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HomeMy WebLinkAbout2018-12-31 2018 Year End Audited Financial Statements Consolidated Financial Statements of COUNTY OF NEWELL Year ended December 31, 2018 \� � , ,v a i LLP CHARTERED PROFESSIONAL ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To: The Mayor and Members of Council of the County of Newell Opinion We have audited the consolidated financial statements of the County of Newell which comprise the consolidated statement of financial position as at December 31, 2018, and the consolidated statements of financial activities, change in net financial assets and cash flow for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the County of Newell as at December 31, 2018, and its results of operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the County in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matter The consolidated financial statements of the County of Newell for the year ended December 31, 2017 were audited by another auditor who expressed an unmodified opinion on those statements on April 5, 2018. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. - In preparing the consolidated financial statements, management is responsible for assessing the County's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the County or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the County's financial reporting process. Auditor's Responsibilities for the Audit of the Financia/Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Claresholm•Fort Macleod•lethbridge•Milk River•Pincher Creek•Taber•Vauxhall 1 INDEPENDENT AUDITORS' REPORT, continued . Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. . Obtain an understanding of internal control relevant to the audit 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 County's internal control. . Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. . Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the County's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern. . Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Other Legal and Regulatory Requirements . Debt Limit Regulation: In accordance with Alberta Regulation 255/2000, we confirm that the County is in compliance with the Debt Limit Regulation. A detailed account of the County's debt limit can be found in note 18. . Supplementary Accounting Principles and Standards Regulation: In accordance with Alberta Regulation 313/2000, we confirm that the County is in compliance with the Supplementary Accounting Principles and Standards Regulation and note the information required can be found in note 17. Lethbridge, Alberta �� ��� April 11, 2019 Chartered Professional Accountants Claresholm.Fort Macleod.Lethbridge.Milk River.Pincher Creek.Taber.Vauxhall 2 MANAGEMENT REPORT The consolidated financial statements are the responsibility of the management of the County of Newell. These consolidated financial statements have been prepared from information provided by management. Financial statements are not precise since they include certain amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the consolidated financial statements are presented fairly, in all material respects. The County maintains systems of internal accounting and administrative controls that are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the County's assets are properly accounted for and adequately safeguarded. The elected Council of the County is responsible for ensuring that management fulfils its responsibilities for financial statements. Council carries out its responsibility principally through the Finance and Administration and General Services committees. The Council meets annually with management and the external auditors to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, and to satisfy itself that each party is properly discharging its responsibilities. Council also considers the engagement or re-appointment of the external auditors. Council reviews the monthly financial reports. The consolidated financial statements have been audited by Avail LLP Chartered Professional Accountants, the external auditors, in accordance with Canadian generally accepted auditing standards on behalf of the Council, residents and ratepayers of the County. Avail LLP has full'and free access to the Council. _._.�l,A��y'"�._ Ch'e i istrative Officer Treasurer c� Ava i I LLP Chartered Professional Accountants 3 COUNTY OF NEWELL Consolidated Statement of Financial Position December 31, 2018, with comparative information for 2017 2018 2017 Financial assets: Cash and cash equivalents (note 2) $ 3,349,499 $ 2,648,535 Taxes and grants in place of taxes receivable (note 3) 1,700,222 1,312,676 Trade and other receivables (note 4) 12,149,564 14,820,227 Land held for resale 19,748 31,491 Investments(note 5) 81,671,584 72;549,878 Notes receivable (note 6) -- 789,542 Other financial assets 6,495 9,819 98,897,112 92,162,168 Financial liabilities: Accounts payable and accrued liabilities 4,212,382 2,407,267 Employee benefit obligations(note 8) 1,580,098 1,604,991 Unearned revenue (note 9) 297,964 22,000 Long-term debt-operating (note 10) -- 789,542 Long-term debt-capital (note 11) 14,882,255 20,020,644 Provision for landfill closure and post-closure costs(note 12) 361,378 662,535 Provision for gravel pit closure and post-closure costs(note 12) 416,059 331,814 Deposit liabilities(note 2) 269,291 212,408 22,019,427 26,051,201 Net financial assets 76,877,685 66,110,967 Non-financial assets: Prepaid expenses 131,631 118,829 Tangible capital assets(note 7) 199,229,568 202,274,435 Inventory for consumption 2,139,527 1,170,123 201,500,726 203,563,387 Contingent liabilities(note 20) Accumulated surplus (note 13) $278,378,411 $269,674,354 The accompanying notes are an integral part of these consolidated financial statements. 4 COUNTY OF NEWELL Consolidated Statement of Financial Activities Year ended December 31, 2018, with comparative information for 2017 Budget 2018 2017 Revenues: Net municipal property taxes(note 14) $ 33,130,046 $33,087,488 $ 32,278,376 Special levies 4,972,179 114,362 117,189 User fees and sale of goods 2,081,005 3,310,758 2,618,838 Government transfers (note 15) 626,574 685,888 638,510 Penalties and cost of taxes 131,000 280,078 210,582 Investment income 1,220,925 2,000,408 1,234,488 Licenses and permits 152,000 213,321 255,278 Other revenue 107,900 421,622 634,705 Gain (loss)on disposal of tangibie capital assets - 102,936 143,662 42,421,629 40,216,861 38,131,628 Expenses (note 16): Legislative 581,800 467,697 515,343 Administration 4,934,564 4,510,648 4,381,172 Corporate safety services 331,965 318,794 339,779 Fireand by-lawenforcement 1,641,524 1,172,017 1,156,185 Disaster and emergency services 290,023 244,948 244,070 Roads,streets, walks and lighting 12,537,923 11,411,031 10,873,803 Airport 139,733 111,071 115,279 Water and waste water 3,263,845 2,925,322 2,890,116 Waste management 332,798 470,972 698,556 Family and community support 65,466 64,466 79,466 Municipal planning 674,623 479,191 571,253 Community and agricultural services 2,006,477 1,783,155 1,609,879 Subdivision land and development 183,395 186,695 190,737 Recreation and parks 845,767 828,494 1,873,728 Culture and library 160,653 160,653 155,326 Other 98,425 158,034 1,269,883 28,088,981 25,293,188 26,964,575 Annual surplus before the undernoted 14,332,648 14,923,673 11,167,053 Other: Contributed to other governments (19,767,188) (6,319,496) -- Transfer of assets to Newell Regional Services Corporation -- -- (30,338,627) Government transfers (note 15) -- 99,880 173,520 Annual surplus (deficit) (5,434,540) 8,704,057 (18,998,054) Accumulated surplus, beginning of year 269,674,354 269,674,354 288,672,408 Accumulated surplus, end of year $264,239,814 $278,378,411 $269,674,354 The accompanying notes are an integral part of these consolidated financial statements. 5 COUNTY OF NEWELL Consolidated Statement of Change in Net Financial Assets December 31, 2018, with comparative information for 2017 Budget 2018 2017 Annual surplus(deficit) $(5,434,540) $ 8,704,057 $(18,998,054) Acquisition of tangible capital assets (10,379,211) (4,382,530) (15,587,875) Contributed (transferred)tangible capital assets - - 33,324,214 Proceeds on disposal of tangible capital assets - 614,248 556,406 Amortization of tangible capital assets 7,155,882 6,916,087 6,528,819 (Gain) loss on disposal of tangible capital assets - (102,936) (143,662) (8,657,869) 11,748,926 5,679,847 Use(acquisition)of inventories for consumption (1,200,000) (969,406) 220,631 Use(acquisition)of prepaid expenses - (12,802) (3,844) Change in net financial assets (1,200,000) 10,766,718 5,896,635 Net financial assets, beginning of year 66,110,967 66,110,967 60,214,332 Net financial assets, end of year $56,253,098 $76,877,685 $ 66,110,967 The accompanying notes are an integral part of these consolidated financial statements. 6 COUNTY OF NEWELL Consolidated Statement of Cash Flows Year ended December 31, 2018, with comparative information for 2017 2018 2017 Cash provided by(used in): Operations: Annual surplus(deficit) $ 8,704,057 $(18,998,054) Items not involving cash: Amortization 6,916,087 6,528,819 Transferred (contributed)assets - 33,324,214 Loss (gain)on disposal of tangible capital assets (102,936) (143,662) Change in non-cash financial assets and liabilities: Taxes and grants in place of taxes receivable (387,545) (18,294) Trade and other receivables 2,670,663 5,367,626 Land held for resale 11,743 - Other financial assets 3,324 76 Prepaid expenses (12,802) (3,844) Inventory for consumption (969,406) 220,631 Accounts payable and accrued liabilities 1,805,115 205,813 Employee benefit obligations (24,893) 76,153 Unearned revenue 275,964 (174,685) Landfill closure and post-closure costs (301,157) 349,002 Gravel pit closure and post-closure costs 84,245 (3,527) 18,672,459 26,730,268 Capital activities: Proceeds on disposal of tangible capital assets 614,248 556,406 Purchase of tangible capital assets (4,382,531) (15,587,875) (3,768,283) (15,031,469) Investing activities: Decrease(increase) in temporary investments - 18,196,412 Increase in investments (9,121,706) (26,097,781) Payments received on notes receivable 789,542 984,096 (8,332,164) (6,917,273) Financing activities: Repayment of long-term debt: -operating (789,542) (748,381) -capital (5,138,389) (5,034,630) Proceeds from debt acquired - 640,850 Increase (decrease) in deposit liabilities 56,883 13,534 (5,871,048) (5,128,627) Increase (decrease) in cash and cash equivalents 700,964 (347,101) Cash and cash equivalents, beginning of year 2,648,535 2,995,636 Cash and cash equivalents, end of year(note 2) $ 3,349,499 $ 2,648,535 Cash and cash equivalents is comprised of: Cash $ 3,349,499 $ 2,648,535 $ 3,349,499 $ 2,648,535 The accompanying notes are an integral part of these consolidated financial statements. 7 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 1. Significant accounting policies: The consolidated financial statements of the County of Newell (the "County") are the representations of management prepared in accordance with Canadian Public Sector accounting standards. Significant aspects of the accounting policies adopted by the County are as follows: (a) Cash and cash equivalents: Cash and cash equivalents include cash on hand and short-term deposits which are highly liquid with original maturities of less than three months from the date of acquisition. (b) Reporting entity: The consolidated financial statements reflect the assets, liabilities, revenues and expenses, changes in net financial assets and cash flows of the County, which comprises of all the organizations that are owned or controlled by the County and are, therefore accountable to the Council for the administration of their financial affairs and resources. All significant inter-department transactions and balances are eliminated on consolidation. Taxes levied also include requisitions for educational, health care, social and other external organizations that are not part of the County. The statements exclude trust assets that are administered for the benefit of external parties. (c) 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 legal obligation to pay. Funds from external parties and earnings thereon restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified. (d) Investments: Investments are recorded at cost. Where there has been a loss in value of an investment other than a temporary decline, the investment is written down to reflect the loss. (e) Requisition over-levy and under-levy: Over-levies and under-levies arise from the difference between the actual property tax levy made to cover each requisition and the actual amount requisitioned. If the actual levy exceeds the requisition, the over-levy is accrued as a liability and property tax revenue is reduced. Where the actual levy is less than the requisition amount, the under-levy is accrued as a receivable and as property tax revenue. Requisition tax rates in the subsequent year are adjusted for any over-levies for the prior year. 8 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 1. Significant accounting policies (continued): (f) Inventories: Land held for resale is recorded at the lower of cost and net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping, and leveling charges. Related development costs incurred to provide infrastructure such as water and waste water services, roads, sidewalks and street lighting are recorded as capital assets under their respective function. (g) Landfill and gravel pit closure and post-closure costs: Pursuant to the Alberta Environment Protection and Enhancement Act, the County is required to fund the closure of its landfill site and provide for post-closure care. Landfill closure and post-closure activities include the final ciay cover, landscaping, as well as surface and ground water monitoring, leachate control and visual inspection. The requirement is being provided for over the estimated remaining life of the landfill site based on usage. The County is required to fund the closure of its gravel pits. Reclamation of these sites includes providing final cover and landscaping. The requirement is being provided for on an estimate of expected cost on size of sites. (h) Government transfers: Government transfers are recognized in the financial statements as revenues in the period that the events giving rise to the transfer occurred, providing the transfers are authorized, all eligibility criteria have been met by the County, and reasonable estimates of the amounts can be made. (i) 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 normal course of operations. (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 is amortized on a straight-line basis over the estimated useful life as follows: Years Land Improvements 15-45 Buildings 25-70 Engineered structures 15-75 Machinery and equipment 5-40 Vehicles 5-14 Assets under construction are not amortized until the asset is available for productive use. 9 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 1. Significant accounting policies (continued): (i) Non-financial assets(continued): (ii) Contributions of tangible capital assets: Tangible capital assets received as contributions are recorded at fair value at the date of receipt and recorded as revenue. (iii) Inventories Inventories of materials and supplies held for consumption are recorded at the lower of cost and replacement cost with cost determined by the average cost method. (iv) Cultural and historical tangible capital assets: Works of art for display are not recorded as tangible capital assets but are disclosed. Q) Tax Revenue: Tax revenue results from non-exchange transactions that are paid to governments in accordance with the laws and regulations established to provide revenue to the government � for public services. The revenue is recognized when the tax has been authorized and the taxable event has occurred. Requisitions operate as a flow through and are excluded from municipal revenue. (k) Pension expenses: The County participates in a multi-employer defined benefit pension plan, wherein contributions for current and past service pension benefits are recorded as expenses in the year in which they become due. (I) Use of estimates: The preparation of the financial statements in conformity with Canadian public sector accounting standards 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 reporting period. Significant areas requiring the use of management estimates relate to the determination of allowance for doubtful accounts, provision for closure and post-closure care, employee benefit obligations and the useful life of tangible capital assets. Contributions of tangible capital assets are recorded at estimated fair value at the date of receipt. Actual results could differ from those estimates. 10 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 1. Significant accounting policies (continued): (m)Contaminated sites: Contaminated sites are a resuit of contamination being introduced into air, soil, water or sediment of a chemical, organic or radioactive or live organism that exceeds an environmental standard. The liability is recorded net of any expected recoveries. A liability for remediation of a contaminated site is recognized when a site is not in productive use and is managemenYs estimate of the cost of post-remediation including operation, maintenance and monitoring. No contaminated sites have been identified. 2. Cash and cash equivalents: 2018 2017 Cash $ 3,349,499 $ 2,648,535 $ 3,349,499 $ 2,648,535 Included in cash are amounts aggregating $269,291 (2017 - $212,408) not available for current use. 2018 2017 Tax sale surplus $ 20,879 $ 20,532 Public reserve 248,412 191,876 $ 269,291 $ 212,408 11 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 3. Taxes and grants in place of taxes receivable: 2018 2017 Current $ 819,359 $ 703,962 Arrears 1,009,363 708,715 1,828,722 1,412,676 Allowance for uncollectible taxes (128,500) (100,000) $ 1,700,222 $ 1,312,676 4. Trade and other receivables: 2018 2017 Grants $ 2,632,716 $ 7,809,602 Local improvement taxes 5,294,765 5,656,126 Other 4,222,083 1,354,499 $ 12,149,564 $ 14,820,227 Local improvement taxes carry annual interest rates ranging from 2.64%-4.44%and are due between 2020—2041. 5. Investments: 2018 2017 Fixed income securities $78,601,321 $ 69,479,617 Credit Union Common shares 7 5 Newell Regional Services Corporation: Common shares 20 20 Preferred shares 3,070,236 3,070,236 3,070,263 3,070,261 $81,671,584 $ 72,549,878 Fixed income securities have effective interest rates of 2.40% to 3.46%with maturity dates from June 2019 through December 2028. The fixed income securities have an aggregate market value of$77,086,341 (2017-$69,105,496). 12 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 6. Notes receivable: 2018 2017 Newell Foundation $ - $ 789,542 $ - $ 789,542 7. Tangible capital assets: Cost 2017 Additions Disposals 2018 Land $ 5,351,168 $ 19,743 $ (2,650) $ 5,368,261 Land improvements 2,037,162 -- -- 2,037,162 Buildings 20,969,663 96,375 -- 21,066,038 Engineered structures 224,166,399 2,488,379 (46,100) 226,608,678 Machinery and equipment 11,587,473 665,076 (1,012,063) 11,240,486 Vehicles 6,087,278 804,853 (466,892) 6,425,239 Work in progress, net of transfers 2,023,836 308,106 -- 2,331,942 Total $272,222,979 $ 4,382,532 $ (1,527,705) $275,077,806 Accumulated Amortization amortization 2017 Disposals expense 2018 Land improvements $ 965,962 $ -- $ 130,104 $ 1,096,066 Buildings 1,715,976 -- 352,523 2,068,499 Engineered structures 59,168,305 (39,027) 5,023,066 64,152,344 Machinery and equipment 5,614,140 (573,215) 941,267 5,982,192 Vehicles 2,484,161 (404,151) 469,127 2,549,137 Total $ 69,948,544 $(1,016,393) $ 6,916,087 $ 75,848,238 Net book value 2018 2017 Land $ 5,368,261 $ 5,351,168 Land improvements 941,096 1,071,200 Buildings 18,997,539 19,253,687 Engineered structures 164,456,334 164,998,094 Machinery and equipment 5,258,294 5,973,333 Vehicles 3,876,102 3,603,117 Work in progress 2,331,942 2,023,836 Total $199,229,568 $202,274,435 Contributed tangible capital assets are recognized at fair value at the date of contribution. 13 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 8. Employee benefit obligations: Vacation The vacation liability is comprised of the vacation that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to these benefits within the next budgetary year. Sick The sick liability is comprised of the sick pay that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to them within the next budgetary year. 9. Unearned Revenue: 2018 2017 Government contributions $ 163,445 $ 22,000 Prepaid taxes 134,519 - Total $ 297,964 $ 22,000 Government contributions in unearned revenue consist of the following: Recognized as Description 2017 Received revenue 2018 ACP $ -- $ 200,536 $ (59,162) $ 141,374 Other 22,000 21,640 (21,569) 22,071 Total $ 22,000 $ 222,176 $ (80,731) $ 163,445 10. Long-term debt—operating: 2018 2017 Debenture supported with notes receivable $ - $ 789,542 Interest on long-term debt amounted to$32,569 (2017—$74,295). The County's total interest paid in 2018 was$43,425 (2017-$84,585). 14 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 11. Long-term debt—capital: 2018 2017 Tax supported debentures $ 14,882,255 $ 20,020,644 Principal and interest repayments are due as follows: Principal Interest Total 2019 $ 5,233,923 $ 300,227 $ 5,534,150 2020 3,651,630 209,611 3,861,241 2021 2,482,572 141,266 2,623,838 2022 1,845,476 81,869 1,927,345 2023 623,877 47,872 671,749 Thereafter 1,044,777 285,497 1,330,274 $ 14,882,255 $ 1,066,342 $ 15,948,597 Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates ranging from 1.124% to 3.406% per annum and matures in periods 2019 through 2042. The average annual interest rate is 2.179% for 2018 (2017— 2.095%). Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to$391,373(2017-$476,748). The County's total interest paid in 2018 was$395,760 (2017-$468,725). 12. Provision for landfill and gravel pit closure and post-closure costs: Alberta environmental law requires closure and post-closure care of landfill sites, which includes final covering and landscaping, pumping of ground water and leachates from the site, and on- going environmental monitoring, site inspections and maintenance. The accrued liability for the remaining post-closure costs of the County's landfill and closure and post-closure costs for the County's gravel pits are based on an estimate of future discounted costs. All landfill sites are closed. One site is expected to be reclaimed in 2019, while post- closure costs associated on another are not expected until 2028. The estimated closure and post-closure costs for the landfill are $361,378 and $416,059 for the gravel pits, all of which have been accrued in the financial statements. 15 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 13. Accumulated surplus: Equity in tangible Unrestricted capital Restricted Total Total net assets assets (�) Surplus (2) 2018 2017 Beginning balance $ 1,288,951 $182,253,791 $86,131,612 $269,674,354 $288,672,408 Annual surplus (deficit) 8,704,057 -- -- 8,704,057 (18,998,054) Transfers to restricted surplus (19,043,515) -- 19,043,515 -- -- Transfers from restricted surplus 14,274,759 -- (14,274,759) -- -- Amortization of tangible capital assets 6,916,087 (6,916,087) -- -- -- Net book value of assets disposed 511,312 (511,312) -- -- -- Capital assets internally funded (4,382,531) 4,382,531 -- -- -- Debt paid-capital (5,138,390) 5,138,390 -- -- -- Total $ 3,130,730 $184,347,313 $90,900,368 $278,378,411 $269,674,354 ��) Equity in tangible capital assets: 2018 2017 Tangible capital assets(note 7) $ 275,077,806 $272,222,979 Accumulated amortization (note 7) (75,848,238) (69,948,544) Long-term debt—capital (note 11) (14,882,255) (20,020,644) $ 184,347,313 $182,253,791 16 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 13. Accumulated surplus(continued): �z) Restricted surpius is comprised of funds internally restricted as follows: 2018 2017 Paving $ 1,851,997 $ 127,805 Infrastructure 46,001,809 38,522,787 Future Projects 15,711,327 19,513,713 Vehicles, Machinery& Equipment 10,972,276 9,478,581 Regional Enhancement 2,258,874 4,428,874 Stabilization 3,150,000 5,400,277 Facilities 3,114,988 2,893,968 Fire Apparatus 3,756,959 3,156,346 Recreation 2,825,027 1,417,008 Tilley 50,662 50,662 Unexpended Budget Appropriation 1,206,449 1,141,591 $90,900,368 $86,131,612 14. Net municipal property taxes: Budget 2018 2017 Taxation: Real property taxes $ 17,729,360 $ 17,683,991 $ 17,285,035 Linear property taxes 28,442,640 28,442,234 27,732,086 Government grants in place of property taxes 380,191 380,191 366,827 46,552,191 46,506,416 45,383,948 Requisitions: Alberta School Foundation Fund 12,520,449 12,517,231 12,207,543 Newell Foundation 901,696 901,696 898,029 13,422,145 13,418,927 13,105,572 Net municipal property taxes $ 33,130,046 $33,087,488 $ 32,278,376 17 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 15. Government transfers: Budget 2018 2017 Transfers for operating: Provincial government $ 394,074 $ 448,368 $ 405,145 Local government 232,500 237,520 233,365 626,574 685,888 638,510 Transfers for capital: Provincial government - 99,880 173,520 Local government - - - - 99,880 173,520 $ 626,574 $ 785,768 $ 812,030 16. Expenses by object: Budget 2018 2017 Salaries, wages and benefits $ 8,330,118 $ 7,893,075 $ 7,895,217 Contracted and general services 5,021,703 3,793,283 3,455,799 Materials, goods, supplies and utilities 5,487,940 4,602,510 4,796,641 Transfers to organizations 1,605,651 1,608,763 2,920,646 Bank charges and short-term interest 8,500 6,407 6,014 Interest on long-term debt 439,187 423,942 551,044 Other expenditures 40,000 49,120 810,395 Amortization 7,155,882 6,916,087 6,528,819 $28,088,981 $25,293,188 $ 26,964,575 18 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 17. Salary and benefits disclosure: Disclosure of salaries and benefits for elected municipal officials and the chief administrative officer as required by provincial regulation is as follows: 2018 2017 Benefits& Salary(1) Allowances (2) Total Total Council: Division 1 -Amulung $ 30,865 $ 5,452 $ 36,317 $ 37,104 Division 2-Kallen 27,683 5,312 32,996 7,696 Division 2-Simpson - - - 24,801 Division 3- Philipsen 35,145 5,641 40,786 33,655 Division 4- Hammergren 24,966 2,658 27,624 28,652 Division 5- Fyfe 27,043 5,283 32,326 32,705 Division 6-Christman 27,480 5,303 32,783 33,897 Division 7- Unruh 32,331 5,517 37,848 33,093 Division 8- De Jong 28,812 1,450 30,262 27,132 Division 9- Douglass 43,902 2,155 46,057 52,522 Division 10-Juss 27,284 5,294 32,578 29,954 $ 305,512 $ 44,065 $ 349,577 $ 341,212 Chief Administrative Officer $ 225,125 $ 48,420 $ 273,545 $ 269,835 1) Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria and any other direct cash remuneration. 2) Benefits and allowances include the employer's share of all employee benefits and contributions or payments made on behalf of employees including pension, health care, dental coverage, vision coverage, group life insurance, accidental disability and dismemberment insurance, long and short-term disability plans, professional memberships and tuition. Benefits and allowances figures also include the employer's share of the costs of additional taxable benefits including special leave with pay, financial planning services, retirement planning services, concessionary loans, travel allowances, car allowances, and club memberships, if applicable. 19 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 18. Debt limits: Section 276(2) of the Municipal Government Act requires that debt and debt limits as defined by Alberta Regulation 255/00 for the County be disclosed as follows: 2018 2017 Total debt limit $60,325,292 $57,197,4420 Total debt (14,882,255) (20,810,186) Unused debt limit $45,443,037 $ 36,387,256 2018 2017 Debt servicing limit $ 10,054,215 $ 9,532,907 Debt servicing (5,534,150) (6,367,116) Unused debt servicing limit $ 4,520,065 $ 3,165,791 The debt limit is calculated at 1.5 times revenue of the County (as defined in Alberta Regulation 255/00) and the debt service limit is calculated at 0.25 times such revenue. Incurring debt beyond these limitations requires approval by the Minister of Municipal Affairs. These thresholds are guidelines used by Alberta Municipal Affairs to identify municipalities which could be at financial risk if further debt is acquired. 19. Local authorities pension plan: The County participates in a multi-employer defined benefit pension plan. This plan is accounted for as a defined contribution plan. Employees of the County participate in the Local Authorities Pension Plan (LAPP), which is one of the plans covered by the Public Sector Pension Plans Act. The LAPP serves about 259,714 people and about 420 employers. The LAPP is financed by employer and employee contributions and investment earnings of the LAPP fund. Contributions for current service are recorded as expenditures in the year in which they become due. The County is required to make current service contributions to the Plan of 10.39% of pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension Plan and 14.84% on pensionable earnings above this amount. Employees of the County are required to make current service contributions of 9.39% of pensionable salary up to the year's maximum pensionable salary and 13.84%on pensionable salary above this amount. Total current service contributions by the County to the LAPP in 2018 were $591,344 (2017 - $619,332). Total current service contributions by the employees of the County to the LAPP in 2018 were$541,737 (2017-$571,265). At December 31, 2017, the LAPP disclosed an actuarial surplus of$4.84 billion. 20 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 20. Contingent liabilities: The County of Newell is a member of the Alberta Municipal Insurance Exchange (MUNIX). Under the terms of inembership, the County of Newell could become liable for its proportionate share of any claim losses in excess of the funds held by the exchange. Any liabi.lity incurred would be accounted for as a current transaction in the year the losses are determined. 21. Recent accounting pronouncements: The Public Sector Accounting Board recently announced the following accounting pronouncements: (a) Financial instruments: This section establishes recognition, measurement, and disclosure requirements for derivative and non-derivative instruments. The standard requires fair value measurements of derivative instruments and equity instruments; all other financial instruments can be measured at either cost or fair value depending upon elections made by the government. Unrealized gains and losses will be presented on the new statement of remeasurement gains and losses arising from the adoption of PS 1201. There will also be a requirement to disclose the nature and extent of risks arising from financial instruments and clarification is given for the de-recognition of financial liabilities. As the Municipality does not invest in derivatives or equity instruments based on its investment policy, it is anticipated that the adoption of this standard will have a minimal impact on the Municipality. This standard is effective for fiscal years beginning on or after April 1, 2019. (b)Foreign currency translation: This section estabiishes guidance on the recognition, measurement, presentation and disclosure of assets and liabilities denominated in foreign currencies. The Section requires monetary assets and liabilities, denominated in a foreign currency and non-monetary items valued at fair value denominated in a foreign currency to be adjusted to reflect the exchange rates in effect at the financial statement date. The resulting unrealized gains and losses are to be presented in the new statement of remeasurement gains and losses. This standard is effective for fiscal years beginning on or after April 1, 2019. (c) Financial statement presentation: The implementation of this standard requires a new statement of re-measurement gains and losses separate from the statement of operations. This new statement will include the unrealized gains and losses arising from the remeasurement of financial instruments and items denominated in a foreign currency. This standard is effective for fiscal years beginning on or after April 1, 2019. Management is assessing the impact of the adoption of these standards which is not known or reasonably estimable at this time. 21 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2018 22. Segmented Disclosures: Segmented disclosures (Schedule 1) are intended to enable users to better understand the government reporting entity and the major expense and revenue activities of the County. The segments have been selected based upon functional activities provided by the County. For each reported segment, revenues and expenses represent both amounts directly attributable to the segment and amounts that are allocated on a reasonable basis. The functional areas that have been separately disclosed, along with the services they provide are as follows: (a) General government is comprised of Council, Legislative, Corporate Administration, Finance, Information and Computer Services, Planning, Economic Development, Corporate Safety, Agricultural Services, Fire and Disaster Services, Bylaw Enforcement, Community Services, Recreation, Parks and Programs and Library. (b) Public Works and Transportation is comprised of Roads and Engineering Services. (c) Public Utilities is comprised of Water, Wastewater and Solid Waste. 23. Budget information: The budget information presented in these consolidated financial statements is based upon the 2018 budget approved by Council on April 5, 2018. 24. Approval of financial statements: These financial statements were approved by Council and Management. 22 COUNTY OF NEWELL Schedule 1 Schedule of Segmented Disclosures Year ended December 31,2018,with comparative information for 2017 Public Works Public Works General and Total General and Total Government Transportation Public Utilities 2018 Govemment Transportation Public Utilities 2017 Revenue Net taxes for municipal purposes $ 33,087,488 $ - $ - $ 33,087,488 $ 32,278,376 $ - $ - $ 32,278,376 Speciallevies - - 114,362 114,362 - - 117,189 117,189 User Fees and sale of goods 1,399,689 342,769 1,568,300 3,310,758 868,422 256,573 1,493,843 2,618,838 Government transfers-operating 579,286 - 106,602 685,888 533,510 - 105,000 638,510 Penalties and costs of taxes 280,078 - - 280,078 210,582 - - 210,582 Investment income 2,000,408 - - 2,000,408 1,234,488 - - 1,234,488 License and permits 213,321 - - 213,321 255,278 - - 255,278 Other 333,799 20,895 66,928 421,622 414,858 46,167 173,680 634,705 Gain(loss)on disposai of capital assets 58,294 44,642 - 102,936 12,217 131,445 - 143,662 37,952,363 408,306 1,856,192 40,216,861 35,807,731 434,185 1,889,712 38,131,628 Expenses Salaries,wages and benefits 5,110,027 2,783,048 - 7,893,075 5,061,846 2,833,371 - 7,895,217 Contracted and general services 1,621,797 1,388,185 783,302 3,793,284 1,656,052 1,118,991 680,756 3,455,799 Materials,goods,supplies and utilities 1,425,116 2,104,693 1,072,702 4,602,511 1,392,641 2,087,032 1,316,968 4,796,641 TransfertoOrganization 1,584,293 - 24,470 1,608,763 2,898,032 - 22,614 2,920,646 Bank charges and short term interest 6,407 - - 6,407 6,014 - - 6,014 Interest on long-term debt 32,569 - 391,373 423,942 74,296 - 476,748 551,044 Other expenditures 49,019 97 3 49,119 810,394 - - 810,394 Amortization 1,154,578 4,637,066 1,124,443 6,916,087 1,073,278 4,363,956 1,091,586 6,528,820 10,983,806 10,913,089 3,396,293 25,293,188 12,972,553 10,403,350 3,588,672 26,964,575 Annual surplus(deficit) beforetheundernoted 26,968,557 (10,504,783) (1,540,101) 14,923,673 22,835,178 (9,969,165) (1,698,960) 11,167,053 Other Contributed to other governments - (6,319,496) - (6,319,496) - - _ _ Contributed assets - - - - - (30,338,627) (30,338,627) Government transfers-capital - 99,880 - 99,880 - 173,520 - 173,520 Annual surplus(deficit) $ 26,968,557 $ (16,724,399) $ (1,540,101) $ 8,704,057 $ 22,835,178 $ (9,795,645) $ (32,037,587) $ (18,998,054) 23