The Corporation of the Town of Hanover Financial Statements For the year ended Contents Auditors Report 1 Financial Statements Consolidated Statement of Financial Position 2 Consolidated Statement of Financial Activities 3 Consolidated Statement of Changes in Financial Position 4 Summary of Significant Accounting Policies 5-7 Notes to Consolidated Financial Statements 8-17 Schedule of Consolidated Current Fund Activities 18 Schedule of Consolidated Capital Fund Activities 19 Schedule of Consolidated Reserves and Reserve Funds 20
Driving growth BDO Dunwoody LLP Chartered Accountants and Advisors 485 10th Street Hanover Ontario N4N 1R2 Telephone: (519) 364-3790 Telefax: (519) 364-5334 Auditors Report To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Town of Hanover We have audited the consolidated statement of financial position of The Corporation of the Town of Hanover as at, the consolidated statement of financial activities, and the consolidated statement of changes in financial position for the year then ended. These financial statements are the responsibility of 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 Corporation of the Town of Hanover as at, and the results of its financial activities and changes in financial position for the year then ended in accordance with Canadian generally accepted accounting principles. BDO DUNWOODY LLP Chartered Accountants Hanover, Ontario April 4, 2006 1
Consolidated Statement of Financial Position December 31 Financial Assets Cash (Note 1) $ 3,187,307 $ 3,821,805 Taxes receivable 347,280 344,504 Water and sewage charges receivable 337,526 290,378 Grants and subsidies receivable 266,796 178,427 Other receivables 313,012 574,002 Inventory for resale 176,442 206,097 Portfolio investments (Note 2) 1,411,784 - Loans receivable (Note 3) 1,335,083 1,335,083 Long-term investments (Note 4) 2,756,742 2,756,742 Liabilities 10,131,972 9,507,038 Temporary borrowings 16,352 12,513 Accounts payable and accrued liabilities 1,052,100 1,011,085 Deferred revenue (Note 5) 683,240 68,891 Long-term debt (Note 6) 3,164,874 3,310,163 Landfill site closure and post-closure care liability (Note 7) 476,050 428,950 Employee future benefits liability (Note 8) 641,619 578,166 6,034,235 5,409,768 Net Financial Assets $ 4,097,737 $ 4,097,270 Commitments and Contingencies (Note 15) Municipal Position Current fund (Note 9 & Page 18) $ 398,107 $ 451,688 Reserves and reserve funds (Note 10 & Page 20) 7,506,123 7,533,911 7,904,230 7,985,599 Amounts to be recovered (Note 11) (3,806,493) (3,888,329) $ 4,097,737 $ 4,097,270 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 2
Consolidated Statement of Financial Activities For the year ended December 31 2005 Budget Actual Actual Revenue Taxation $ 3,738,544 $ 3,766,221 $ 3,639,651 Government grants 1,472,339 1,319,538 704,524 Ontario Lottery Corporation 650,000 755,987 661,349 Municipal contributions 320,800 316,745 313,572 Water and sewer charges 1,594,924 1,582,149 2,066,235 User fees and service charges 1,036,341 1,171,836 1,556,394 Investment income 159,100 250,744 193,436 Donations 43,300 50,279 64,070 Contributions from deferred revenue - - 11,543 Other (Note 12) 419,750 472,419 539,659 9,435,098 9,685,918 9,750,433 Expenditures Current (Note 13) General government 670,651 645,607 570,888 Protection to persons and property 2,727,100 2,639,380 2,272,960 Transportation services 606,222 599,402 566,215 Transit 526,639 474,297 255,000 Environmental services 1,602,800 1,567,102 1,559,013 Health services 328,600 306,428 304,196 Recreation and cultural services 1,819,900 1,827,027 2,045,197 Planning and development 124,045 133,625 124,779 Employee future benefits not funded - 63,453 90,655 8,405,957 8,256,321 7,788,903 Capital General government 25,800 40,084 9,715 Protection to persons and property 182,900 155,939 76,168 Transportation services 558,819 534,975 583,125 Environmental services 433,000 347,693 872,435 Health services 48,000 18,137 13,824 Recreational and cultural services 320,800 315,285 150,486 Planning and development 8,500 17,017 13,624 1,577,819 1,429,130 1,719,377 Total expenditures 9,983,776 9,685,451 9,508,280 Net revenue (expenditure) for the year (548,678) 467 242,153 Change in amounts to be recovered (Note 11) (145,300) (81,836) 3,400,818 Change in fund balances for the year $ (693,978) $ (81,369) $ 3,642,971 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 3
Consolidated Statement of Changes in Financial Position For the year ended December 31 Cash provided by (used in) Operating activities Net revenue (expenditure) for the year $ 467 $ 242,153 Items not involving cash: Contributions from restricted deferred revenue - (10,822) Increase in taxes receivable (2,776) 3,350 Decrease (increase) in accounts receivable 125,473 (269,329) Decrease (increase) in inventory for resale 29,655 89,357 Increase (decrease) in accounts payable 41,015 49,671 Increase (decrease) in deferred revenue 44,144 (20,474) Increase in landfill closure and post-closure care liability 47,100 39,800 Increase in employee future benefits liability 63,453 90,655 348,531 214,361 Investing activities Repayment of loans receivable - 1,000,000 Increase in portfolio investments (1,411,784) - (1,411,784) 1,000,000 Financing activities Proceeds on issue of long-term debt - 3,415,000 Repayment of long-term debt (145,289) (104,837) (145,289) 3,310,163 Net change in cash and cash equivalents (1,208,542) 4,524,524 Cash and cash equivalents, beginning of year 3,759,903 (764,621) Cash and cash equivalents, end of year $ 2,551,361 $ 3,759,903 Represented by: Unrestricted cash (Note 1) $ 2,567,713 $ 3,772,416 Temporary borrowings (16,352) (12,513) $ 2,551,361 $ 3,759,903 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 4
Summary of Significant Accounting Policies Basis of Accounting The consolidated financial statements of The Corporation of the Town of Hanover are the representation of management prepared in accordance with accounting principles established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants as prescribed by the Ministry of Municipal Affairs and Housing. The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from management s best estimates as additional information becomes available in the future. Revenues and expenditures are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. The consolidated statement of financial position reflects the financial assets and liabilities of the municipality. Financial assets are those assets which could provide resources to discharge existing liabilities or finance future operations. Municipal position represents the financial position of the municipality, and is the difference between its assets and liabilities. Basis of Consolidation The consolidated statements reflect the assets, liabilities, revenues and expenditures of the current fund, capital fund, reserves and reserve funds of all municipal organizations, committees, and boards which are owned or controlled by Council. All interfund assets, liabilities, revenues and expenditures have been eliminated on consolidation. The following boards and municipal enterprises owned or controlled by Council have been consolidated: Hanover Police Services Board Hanover Cemetery Board Hanover Public Library Board Hanover Downtown Improvement Area 5
Summary of Significant Accounting Policies A government partnership exists where the municipality has shared control over the board or entity. The municipality's pro-rata share of the assets, liabilities, revenues and expenditures are reflected in the financial statements using the proportionate consolidation method. The municipality's proportionate interest of the following government partnerships are reflected in the consolidated financial statements: Saugeen Municipal Airport 34.1% (2004-38.5%) Hanover/Walkerton Landfill Site 50% Temporary Investments Inventory Portfolio and Long-term Investments Capital Assets Deferred Revenue Landfill Site Closure and Post-Closure Care Employee Future Benefits Temporary investments are recorded at the lower of cost and market value. Inventory of goods held for resale are recorded at the lower of cost and net realizable value. Cost is determined on the average cost basis. Portfolio and long-term investments are recorded at cost. The historical cost and accumulated amortization of capital assets are not recorded for municipal purposes. Capital assets are reported as an expenditure on the consolidated statement of financial activities in the period of acquisition. Revenue restricted by legislation, regulation or agreement and not available for general municipal purposes is reported as deferred revenue on the consolidated statement of financial position. The revenue is reported on the consolidated statement of financial activities in the year in which it is used for the specified purpose. Landfill site closure and post-closure care costs are recognized over the operating life of the landfill, based on capacity used. The liability is recorded at its discounted value, based on the average long-term borrowing rate of the municipality. The municipality pays post-employment benefits to eligible employees on retirement. The benefits earned are recognized over the service life of the employees using the projected benefit method and management s best estimate of salary escalation, benefit costs, and retirement ages of employees. Defined contribution plan accounting is applied to the municipality s multi-employer defined benefit pension plan. 6
Summary of Significant Accounting Policies Amounts to be Recovered Cash and Cash Equivalents County and School Boards Trust Funds Amounts to be recovered are reported in the municipal position on the consolidated statement of financial position. The balance represents the outstanding principal portion of unmatured long-term liabilities, liabilities not yet due, and other future expenditures not yet levied on the ratepayers. Cash and cash equivalents consist of cash on hand, bank balances, and investments in money market instruments with maturities of three months or less. The municipality collects taxation revenue on behalf of the school boards and the County of Grey. The taxation, other revenues, expenditures, assets and liabilities with respect to the operations of the school boards and the County of Grey are not reflected in these financial statements. Funds held in trust by the municipality, and their related operations, are not included in these financial statements. The financial position and activity of the trust fund are reported separately on the trust fund balance sheet and statement of continuity. 7
Notes to Consolidated Financial Statements 1. Cash Cash consists of bank deposits at an interest rate of prime less 1.75%, payable monthly. Included in cash is $619,594 (2004 $49,389), the use of which is externally restricted by legislation or agreement. 2. Portfolio Investments Carrying value $ 1,411,784 $ - Market value $ 1,395,248 $ - Portfolio investments consist of corporate and government debt securities with an effective interest rate of 3.2%, maturing in 2007. Interest is paid monthly or semi-annually. 3. Loans Receivable Note receivable, Westario Power Inc., 5.47%, interest only payable quarterly $ 1,335,083 $ 1,335,083 The note receivable from Westario Power Inc. is due on demand in accordance with the terms set out in the shareholders agreement. The Town of Hanover is a shareholder of the parent corporation, Westario Power Holdings Inc. 4. Long-Term Investments Westario Power Holdings Inc. 1,509 common shares $ 2,756,742 $ 2,756,742 The municipality owns 15.09% of the outstanding shares of Westario Power Holdings Inc., a private company incorporated under the laws of the Province of Ontario. The fair value of these shares is not practicable to determine in the absence of published market quotations. 8
Notes to Consolidated Financial Statements 5. Deferred Revenue Obligatory Reserve Funds Water user charges $ 359,698 $ - Waste Water user charges 191,450 - Federal Gasoline Tax Funding 67,198 - Provincial Gasoline Tax Funding 43,221 49,389 661,567 49,389 Unrestricted Deferred revenue 21,673 19,502 $ 683,240 $ 68,891 The net change during the year in the restricted deferred revenue balances is made up of the following: Water Waste Water Federal Gasoline Tax Funding Provincial Gasoline Tax Funding Total Restricted deferred revenue, beginning of year $ - $ - $ - $ 49,389 $ 49,389 Restricted funds received during the year 358,476 190,800 66,970 41,973 658,219 Interest earned 1,222 650 228 1,248 3,348 Revenue recognized during the year - - - (49,389) (49,389) Restricted deferred revenue, end of year $ 359,698 $ 191,450 $ 67,198 $ 43,221 $ 661,567 9
Notes to Consolidated Financial Statements 6. Long-Term Debt The balance of long-term debt reported on the consolidated statement of financial position is made up of the following: Term loan payable, 3.886%, repayable $17,371 principal and interest monthly, due March 2009 $ 2,721,883 $ 2,822,488 Term loan payable, 3.886%, repayable $5,237 principal and interest monthly, due March 2009 442,991 487,675 $ 3,164,874 $ 3,310,163 Principal payments required on the long-term debt for the next five years are as follows: Year Amount 2006 $ 150,980 2007 156,953 2008 162,851 2009 2,694,090 $ 3,164,874 7. Landfill Site Closure and Post-Closure Care Liability The Hanover/Walkerton Landfill Site closure and post-closure care requirements are defined in accordance with industry standards and include final covering and landscaping of the landfill, removal of ground water and leachates, and ongoing environmental monitoring, site inspection and maintenance. These costs will be incurred when the Hanover/Walkerton Landfill Site stops accepting waste, with the post-closure care expected to continue for an additional 25 years. The total future closure and post-closure care costs are estimated to be $1,300,000, with the Town of Hanover s share being $650,000. At, the Town of Hanover has recognized a liability of $476,050. This represents the town s 50% share of 83% of the present value of the total estimated costs, and is based on a total capacity of 506,000 cubic metres and a discount rate of 6%. The balance of the town s share of the liability of $173,950 will be accrued as the remaining capacity of 110,376 cubic metres is utilized, which is expected to be over the next 5 to 7 years. The site closure and post-closure care liability has been funded and a sufficient cash level is being maintained to settle the estimated liability. 10
Notes to Consolidated Financial Statements 8. Employee Future Benefits Liability Pension Plan The municipality makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf of 58 (2004-54) members of its staff. This 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 2005 was $199,158 (2004 - $188,741). At the end of 2005, OMERS reported an actuarial funding deficit of $2.8 billion (2004 - $963 million deficit). Retirement and Other Benefits The municipality is a Schedule 2 employer under the Workplace Safety and Insurance Act (WSIB), and is liable for reimbursing WSIB for all costs relating to claims by its employees. The municipality also provides retirement benefits to eligible employees consisting of a severance benefit or the continuation of health benefits. The accrued benefit liability at December 31 includes the following components: Accrued benefit obligation WSIB $ 27,972 $ 14,942 Retirement benefit 722,249 681,191 750,221 696,133 Recoverable (108,602) (117,967) Accrued benefit liability $ 641,619 $ 578,166 The accrued benefit obligations are based on actuarial valuations performed using the projected benefit method, prorated on services. The most recent actuarial report was prepared as at December 31, 2004. Total benefit payments on behalf of retirees during the year were $31,145 (2004 - $29,985). The plans are unfunded and require no contributions from the employees. The actuarial valuations are based on a number of assumptions about future events, such as inflation rates, interest rates, medical inflation rates, wage increases, and employee turnover and mortality. The assumptions used reflect the municipality s best estimates. A discount rate of 6% was assumed to determine the accrued benefit obligation, along with a compensation increase rate of 4%, a 5% annual rate increase in dental premium rates, and a 10% increase in health premium rates for 2005 scaling down over 15 years to 5% in 2019. 11
Notes to Consolidated Financial Statements 8. Employee Future Benefits Liability (cont d) The total expenditure related to post-employment benefits other than pensions includes the following components: Current period benefit cost $ 59,070 $ 51,257 Actuarial loss - 33,944 59,070 85,201 Interest cost 35,528 39,279 Total expenditure for the year $ 94,598 $ 124,480 9. Current Fund The current fund balance reported on the consolidated statement of financial position is comprised of the following: General operations $ 344,068 $ 379,994 Waterworks 34,049 130,676 Sanitary sewer system (3,463) 1,811 Public Library Board 2,018 (14,039) Downtown Improvement Area 1,315 4,636 Saugeen Municipal Airport (13,646) (13,433) Hanover / Walkerton Landfill Site 33,766 (37,957) $ 398,107 $ 451,688 12
Notes to Consolidated Financial Statements 10. Reserves and Reserve Funds Reserves set aside for specific purpose by Council: Working capital $ 265,338 $ 265,339 Insurance 74,508 75,369 General government 236,633 203,369 Fire 25,000 9,300 Police 70,698 59,271 Parking 98,259 98,259 Airport 16,214 18,306 Sewage plant 214,953 201,603 Waterworks 1,914,387 1,943,309 Cemetery 33,530 14,525 Health Services (Medical Clinic) 5,640 22,600 Recreation and culture 149,617 134,248 Westario Power proceeds, set aside in note for future use 890,881 987,229 3,995,658 4,032,727 Reserve funds set aside for specific purpose by Council: Lot levies 261,734 242,426 Landfill 491,989 502,016 Westario Power proceeds, set aside in shares for future use 2,756,742 2,756,742 3,510,465 3,501,184 $ 7,506,123 $ 7,533,911 11. Amounts to be Recovered The balance of the amounts to be recovered reported on the consolidated statement of financial position is comprised of the following: Long-term debt $ 3,164,874 $ 3,310,163 Employee future benefits liability 641,619 578,166 $ 3,806,493 $ 3,888,329 13
Notes to Consolidated Financial Statements 11. Amounts to be Recovered (cont d) The net change during the year in the amounts to be recovered is made up of the following: Proceeds on issue of long-term debt $ - $ 3,415,000 Principal payments on long-term debt (145,289) (104,837) Increase in employee future benefits liability 63,453 90,655 Increase (decrease) in amounts to be recovered for the year $ (81,836) $ 3,400,818 12. Other Income Penalties and interest on taxes $ 48,876 $ 55,721 Sale of land and other assets 70,527 161,538 Rents 290,840 275,140 Other 62,176 47,260 $ 472,419 $ 539,659 13. Expenditures by Object Total expenditures of the current fund reported on the consolidated statement of financial activities are classified by object as follows: Salaries, wages, and employee benefits $ 4,812,512 $ 4,359,774 Materials, services, rents and financial expenditures 2,754,112 2,979,012 Interest on long-term debt 126,004 98,633 Contributions to other organizations 563,693 351,484 $ 8,256,321 $ 7,788,903 14
Notes to Consolidated Financial Statements 14. Government Partnerships The following summarizes the financial position and activities of the municipal joint boards. The Town of Hanover s pro-rata share of these amounts has been reported in the financial statements using the proportionate consolidation method. Saugeen Municipal Airport Hanover / Walkerton Landfill Site Financial Assets Cash and temporary investments $ 43 $ 1,924,409 Accounts receivable 31,577 57,386 Other assets 36,487 35,571 $ 68,107 $ 2,017,366 Liabilities Temporary borrowings $ 47,954 $ - Accounts payable 12,624 13,757 Closure and post-closure care liability - 952,100 60,578 965,857 Board Position Current fund (40,018) 67,532 Reserves and reserve funds 47,547 983,977 $ 68,107 $ 2,017,366 Revenue Contributions from Town of Hanover $ 21,806 $ - Other 129,920 455,169 Expenditures Current (139,133) (331,776) Capital (17,720) - Net revenue (expenditure) for the year $ (5,127) $ 123,393 15
Notes to Consolidated Financial Statements 15. Commitments and Contingencies i) The Town of Hanover owns property which has undergone a preliminary site review. The site review identified potential environmental issues which may require future remediation. The cost of this clean up has not been accrued in these financial statements as the amount, if any, cannot be reasonably estimated at this time. ii) The Town of Hanover has guaranteed a demand instalment bank loan of the Hanover, Bentinck and Brant Agricultural Society up to the maximum amount of $650,000. A balance of $425,000 was outstanding at ($485,000 at December 31, 2004). iii) The Town of Hanover is undergoing a review under pay equity legislation which may result in retroactive pay owing to the Town s employees for prior years. No liability for this assessment has been accrued in these financial statements as the amount, if any, cannot be reasonably estimated at this time. 16. Public Sector Salary Disclosure Act During the year, no employees of the municipality were paid a salary, as defined by the Public Sector Salary Disclosure Act, 1996, of $100,000 or more. 17. Budget Amounts Budget amounts are reported on the consolidated statement of financial activities for comparative purposes. The budget amounts for the Town of Hanover are as approved by council and have been restated to conform to the basis of presentation of the revenues and expenditures on the consolidated statement of financial activities. The budget figures have not been audited. 18. Operations of School Boards and the County of Grey During the year, the following taxation revenue was raised and remitted to the school boards and County of Grey: School boards $ 2,529,002 $ 2,583,335 County of Grey 2,261,891 2,223,249 $ 4,790,893 $ 4,806,584 16
Notes to Consolidated Financial Statements 19. Trust Funds Trust funds administered by the municipality have not been included in the consolidated statement of financial position nor have their operations been included in the consolidated statement of financial activities. At, the trust fund balances are as follows: Cemetery Pre-Need Assurance Fund $ 94,843 $ 86,259 Cemetery Care and Maintenance Fund 281,674 268,014 $ 376,517 $ 354,273 17
Schedule of Consolidated Current Fund Activities For the year ended December 31 2005 Budget Actual Actual Revenue Taxation $ 3,738,544 $ 3,766,221 $ 3,639,651 Government grants 1,322,339 1,254,538 693,319 Ontario Lottery Corporation grant 650,000 755,987 661,349 Municipal contributions 320,800 316,745 313,572 Water and sewer charges 1,594,924 1,582,149 2,066,235 User fees and service charges 1,036,341 1,171,836 1,352,043 Investment income 159,100 220,106 171,865 Donations 9,300 18,463 61,760 Other 399,750 413,938 468,719 9,231,098 9,499,983 9,428,513 Expenditures General government 670,651 645,607 570,888 Protection to persons and property 2,727,100 2,639,380 2,272,960 Transportation services 606,222 599,402 566,215 Transit 526,639 474,297 255,000 Environmental services 1,602,800 1,567,102 1,559,013 Health services 328,600 306,428 304,196 Recreation and cultural services 1,819,900 1,827,027 2,045,197 Planning and development 124,045 133,625 124,779 Post employment benefits - 63,453 90,655 8,405,957 8,256,321 7,788,903 Net revenue for the year 825,141 1,243,662 1,639,610 Financing and transfers Principal payments on long-term debt (145,300) (145,289) (104,837) Increase in post-employment benefits liability - 63,453 90,655 Contributions from (to) capital fund (1,195,219) (1,094,988) (894,640) Contributions from (to) reserves and reserve funds 50,257 (120,419) (271,952) (1,290,262) (1,297,243) (1,180,774) Change in fund balance for the year (465,121) (53,581) 458,836 Current fund, beginning of the year 465,121 451,688 (7,148) Current fund, end of the year $ - $ 398,107 $ 451,688 18
Schedule of Consolidated Capital Fund Activities For the year ended December 31 2005 Budget Actual Actual Revenue Government grants $ 150,000 $ 65,000 $ 11,205 User fees and charges - - 195,351 Contributions from deferred revenue - - 11,543 Donations 34,000 31,816 2,310 Other 20,000 44,481 70,940 204,000 141,297 291,349 Expenditures General government 25,800 40,084 9,715 Protection to persons and property 182,900 155,939 76,168 Transportation services 558,819 534,975 583,125 Environmental services 433,000 347,693 872,435 Health services 48,000 18,137 13,824 Recreational and cultural services 320,800 315,285 150,486 Planning and development 8,500 17,017 13,624 1,577,819 1,429,130 1,719,377 Net revenue (expenditure) for the year (1,373,819) (1,287,833) (1,428,028) Financing and transfers Proceeds on issue of long-term debt - - 3,415,000 Contributions from (to) current fund 1,195,219 1,094,988 894,640 Contributions from (to) reserves and reserve funds 178,600 192,845 533,388 1,373,819 1,287,833 4,843,028 Change in fund balance for the year - 3,415,000 Capital fund, beginning of the year - (3,415,000) Capital fund, end of the year $ - $ - $ - 19
Schedule of Consolidated Reserves and Reserve Funds For the year ended December 31 2005 Budget Actual Actual Revenue Investment income $ - $ 30,638 $ 21,571 Lot levies - 14,000 9,000-44,638 30,571 Net transfers from (to) other funds Transfers from (to) current fund (50,257) 120,419 271,952 Transfers from (to) capital fund (178,600) (192,845) (533,388) (228,857) (72,426) (261,436) Change in balances for the year (228,857) (27,788) (230,865) Reserves and reserve funds, beginning of the year 7,533,911 7,533,911 7,764,776 Reserves and reserve funds, end of the year $ 7,305,054 $ 7,506,123 $ 7,533,911 20