-FinancialAssets 17,074,099 $ 17,296,632 Sale of goods to NWLpartners 237,028 $ 211,051 Other user fees and sale of goods 67,402 75,225 Other revenues ,703 Total Revenues 305,147 $ 300,979 Salaries, wages and benefits 108,928 $ 95,169 Contracted services 68,209 81,958 Materials, goods and utilities 77,369 90,113 Amortizationof tangible capital assets 299, ,191 Total Expenses 554,367 $ 566,431 Related party transactions eliminatedon consolidation: Administration fees $ 13,900 $ 13,240 Sales to Northern Sunrise County 117, ,361 24

26 NORTHERN SUNRISE COUNTY NOTES TO THE FINANCIALSTATEMENTS For the year ended December 31, COMMITMENTS In 1996, the County entered into an agreement with the East Peace Water Co-op to advance funds for the construction of water lines. Under this agreement the County is committed to advance funds totaling no more than $3,931,500. As of the end of 2007, the East Peace Water Coop has been advanced the total $3,931,500. Through the County's continuing commitment to provide residents with clean and safe drinking water, the County will provide continued funding for the expansion of the water distribution lines throughout the County. Funding will be based on connection applications submitted to the East Peace Water Co-op. The amount provided in 2016 was $233,679 (2015 $279,787). 23. SEGMENTEDDISCLOSURE Northern Sunrise County provides a range of services to its ratepayers. For each reported segment, revenues and expenses represent both amounts that are directly attributable to the segment and amounts that are allocated on a reasonable basis. The accounting policies used in these segments are consistent with those followed in preparation of the financial statements as disclosed in note 1. Refer to the Schedule of Segmented Disclosure (page 11). 24. APPROVAL OF FINANCIALSTATEMENTS Council and management approved these financial statements. 25