Consolidated Financial Statements of DISTRICT OF MACKENZIE

Transcription

1 Consolidated Financial Statements of

2 Consolidated Financial Statements Consolidated Financial Statements Management's Responsibility for the Consolidated Financial Statements 1 Independent Auditors' Report 2-3 Consolidated Statement of Financial Position 4 Consolidated Statement of Operations and Accumulated Surplus 5 Consolidated Statement of Change in Net Financial Assets 6 Consolidated Statement of Cash Flows 7 Notes to Consolidated Financial Statements 8-27 Supplementary Information Consolidated Schedule of Federal Gas Tax Funds Receipts and Disbursements 27

3 MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS The accompanying consolidated financial statements of the District of Mackenzie (the "District") are the responsibility of the District's management and have been prepared in compliance with legislation, and in accordance with generally accepted accounting principles for local governments established by the Public Sector Accounting Board of The Canadian Institute of Chartered Professional Accountants. A summary of the significant accounting policies is described in Note 1 to the consolidated financial statements. The preparation of financial statements necessarily involves the use of estimates based on management's judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. The District's management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded, transactions are properly authorized and recorded in compliance with legislative and regulatory requirements, and reliable financial information is available on a timely basis for preparation of the consolidated financial statements. These systems are monitored and evaluated by management. Mayor and Council meet with management and the external auditors to review the consolidated financial statements and discuss any significant financial reporting or internal control matters prior to their approval of the consolidated financial statements. The consolidated financial statements have been audited by KPMG LLP, independent external auditors appointed by the District. The accompanying Independent Auditors' Report outlines their responsibilities, the scope of their examination and their opinion on the District's consolidated financial statements. Mr. Mark Fercho, Chief Administrative Officer Ms. Sheila McCutcheon, Chief Financial Officer 1

4 KPMG LLP Chartered Accountants 177 Victoria Street, Suite 400 Prince George BC V2L 5R8 Canada Telephone (250) Fax (250) Internet INDEPENDENT AUDITORS' REPORT To the Mayor and Council Report on Financial Statements We have audited the accompanying consolidated financial statements of the District of Mackenzie (the "District"), which comprise the consolidated statement of financial position as at December 31, 2013 and the consolidated statement of operations and accumulated surplus, consolidated statement of change in net financial assets and consolidated statement of cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District'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 District's internal controls. 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. KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG Canada provides services to KPMG LLP. 2

5 Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the District of Mackenzie as at December 31, 2013, and the results of its operations and cash flows for the year then ended in accordance with Canadian public sector accounting standards. Comparative Information Without modifying our opinion, we draw attention to Note 17 to the consolidated financial statements which indicates that the comparative information presented as at and for the year ended December 31, 2012 has been restated. The consolidated financial statements of The District of Mackenzie as at and for the year ended December 31, 2012, excluding the restatement described in Note 17 to the consolidated financial statements, were audited by another auditor who expressed an unmodified opinion on those financial statements on May 13, As part of our audit of the consolidated financial statements as at and for the year ended December 31, 2013, we audited the restatement described in Note 17 to the consolidated financial statements that was applied to restate the comparative information as at and for the year ended December 31, 2012, In our opinion, the restatement is appropriate and has been properly applied. We were not engaged to audit, review, or apply any procedures to the December 31, 2012 consolidated financial statements, the December 31, 2011 consolidated financial statements (not presented herein), other than with respect to the restatement descibed in Note 17 to the consolidated financial statements. Accordingly, we do not express an opinion or any other form of assurance on those financial statements taken as whole. Other Matters Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The supplementary information included in the Schedule of Federal Gas Tax Funds Receipts and Disbursements is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such supplementary information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole. Chartered Accountants April 28, 2014 Prince George, Canada KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. KPMG Canada provides services to KPMG LLP.

6 Consolidated Statement of Financial Position December 31, (restated - note 17) Financial assets: Cash and cash equivalents Accounts receivable (note 2) Inventory Investment in McLeod Lake Mackenzie Community Forest (Limited Partnership) (note 3) Land held for resale $ 11,491,290 1,106,580 56, ,408 1,962,798 $ 10,957,889 1,450,281 40,062 99, ,655 14,802,683 13,073,787 Financial liabilities: Accounts payable and accrued liabilities (note 4) Deferred revenue Municipal debt, net of sinking funds (note 5) Long-term capital leases (note 6) 988,421 1,796,058 1,000, , ,545 1,537, ,933 4,267,752 2,638,459 Net financial assets 10,534,931 10,435,328 Non-financial assets: Tangible capital assets (note 7) Prepaid expenses 29,127, ,957 29,475, ,229 29,326,779 29,702,315 Accumulated surplus (note 8) $ 39,861,710 $ 40,137,643 Commitments and contingencies (note 9) The accompanying notes are an integral part of these consolidated financial statements. /^^C^t^^y^j Mayor Ill^L ^ ^ ^ M ^ l ^ - ^ Chief Financial Officer 4

7 Consolidated Statement of Operations and Accumulated Surplus Budget (restated - notel 7) Revenue: Net taxation revenue (note 11) $ 3,887,223 $ 3,880,550 $ 3,333,681 Sale of services 487, , ,509 Government transfers (note 12): Provincial 888, ,285 1,431,121 Federal 9,213 6, ,752 Other 1,566,175 1,571,624 1,479,246 Investments and penalties 50, , ,582 Other 362, , ,679 Licenses and permits 75,500 78,325 78,505 User fees 610, , ,778 Log sales - - 6,491 Total revenue 7,936,134 8,182,508 8,240,344 Expenses: Community services 2,616,112 2,682,549 2,766,636 Garbage and waste collection 283, , ,712 General government 1,628,957 1,566,562 1,432,841 Protective services 1,022, , ,039 Public health 91,167 76,734 62,043 Sewer system 263, , ,505 Transportation services 2,419,188 2,141,211 2,027,912 Water system 431, , ,723 Total expenses 8,756,930 8,458,441 8,267,411 Revenue under expenses (820,796) (275,933) (27,067) Accumulated surplus, beginning of year: As previously reported 41,572,069 41,572,069 41,558,870 Restatement (note 17) - (1,434,426) (1,394,160) As restated 41,572,069 40,137,643 40,164,710 Accumulated surplus, end of year: $ 40,751,273 $ 39,861,710 $ 40,137,643 The accompanying notes are an integral part of these consolidated financial statements. 5

8 Consolidated Statement of Change in Net Financial Assets Budget (restated - note 17) Annual deficit $ (820,796) $ (275,933) $ (27,067) Acquisition of tangible capital assets Amortization of tangible capital assets Loss on sale of tangible capital assets Proceeds on sale of tangible capital assets Acquisition of prepaid expenses Use of prepaid expenses (2,935,850) (1,074,436) 1,240,339 (23,200) 204,561 (803,813) 1,208,581 (210) 10,175 (2,935,850) 71, ,666 - (198,957) 227,229 (227,229) 134,363-28,272 (92,866) Change in net financial assets (3,756,646) 99, ,800 Net financial assets, beginning of year: As originally reported Restatement (note 17) 11,281,459 11,281,459 (846,131) 10,946,393 (805,865) as restated 10,435,328 10,435,328 10,140,528 Net financial assets, end of year: $ 6,678,682 $ 10,534,931 $ 10,435,328 The accompanying notes are an integral part of these consolidated financial statements. 6

9 Consolidated Statement of Cash Flows Year ended December 31, (restated - note 17) Cash provided by (used in): Operating activities: Revenue under expenses $ (275,933) $ (27,067) Items not involving cash: Amortization of tangible capital assets 1,240,339 1,208,581 Gain on sale of tangible capital assets (23,200) (210) Equity in earnings of McLeod Lake Mackenzie Community Forest (Limited Partnership) (85,163) - Change in financial assets and liabilities: Accounts receivable 343,702 1,018,122 Inventory (16,545) (23,650) Accounts payable and accrued liabilities (7,124) 194,875 Advances to McLeod Lake Mackenzie Community Forest Limited Partnership (345) (99,900) Deferred revenue 258, ,289 Prepaid expenses 28,272 (92,866) Land held for resale (1,437,143) (70,290) Net change in cash from operating activities 606,037 2,511,884 Capital activities: Proceeds on sale of tangible capital assets 204,561 10,175 Acquisition of tangible capital assets (1,074,436) (803,813) Net change in cash from capital activities (869,875) (793,638) Financing activities: Proceeds from capital lease 398, ,933 Capital lease repaid (20,207) - Proceeds from long-term debt 1,000,000-1,378, ,933 Increase in cash and cash equivalents 533,401 1,823,179 Cash and cash equivalents, beginning of year 10,957,889 9,134,710 Cash and cash equivalents, end of year $ 11,491,290 $ 10,957,889 The accompanying notes are an integral part of these consolidated financial statements. 7

10 MMENZIt I I I BRITISH COLUMBIA k> Notes to Consolidated Financial Statements The District of Mackenzie (the "District") is a municipality that was created in 1966 under the Community Charter, formerly the Municipal Act, a statute of the Province of British Columbia. The District's principal activities include the provision of local government services to residents of the incorporated area. These services include administrative, protective, transportation, environmental, recreational, water, waste water and fiscal services. 1. Significant accounting policies: The consolidated financial statements of the District are prepared in accordance with Canadian generally accepted accounting principles for governments as recommended by the Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartered Accountants. Significant accounting policies adopted by the District are as follows: (a) Basis of consolidation: (i) Consolidated entities: The consolidated financial statements reflect the assets, liabilities, revenues and expenses of the reporting entity. The reporting entity is comprised of all organizations, committees and local boards accountable for the administration of their financial affairs and resources to the District and which are owned or controlled by the District. (ii) Accounting for Region and School Board transactions: The taxation, other revenues, expenses, assets and liabilities with respect to the operations of the Region and the School Board are not reflected in these consolidated financial statements. (iii) Trust funds: Trust funds and their related operations administered by the District are not included in these consolidated financial statements. 8

11 Year ended December 31, Significant accounting policies (continued): (iv) Investment in Government Business Enterprises: The District's investment in the McLeod Lake Mackenzie Community Forest (Limited Partnership), 50% partner, is accounted for on a modified equity basis, consistent with Canadian generally accepted accounting principles as recommended by PSAB. Under the modified equity basis, the accounting policies are not adjusted to conform with those of the District and inter-organizational transactions and balances are not eliminated. The District recognizes its equity interest in the annual earnings or loss of the McLeod Lake Mackenzie Community Forest in its consolidated statement of operations and accumulated surplus with a corresponding increase or decrease in its investment asset account. (b) Basis of accounting: The District follows the accrual method of accounting for revenues and expenses. Revenues are normally recognized in the year in which they are earned and measurable. Expenses are recognized as they are incurred and measurable as a result of receipt of goods or services and/or the creation of a legal obligation to pay. (c) Revenue recognition: Taxation and user fee revenues are recognized in accordance with the provisions of the Community Charter. The District is required to act as the agent for the collection of certain taxes and fees imposed by other authorities. Collections for other authorities are excluded from the District's taxation revenues. Revenue unearned in the current period is reported on the statement of financial position as deferred revenue or deposits. (d) Investment income: Investment income is reported as revenue in the period earned. When required by the funding government or related Act, investment income earned on deferred revenue is added to the investment and forms part of the deferred revenue balance. 9

12 1. Significant accounting policies (continued): (e) Cash equivalents: Cash equivalents include short-term highly liquid investments with a term to maturity of 90 days or less at acquisition. (f) Land held for resale: Land 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. (g) Non-financial assets: Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. (i) Tangible capital assets: Tangible capital assets are recorded at cost which includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets, excluding land, are amortized on a straight-line basis over their estimated useful lives as follows: Asset Useful life - years Buildings Building improvements, equipment and IT 4-40 Drainage and transportation infrastructure Machinery and equipment and vehicles Vehicles 5-20 Water and sewer infrastructure Assets under construction are not amortized until the asset is available for productive use. Tangible capital assets are tested annually for any impairment in value based on continued usefulness of the assets and the related carrying values. Any impairment in carrying value would be recorded in the period that the impairment occurs. 10

13 1. Significant accounting policies (continued): (ii) Contributions of tangible capital assets: Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and also are recorded as revenue. (iii) Interest capitalization: The District does not capitalize interest costs associated with the acquisition or construction of a tangible capital asset. (h) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Items subject to such estimates and assumptions include the carrying values of tangible capital assets and land for resale. Actual results could differ from these estimates. 2. Accounts receivable: Taxes $ 341,712 $ 280,253 Grants 350, ,641 Sales tax 74, ,464 Trade and miscellaneous 431, ,166 1,198,088 1,518,524 Less allowance for doubtful accounts (91,508) (68,243) Total $ 1,106,580 $ 1,450,281 11

14 3. Investment in McLeod Lake Mackenzie Community Forest Limited Partnership (MLMCF): Investment (50% partner): McLeod Lake Mackenzie Community Forest (limited partnership): Investment in shares Advances Accumulated earnings (loss) $ 50 87,889 91,193 $ 50 87,544 6,030 McLeod Lake Mackenzie Community Forest Corporation: Advances 6,276 6,276 Total investment $ 185,408 $ 99,900 The following table provides condensed supplementary financial information for the McLeod Lake Mackenzie Community Forest Limited Partnership (the "LP"), for the year ended December 31: (i) Financial position: Assets: Current $ 623,782 $ 507,077 Liabilities: Current Silviculture obligation - long-term portion $ 36, ,587 $ 260,328 96,071 Total liabilities 259, ,399 Equity: Share capital Partner's equity 1 364, ,677 Total equity 364, ,678 Total liabilities and equity $ 623,782 $ 507,077 (ii) Operations: Revenue Expenses $ 1,291,604 1,078,036 $ 908, ,319 Change in equity $ 213,568 $ 117,402 12

15 4. Accounts payable and accrued liabilities: Trade $ 587,597 $ 584,990 Wages and related costs 400, ,981 Sales tax - 6,574 Tax sale deposits 20,000 Total $ 988,421 $ 995, Long-term debt: The District issues debt instruments through the Municipal Finance Authority ("MFA") of British Columbia ("MFA"), pursuant to security issuing bylaws under authority of the Community Charter, to finance certain capital expenditures. Debt servicing requirements comprising principal repayments and interest are funded as incurred by revenue earned during the year. By-Law Number Purpose Rate % Maturity Gross Debt Sinking Fund Assets Net Debt 2013 Net Debt 2012 General fund: N/A Bell Place 1.72 %08/14/2018 $ 1,000,000 $ $ 1,000,000 $ - Aggregate repayment of principal over the next four years are as follows: Total 2014 $ 200, , , , ,000 $ 1,000,000 13

16 6. Obligations under capital lease: General fund: Year ending December 31: 2013 $ - $ 22, ,469 22, ,469 22, ,469 22, ,024 18, ,755 - Total 499, ,402 Less amount representing interest at prime minus 1% (2013-2%) 15,913 3,469 Present value of net minimum capital lease payments $ 483,273 $ 104,933 14

17 7. Tangible capital assets: Assets under construction Land and improvements Building improvements equipment and IT 2013 Building Machinery/ equipment and vehicles Infrastructure Water infrastructure Sewer infrastructure Total Cost: Balance, beginning of year Additions Disposals Transfers from assets under construction $ 124,118 $ 7,191,500 (84,175) $ 2,916,401 33,170 $ 10,689,288 : 5 8,103,065 17, ,204 (35,697) (253,786) $ 11,991,572 22,341 (14,910) $ 2,683,218 $ 4,798,853 $ 48,373,897 1,074,436 (388,568) Balance, end of year 124,118 7,107,325 2,949,571 10,671,194 8,726,483 11,999,003 2,683,218 4,798,853 49,059,765 Accumulated amortization: Balance, beginning of year ,947 3,879,079 5,393,216 6,037, ,976 1,694,789 18,898,811 Disposals (206,066) ' (1,141) (207,207) Amortization expense 81, , , ,346 26, ,781 1,240,339 Balance, end of year - - 1,054,932 4,031,886 5,667,724 6,406, ,822 1,823,570 19,931,943 Net book value, end of year $ 124,118 $ 7,107,325 $ 1,894,639 $ 6,639,308 $ 3,058,759 $ 5,592,994 $ 1,735,396 $ 2,975,283 $ 29,127,822 15

18 7. Tangible capital assets (continued): Assets under construction Land and improvements Building improvements equipment and IT 2012 (restated) Building Machinery/ equipment and vehicles Infrastructure Water infrastructure Sewer infrastructure Total Cost: Balance, beginning of year $ Additions Disposals Transfers from assets under construction $ 7,191,500 $ 2,415,965 $ 511,827 (11,391) 10,560, ,597 $ 7,936, ,124 (20,613) $ 11,991,572 $ 2,683,218 $ 4,798,853 $ 47,578, ,548 (32,004) Balance, end of year 7,191,500 2,916,401 10,689,288 8,103,065 11,991,572 2,683,218 4,798,853 48,373,897 Accumulated amortization: Balance, beginning of year - 903,420 3,729,403 4,950,736 5,668, ,130 1,566,008 17,712,266 Disposals (1,424) (20,613) (22,037) Amortization expense 70, , , ,235 26, ,781 1,208,582 Balance, end of year - 972,947 3,879,079 5,393,216 6,037, ,976 1,694,789 18,898,811 Net book value, end of year $ $ 7,191,500 $ 1,943,454 $ 6,810,209 $ 2,709,849 $ 5,953,768 $ 1,762,242 $ 3,104,064 $ 29,475,036 16

19 8. Accumulated surplus: Accumulated surplus consists of individual fund surpluses, reserves and reserve funds as follows: (restated-note 17) Surplus (deficiency): Invested in tangible capital assets $ 28,644,549 $ 29,370,156 General fund 5,667,156 4,653,223 Water utility fund 1,357,329 1,325,863 Sewer utility fund (150,075) (6,362) Total surplus 35,518,959 35,342,880 Reserve funds set aside for specific purposes by Council: Parkland 34,366 33,575 Curling rink 49,629 48,486 Dental Clinic 5, ,143 Firefighting equipment 470, ,970 Library 41,450 40,496 Office equipment 63,910 62,439 Public works 718, ,863 Recreation 1,191,251 1,154,653 General capital 730, ,020 Land 1,036,818 1,281,118 Total reserve funds 4,342,751 4,794,763 $ 39,861,710 $ 40,137,643 17

20 Year ended December 31, Commitments and contingencies: (a) The District is responsible, as a member of the Regional District of Fraser-Fort George, for its portion of any operating deficits or capital debt related to functions in which it participates (b) The District and its employees contribute to the Municipal Pension Plan ("the plan"), a jointlytrusteed pension plan. The Board of Trustees, representing plan members and employers, is responsible for overseeing the management of the plan, including investment of the assets and administration of benefits. The plan is a multi-employer contributory pension plan. Basic pension benefits provided are based on a formula. The plan has about 179,000 active members and approximately 71,000 retired members. Active members include approximately 47 contributors from the District, The most recent actuarial valuation as at December 31, 2012 indicated a $1,370 million funding deficit for basic pension benefits. The next valuation will be as at December 31, 2015 with results available in Employers participating in the Plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the Plan records accrued liabilities and accrued assets for the Plan in aggregate with the result that there is no consistent and reliable basis for allocating the obligation, assets and cost to the individual employers participating in the Plan. The District paid $245,254 ( $251,194) for employer contributions while employees contributed $201,914 ( $202,327) to the Plan in fiscal

21 9. Commitments and contingencies (continued): (c) The District is obligated to collect and transmit property taxes levied on Mackenzie taxpayers in respect of the following bodies: Ministry of Finance, Province of British Columbia Regional District of Fraser-Fort George British Columbia Assessment Authority Municipal Finance Authority Fraser-Fort George Regional Hospital District Royal Canadian Mounted Police (d) The District is a participant in the Municipal Insurance Association of British Columbia. Should the Association pay out claims in excess of premiums received, it is possible that the District, along with other participants, would be required to contribute towards the deficit. 10. Trust fund: The District maintains a cemetery perpetual care fund in accordance with the Cemeteries and Funeral Services Act. At December 31, 2013, the trust fund balance for both the fund and its corresponding term deposit is $6,526 ( $6,376). 19

22 11. Net taxation revenue: As disclosed in note 9(c), the District is required to collect taxes on behalf of and transfer these amounts to the government agencies below: Taxes collected: General purposes $ 3,886,852 $ 3,333,681 Collection for other governments 1,873,798 1,767,485 5,760,650 5,101,166 Transfers to other governments: Provincial government 1,095, ,736 Fraser-Fort George Regional Hospital District 179, ,944 Regional District of Fraser-Fort George 361, ,241 B.C. Assessment Authority 50,501 53,426 Municipal Finance Authority Royal Canadian Mounted Police 193, ,039 1,880,100 1,767,485 $ 3,880,550 $ 3,333,681 20

23 12. Government transfers: The District recognizes the transfer of government funding as expenses or revenues in the period that the events giving rise to the transfer occurred. The Government transfers reported on the Statement of Operations and Accumulated Surplus are: Provincial grants: Unconditional $ 313,664 $ 671,116 Carbon tax 34,034 33,248 Miscellaneous. 520, ,757 Subtotal provincial grants 868,285 1,431,121 Federal grants: Gas tax - 192,831 Miscellaneous 6,300 7,921 Subtotal federal grants 6, ,752 Other grants: BC Hydro 1,571,624 1,479,246 Total government transfers $ 2,446,209 $ 3,111, Segmented information: Segmented information has been identified based upon lines of service provided by the District. District services are provided by departments and their activities are reported by functional area in the body of the financial statements. Certain lines of service that have been separately disclosed in the segmented information are as follows: 21

24 13. Segmented information (continued): 2013 Environmental Garbage General Protective Transportation and Public and Waste Community Water Sewer Government Services Services Health Collection Services Utility System Total Expenses: Operating $ 583,790 $ 273,730 $ 835,687 $ 44,942 $ 3,803 $ 922,220 $ 188,839 $ 167,340 $ 3,020,351 Salaries, wages and employee benefits 778, , ,584 11, ,857 1,475, ,855 86,944 3,846,363 Legislature 60, ,241 Amortization 39, , ,964 20, ,522 38, ,353 1,240,339 Interest 6, ,893 Insurance 53,050 12,448 11, ,539 3,028 1, ,223 Professional services 45,008 1,654 1, , ,355 Garbage disposal - 2, , ,676 Total expenses $1,566,562 $ 940,080 $2,141,211 $ 76,734 $ 275,666 $ 2,682,549 $ 383,941 $ 391,698 $ 8,458,441 22

25 13. Segmented information (continued): 2012 Environmental Garbage General Protective Transportation and Public and Waste Community Water Sewer Government Services Services Health Collection Services Utility System Total Expenses: Operating $ 561,617 $ 293,245 $ 672,350 $ 31,273 $ 4,315 $ 875,148 $ 190,400 $ 155,872 $ 2,784,220 Salaries, wages and employee benefits 716, , ,259 8, ,946 1,620, ,554 73,179 3,983,338 Legislature 62, ,318 Amortization 36, , ,392 22, ,061 37, ,353 1,208,582 Interest Insurance 55,605 12,458 10, ,241 3,129 1, ,445 Professional services Garbage - 2, , ,318 Total expenses $1,432,841 $ 921,039 $2,027,912 $ 62,043 $ 277,712 $2,766,636 $ 412,723 $ 366,505 $ 8,267,411 23

26 14. Budget data: The budget data presented in these consolidated financial statements is based upon the 2013 operating and capital budgets approved by Council. The chart below reconciles the approved budget to the budget figures reported in these consolidated financial statements Budget Deficit for the year $ (820,796) Add: Amortization of tangible capital assets 1,111,030 Add: Transfer from prior year surplus Add: Transfer from reserve funds 48,280 Less: Transfer to reserve funs Less: Capital expenditure (338,514) Surplus (deficit) after reconciling items $ 15. Significant taxpayers: The District derives a significant portion of its taxation revenue from the major industry taxpayers. Any changes in this sector could have an impact on the ongoing operations of the District. 16. Comparative information: The financial statements have been reclassified, where applicable, to conform to the presentation used in the current year. The reclassification has had no impact on the surplus as restated in note

27 Year ended December 31, Restatement: During the year, management determined that the following adjustments needed to be made to correct errors reported in prior periods: (a) Unspent funds received under the Federal Gas Tax program were included in revenue and accumulated surplus instead of being included in deferred revenue. (b) A piece of land previously reported in tangible capital assets and equity in tangible capital assets were also included in land held for resale. The District determined that it is correctly reported as land held for resale and removed it from tangible capital assets. (c) A lease buyout on a vehicle was previously included in expenses rather than being reported as a tangible capital asset. (d) The cemetery trust fund asset and liability was included in the financial statements of the District as part of cash and cash equivalents and accumulated surplus. As trust funds, these amounts should not be included in the District financial statements. 25

28 17. Restatement (continued): As a result, the prior year financial statements have been restated on a retroactive basis. effect of the restatements is as follows: The As Previously Reported Increase (Decrease) As restated Statement of Financial Position as at December 31, 2012: Cash and cash equivalents: $ 10,964,264 Cemetery trust funds $ (6,375) $ 10,957,889 Deferred revenue: 698,225 Federal Gas Tax funds unspent 839,756 1,537,981 Tangible capital assets: 30,063,381 Land Vehicle (597,620) 9,325 29,475,086 Statement of Operations for the year ended December 31, 2012: Government transfers: 3,151,263 Federal Gas Funds unspent (40,144) 3,111,119 Interest and penalties revenue: 112,704 Cemetery trust fund interest (122) 112,582 Accumulated surplus for the year ended December 31, 2012: Annual surplus (deficiency) 13,199 (40,266) (27,067) Accumulated Surplus, beginning 41,558,870 Federal Gas Tax Funds unspent Tangible capital assets Cemetery trust fund (799,612) (588,295) (6,253) 40,164,710 Accumulated Surplus, ending $ 41,572,069 $ (1,434,426) $ 40,137,643 26

29 Consolidated Schedule of Federal Gas Tax Funds Receipts and Disbursements Year ended December 31, Opening balance of unspent funds $ 839,756 Add: Amount received from UBCM during the year 232,975 Add: Interest earned 22,440 Less: Amount spent during the year Closing balance of unspent funds $ 1,095,171 Gas Tax funding is provided by the Government of Canada. The use of the funding is established by a funding agreement between the Municipality and the Union of British Columbia Municipalities. Gas Tax funding may be used toward designated public transit, community energy, water, wastewater, and solid waste and capacity building projects, as specified in the funding agreement.