The Corporation of the Township of Norwich. Consolidated Financial Statements

Transcription

1 Consolidated Financial Statements December 31, 2016

2 Index to Consolidated Financial Statements December 31, 2016 Page INDEPENDENT AUDITORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENTS 2 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position 3 Consolidated Statement of Operations 4 Consolidated Statement of Changes in Net Financial Assets 5 Consolidated Statement of Cash Flow 6 Notes to the Consolidated Financial Statements 7-16 Segmented Information INDEPENDENT AUDITORS' REPORT ON TRUST FUNDS 20 TRUST FUND FINANCIAL STATEMENTS Trust Funds Balance Sheet 21 Trust Funds Statement of Continuity 22 Notes to the Trust Funds Financial Statements 23 INDEPENDENT AUDITORS' REPORT ON NORWICH BUSINESS IMPROVEMENT AREA 24 NORWICH BUSINESS IMPROVEMENT AREA FINANCIAL STATEMENTS Statement of Financial Position and Statement of Operations and Changes in Net Assets 25 Notes to the Norwich Business Improvement Area Financial Statements 26 1

3 INDEPENDENT AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of We have audited the accompanying consolidated financial statements of The Corporation of the Township of Norwich, which comprise the consolidated statement of financial position as at December 31, 2016, and the consolidated statements of operations, changes in net financial assets and cash flow for the year then ended, and a summary of significant 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 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 consolidated 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 the 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 our judgment, 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, we consider 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 as at December 31, 2016 and the results of its operations, changes in net financial assets and its cash flow for the year then ended in accordance with Canadian Public Sector Accounting Standards. Budget figures are provided for comparative purposes and have not been subject to audit procedures. Accordingly, we do not express any opinion regarding the budget figures. June 20, 2017 Norwich, Ontario Chartered Professional Accountants Licensed Public Accountants 2

4 Consolidated Statement of Financial Position As at December 31, FINANCIAL ASSETS Cash $ 2,919,655 $ 2,660,662 Taxes receivable 794, ,934 Accounts receivable (Note 2) 537, ,685 Drainage receivable (Note 3) 1,902,278 1,515,840 Assets held for sale (Note 4) 279, ,920 Investment in ERTH Corporation (Note 5) 2,188,626 2,097,321 LIABILITIES 8,621,751 7,931,362 Accounts payable 1,019, ,321 Deposits repayable 957, ,221 Deferred revenue (Note 6) 410, ,402 Long term liabilities (Note 7) 2,445,663 2,664,664 4,833,018 4,421,608 NET FINANCIAL ASSETS 3,788,733 3,509,754 NON-FINANCIAL ASSETS Tangible capital assets (Note 8) 28,693,422 27,958,839 Prepaid expenses 125,621 47,218 Inventory of supplies 14,700 9,476 28,833,743 28,015,533 ACCUMULATED SURPLUS (Note 9) $ 32,622,476 $ 31,525,287 See accompanying notes 3

5 Consolidated Statement of Operations Budget REVENUE (Note 15) Taxation $ 7,437,223 $ 7,341,092 $ 6,945,313 Government transfers - Federal (Note 10) 381, , ,400 Government transfers - Provincial (Note 11) 993,300 1,026,193 1,210,900 User charges 1,121,223 1,265,134 1,190,158 Other income (Note 12) 287, , ,575 Expenses 10,220,900 10,676,530 10,181,346 General government 1,380,880 1,361,056 1,293,140 Protection services 2,494,313 2,752,487 2,658,684 Transportation services 2,229,416 2,873,118 2,781,220 Health services 606, , ,502 Recreation and cultural services 1,249,083 1,538,024 1,515,068 Planning and development 73, , ,181 8,033,792 9,579,341 9,075,795 ANNUAL SURPLUS 2,187,108 1,097,189 1,105,551 Accumulated surplus, beginning of year 31,525,287 30,419,736 ACCUMULATED SURPLUS, END OF YEAR $ 32,622,476 $ 31,525,287 See accompanying notes 4

6 Consolidated Statement of Changes in Net Financial Assets Budget (Note 15) ANNUAL SURPLUS $ 2,187,108 $ 1,097,189 $ 1,105,551 Acquisition of tangible capital assets (2,348,227) (2,506,322) (1,889,912) Proceeds on disposal of tangible capital assets - 70, ,872 Amortization of tangible capital assets - 1,467,578 1,306,831 Gain on disposal of tangible capital assets - (45,985) (40,551) Transfer to assets held for sale - 279, ,920 (161,119) 362,606 1,108,711 Acquisition of prepaid expenses - (78,403) 181,647 Disposition of inventory of supplies - (5,224) (3,715) - (83,627) 177,932 Net change in net financial assets (161,119) 278,979 1,286,643 Net financial assets, beginning of year 3,509,754 3,509,754 2,223,111 NET FINANCIAL ASSETS, END OF YEAR $ 3,348,635 $ 3,788,733 $ 3,509,754 See accompanying notes 5

7 Consolidated Statement of Cash Flow 2015 CASH PROVIDED (USED IN) : OPERATING TRANSACTIONS Annual surplus $ 1,097,189 $ 1,105,551 Amortization 1,467,578 1,306,831 Gain on disposal of tangible capital assets and land (99,075) (40,551) Change in equity - ERTH Corporation (91,305) (22,378) Changes in non-cash operating balances: 2,374,387 2,349,453 Taxes receivable 120, ,015 Accounts receivable (195,142) 251,674 Drainage receivable (386,438) (626,584) Accounts payable 553,287 (917,124) Deposits repayable (24,778) 345,755 Deferred revenue 101,902 25,851 Prepaid expenses (78,403) 181,647 Inventory of supplies (5,215) (3,715) CAPITAL TRANSACTIONS 2,460,342 1,828,972 Acquisition of tangible capital assets (2,506,322) (1,889,912) Proceeds on disposal of tangible capital assets and land 523, ,872 FINANCING TRANSACTIONS (1,982,349) (1,663,040) Long term debt issued - 616,310 Long term debt repaid (219,000) (201,647) Repayment of other long term assets - 10,000 (219,000) 424,663 NET CHANGE IN CASH AND CASH EQUIVALENTS 258, ,595 Cash and cash equivalents, beginning of year 2,660,662 2,070,067 CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,919,655 $ 2,660,662 See accompanying notes 6

8 Notes to the Consolidated Financial Statements is a municipality in the Province of Ontario, Canada. It conducts its operations guided by the provisions of the provincial statutes such as the Municipal Act and related legislation. 1. Summary of significant accounting policies The consolidated financial statements of are prepared by management in accordance with Canadian generally accepted accounting principles for local governments as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the Township are as follows: (i) Consolidated entities These consolidated financial statements reflect the assets, liabilities, revenues and expenses of all municipal organizations, committees and boards which are owned or controlled by the Township. These consolidated financial statements include: Norwich Business Improvement Area All inter-departmental and inter-organizational transactions and balances between these organizations have been eliminated. The investments in government business enterprises are accounted for using the modified equity basis which is consistent with the Canadian generally accepted accounting treatment for government business enterprises. Under the modified equity basis, the business enterprise's accounting principles are not adjusted to conform with those of the Township and inter-organizational transactions and balances are not eliminated. The following government business enterprise is reflected in these consolidated financial statements: ERTH Corporation (ii) Accounting for Oxford County and school board transactions The taxation, other revenue, expenditures, assets and liabilities with respect to the operations of the school boards and the County of Oxford, are not reflected in the municipal fund balances of these financial statements. (iii) Trust funds Trust funds and their related operations administered by the municipality are not consolidated, but are reported separately on the "Trust Funds Statement of Continuity and Balance Sheet". (iv) Basis of presentation Revenue and expenses are recorded on the accrual basis of accounting. Revenue is recognized in the year in which it is earned and measurable. Expenses 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. (v) Inventory Inventory of supplies held for consumption is valued at the lower of cost and replacement value. 7

9 Notes to the Consolidated Financial Statements 1. Summary of significant accounting policies (continued) (vi) Tangible capital assets Tangible capital assets are recorded at cost less accumulated amortization. Costs include all costs directly attributable to acquisition or construction of the tangible capital asset including transportation costs, installation costs, design and engineering fees, legal fees and site preparation costs. Contributed tangible capital assets are recorded at fair value at the time of the donation, with a corresponding amount recorded as revenue. Amortization is recorded on a straight-line basis over the estimated life of the tangible capital asset commencing the year the asset is available for productive use. Half the normal rate of amortization is recorded in the initial year of productive use. Amortization rates are as follows: Land improvements 20 years Buildings and structures 10 to 50 years Infrastructure 15 to 60 years Vehicles, machinery and equipment 5 to 15 years Land permanently removed from service and held for resale is recorded at the lower of cost and net realizable value. Cost includes amounts for improvements to prepare the land for sale or servicing. Tangible capital assets which meet this criteria for financial assets are reclassified as "assets held for sale" on the Statement of Financial Position. (vii) Interest Capitalization Interest is capitalized whenever external debt is issued to finance the construction of tangible capital assets. (viii) Deferred revenue The municipality receives funds for specific purposes which are externally restricted by legislation, regulation or agreement. These restricted funds are not available for general municipal purposes and are recognized as revenue in the fiscal year the funds are used for the specified purpose. (ix) Government transfers Government transfers are recognized in the financial statements as revenues 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 of the amounts can be made. (x) Use of estimates The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from management's best estimates as additional information becomes available in the future. 8

10 Notes to the Consolidated Financial Statements 2. Accounts receivable Accounts receivable consists of the following: Government of Canada $ 148,547 $ 137,185 Province of Ontario 25,706 28,190 Other municipalities 28,786 28,604 School boards 4, Other receivables 330, ,537 $ 537,827 $ 342, Drainage receivable The Township incurs costs to maintain and construct municipal drains which are recoverable from the benefiting landowners. In accordance with the Drainage Act these costs can accumulate for a five year period prior to being invoiced. Drainage costs receivable represents accumulated drainage costs which have not yet been invoiced to the benefiting landowners, and before Ministry grants and Municipal portions. The receivable also includes amounts that have been billed to the benefiting landowners, financed on taxes. 4. Assets held for sale As at December 31, 2016, $279,173 ( $339,920) related to land was recorded as assets held for sale. During the year the Township disposed of land with a book value of $339,920 for proceeds of $453,000. Also, the Township transferred $279,173 into assets held for sale during the year. 9

11 Notes to the Consolidated Financial Statements 5. Investment in ERTH Corporation ERTH Corporation is incorporated under the laws of the Province of Ontario. The Corporation of the Township of Norwich holds a 8.74% ( %) equity position in ERTH Corporation. The promissory note receivable from ERTH Corporation is unsecured and bears interest at 7.25%. The term of the note is undefined but no principal repayments are expected within the next twelve months. The following summarizes the investment of ERTH Corporation: Share of ERTH Corporation's net assets $ 1,168,626 $ 1,077,321 Loan receivable from ERTH Corporation 1,020,000 1,020,000 Total investment in ERTH Corporation $ 2,188,626 $ 2,097,321 The following summarizes the financial position and operations of ERTH Corporation which have been reported in these financial statements using the modified equity method: Financial position Total assets $ 80,006,933 $ 74,817,577 Total liabilities 61,325,552 58,367,516 Total net assets $ 18,681,381 $ 16,450,061 Results of operations Revenue $ 91,044,239 $ 83,471,032 Expenses 89,999,555 83,977,946 Net income (loss) for the year $ 1,044,684 $ (506,914) Total comprehensive income $ 122,427 $ 254,280 10

12 Notes to the Consolidated Financial Statements 6. Deferred revenue A requirement of the Public Sector Accounting Principles of the Canadian Institute of Chartered Accountants, is that obligatory reserve funds be reported as deferred revenue. This requirement is in place as provincial legislation restricts how these funds may be used and under certain circumstances these funds may possibly be refunded. The balances in deferred revenue including obligatory reserve funds (consisting of Recreational Land - Planning Act, Development Charges and Federal Gas Tax) of the Township are as follows: Opening Contributions Investment Revenue Ending Balance Received Income Recognized Balance Recreational land $ 49,066 $ 1,000 $ 416 $ - $ 50,482 Development charges 256, ,961 2,582 (50,000) 328,258 Federal gas tax 1, , (296,186) 31,149 Other 1, (1,286) 415 $ 308,402 $ 446,328 $ 3,046 $ (347,472) $ 410, Long term liabilities Long term liabilities reported on the Consolidated Statement of Financial Position are comprised of the following: Long term liabilities issued by the County of Oxford for which the Township has assumed responsibility for repayment. $ 2,445,663 $ 2,664,664 Principal repayments relating to long term liabilities are due as follows: 2017 $ 219, , , , ,110 Thereafter 1,335,618 $ 2,445,663 The above long term liabilities have maturity dates and interest rates ranging from 2017 to 2030 and 2.82% to 4.91% respectively. 11

13 Notes to the Consolidated Financial Statements 8. Tangible capital assets Land Improvements Buildings and Structures Infrastructure Vehicles, Machinery and Equipment 2016 Cost, beginning of year $ 3,648,262 $ 14,826,279 $ 32,535,963 $ 6,389,169 $ 57,399,673 Additions 126, ,582 1,203, ,973 2,506,313 Transfer to assets held for sale (279,173) (279,173) Disposals (14,626) (130,002) - (197,907) (342,535) Cost, end of year 3,480,799 15,038,859 33,739,385 7,025,235 59,284,278 Accumulated amortization, beginning of year 567,561 3,395,664 21,546,897 3,930,712 29,440,834 Amortization 33, , , ,370 1,467,578 Disposals - (114,784) - (202,772) (317,556) Accumulated amortization, end of year Net carrying amount, end of year 601,291 3,618,359 22,228,896 4,142,310 30,590,856 $ 2,879,508 $ 11,420,500 $ 11,510,489 $ 2,882,925 $ 28,693,422 Land Improvements Buildings and Structures Infrastructure Vehicles, Machinery and Equipment 2015 Cost, beginning of year $ 3,733,510 $ 11,857,611 $ 32,154,208 $ 5,970,816 $ 53,716,145 Additions 332,229 3,216, , ,209 4,608,087 Transfer to assets held for sale (399,920) (399,920) Disposals (17,557) (248,151) (122,075) (136,856) (524,639) Cost, end of year 3,648,262 14,826,279 32,535,963 6,389,169 57,399,673 Accumulated amortization, beginning of year 537,602 3,227,927 20,997,262 3,709,528 28,472,319 Amortization 32, , , ,040 1,306,831 Disposals (2,059) (104,449) (94,952) (136,856) (338,316) Accumulated amortization, end of year Net carrying amount, end of year 567,561 3,395,664 21,546,897 3,930,712 29,440,834 $ 3,080,701 $ 11,430,615 $ 10,989,066 $ 2,458,457 $ 27,958,839 12

14 Notes to the Consolidated Financial Statements 9. Accumulated surplus segregates its accumulated surplus into the following categories: Investment in tangible capital assets $ 28,693,422 $ 27,958,839 Long term liabilities $ (2,445,663) $ (2,664,664) Net investment in tangible capital assets $ 26,247,759 $ 25,294,175 Current funds 90, ,319 Reserve funds Working funds 202, ,300 Current purposes 1,691,901 1,100,906 Capital purposes 2,155,173 2,414,370 Specific purposes 45,800 49,896 Investment in ERTH Corporation (Note 5) 2,188,626 2,097,321 $ 32,622,476 $ 31,525, Government transfers - Federal Budget Federal transfers (Note 15) Operating $ 8,900 $ 6,398 $ 23,400 Capital 372, , ,000 $ 381,888 $ 350,451 $ 333, Government transfers - Provincial Budget Provincial transfers (Note 15) Operating $ 993,300 $ 996,538 $ 1,181,245 Capital - 29,655 29,655 $ 993,300 $ 1,026,193 $ 1,210,900 13

15 Notes to the Consolidated Financial Statements 12. Other income Budget (Note 15) Penalties and interest on taxes $ 145,000 $ 136,547 $ 156,563 Investment income 120, , ,831 Contributions for tangible capital assets - 47,492 - Gain on disposal of land and tangible capital assets - 104,016 31,321 Income from ERTH Corporation - 91,305 22,378 Deferred revenue earned - 50,000 88,470 Donations 14, ,965 34,678 Other 7,766 8,667 50,334 $ 287,266 $ 693,660 $ 501, Operations of school boards and the County of Oxford Further to note 1(ii), the taxation revenue collected and remitted on behalf of the school boards and the County of Oxford totaled: School boards $ 3,030,356 $ 3,001,201 County of Oxford 5,187,021 5,053,672 $ 8,217,377 $ 8,054, Pension agreements The Township makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf of all permanent full-time members of its staff. OMERS 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 rate of pay. Municipality service payments for 2016 totaled $223,545 ( $215,054) which are reflected in expenditures on the Consolidated Statement of Operations. As at December 31, 2016, the municipality had no past service obligation to the plan. 14

16 Notes to the Consolidated Financial Statements 15. Budget figures The budget by-law adopted by Council on May 10, 2016 was not prepared on a basis consistent with that used to report actual results (Public Sector Accounting Standards). The budget was prepared on a modified accrual basis while Public Sector Accounting Standards now require a full accrual basis to be used. The budget figures anticipated use surpluses accumulated in previous years to reduce current year expenditures in excess of current year revenues to $nil. In addition, the budget expensed all tangible capital expenditures rather than including amortization expense. As a result, the budget figures presented in the Consolidated Statements of Operations represent the budget adopted by Council on May 10, 2016 with adjustments as follows: Add: Budget by-law surplus for the year $ - $ - Less: Capital expenditures 2,348,227 2,989,396 Budgeted transfers to accumulated surplus 986, ,111 Principal payments on debt 219, ,100 Budgeted transfers from accumulated surplus (1,366,950) (1,973,000) Budget surplus per Consolidated Statement of Operations $ 2,187,108 $ 1,999, Subsequent events The corporation entered into various agreements to sell properties totaling $430,000, and purchase a property for $68,000, which all closed subsequent to year end. 17. Liability for contaminated sites The Township is responsible for a vacant lot in the Town of Norwich where a site assessment has confirmed that contamination exists that exceed an environmental standard. The site is not likely to affect public health and safety, cause damage or otherwise impair the quality of the surrounding environment. There is an indication that the site may naturally rehabilitate itself over time. Due to these factors, the Township does not expect to remediate the site. The site will continue to be monitored as part of the Township s ongoing environmental protection program. 15

17 Notes to the Consolidated Financial Statements 18. Contingencies The Township is the defendant in a lawsuit related to dismissal of a former employee. At present, the outcome is not determinable. The amount of any future settlement would be accounted for as a current transaction in the year of the settlement. 19. Contractual Obligations The Township has entered into an agreement with the Ontario Provincial Police (OPP) to provide policing services, which expires December 31, 2019, policing costs are determined annually. In 2016, the OPP contract approximated $1,426,000 ( $1,380,000) 20. Comparative Amounts Certain comparative balances have been reclassified to conform with the current year's presentation. 16

18 Segmented Information is a municipality that provides a wide range of services to its residents. The major services chosen for segmented disclosure are the five departments which consume the greatest amount of the Township's total operating expenses. The revenue and expenses reported for each segment includes directly attributable amounts as well as internal charges and recoveries allocated on a reasonable basis. A description of each major service and the activities each provide are as follows: General government The general government includes council and corporate management. Protection services The protection services includes fire, police, protection inspection and control, animal control and emergency measures. Transportation services The transportation services department is responsible for the safe and efficient movement of people and goods within the Township of Norwich. Responsibilities include road construction and maintenance, traffic signals and signs, winter control, developing parking and traffic by-laws, and implementation and maintenance of street lighting. Recreation and cultural services The recreation and cultural services department is responsible for the development and upkeep of community parks and community halls and recreation facilities. 17

19 Segmented Information General Government Protection Services Transportation Services Recreation and Cultural Services Other Services [1] Consolidated 2016 Revenue Taxation $ - $ - $ - $ - $ 7,341,092 $ 7,341,092 Government grants - Federal , , ,585 Government grants - Provincial - 36,383 29, ,155 1,026,193 Recoveries from other municipalities ,866 47,866 User charges 98,231 55,746 32, , ,922 1,265,134 Other income (Note 12) , ,660 Total revenue 98,231 92,129 62, ,672 10,115,882 10,676,530 Expenses Salaries, wages and benefits 848, , , , ,069 3,638,006 Materials 375, , , , ,607 2,230,029 Contracted services 36,553 1,429, , ,109 2,073,248 External transfers ,358-48,358 Financial expenses 9, ,049 Interest on long term liabilities - 28,186 16,673 68, ,073 Amortization 92, , , ,433 18,871 1,467,578 Total expenses 1,361,056 2,752,487 2,873,118 1,538,024 1,054,656 9,579,341 Net revenue (deficit) before financing $ (1,262,825)$ (2,660,358)$ (2,810,502)$ (1,230,352)$ 9,061,226 $ 1,097,189 [1] Other services - Revenue includes amounts not allocated to specific segments and expenses includes health services and planning and development. See accompanying notes 18

20 Segmented Information Year Ended December 31, 2015 General Government Protection Services Transportation Services Recreation and Cultural Services Other Services [1] Consolidated 2015 Revenue Taxation $ - $ - $ - $ - $ 6,945,313 $ 6,945,313 Government grants - Federal , , ,400 Government grants - Provincial - 36,643 29,655-1,144,602 1,210,900 User charges 39,686 18,479 38, , ,667 1,190,158 Other income (Note 12) , ,575 Total revenue 39,686 55,122 67, ,591 9,690,157 10,181,346 Expenses Salaries, wages and benefits 857, , , , ,221 3,546,097 Materials 354, ,015 1,044, , ,096 2,316,028 Contracted services 39,557 1,397, , ,758 1,733,682 External transfers ,612-50,612 Financial expenses 8, ,681 Interest on long term liabilities - 30,296 8,690 74, ,864 Amortization 32, , , ,636 20,608 1,306,831 Total expenses 1,293,140 2,658,684 2,781,220 1,515, ,683 9,075,795 Net revenue (deficit) before financing $ (1,253,454)$ (2,603,562)$ (2,713,430)$ (1,186,477)$ 8,862,474 $ 1,105,551 [1] Other services - Revenue includes amounts not allocated to specific segments and expenses includes health services and planning and development. See accompanying notes 19

21 INDEPENDENT AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of We have audited the accompanying financial statements of the trust funds of The Corporation of the Township of Norwich which comprise the trust funds balance sheet as at December 31, 2016 and the trust funds statement of continuity 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 the 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 our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 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 The Corporation of the Township of Norwich trust funds as at December 31, 2016 and the results of its operations and its cash flow for the year then ended in accordance with Canadian Public Sector Accounting Standards. June 20, 2017 Norwich, Ontario Chartered Professional Accountants Licensed Public Accountants 20

22 Trust Funds Balance Sheet As at December 31, 2016 Otterville Cemetery Perpetual Care Guarantee Deposits Pioneer Cemetery Perpetual Care Rosanna Cemetery Perpetual Care Milldale Cemetery Perpetual Care Old Quaker Cemetery Perpetual Care Assets Cash $ 55,040 $ 2,014 $ 33,074 $ 6,488 $ 10,785 $ 1,108 $ 108,509 $ 103,657 Due from Township - 39, ,750 29,984 Total 2016 Total ,040 41,764 33,074 6,488 10,785 1, , ,641 Liabilities Due to cemetery boards Trust funds balance 54,661 41,750 32,849 6,443 10,715 1, , ,858 $ 55,040 $ 41,764 $ 33,074 $ 6,488 $ 10,785 $ 1,108 $ 148,259 $ 133,641 See accompanying notes 21

23 Trust Funds Statement of Continuity Otterville Cemetery Perpetual Care Guarantee Deposits Pioneer Cemetery Perpetual Care Rosanna Cemetery Perpetual Care Milldale Cemetery Perpetual Care Old Quaker Cemetery Perpetual Care Revenue Interest $ 379 $ 14 $ 225 $ 45 $ 80 $ 8 $ 751 $ 783 Perpetual care 1,900-1, ,300-4,900 3,440 Deposits received - 9, ,750 - Total 2016 Total ,279 9,764 1, , ,401 4,223 Expenses Transfer to cemetery board Excess of revenue over expenses 1,900 9,750 1, ,310-14,660 3,440 Trust funds balance - beginning of year 52,761 32,000 31,349 6,243 9,405 1, , ,418 Trust funds balance - end of year $ 54,661 $ 41,750 $ 32,849 $ 6,443 $ 10,715 $ 1,100 $ 147,518 $ 132,858 See accompanying notes 22

24 Notes to the Trust Funds Financial Statements 1. Summary of significant accounting policies The financial statements reflect the day to day operations of the trust funds, under administration by the Corporation of the Township of Norwich. The trust funds revenue, expenses, assets and liabilities are not included in the Township s consolidated financial statements. The financial statements of the trust funds are the representation of management prepared in accordance with accounting policies prescribed for Ontario municipalities by the Ministry of Municipal Affairs and Housing. Since precise determination of many assets and liabilities is dependent upon future events, the preparation of periodic financial statements necessarily involves the use of estimates and approximations. These have been made using careful judgment. Actual results could differ from these estimates. Basis of accounting Revenue and expenses are recorded on an accrual basis. The accrual basis recognizes revenue as they become available and measurable; expenses are recognized as they are incurred and become measurable as a result of the receipt of goods or services and the creation of an obligation to pay. 2. Statement of cash flow A statement of cash flow has not been included as part of the financial statements as it would not provide any additional information that would be of use to the users of these financial statements. 23

25 To the Members of the Norwich Business Improvement Area INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the Norwich Business Improvement Area, which comprise the statement of financial position as at December 31, 2016, and the statement of operations and changes in net assets for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian Public Sector Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the 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 our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 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 Norwich Business Improvement Area as at December 31, 2016 and the results of its operations and its cash flow for the year then ended in accordance with Canadian Public Sector Accounting Standards. June 20, 2017 Norwich, Ontario Chartered Professional Accountants Licensed Public Accountant 24

26 Statement of Financial Position Norwich Business Improvement Area As at December 31, Assets Cash $ 8,017 $ 6,570 Liabilities Accounts payable Net assets Unrestricted $ 8,017 $ 5,950 Statement of Operations and Changes in Net Assets 2015 Revenue Tax levy $ 14,500 $ 14,500 Fees and service charges 5,770 4,242 20,270 18,742 Expenses Promotion and advertising 18,203 21,582 18,203 21,582 Excess (deficiency) of revenue over expenses for the year 2,067 (2,840) Net assets, beginning of year 5,950 8,790 Net assets, end of year $ 8,017 $ 5,950 See accompanying notes 25

27 Notes to the Financial Statements Norwich Business Improvement Area 1. Summary of significant accounting policies The financial statements of the Norwich Business Improvement Area are the representation of management prepared in accordance with accounting policies prescribed for Ontario municipalities and their local boards by the Ministry of Municipal Affairs and Housing and by the Public Sector Accounting and Auditing Board of the Chartered Professional Accountants of Canada. Since precise determination of many assets and liabilities is dependent upon future events, the preparation of periodic financial statements necessarily involves the use of estimates and approximations. These have been made using careful judgment. Actual results could differ from these estimates. Basis of accounting Sources of financing and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenue as they become available and measurable; expenses are recognized as they are incurred and measurable as a result of the receipt of goods or services and the creation of a legal obligation to pay. 2. Statement of cash flows A statement of cash flows has not been included as part of the financial statements as it would not provide any additional information that would be of use to the users of these financial statements. 26