CORPORATION OF THE TOWNSHIP OF ADELAIDE METCALFE Financial Statements December 31, 2015
Financial Statements Table of Contents PAGE Independent Auditors' Report 1 Statement of Financial Position 2 Statement of Operations and Accumulated Surplus 3 Statement of Change in Net Financial Assets 4 Statement of Cash Flows 5 6-19 Schedule of Segment Disclosure 20-21
To the Members of Council, Inhabitants and Ratepayers of the Corporation of the Township of Adelaide Metcalfe: INDEPENDENT AUDITORS' REPORT Report on the Financial Statements We have audited the accompanying financial statements of the Corporation of the Township of Adelaide Metcalfe, which comprise the statement of financial position as at December 31, 2015, and the statements of operations and accumulated surplus, changes in financial assets, and cash flows 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 accounting standards for public sector entities 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 Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of 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 the auditor's 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, the auditor considers 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 statement of financial position of the Corporation of the Township of Adelaide Metcalfe as at December 31, 2015, and the statements of operations and accumulated surplus, changes in financial assets, and cash flows for the year then ended in accordance with Canadian accounting standards for public sector entities. St. Thomas, Ontario November 7, 2016 Graham Scott Enns LLP CHARTERED PROFESSIONAL ACCOUNTANTS Licensed Public Accountants -1-
Statement of Financial Position December 31, 2015 2015 2014 $ $ FINANCIAL ASSETS Cash 4,478,600 541,518 Investments (Note 2) 104,916 3,450,126 Taxes receivable 795,558 741,641 Accounts receivable 1,231,151 453,588 Total financial assets 6,610,225 5,186,873 FINANCIAL LIABILITIES Accounts payable and accrued liabilities 1,496,207 785,812 Deferred revenue (Note 3) 372,617 1,088,690 Net long-term liabilities (Note 6) 423,793 443,361 Landfill closure and post-closure liability (Note 4) 225,461 217,214 Total financial liabilities 2,518,078 2,535,077 NET FINANCIAL ASSETS 4,092,147 2,651,796 NON-FINANCIAL ASSETS Tangible capital assets (Note 5) 17,206,357 17,183,432 Inventories 15,507 28,959 Prepaid expenses 12,626 12,049 Total non-financial assets 17,234,490 17,224,440 ACCUMULATED SURPLUS (NOTE 7) 21,326,637 19,876,236 The accompanying notes are an integral part of these consolidated financial statements. -2-
Statement of Operations and Accumulated Surplus (Note 13) Budget Actual Actual 2015 2015 2014 $ $ $ REVENUES Property taxation 3,126,110 3,205,993 2,926,815 Taxation from other governments 25,000 33,745 33,700 User charges 396,285 372,127 746,331 Local improvement levies 144,515 255,941 256,685 Government Transfers: Federal - 7 2,582 Provincial 1,200,190 1,208,738 1,530,223 Other municipalities 24,000 51,951 36,517 Investment income 40,000 60,750 52,464 Penalties and interest on taxes 75,000 99,236 101,008 Other - 1,464,162 178,666 Gain (loss) on disposal of capital assets - - 34,000 Total revenues 5,031,100 6,752,650 5,898,991 EXPENSES General government 648,316 611,863 608,576 Fire and police protection 674,314 662,413 617,561 Other protective services 187,344 163,979 183,761 Transportation services 3,332,169 3,253,833 2,138,681 Waterworks and sewer 107,550 162,918 137,094 Garbage collection and disposal 193,155 192,779 183,756 Health services 13,550 7,408 13,709 Recreation and cultural services 26,152 23,817 26,102 Planning and zoning 22,300 26,453 23,524 Agriculture 52,730 196,786 349,590 Total expenses (Note 12) 5,257,580 5,302,249 4,282,354 ANNUAL SURPLUS (226,480) 1,450,401 1,616,637 ACCUMULATED SURPLUS, BEGINNING OF YEAR 19,876,236 19,876,236 18,259,599 ACCUMULATED SURPLUS, END OF YEAR (NOTE 7) 19,649,756 21,326,637 19,876,236 The accompanying notes are an integral part of these consolidated financial statements. -3-
Statement of Change in Net Financial Assets Budget Actual Actual 2015 2015 2014 (Note 13) $ $ $ ANNUAL SURPLUS (DEFICIT) (226,480) 1,450,401 1,616,637 Acquisition of tangible capital assets (757,605) (757,605) (1,222,894) Amortization of tangible capital assets 734,680 734,680 671,635 Proceeds on disposal of tangible capital assets - - 34,000 Change in inventories and prepaid expenses - 12,875 (14,846) (Gain) loss on disposal of tangible capital assets - - (34,000) INCREASE IN NET FINANCIAL ASSETS (984,085) 1,440,351 1,050,532 NET FINANCIAL ASSETS, BEGINNING OF YEAR 2,651,796 2,651,796 1,601,264 NET FINANCIAL ASSETS, END OF YEAR 1,667,711 4,092,147 2,651,796 The accompanying notes are an integral part of these consolidated financial statements. -4-
Statement of Cash Flows 2015 2014 $ $ OPERATING ACTIVITIES Annual surplus 1,450,401 1,616,637 Add (deduct) items not involving cash: Amortization of tangible capital assets 734,680 671,635 Change in landfill closure and post-closure liability 8,247 8,247 (Gain) loss on disposal of tangible capital assets - (34,000) 2,193,328 2,262,519 Change in non-cash assets and liabilities related to operations (Note 12 [b]) (824,282) 632,237 1,369,046 2,894,756 INVESTING ACTIVITIES Decrease (increase) in investments 3,345,209 (1,813,615) CAPITAL ACTIVITIES Acquisition of tangible capital assets (757,605) (1,222,894) Proceeds on disposal of tangible capital assets - 34,000 (757,605) (1,188,894) FINANCING ACTIVITIES Long-term debt repaid (19,568) (231,241) NET (DECREASE) INCREASE IN CASH DURING THE YEAR 3,937,082 (338,994) CASH, BEGINNING OF YEAR 541,518 880,512 CASH, END OF YEAR 4,478,600 541,518 SUPPLEMENTARY INFORMATION: Cash paid for interest on temporary bank advances - - Cash received for interest on investments 60,750 52,464 The accompanying notes are an integral part of these consolidated financial statements. -5-
The Corporation of the Township of Adelaide Metcalfe (the "Municipality") is a municipality in the Province of Ontario. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act, Municipal Affairs Act and related legislation. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Municipality 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 Municipality are as follows: Reporting Entity The financial statements reflect the assets, liabilities, revenues, 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 Municipality and which are owned or controlled by the Municipality. Consolidated Entity There are no organizations or local boards that are consolidated in these financial statements. Proportionate Consolidation There are no organizations or local boards that are proportionately consolidated in these financial statements. Basis of Accounting The financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the creation of a legal obligation to pay. Investments Investments consisting of government and corporate bonds, money market funds and guaranteed investment certificates are carried at cost. Interest income is recognized when received or receivable. Trust Funds Trust funds and their related operations administered by the Municipality are not included in these consolidated financial statements. -6-
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Accounting for County and School Board Transactions Although the Municipality collects taxation on behalf of the County of Middlesex and the School Boards, the taxation, other revenues, expenses, assets and liabilities with respect to the operations of the County and the school boards are not reflected in these financial statements. 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. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the Change in Net Financial Assets for the year. i) Tangible capital assets Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets, excluding land are amortized on a straight-line basis over their estimated useful lives as follows: Land improvements Buildings Equipment Vehicles Transportation infrastructure Water system infrastructure Wastewater infrastructure 20 years 50 years 5-20 years 10-20 years 20-75 years 75 years 75 years Amortization begins the first month of the year following the year the asset is placed in service and to the year of disposal. Assets under construction are not amortized until the asset is available for productive use. 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) Inventories of supplies Inventories of supplies held for consumption are recorded at the lower of cost and replacement cost. iv) Works of art and cultural and historic assets Works of art and cultural and historic assets are not recorded as assets in these financial statements. -7-
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred Revenue Government transfers, contributions and other amounts are received from third parties pursuant to legislation, regulation or agreement and may only be used in the conduct of certain programs, in the completion of specific work. In addition, certain user charges and fees which have been collected but for which the related services have yet to be performed. Revenue is recognized in the period when the related expense are incurred, services preformed. Solid Waste Landfill Closure and Post-Closure Liability Landfill closure and post-closure care requirements have been defined in accordance with industry standards and include covering and landscaping of the landfill, pumping of ground water and leachates from the site, and ongoing environmental monitoring, site inspection and maintenance. The Municipality discounts these future cash flows for closure and post-closure care activities at the Municipality's long term borrowing rate. The change in liability is expensed in the year with the cumulative liability reported in financial liabilities. Government Transfers Government transfers are recognized in the consolidated financial statements as revenues in the financial period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met including performance and return requirements, and reasonable estimates of the amounts can be determined. Any amount received but restricted is recorded as deferred revenue in accordance with Section 3100 of the Public Sector Accounting Handbook and recognized as revenue in the period in which the resources are used for the purpose specified. In addition, the Municipality periodically receives senior government capital funding in the form of infrastructure grants and receives ongoing funding from both senior levels of government as a result of an allocation of the gas tax funds. Employee Benefit Plans The Municipality provides a pension plan for its employees through the Ontario Municipal Employees Retirement System (OMERS). OMERS is a multi-employer pension plan which operates as the Ontario Municipal Employees Retirement Fund. The fund is a contributory defined benefit pension plan. As this is a multi-employer plan, no liability is recorded on the municipality's books. The employer's contribution to a multi-employer, defined benefit plan are expensed as the obligations arise. -8-
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Tax Revenues In 2015 the Municipality received $3,205,993 (2014 - $2,926,815) in property tax revenues for municipal purposes. The authority to levy and collect property taxes is established under the Municipal Act 2001, the Assessment Act, the Education Act, and other legislation. The amount of the total annual property tax levy is determined each year through Council's approval of the annual budget. Municipal tax rates are set annually by Council for each class or type of property, in accordance with legislation and Council-approved policies, in order to raise the revenue required to meet operating budget requirements. Education tax rates are established by the Province each year in order to fund costs of education on a Province-wide basis. Taxation revenues are recorded at the time billings are issued. Additional property tax revenue can be added throughout the year, related to new properties that become occupied, or that become subject to property tax, after the return of the annual assessment roll used for billing purposes. The Municipality may receive supplementary assessment rolls over the course of the year from MPAC that identify new or omitted assessments. Property taxes for these supplementary/omitted amounts are then billed according to the approved tax rate for the property class. Taxation revenues in any year may also be reduced as a result of reductions in assessment value rising from assessment and/or tax appeals. Each year, an amount is identified to cover the estimated amount of revenue loss attributable to assessment appeals, tax appeals or other deficiencies in tax revenue (e.g. uncollectible amounts, write-offs, etc.). 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 expenditures during the period. Significant estimates include assumptions used in estimating provisions for accrued liabilities, landfill closure liability costs, allowances for vacancies, rebates and uncollectible property taxes. Actual results could differ from these estimates. -9-
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Environmental Provisions and Contaminated Sites The Municipality may be exposed to litigation or other costs of remediation due to contaminated properties in it's jurisdiction. A liability for remediation is recognized in the financial statements when an environmental standard exists, contamination exceeds the standard, the government is responsible for the remediation and a reasonable estimate of the liability can be made. As at December 31, 2015 there were no properties that the Municipality was responsible to remedy and as such no liability has been accrued. Financial Instruments The Municipality's financial instruments consist of cash and cash equivalents, accounts receivable, taxes receivable, accounts payable and accrued liabilities and long-term liabilities. Unless otherwise noted, it is management's opinion that the Municipality is not exposed to significant interest, currency, or credit risk arising from these financial instruments. 2. INVESTMENTS The investments consist of guaranteed investment certificates of $104,916 (2014 - $3,450,126) and are recorded at cost which approximates their market value. The certificates mature on dates ranging from 2016-2017 and yield interest rates from 0.4% to 1.85%. 3. DEFERRED REVENUE (INCLUDING OBLIGATORY RESERVE FUNDS) A requirement of the public sector accounting principles of the Canadian Institute of Chartered Professional 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 Recreation Land - Planning Act, Federal Gas Tax and Subdivider Contributions) of the Municipality are summarized below: 2015 2014 $ $ Recreation land 31,186 30,552 Federal gas tax 177,922 90,252 Subdivider contributions 18,082 17,714 Other - building permit and road restoration revenue 145,427 950,172 372,617 1,088,690-10-
4. LANDFILL CLOSURE AND POST-CLOSURE LIABILITY This liability is the estimated cost to date, based on a volumetric basis, of the expenses relating to those activities required when the site or phase stops accepting waste. The sanitary closure costs include final cover and vegetation, completing facilities for drainage control features, leachate monitoring, water quality monitoring, and monitoring and recovery of gas. Postclosure care activities include all activities related to monitoring the site once it can no longer accept waste, including acquisition of any additional land for buffer zones, treatment and monitoring of leachate, monitoring ground water and surface water, gas monitoring and recovery, and ongoing maintenance of various control systems, drainage systems and final cover. The estimated liability for the care of the landfill sites is the present value of future cash flows associated with the closure and post-closure costs. The Municipality currently has two landfill sites "Adelaide" and "Metcalfe". The key assumptions for each of the landfill sites is as follows: Adelaide site Metcalfe site Date landfill is expected to reach capacity 2024 2012 Estimated remaining capacity at December 31, 2015 (cubic metres) 13,000 - Inflation rate 2.0% 2.0% Discount rate 5.0% 5.0% Estimated time required for post closure care 25 years 25 years Estimate closure costs $158,000 $52,000 Estimated post-closure costs $74,700 $14,700 The estimated liability of $225,461 (2014 - $217,214) represents the sum of the discounted future cash flows for closure and post-closure care activities discounted at the Municipality's current long term borrowing rate of 5.0%. The liability is expected to be funded through budget allocations to a landfill reserve over the remaining life of the landfill. At year end this reserve was $150,000 (2014 - $125,000). -11-
5. TANGIBLE CAPITAL ASSETS December 31, 2015 Cost Opening Additions Disposals Ending Infrastructure Land 317,500 - - 317,500 Buildings 252,208 - - 252,208 Machinery and Equipment 1,607,948 - - 1,607,948 Linear - Roadways 15,227,901 630,642-15,858,543 Linear - Water Services 1,210,000 - - 1,210,000 Linear - Waste Water 4,562,000 - - 4,562,000 Infrastructure Total 23,177,557 630,642-23,808,199 General Land 55,503 - - 55,503 Land Improvements 83,940 - - 83,940 Building 843,267 - - 843,267 Machinery and Equipment 517,598 - - 517,598 Vehicle 734,997 236,323-971,320 General Total 2,235,305 236,323-2,471,628 Work In Progress 117,363 129,904 (239,264) 8,003 Total Cost 25,530,225 996,869 (239,264) 26,287,830 Accumulated Amortization Opening Amortization Disposal Ending Infrastructure Buildings 170,114 4,434-174,548 Machinery and Equipment 946,979 112,814-1,059,793 Linear - Roadways 5,845,739 456,467-6,302,206 Linear - Water Services 129,064 16,133-145,197 Linear - Waste Water 340,108 60,827-400,935 Infrastructure Total 7,432,004 650,675-8,082,679 General Land Improvements 28,908 4,140-33,048 Building 154,420 16,662-171,082 Machinery and Equipment 344,570 29,816-374,386 Vehicle 386,891 33,387-420,278 General Total 914,789 84,005-998,794 Total Accumulated Amortization 8,346,793 734,680-9,081,473 Net Book Value Opening Ending Infrastructure Land 317,500 317,500 Buildings 82,094 77,660 Machinery and Equipment 660,969 548,155 Linear - Roadways 9,382,162 9,556,337 Linear - Water Services 1,080,936 1,064,803 Linear - Waste Water 4,221,892 4,161,065 15,745,553 15,725,520 General Land 55,503 55,503 Land improvements 55,032 50,892 Building 688,847 672,185 Machinery and Equipment 173,028 143,212 Vehicles 348,106 551,042 1,320,516 1,472,834 Work In Progress 117,363 8,003 Total Net Book Value 17,183,432 17,206,357-12-
5. TANGIBLE CAPITAL ASSETS (CONTINUED) December 31, 2014 Cost Opening Additions Disposals Ending Infrastructure Land 317,500 - - 317,500 Buildings 252,208 - - 252,208 Machinery and Equipment 1,405,982 350,300 (148,334) 1,607,948 Linear - Roadways 13,819,877 1,408,024-15,227,901 Linear - Water Services 1,210,000 - - 1,210,000 Linear - Waste Water 4,562,000 - - 4,562,000 Infrastructure Total 21,567,567 1,758,324 (148,334) 23,177,557 General Land 55,503 - - 55,503 Land Improvements 83,940 - - 83,940 Building 843,267 - - 843,267 Machinery and Equipment 491,863 25,735-517,598 Vehicle 734,997 - - 734,997 General Total 2,209,570 25,735-2,235,305 Work In Progress 678,527 117,363 (678,527) 117,363 Total Cost 24,455,664 1,901,422 (826,861) 25,530,225 Accumulated Amortization Opening Amortization Disposal Ending Infrastructure Buildings 165,682 4,432-170,114 Machinery and Equipment 1,008,481 86,832 (148,334) 946,979 Linear - Roadways 5,424,837 420,902-5,845,739 Linear - Water Services 112,931 16,133-129,064 Linear - Waste Water 279,281 60,827-340,108 Infrastructure Total 6,991,212 589,126 (148,334) 7,432,004 General Land Improvements 24,768 4,140-28,908 Building 137,758 16,662-154,420 Machinery and Equipment 316,250 28,320-344,570 Vehicle 353,504 33,387-386,891 General Total 832,280 82,509-914,789 Total Accumulated Amortization 7,823,492 671,635 (148,334) 8,346,793 Net Book Value Opening Ending Infrastructure Land 317,500 317,500 Buildings 86,526 82,094 Machinery and Equipment 397,501 660,969 Linear - Roadways 8,395,040 9,382,162 Linear - Water Services 1,097,069 1,080,936 Linear - Waste Water 4,282,719 4,221,892 14,576,355 15,745,553 General Land 55,503 55,503 Land improvements 59,172 55,032 Building 705,509 688,847 Machinery and Equipment 175,613 173,028 Vehicles 381,493 348,106 1,377,290 1,320,516 Work In Progress 678,527 117,363 Total Net Book Value 16,632,172 17,183,432-13-
6. NET LONG-TERM LIABILITIES a) The balance of net long-term liabilities reported on the Statement of Financial Position consists of the following: 2015 2014 $ $ Total long-term liabilities incurred by the municipality and outstanding at the end of the year 684,333 765,612 Tile drainage loans assumed by the individual (260,540) (322,251) Total long-term liabilities at the end of the year 423,793 443,361 b) Principal repayments are summarized as follows: 2016 2017 2018 2019 2020 Beyond Total $ $ $ $ $ $ $ Recoverable from: General tax revenue - - - - - - - User charges 19,525 20,399 21,313 22,267 23,265 317,024 423,793 19,525 20,399 21,313 22,267 23,265 317,024 423,793 c) All long-term liabilities issued on or before December 31, 1992 have received approval of the Ontario Municipal Board. Long-term liabilities issued after January 31, 1993 have 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 d) Interest rate is 4.33%. Interest expense on long-term liabilities in 2015 amounted to $19,433 (2014 - $20,259). e) The Municipality is contingently liable for municipality debt with respect to tile drainage loans. The total amount outstanding as at December 31, 2015 is $260,540 (2014-322,251) and is not recorded on the Statement of Financial Position. -14-
7. ACCUMULATED SURPLUS The accumulated surplus consists of individual fund surplus/(deficit) and reserves/reserve funds as follows: 2015 2014 $ $ SURPLUS General revenue fund 1,463,026 984,848 Benefitting land owners (1,210,720) (1,280,056) Invested in tangible capital assets 17,206,357 17,183,432 Reserves 4,517,228 3,648,587 21,975,891 20,536,811 AMOUNTS TO BE RECOVERED Unfunded landfill closure and post-closure liability (225,461) (217,214) Net long-term debt (423,793) (443,361) ACCUMULATED SURPLUS 21,326,637 19,876,236 RESERVES AND RESERVE FUNDS Reserves and reserve funds set aside for specific purposes by Council: Working capital and other 428,813 405,312 Fire purposes 280,806 240,806 Roadway purposes 2,337,427 1,710,631 Sewage purposes 117,063 97,058 Landfill restoration 150,000 125,000 Recreation purposes 123,365 88,365 Tree planting purposes 54,438 56,099 Water and sewer capital 1,025,316 925,316 Total reserves and reserve funds 4,517,228 3,648,587-15-
8. PENSION AGREEMENTS The Municipality makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf 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. Each year, an independent actuary determines the funding status of OMERS Primary Pension Plan (the Plan) by comparing the actuarial value of invested assets to the estimated present value of all pension benefits the members have earned to date. The most recent actuarial valuation of the Plan was conducted December 31, 2015, and the results of this valuation disclosed actuarial liabilities of $81.9 billion in respect of benefits accrued for service with actuarial assets at that date of $74.9 billion leaving an actuarial deficit of $7 billion. Since any surpluses or deficits are a joint responsibility of all Ontario municipalities and their employees, the Municipality does not recognize any share of the OMERS Pension surplus or deficit in these consolidated financial statements. The total amount contributed for pension purposes for 2015 was $51,872 (2014 - $50,574) and is included as an expense on the Statement of Operations and Accumulated Surplus. 9. OPERATIONS OF SCHOOL BOARDS AND THE COUNTY OF MIDDLESEX During 2015, requisitions were made by the School Boards and the County of Middlesex requiring the Municipality to collect property taxes and payments-in-lieu of property taxes on their behalf. The amounts collected and remitted are summarized below: School Boards County $ $ Taxation 1,653,121 1,686,755 Payments-in-lieu of taxes 11,177 12,098 Amounts requisitioned 1,664,298 1,698,853 10. TRUST FUNDS Trust funds administered by the Municipality amounting to $1,758 (2014 - $1,736) have not been included in the Statement of Financial Position nor have their operations been included in the Statement of Operations and Accumulated Surplus. -16-
11. CONTINGENT LIABILITIES As at December 31, 2015 certain legal actions are pending against the Municipality. The final outcome of the outstanding claims cannot be determined at this time. However, management believes that ultimate disposition of these matters will not materially exceed the amounts recorded in these consolidated financial statements. Estimated costs to settle claims are based on available information and projections of estimated future expenses developed based on the Municipality's historical experience. Claims are reported as an operating expense in the year of the loss, where the costs are deemed to be likely and can be reasonable determined. Claim provisions are reported as a liability in the consolidated statement of financial position. 12. SUPPLEMENTARY INFORMATION: [a] Classification of expenses by object: 2015 2014 $ $ Salaries, wages and employee benefits 1,103,891 1,068,379 Long-term debt interest 19,433 20,259 Materials 1,568,709 1,720,865 Contracted services 1,837,043 756,422 Amortization 734,680 671,635 Transfer to others 38,493 44,794 Total expenses by object 5,302,249 4,282,354 [b] Change in non-cash assets and liabilities related to operations: (Increase) decrease in taxes receivable (53,917) (56,050) (Increase) decrease in accounts receivable (777,563) (54,483) (Increase) decrease in inventories and prepaid expenses 12,876 (14,845) Increase (decrease) in accounts payable and accrued liabilities 710,395 96,255 Increase (decrease) in deferred revenue (716,073) 661,360 (824,282) 632,237-17-
13. BUDGET FIGURES The budget by-law adopted by Council was not prepared on a basis consistent with that used to report actual results under 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. In addition, the budget expensed all tangible capital expenditures rather than including amortization expense. As a result, the budget figures presented in the Statement of Operations and Accumulated Surplus represent the budget adopted by Council with adjustment as follows: Approved PSAB Budget Adjustments Budget $ $ $ REVENUES Property taxation 3,126,110-3,126,110 Taxation from other governments 25,000-25,000 User charges 396,285-396,285 Local improvement levies 144,515-144,515 Government transfers Provincial 1,200,190-1,200,190 Other municipalities 24,000-24,000 Investment income 40,000-40,000 Penalties and interest on taxes 75,000-75,000 Total revenues 5,031,100-5,031,100 EXPENSES General government 720,440 (72,124) 648,316 Fire and police protection 671,800 2,514 674,314 Other protective services 185,410 1,934 187,344 Transportation services 2,912,745 419,424 3,332,169 Waterworks and sewers 207,550 (100,000) 107,550 Garbage collection and disposal 216,355 (23,200) 193,155 Health services 13,550-13,550 Recreation and cultural services 28,220 (2,068) 26,152 Planning and zoning 22,300-22,300 Agriculture 52,730-52,730 Total expenses 5,031,100 226,480 5,257,580 BUDGETED ANNUAL SURPLUS (DEFICIT) - (226,480) (226,480) -18-
14. SEGMENTED DISCLOSURE The Municipality is a lower-tier municipal government that provides a wide range of services to its citizens. For management reporting purposes the Municipality s operations and activities are organized and reported by departments, and the departments have been separately disclosed in the Schedule of Segment Disclosure. A description of each major department and the activities each provide are as follows: General government General government is comprised of municipal council, corporate management and program support. Protection services Protection services include fire, police, conservation authority, building inspection and animal control. Transportation services Transportation services include the maintenance of roads and bridges throughout the Municipality in accordance with minimum maintenance standards. Environmental services Environmental services include the provision of safe drinking water, the collection and treatment of wastewater, and waste collection, disposal and recycling. Health services Health services are comprised of public health services and cemeteries. Recreation services Recreation services include the development and upkeep of community parks and recreation facilities. Planning and development Planning and development services include land use planning and amendments according to the Official Plan, plans of subdivision, economic development and tourism, municipal drainage, and tree cutting and reforestation. For each reported segment, revenues and expenses represent both amounts that are directly attributable to the segment and amounts that are allocated on a reasonable basis. Taxation revenue is allocated to segments based on budgeted amounts. The accounting policies used in these segments are consistent with those followed in the preparation of the financial statements as disclosed in Note 1. -19-
Schedule of Segment Disclosure Planning and General Protection TransportationEnvironmental Health Recreation Development Government Services Services Services Services Services Services Total $ $ $ $ $ $ $ $ REVENUES Taxation and local improvements 444,128 500,231 2,010,173 140,154 9,762 20,087 371,144 3,495,679 User charges 4,515 211,633 5,066 123,495-390 27,028 372,127 Government transfers 166,437 209,330 780,767 52,468 3,571 7,348 40,775 1,260,696 Other 214,935 236,031 1,173,182 - - - - 1,624,148 830,015 1,157,225 3,969,188 316,117 13,333 27,825 438,947 6,752,650 EXPENSES Salaries, wages and employees benefits 411,651 261,679 416,219 5,027 - - 9,315 1,103,891 Long-term debt interest - - - 19,397 - - 36 19,433 Materials and supplies 121,632 86,562 1,089,871 72,977-10,232 187,435 1,568,709 Contracted services, rents and financial 68,753 375,211 1,174,850 178,715 7,408 5,653 26,453 1,837,043 External transfers - 38,493 - - - - - 38,493 Amortization 9,826 64,448 572,894 79,580-7,932-734,680 611,862 826,393 3,253,834 355,696 7,408 23,817 223,239 5,302,249 ANNUAL SURPLUS (DEFICIT) 218,153 330,832 715,354 (39,579) 5,925 4,008 215,708 1,450,401-20 -
Schedule of Segment Disclosure For the Year Ended December 31, 2014 Planning and General Protection TransportationEnvironmental Health Recreation Development Government Services Services Services Services Services Services Total $ $ $ $ $ $ $ $ REVENUES Taxation and local improvements 327,489 429,383 1,932,102 374,318 11,536 18,899 123,473 3,217,200 User charges 7,394 579,528 13,172 125,288 - - 20,949 746,331 Government transfers 185,660 226,617 961,385 109,346 5,623 9,213 71,478 1,569,322 Other 158,348 30,200 143,590 - - - - 332,138 Gain on disposal of capital assets - - 34,000 - - - - 34,000 678,891 1,265,728 3,084,249 608,952 17,159 28,112 215,900 5,898,991 EXPENSES Salaries, wages and employees benefits 403,655 249,737 409,841 4,840-306 - 1,068,379 Long-term debt interest - - - 20,198 - - 61 20,259 Materials and supplies 99,980 105,586 1,125,292 48,526 839 8,680 331,962 1,720,865 Contracted services, rents and financial 87,915 345,454 92,202 167,706 12,870 9,184 41,091 756,422 External transfers 7,200 37,594 - - - - - 44,794 Amortization 9,826 62,951 511,346 79,580-7,932-671,635 608,576 801,322 2,138,681 320,850 13,709 26,102 373,114 4,282,354 ANNUAL SURPLUS (DEFICIT) 70,315 464,406 945,568 288,102 3,450 2,010 (157,214) 1,616,637-21 -