CORPORATION OF THE COUNTY OF FRONTENAC

Transcription

1 Financial Statements CORPORATION OF THE COUNTY OF FRONTENAC

2 Financial Statements CORPORATION OF THE COUNTY OF FRONTENAC Page Auditors' Report 1 Consolidated Statement of Financial Position 2 Consolidated Statement of Financial Activities 3 Consolidated Statement of Changes in Financial Position 4 Notes to Consolidated Financial Statements 5 Schedule of Current Fund Operations 15 Schedule of Capital Fund Operations 16 Schedule of Reserves and Reserve Funds 17 TRUST FUNDS Auditors' Report 19 Statement of Financial Position 20 Statements of Continuity 20 Note to Financial Statements 21 AUDITED FINANCIAL STATEMENTS FAIRMOUNT HOME FOR THE AGED Auditors' Report 22 Statement of Financial Position 23 Statement of Revenue and Expenditure 24 Notes to Financial Statements 25 OTHER FINANCIAL INFORMATION Auditors' Report on Supplementary Information 30 Schedule of Expenditure 31

3 KPMG LLP Chartered Accountants 863 Princess Street Suite 400 Telephone (613) PO Box 1600 Stn Main Telefax (613) Kingston ON K7L 5C8 Canada AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of the Corporation of the County of Frontenac We have audited the consolidated statement of financial position of the Corporation of the County of Frontenac as at December 31, 2007 and the consolidated statements of financial activities and changes in financial position for the year then ended. These financial statements are the responsibility of the County s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the County as at December 31, 2007 and the results of its operations and changes in its financial position for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants, Licensed Public Accountants Kingston, Canada April 4,

4 Consolidated Statement of Financial Position December 31, 2007, with comparative figures for 2006 Assets Financial assets: Cash $ 16,490,910 $ 14,752,980 Accounts receivable 1,506,927 2,129,211 17,997,837 16,882,191 Liabilities: Accounts payable and accrued liabilities (note 9) 5,890,800 6,171,103 Deferred revenue 889, ,528 Deferred revenue - obligatory reserve fund (note 7) 799, ,958 Employee benefit obligations (note 5) 115,012 Long-term liabilities (note 3) 15,691,539 16,309,410 23,386,218 23,222,999 Net financial asset deficiency (5,388,381) (6,340,808) Other assets: Inventory 149,478 83,433 Total net asset deficiency $ (5,238,903) $ (6,257,375) Municipal Position Capital fund (note 4(a)) $ 16,801 $ 16,801 Reserves (note 6) 7,953,015 7,504,579 Reserve funds (note 6) 2,597,832 2,530,655 10,567,648 10,052,035 Amounts to be recovered from future revenues (15,806,551) (16,309,410) Lease commitments (note 11) Contingent liabilities (note 16) Total municipal position $ (5,238,903) $ (6,257,375) The accompanying notes are an integral part of these financial statements. Approved by The Corporation of the County of Frontenac: Council Member Council Member 2

5 Consolidated Statement of Financial Activities, with comparative figures for 2006 Revenues: Taxation and user charges: Taxation from other governments $ 8,420,892 $ 8,319,507 User charges 3,004,549 2,643,251 Payments in lieu of taxes 50,159 46,942 Grants: Province of Ontario 12,539,946 12,322,882 Other municipalities 7,366,260 6,603,038 Other: Provincial offences fines penalties 264, ,347 Investment income 412, ,577 Other 348, ,032 Transfer from deferred obligatory reserve fund 8,253 Total revenues 32,414,723 30,803,576 Expenditures: Current (note 15): General government 1,366,875 2,354,077 Protection to persons and property Transportation services 797, ,871 Ambulance services 10,032,835 8,994,700 Health services 1,916,357 1,793,574 Social and family services 12,896,649 12,245,121 Libraries 604, ,159 Social housing 548, ,469 Planning and development 170, ,381 Other 41,103 Total current expenditures 28,374,328 27,453,602 Capital operations: General government 900, ,000 Transportation services 638, ,219 Ambulance services 1,104, ,902 Health services 5,337 Social and family services 444,788 53,469 Total capital expenditures 3,087,968 1,449,927 Total expenditures 31,462,296 28,903,529 Net revenues 952,427 1,900,047 Financing: Debt principal repayment (617,871) (581,625) Change in employee benefit obligations 115,012 Change in non-financial asset 66,045 15,889 (436,814) (565,736) Increase in fund balances $ 515,613 $ 1,334,311 The accompanying notes are an integral part of these financial statements. 3

6 Consolidated Statement of Changes in Financial Position, with comparative figures for 2006 Operations: Net revenues $ 952,427 $ 2,366,005 Sources (uses) of funds: Decrease in accounts receivable 622, ,880 Increase (decrease) in accounts payable and accrued liabilities (280,303) 379,477 Increase in deferred revenue 613,212 61,693 Increase in obligatory reserve fund 333,169 Increase in employee benefit obligations 115,012 Net change in cash from operations 2,355,801 3,092,055 Financing: Debt principal repayments (617,871) (581,625) Increase in cash and cash equivalents 1,737,930 2,510,430 Cash and cash equivalents, beginning of year 14,752,980 12,242,550 Cash and cash equivalents, end of year $ 16,490,910 $ 14,752,980 The County considers cash and cash equivalents to be highly liquid investments with original maturities of three months or less. The accompanying notes are an integral part of these financial statements. 4

7 Notes to Consolidated Financial Statements 1. Accounting policies The consolidated financial statements of the Corporation of the County of Frontenac ( the County ) 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 Council are as follows: (a) Basis of consolidation: (i) The consolidated financial statements reflect the assets, liabilities, revenues, expenditures and fund balances of the current, capital and reserve funds 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 County and which are owned or controlled by the County. Interdepartmental and interorganizational transactions and balances between these organizations are eliminated. These consolidated financial statements include: Fairmount Home for the Aged Kingston, Frontenac and Lennox and Addington Health Unit (proportionately consolidated) Kingston, Frontenac and Lennox and Addington Health Unit is accounted for using the proportionate consolidation method of accounting and reporting, whereby the County s pro-rata share of each of the assets, liabilities, revenues and expenses is combined on a line-by-line basis in the financial statements. (ii) Non-consolidated entities: The following joint local board is not consolidated: Kingston-Frontenac Public Library Board (iii) Trust funds and their related operations administered by the County are not consolidated, but are reported separately on the "Trust Funds Statement of Continuity and Statement of Financial Position". (b) Basis of accounting: (i) Capital assets: The historical cost and accumulated depreciation of capital assets are not reported for municipal purposes. Capital assets are reported as an expenditure on the "Consolidated Statement of Financial Activities" in the year of acquisition. 5

8 Notes to Consolidated Financial Statements (continued) 1. Accounting policies (continued): (c) Inventory: Inventory is valued at the lower of cost and replacement cost. (d) Use of estimates: The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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. Actual results could differ from those estimates. (e) Employee benefit obligations: The County accrues its obligations for employee benefit plans. The cost of post-retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on services and management s best estimate of salary escalation, retirement ages of employees and expected health care costs. Actuarial gains (losses), which can arise from changes in actuarial assumptions used to determine the accrued benefit obligation, are amortized over the average remaining service period of active employees, which is estimated to be 14 years. 2. Accounting changes tangible capital assets: Commencing with the fiscal year beginning January 1, 2009, the County will be adopting CICA Public Sector Accounting Handbook Section PS 3150, Tangible Capital Assets. This section establishes standards on how to account for and report tangible capital assets in government financial statements. Tangible capital assets include such diverse items as roads, bridges, buildings, vehicles, equipment, land, water systems and other utility systems. Effective January 1, 2007, the County adopted Public Sector Guideline 7 (PSG-7) of the Public Sector Accounting Handbook of the Canadian Institute of Chartered Accountants with respect to the disclosure of tangible capital assets of local governments. PSG-7 provides transitional guidance on presenting information related to tangible capital assets by way of a note to the financial statements until Section 3150 Tangible Capital Assets comes into affect on January 1, As of December 31, 2007, the County does not have adequate information to disclose any of the tangible capital assets by major category. 6

9 Notes to Consolidated Financial Statements (continued) 3. Long-term liabilities: (a) The long-term liabilities reported on the Consolidated Statement of Financial Position are made up of the following: Debenture issue $ 14,772,137 $ 15,370,755 Proportionate share of Kingston, Frontenac and Lennox and Addington Health Unit long-term liabilities 919, ,655 $ 15,691,539 $ 16,309,410 A debenture was issued on September 12, 2002 maturing September 12, 2022, to finance a building project at Fairmount Home for the Aged. The debenture has an interest rate of 6.157% with principal repayments commencing on September 12, Debt repayment costs will be recovered from future revenues. The City of Kingston share of the debt repayment was established through a Mediated Settlement dated August 7, 2002 and is based on 50% of the repayments related to the 32 new beds and 74% of the repayments related to the 96 existing beds. New debt of $3,142,000 was issued during 2004 by the Kingston, Frontenac and Lennox and Addington Health Unit to fund a new building project. The amount of $919,402 ( $938,655) reflects the County s proportionate share of the Kingston, Frontenac and Lennox and Addington Health Unit s total long-term liabilities upon year end consolidation. (b) Principal due on long-term liabilities is summarized as follows: 2008 $ 636, , , , , and thereafter 11,257,113 $ 14,772,137 Principal due on proportionately consolidated long-term liabilities of the Kingston, Frontenac, Lennox and Addington Health Unit is summarized as follows: 2008 $ 21, , , , and thereafter 826,198 $ 919,402 7

10 Notes to Consolidated Financial Statements (continued) 3. Long-term liabilities (continued): (c) Charges for long-term liabilities: Total charges for the year for long-term liabilities which are reported on the consolidated statement of financial activities are as follows: Principal payments $ 617,871 $ 581,625 Interest 916, ,908 $ 1,533,949 $ 1,547,533 (d) The long-term debt issued in the name of the County, has been approved by by-law. The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs and Housing. 4. Municipal fund balances at the end of the year: (a) The capital fund balance on the Consolidated Statement of Financial Position of $ $16,801 ( $16,801) at the end of the year is comprised of the following: Unexpended (unfinanced) Kingston, Frontenac and Lennox and Addington Health Unit capital financing $ 16,801 $ 16,801 Approval by by-law has been obtained for those pending issues of long-term liabilities and commitments to be financed by revenues beyond the term of Council. The principal and interest payments required to service these pending issues and commitments are within the debt repayment limit prescribed by the Ministry of Municipal Affairs & Housing. Unexpended capital financing represents capital revenues received that are related to capital projects in progress at year end. These funds are reported as part of the capital fund balance and will be used to finance remaining capital project costs in the subsequent year. Year end reporting of the County s proportionate share of the Kingston, Frontenac and Lennox and Addington Health Unit s unexpended capital is $16,801 as at December 31, 2007 ( $16,801). 8

11 Notes to Consolidated Financial Statements (continued) 4. Municipal fund balances at the end of the year: (b) The balance available for application to operations for the fiscal year ending December 31, 2007 has been reduced by the following amounts transferred to reserves and reserve funds. Working funds County of Frontenac $ 610,143 $ 905,555 Working funds - Fairmount Home for the Aged 188, ,287 $ 798,406 $ 1,112,842 Had these reductions not been made the balance would have been shown as an operating surplus of $798,406 ( $1,112,842). 5. Employee benefit obligations: Employee non-pension retirement benefits (extended health care and dental benefits for early retirees): The County provides extended health care, dental and other benefits to one group of Fairmount Home employees. Extended health care and dental benefits continue to be available to early retirees at 100% of their cost up to the age of 60, then between the age of 60 and 65, the retiree will generally be responsible for paying 50% of the benefit premiums. An independent actuarial study of the employee non-pension retirement benefits has been undertaken. The most recent valuation of the employee future benefits was completed at December 31, The accrued benefit obligation relating to employee non-pension retirement benefits has been actuarially determined using the projected benefit method pro-rated on services. At December 31, 2007, based on an actuarial update, the accrued benefit obligation was $115,012. The significant actuarial assumptions adopted in estimating the County s accrued benefit obligation are as follows: Discount rate Inflation rate Salary escalation Dental benefits escalation Health benefits escalation 5.0% per annum 2.0% per annum 3.0% per annum 4.0% per annum 8% per year starting in 2008, reducing to 4% per year over 12 years to reach 4% per year starting in

12 Notes to Consolidated Financial Statements (continued) 5. Employee benefit obligations (continued): Employee non-pension retirement benefits (Extended health care and dental benefits for early retirees) (continued): Information with respect to the County s non-pension retirement obligations is as follows: 2007 Increase due to plan amendment $ 113,370 Expense recognized for the year 894 Interest cost 748 Accrued benefit obligation, end of year $ 115, Reserves and reserve funds: The total balance of reserves and reserve funds of $10,550,847 ( $10,035,234) is made up of the following: Reserves set aside by Council: Working funds-county of Frontenac $ 4,446,694 $ 4,584,264 Working funds-fairmount Home for the Aged 847, ,443 Land ambulance 1,198, ,754 Social housing 289, ,400 Library 144, ,165 Land use planning 38,000 36,000 County of Frontenac Land ambulance 408, ,903 Stabilization reserve 495, ,000 Ferry revenue 36,849 37,530 County capital replacement 42,240 21,120 Ontarians with disabilities 5,000 7,953,015 7,504,579 Reserve funds set aside by Council: Administration capital 45,036 43,718 Fairmount donations 69,318 47,723 Fairmount rebuild donations 60,675 52,554 County of Frontenac capital 2,422,803 2,386,660 2,597,832 2,530,655 $ 10,550,847 $ 10,035,234 10

13 Notes to Consolidated Financial Statements (continued) 7. Deferred revenue obligatory reserve funds: 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 and municipal legislation restricts how these funds may be used. The balances in the obligatory reserve funds of the Municipality are summarized below: Balance, beginning of year $ 465,958 $ 238,000 Federal grant gasoline tax 317, ,999 Investment income 24,125 11,414 Transfers to current fund (8,253) (21,455) Balance, end of year $ 799,127 $ 465,958 Analyzed as follows: Federal gasoline tax $ 799,127 $ 465, Contributions to joint boards: (a) The assets and liabilities of the Kingston-Frontenac Public Library Board, as an unconsolidated joint board, have not been consolidated and are not reported on the Consolidated Statement of Financial Position. The operations of this joint board have also not been consolidated. The Consolidated Statement of Financial Activities includes only the following contributions made by the County: Kingston-Frontenac Public Library Board $ 604,370 $ 574,159 The County is contingently liable for its share of any operating deficit, which is approximately 13.0% of the accumulated balance as at the end of the year for this board. The municipality s share of the accumulated operating surpluses (deficits) of this joint board is as follows: Kingston-Frontenac Public Library Board $ (4,754) $ (199) 11

14 Notes to Consolidated Financial Statements (continued) 8. Contributions to joint boards (continued): (b) The assets, liabilities, revenues and expenses of the Kingston, Frontenac and Lennox and Addington Health Unit have been consolidated using the proportionate consolidation method of accounting and reporting. The County made the following contributions to this joint board: Kingston, Frontenac and Lennox and Addington Health Unit $ 411,621 $ 470, Measurement uncertainty - land ambulance cross-border transactions: During the year, costs are incurred and/or recovered for land ambulance services that are provided by or to other municipalities and that span across municipal boundaries. An amount of $2,040,899 ( $2,045,987) is included in accounts payable and accrued liabilities on the consolidated statement of financial position and represents management s estimate of the net amount payable to other municipalities for cross-border transactions for the six year period ending December 31, Annual cross-border costs incurred and/or recovered are estimated based on a combination of estimated number of calls, estimated average cost per call and annual budget estimates. Reconciliation of actual cross-border costs will occur subsequent to final inter-municipal approval of the cost calculation method. Any adjustments to costs incurred and/or recovered will be reported as an adjustment to expenditures on the statement of financial activities in the year of reconciliation. 10. Trust funds: Trust funds administered by the County amounting to $15,248 ( $20,031) have not been included in the "Consolidated Statement of Financial Position" nor have their operations been included in the "Consolidated Statement of Financial Activities". 11. Lease commitments: The County leases premises under long-term operating lease agreements with terms as follows: Five years ending November 2008 at an annual rental of $36,650, with a further five years at an annual rental of $25,500; Forty months ending December 2010 at a base rate of $23,600 adjusted annually by consumer price index. 12

15 Notes to Consolidated Financial Statements (continued) 12. Pension agreements: The County makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf of 216 members of its staff. The plan is a defined benefit plan, which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for current service in 2007 was $701,587 ( $707,672). 13. Cost sharing allocations: The Local Service Realignment Cost Sharing Agreement sets out formulae under which the costs for Social Services, Child Care, Social Housing, Provincial Offences, and Land Ambulance are shared between the County of Frontenac and the City of Kingston. A new cost sharing arrangement was derived for the period of 2004 to 2006 through an arbitrated settlement and continued on a year to year basis in Program costs for Social Services and Child Care are distributed on the basis of caseload and Social Housing costs are allocated by the location of the unit. The administrative costs for these services are allocated on the basis of weighted assessment. The cost of Land Ambulance and the net revenue of Provincial Offences are distributed on the basis of weighted assessment. 14. Budget figures: The County reviews its operating and capital budgets annually. The approved operating and capital budgets for 2007 are reflected on the Schedules of Current and Capital Fund Operations. Budget figures have not been audited and are presented for information purposes. Budgets established for capital funds are based on a project-oriented basis, the costs of which may be carried out over one or more years. 15. Supplementary information: Current fund expenditure by object: Salaries, wages and employee benefits $ 17,122,973 $ 15,299,403 Long-term debt interest expense 931, ,909 Materials 1,880,693 1,689,560 Contracted services 8,166,235 8,193,839 Rents and financial expenses 157, ,631 External transfers 50,000 1,087,398 Other 65,631 69,862 $ 28,374,328 $ 27,453,602 13

16 Notes to Consolidated Financial Statements (continued) 16. Contingent liabilities: The County is involved with pending litigation and claims, which arose in the normal course of operations. In the opinion of the management, any liability that may arise from such contingencies would not have a significant adverse effect on the financial statements of the County. Any adjustments, arising from these matters, will be provided for in future years. 17. Fair value of financial instruments: The carrying value of cash, accounts receivable, accounts payable and accrued liabilities and deferred revenue approximates their fair value because of the relatively short period to maturity of the instruments. The carrying value of the long-term liabilities approximates their fair value as the terms and conditions of the borrowing arrangements are comparable to current market terms and conditions for similar items. 14

17 Schedule of Current Fund Operations, with comparative figures for 2006 Budget (unaudited) Actual Actual Revenues: Taxation and user charges: Taxation from other governments $ 8,407,479 $ 8,420,895 $ 8,319,507 User charges 2,928,704 3,004,548 2,643,251 Payments in lieu of taxes 48,170 50,159 46,942 Grants: Province of Ontario 12,497,025 12,539,946 12,298,644 Other municipalities 8,246,547 6,728,160 5,970,819 Other: Provincial offences fines penalties 155, , ,347 Investment income 200, , ,765 Other 40,420 77,020 92,411 Transfers from deferred obligatory fund 8,253 Total revenues 32,523,622 31,392,116 29,932,686 Expenditures: General government 1,775,955 1,366,875 2,354,077 Protection to persons and property 4, Transportation services 879, , ,871 Ambulance services 10,708,041 10,032,835 8,994,700 Health services 1,911,756 1,916,357 1,793,574 Social and family services 12,922,908 12,896,649 12,245,121 Libraries 632, , ,159 Social housing 595, , ,469 Planning and development 146, , ,381 Other 81,500 41,103 Total expenditures 29,659,459 28,374,328 27,453,602 Net revenue 2,864,163 3,017,788 2,479,084 Financing and transfers: Transfers to capital fund (1,383,729) (1,119,002) (232,916) Transfer to reserves and reserve funds (862,563) (1,579,248) (1,782,835) Transfers from reserves and reserve funds 117, ,403 Change in employee benefit obligations 115,012 Debt principal repayments (617,871) (617,871) (581,625) Change in non-financial assets 66,045 15,889 (2,864,163) (3,017,788) (2,479,084) Change in current fund balance Opening current fund balance Closing current fund balance $ $ $ 15

18 Schedule of Capital Fund Operations, with comparative figures for 2006 Budget (unaudited) Actual Actual Revenues: Municipal grants $ 638,100 $ 638,100 $ 632,219 Sale of assets 31,000 33,500 31,000 Provincial contributions 24,238 Other 204,370 Total revenues 669, , ,457 Expenditures: General government 944, , ,000 Transportation services 638, , ,219 Ambulance services 1,204,614 1,104, ,902 Health services 5,337 Social and family services 430, ,788 53,469 Total expenditures 3,217,998 3,087,969 1,449,927 Net expenditures (2,545,898) (2,211,999) (762,470) Financing and transfers: Transfers from current fund 1,275,728 1,119, ,916 Transfers from reserves and reserve funds 1,273,170 1,092, ,217 2,548,898 2,211, ,133 Change in capital fund balance (5,337) Opening capital fund balance 16,801 16,801 22,138 Closing capital fund balance $ 16,801 $ 16,801 $ 16,801 16

19 Schedule of Reserves and Reserve Funds, with comparative figures for 2006 Working Working Social Housing Capital Capital Vehicle Equipment Severance Out of Scope Reserves Frontenac Fairmount Replacement Replacement Reserve Reserve Library Interfund transfers: Transfers from current year surplus $ 610,143 $ 188,263 $ $ $ $ $ Transfer to capital fund operations (766,462) (223,598) (102,937) Transfer to (from) reserve funds Transfer (to) from current funds 18, , , ,433 (25,000) 28,549 (137,569) 188, ,235 28, ,433 (25,000) 28,549 Reserves, beginning of year 4,584, , , , , , ,165 Reserves, end of year $ 4,446,695 $ 847,707 $ 433,473 $ 271,306 $ 493,729 $ 289,400 $ 144,714 County Ontarians County Capital County Ferry With Ambulance Replacement Planning Stabilization Revenue Reserves Disabilities Reserve FMT OMB Reserve Reserve Reserve Total Total Interfund transfers: Transfers from current year surplus $ $ $ $ $ $ $ 798,406 $ 1,112,842 Transfer (to) from capital fund operations (1,092,997) (524,217) Transfer from reserve funds 21,120 21,120 21,120 Transfer (to) from current funds 5,000 2, ,000 (681) 721, ,474 5,000 21,120 2, ,000 (681) 448,436 1,267,219 Reserves, beginning of year 408,903 21,120 36, ,000 37,530 7,504,580 6,237,361 Reserves, end of year $ 5,000 $ 408,903 $ 42,240 $ 38,000 $ 495,000 $ 36,849 $ 7,953,016 $ 7,504,580 17

20 Schedule of Reserves and Reserve Funds (continued), with comparative figures for 2006 County of Frontenac Administration Fairmount Rebuild Frontenac Reserve Funds Capital Donations Donations Capital Total Total Revenue: Interest earned $ 1,317 $ 2,623 $ 2,216 $ 107,262 $ 113, ,812 Donations 27,313 5,906 33,219 61,622 Net revenue 1,317 29,936 8, , , ,434 Transfer (to) from reserves (21,120) (21,120) (21,120) Contribution from current funds 12,519 Transfer (to) from to current fund (8,340) (50,000) (58,340) (102,403) Reserve funds, beginning of year 43,718 47,723 52,554 2,386,660 2,530,655 2,458,225 Reserve funds, end of year $ 45,035 $ 69,319 $ 60,676 $ 2,422,802 $ 2,597,832 $ 2,530,655 18

21 KPMG LLP Chartered Accountants 863 Princess Street Suite 400 Telephone (613) PO Box 1600 Stn Main Telefax (613) Kingston ON K7L 5C8 Canada AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of the Corporation of the County of Frontenac We have audited the statements of financial position of the trust funds of the Corporation of the County of Frontenac as at December 31, 2007 and the statements of continuity of trust funds for the year then ended. These financial statements are the responsibility of the County s management. Our responsibility is to express an opinion on these financial statements based on our audit. Except as explained in the following paragraph, we conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In common with many trust funds, the Corporation of the County of Frontenac trust funds derive receipts from donations and residents deposits, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of the funds and we were not able to determine whether any adjustments might be necessary to capital receipts, assets and fund balances. In our opinion, except for the effect of adjustments, if any, which we might have determined to be necessary had we been able to satisfy ourselves concerning the completeness of donations and residents deposits referred to in the preceding paragraph, these financial statements present fairly, in all material respects, the financial position of the trust funds of the County as at December 31, 2007 and the continuity of trust funds for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants, Licensed Public Accountants Kingston, Canada April 4,

22 Trust Funds Statements of Financial Position As at December 31, 2007, with comparative figures for 2006 Fairmount Home Residents' Bridget Fowler NAME OF FUND Trust Funds Trust fund Total Total Assets Cash $ 11,600 $ 3,648 $ 15,248 $ 20,031 Capital Balances - capital $ 11,600 $ 3,648 $ 15,248 $ 20,031 Trust Funds Statements of Continuity, with comparative figures for 2006 Fairmount Home Residents' Bridget Fowler NAME OF FUND Trust Funds Trust fund Total Total Balances, beginning of year $ 16,435 $ 3,596 $ 20,031 $ 26,218 Receipts: Deposits by residents 22,953 22,953 35,337 Interest earned ,630 Dividends received ,064 3,948 44,012 63,748 Expenditures: Withdrawals by residents 28,464 28,464 43,391 Payment out of fund , ,764 43,717 Balances, end of year $ 11,600 $ 3,648 $ 15,248 $ 20,031 The accompanying note is an integral part of these financial statements. 20

23 Trust Funds Note to Financial Statements Accounting policy: Receipts and expenditures are reported on the accrual basis of accounting. 21

24 KPMG LLP Chartered Accountants 863 Princess Street Suite 400 Telephone (613) PO Box 1600 Stn Main Telefax (613) Kingston ON K7L 5C8 Canada AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of the Corporation of the County of Frontenac We have audited the statement of financial position of Fairmount Home for the Aged as at December 31, 2007 and the statement of revenue and expenditure for the year then ended. These financial statements are the responsibility of the Home s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Fairmount Home for the Aged as at December 31, 2007 and the results of its operations and changes in its financial position for the year then ended in accordance with the Canadian generally accepted accounting principles. Chartered Accountants, Licensed Public Accountants Kingston, Canada April 4,

25 FAIRMOUNT HOME FOR THE AGED Statement of Financial Position December 31, 2007, with comparative figures for 2006 Assets Current assets: Cash $ 1,200 $ 1,200 Cash held by County of Frontenac 1,284, ,436 Accounts receivable: GST recoverable Other 273, ,183 Due from the Province of Ontario 14,590 Inventories 36,295 33,340 Liabilities $ 1,610,157 $ 1,314,159 Current liabilities: Accounts payable and accrued liabilities $ 1,027,422 $ 781,400 Due to City of Kingston 402, ,248 Due to Province of Ontario 107,889 89,511 Deferred revenue 72,025 Employee benefit obligations (note 1(f)) 115,012 1,725,169 1,314,159 Amounts to be recovered from future revenues (115,012) See accompanying notes to financial statements. $ 1,610,157 $ 1,314,159 Approved by The Corporation of the County of Frontenac: Council Member Council Member 23

26 FAIRMOUNT HOME FOR THE AGED Statement of Revenue and Expenditure, with comparative figures for 2006 Revenue: Resident revenues $ 2,561,496 $ 2,457,548 Province of Ontario 4,593,630 4,370,486 County of Frontenac 622, ,377 City of Kingston 1,322, ,677 Other revenue 71, ,387 Transfer from Reserve Fund 8,340 9,179,739 8,354,475 Expenditure: Salaries and benefits 7,295,076 6,795,651 Food and provisions 333, ,347 Medical and dental services 114, ,082 Welfare of residents 111, ,002 General operation and administration 1,440, ,393 9,294,751 8,354,475 Net expenditures (115,012) Change in employee future benefit obligations 115,012 Excess of revenue over expenditure $ $ See accompanying notes to financial statements. 24

27 FAIRMOUNT HOME FOR THE AGED Notes to Financial Statements 1. Significant accounting policies: The financial statements of Fairmount Home for the Aged (the Home ) are prepared by management in accordance with Canadian generally accepted accounting principles for local government as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the Council are as follows: (a) Reporting entity: These statements reflect the assets, liabilities, revenues and expenditures of Fairmount Home for the Aged and include operating and capital activities. (b) Revenue recognition: Operating grants and government contributions are recorded as revenue in the period to which they relate. Resident revenues are recorded on an accrual basis when earned and ultimate collection is reasonably assured. (c) Capital assets: The historical costs and accumulated depreciation of capital assets are not reported for municipal purposes. Expenditures on capital assets are reported as an expenditure on the Statement of Revenue and Expenditure in the year of acquisition. Financing costs associated with the Fairmount Home Redevelopment Project and any related funding are reported on the financial statements of the County of Frontenac. (d) Trust funds: Trust funds administered by the Home are not consolidated on the "Statement of Financial Position" and the related revenues and expenditures are not included in the "Statement of Revenue and Expenditure". These are reported separately in the "Trust Fund Statement of Continuity" which is included with the County of Frontenac s financial statements. (e) Use of estimates: The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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. Actual results could differ from those estimates. 25

28 FAIRMOUNT HOME FOR THE AGED Notes to Financial Statements (continued) 1. Significant accounting policies (continued): (f) Employee benefit obligations: The Home accrues its obligations for employee benefit plans. The cost of post-retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on services and management s best estimate of salary escalation, retirement ages of employees and expected health care costs. Actuarial gains (losses), which can arise from changes in actuarial assumptions used to determine the accrued benefit obligation, are amortized over the average remaining service period of active employees, which is estimated to be 14 years. 2. Reserve funds: The County of Frontenac holds, for the benefit of Fairmount Home, the following reserve fund. The following reflects the balances and activities of the Fairmount Home Donations reserve fund: Fairmount Home Donations Balance, beginning of year $ 47,723 $ 44,807 Revenue: Interest earned 2,623 1,908 Donations/sale of items 27,312 21,921 Transfers (8,340) (20,913) Balance, end of year $ 69,318 $ 47, Changes in accounting policies: Commencing with the fiscal year beginning January 1, 2009, the Home will be adopting CICA Public Sector Accounting Handbook Section PS 3150, Tangible Capital Assets. This Section establishes standards on how to account for and report tangible capital assets in government financial statements. Tangible capital assets include such diverse items as roads, bridges, buildings, vehicles, equipment, land, water systems and other utility systems. Effective January 1, 2007, the Home adopted Public Sector Guideline 7 (PSG-7) of the Public Sector Accounting Handbook of the Canadian Institute of Chartered Accountants with respect to the disclosure of tangible capital assets of local governments. PSG-7 provides transitional guidance on presenting information related to tangible capital assets by way of a note to the financial statements until Section 3150, Tangible Capital Assets, comes into affect on January 1,

29 FAIRMOUNT HOME FOR THE AGED Notes to Financial Statements (continued) 3. Change in accounting policies (continued): As of December 31, 2007, the Home does not have adequate information to disclose any of the tangible capital assets by major category. 4. Long-term debt and debt charges: The County of Frontenac issued debt to finance construction related to the redevelopment project and the addition of 32 new beds at the Home. A debenture was issued on September 12, 2002 maturing September 12, 2022 with an interest rate of 6.157%. Debt repayment costs will be recovered from future revenues. The City of Kingston is responsible for a share of the debt repayment based on 50% of the repayments related to the 32 new beds and 74% of the repayments related to the 96 existing beds. The long-term debt and related debt charges and revenues are reported on the financial statements of the County of Frontenac. The long-term debt reported on the financial statements of the County of Frontenac, on behalf of the Home, is summarized as follows: Debenture issue $ 14,772,137 $ 15,370,755 Principal due on debt issued by the County of Frontenac, on behalf of the Home, is summarized as follows: 2008 $ 636, , , , and thereafter 11,975,953 $ 14,772, Pension agreements: The Home makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf of 108 members of its staff. The plan is a defined benefit plan, which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for current service in 2007 was $255,126 ( $245,236). 27

30 FAIRMOUNT HOME FOR THE AGED Notes to Financial Statements (continued) 6. Employee benefit obligations: Employee non-pension retirement benefits (Extended health care and dental benefits for early retirees): The Home provides extended health care, dental and other benefits to some of its employees. Extended health care and dental benefits continue to be available to early retirees at 100% of their cost up to the age of 60, then between the age of 60 and 65, the retiree will generally be responsible for paying 50% of the benefit premiums. An independent actuarial study of the employee non-pension retirement benefits has been undertaken. The most recent valuation of the employee future benefits was completed at December 31, The accrued benefit obligation relating to employee non-pension retirement benefits has been actuarially determined using the projected benefit method pro-rated on services. At December 31, 2007, based on an actuarial update, the accrued benefit obligation was $115,012. The significant actuarial assumptions adopted in estimating the Home s accrued benefit obligation are as follows: Discount rate Inflation rate Salary escalation Dental benefits escalation Health benefits escalation 5.0% per annum 2.0% per annum 3.0% per annum 4.0% per annum 8% per year starting in 2008, reducing to 4% per year over 12 years to reach 4% per year starting in 2010 Employee non-pension retirement benefits (Extended health care and dental benefits for early retirees) (continued): Information with respect to the Home s non-pension retirement obligations is as follows: 2007 Increase due to plan amendment $ 113,370 Expense recognized for the year 894 Interest cost 748 Accrued benefit obligation, end of year $ 115,012 28

31 FAIRMOUNT HOME FOR THE AGED Notes to Financial Statements (continued) 7. Trust funds: Trust funds administered by the Home amounting to $11,600 ( $16,435) have not been included in these financial statements, but have been reported in the financial statements of the trust funds administered by the County of Frontenac. 8. Management responsibility: Fairmount Home for the Aged is managed by the County of Frontenac. As a result of local restructuring, the funding, formerly provided by the County of Frontenac, was changed and is now provided 26% by the County of Frontenac and 74% by the City Kingston, funding a total of 96 beds. As a result of the redevelopment project, an additional 32 beds were added in An agreement with the City of Kingston allows for funding of these additional beds to be provided 50% from the County of Frontenac and 50% from the City of Kingston. 9. Statement of changes in financial position: A statement of changes in financial position has not been included as it would not provide additional meaningful information. 10. Fair value of financial assets and financial liabilities: The carrying values of cash, accounts receivable, amounts due from and due to related parties, accounts payable and accrued liabilities and deferred revenue approximate their fair values due to the relatively short periods to maturity of these items or because they are receivable or payable on demand. 29

32 KPMG LLP Chartered Accountants 863 Princess Street Suite 400 Telephone (613) PO Box 1600 Stn Main Telefax (613) Kingston ON K7L 5C8 Canada AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION To the Members of Council, Inhabitants and Ratepayers of the Corporation of the County of Frontenac We have audited and reported separately herein on the financial statements of Fairmount Home for the Aged as at and for the year ended December 31, Our audit was conducted for the purpose of forming an opinion on the basic financial statements of the Fairmount Home for the Aged taken as a whole. The current year's supplementary information included in the Schedule of Expenditure is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Chartered Accountants, Licensed Public Accountants Kingston, Canada April 4,

33 FAIRMOUNT HOME FOR THE AGED Schedule of Expenditure, with comparative figures for 2006 Salaries and benefits: Salaries and wages $ 5,677,024 $ 5,490,581 Benefits 1,503,040 1,305,071 $ 7,180,064 $ 6,795,652 Food and provisions $ 333,342 $ 328,347 Medical and dental services: Medical director $ 26,816 $ 30,016 Other medical 87,463 94,066 $ 114,279 $ 124,082 Welfare of residents: Material and supplies for occupational therapy $ 6,218 $ 4,427 Recreation and entertainment 19,138 21,265 Other welfare provisions 86,427 85,310 $ 111,783 $ 111,002 General operation and administration: Household supplies $ 113,734 $ 92,182 Replacement of equipment 33,460 60,210 Repairs and maintenance 262, ,441 Fuel 79,482 66,906 Electricity 144, ,509 Telephone 14,529 9,805 Water 11,593 31,766 Garbage collection 37,133 25,745 Travel 20,211 9,955 Stationery and office supplies 22,205 19,208 Insurance 49,847 42,141 Membership/accreditation 14,231 15,884 Audit and legal 23,594 29,719 Miscellaneous (recovery) (15,784) 15,446 Purchased management services 184, ,005 Capital expenditures 444,788 53,470 $ 1,440,271 $ 995,392 31