HomeMy WebLinkAbout2019-12-31 2019 Year End Audited Financial Statements Consolidated Financial Statements of
COUNTY OF NEWELL
Year ended December 31, 2019
va i 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, 2019, 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, 2019, 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.
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 Financial 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 16.
• 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 15.
Lethbridge, AlbertaCk
April 9, 2020 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.
Chief Administrative Officer Treasurer
Avail LLP Chartered Prgfes5iQr uI Accvurtants 3
COUNTY OF NEWELL
Consolidated Statement of Financial Position
December 31, 2019, with comparative information for 2018
2019 2018
Financial Assets:
Cash and cash equivalents (note 2) $ 26,681,744 $ 3,349,499
Taxes and grants in place of taxes receivable (note 3) 1,321,064 1,700,222
Trade and other receivables (note 4) 7,417,461 12,149,564
Land held for resale 19,748 19,748
Investments (note 5) 72,655,027 81,671,584
Other financial assets - 6,495
Total Financial Assets 108,095,044 98,897,112
Financial Liabilities:
Accounts payable and accrued liabilities 2,205,551 4,212,382
Employee benefit obligations (note 7) 1,470,819 1,580,098
Unearned revenue (note 8) 230,488 297,964
Long-term debt -capital (note 9) 9,648,333 14,882,255
Provision for landfill closure and post-closure costs (note 10) 340,388 361,378
Provision for gravel pit closure and post-closure costs (note 10) 416,059 416,059
Deposit liabilities (note 2) 307,215 269,291
Other financial liabilities 83,156 -
Total Financial Liabilities 14,702,010 22,019,427
Net Financial Assets 93,393,034 76,877,685
Non-Financial Assets:
Prepaid expenses 145,106 131,631
Tangible capital assets (note 6) 195,333,426 199,229,568
Inventory for consumption 1,773,602 2,139,527
Total Non-Financial Assets 197,252,134 201,500,726
Contingent liabilities (note 18)
Accumulated surplus (note 11) $290,645,168 $278,378,411
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, 2019, with comparative information for 2018
Budget 2019 2018
Revenues:
Net municipal property taxes (note 12) $ 33,147,891 $29,653,558 $ 32,982,614
Special levies 127,413 118,918 114,362
User fees and sale of goods 2,478,647 3,939,006 3,310,758
Government transfers (note 13) 776,986 4,149,246 685,888
Penalties and cost of taxes 143,000 321,397 280,078
Investment income 1,184,000 2,788,328 2,000,408
Licenses and permits 157,500 185,448 213,321
Other revenue 131,900 558,461 421,622
Gain (loss) on disposal of tangible
capital assets - (35,551) 102,936
Total Revenues 38,147,337 41,678,811 40,111,988
Expenses (note 14):
Legislative 575,433 478,695 467,697
Administration 4,807,011 4,245,460 4,405,774
Corporate safety services 464,121 428,417 318,794
Fire and by-law enforcement 1,865,387 1,725,647 1,172,017
Disaster and emergency services 303,495 221,852 244,948
Roads, streets, walks and lighting 12,300,842 11,133,537 11,411,031
Airport 145,908 115,718 111,071
Water and wastewater 3,238,909 2,878,882 2,925,322
Waste management 336,084 335,958 470,972
Family and community support 66,755 65,755 64,466
Municipal planning 684,934 545,420 479,191
Community and agricultural services 2,122,058 1,808,897 1,783,155
Subdivision land and development 240,464 197,438 186,695
Recreation and parks 1,012,259 915,686 828,494
Culture and library 161,745 161,745 160,653
Other 55,000 575,027 158,034
Total Expenses 28,380,405 25,834,134 25,188,315
Annual surplus
before the undernoted 9,766,932 15,844,677 14,923,673
Other:
Contributed to other governments (4,355,870) (4,420,725) (6,319,496)
Government transfers (note 13) 861,563 842,805 99,880
Annual surplus (deficit) 6,272,625 12,266,757 8,704,057
Accumulated surplus, beginning of year 278,378,411 278,378,411 269,674,354
Accumulated surplus, end of year $284,651,036 $290,645,168 $278,378,411
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, 2019, with comparative information for 2018
Budget 2019 2018
Annual surplus (deficit) $ 6,272,625 $ 12,266,757 $ 8,704,057
Acquisition of tangible capital assets (6,842,643) (3,319,320) (4,382,530)
Contributed (transferred)tangible capital assets - - -
Proceeds on disposal of tangible capital assets - 142,425 614,248
Amortization of tangible capital assets 7,153,441 7,037,486 6,916,087
(Gain) loss on disposal of tangible capital assets - 35,551 (102,936)
6,583,423 16,162,899 11,748,926
Use (acquisition) of inventories for consumption (1,400,000) 365,925 (969,406)
Use (acquisition) of prepaid expenses - (13,475) (12,802)
Change in net financial assets 5,183,423 16,515,349 10,766,718
Net financial assets, beginning of year 76,877,685 76,877,685 66,110,967
Net financial assets, end of year $82,061,108 $93,393,034 $ 76,877,685
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, 2019, with comparative information for 2018
2019 2018
Cash provided by (used in):
Operations:
Annual surplus (deficit) $ 12,266,757 $ 8,704,057
Items not involving cash:
Amortization 7,037,486 6,916,087
Loss (gain) on disposal of tangible capital assets 35,551 (102,936)
Change in non-cash financial assets and liabilities:
Taxes and grants in place of taxes receivable 379,158 (387,545)
Trade and other receivables 4,732,103 2,670,663
Land held for resale - 11,743
Other financial assets 6,495 3,324
Prepaid expenses (13,475) (12,802)
Inventory for consumption 365,925 (969,406)
Accounts payable and accrued liabilities (2,006,831) 1,805,115
Employee benefit obligations (109,279) (24,893)
Unearned revenue (67,476) 275,964
Landfill closure and post-closure costs (20,989) (301,157)
Gravel pit closure and post-closure costs - 84,245
Other financial liabilities 83,156 -
22,688,582 18,672,459
Capital activities:
Proceeds on disposal of tangible capital assets 142,425 614,248
Purchase of tangible capital assets (3,319,320) (4,382,531)
(3,176,895) (3,768,283)
Investing activities:
Decrease (increase) in investments 9,016,556 (9,121,706)
Payments received on notes receivable - 789,542
9,016,556 (8,332,164)
Financing activities:
Repayment of long-term debt:
- operating - (789,542)
- capital (5,233,923) (5,138,389)
Increase (decrease) in deposit liabilities 37,924 56,883
(5,195,999) (5,871,048)
Increase (decrease) in cash and cash equivalents 23,332,244 700,964
Cash and cash equivalents, beginning of year 3,349,499 2,648,535
Cash and cash equivalents, end of year (note 2) $26,681,744 $ 3,349,499
Cash and cash equivalents is comprised of:
Cash $26,681,744 $ 3,349,499
$ 26,681,744 $ 3,349,499
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, 2019
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 amortized cost. Investment premiums and discounts are
amortized over the life of the respective investments. 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. Gains on principal protected notes are recognized as income when sold.
(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, 2019
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 clay 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, 2019
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.
(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.
(1) 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, 2019
1. Significant accounting policies (continued):
(m) Contaminated sites:
Contaminated sites are a result 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
management's estimate of the cost of post-remediation including operation, maintenance and
monitoring. No contaminated sites have been identified.
2. Cash and cash equivalents:
2019 2018
Cash $26,681,744 $ 3,349,499
$ 26,681,744 $ 3,349,499
Included in cash are amounts aggregating $307,214 (2018 - $269,291) not available for current
use.
2019 2018
Tax sale surplus $ 28,125 $ 20,879
Public reserve 267,781 248,412
Bow City Cemetery Perpetual Care Fund 11,308 -
$ 307,214 $ 269,291
11
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
3. Taxes and grants in place of taxes receivable:
2019 2018
Current $ 998,879 $ 819,359
Arrears 981,685 1,009,363
1,980,564 1,828,722
Allowance for uncollectible taxes (659,500) (128,500)
$ 1,321,064 $ 1,700,222
4. Trade and other receivables:
2019 2018
Grants $ 495,219 $ 2,632,716
Local improvement taxes 4,930,592 5,294,765
Other 1,991,650 4,222,083
$ 7,417,461 $ 12,149,564
Local improvement taxes carry annual interest rates ranging from 2.64% -4.44% and are due
between 2020—2041.
5. Investments:
2019 2018
Fixed income securities $69,584,764 $ 78,601,321
Credit Union Common shares 7 7
Newell Regional Services Corporation:
Common shares 20 20
Preferred shares 3,070,236 3,070,236
3,070,263 3,070,263
$72,655,027 $ 81,671,584
Fixed income securities have effective interest rates of 2.50% to 3.00% with maturity dates from
March 2020 through December 2029. The fixed income securities have an aggregate market
value of$69,887,759 (2018 - $77,086,341).
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COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
6. Tangible capital assets:
Cost 2018 Additions Disposals 2019
Land $ 5,368,261 $ -- $ (9,600) $ 5,358,661
Land improvements 2,037,162 20,267 -- 2,057,429
Buildings 21,066,038 58,000 -- 21,124,038
Engineered structures 226,608,678 1,984,760 (11,503) 228,581,935
Machinery and equipment 11,240,486 383,166 (327,424) 11,296,228
Vehicles 6,425,239 171,781 (295,396) 6,301,624
Work in progress, net
of transfers 2,331,942 701,346 -- 3,033,288
Total $275,077,806 $ 3,319,320 $ (643,923) $277,753,203
Accumulated Amortization
amortization 2018 Disposals expense 2019
Land improvements $ 1,096,066 $ -- $ 130,334 $ 1,226,400
Buildings 2,068,499 -- 354,468 2,422,967
Engineered structures 64,152,344 (8,043) 5,067,295 69,211,600
Machinery and equipment 5,982,192 (245,509) 987,532 6,724,214
Vehicles 2,549,137 (212,395) 497,857 2,834,597
Total $ 75,848,238 $ (465,947) $ 7,037,486 $ 82,419,777
Net book value 2019 2018
Land $ 5,358,661 $ 5,368,261
Land improvements 831,029 941,096
Buildings 18,701,071 18,997,539
Engineered structures 159,370,339 164,456,334
Machinery and equipment 4,572,013 5,258,294
Vehicles 3,467,025 3,876,102
Work in progress 3,033,288 2,331,942
Total $ 195,333,426 $199,229,568
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, 2019
7. 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.
8. Unearned Revenue:
2019 2018
Government contributions $ 83,392 $ 163,445
Prepaid taxes 107,878 134,519
Other 39,218 -
Total $ 230,488 $ 297,964
Government contributions in unearned revenue consist of the following:
Recognized as
Description 2018 Received revenue 2019
ACP $ 141,374 $ 2,125 $ (80,392) $ 63,106
FGTF - 863,669 (861,563) 2,106
Other 22,071 18,180 (22,071) 18,180
Total $ 163,445 $ 883,974 $ (964,026) $ 83,392
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COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
9. Long-term debt—capital:
2019 2018
Tax supported debentures $ 9,648,333 $ 14,882,255
Principal and interest repayments are due as follows:
Principal Interest Total
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
2024 62,110 34,163 96,273
Thereafter 982,668 251,336 1,234,004
$ 9,648,333 $ 766,117 $ 10,414,450
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 2.357% for 2019 (2018 — 2.179%). Debenture debt is issued on
the credit and security of the County of Newell at large.
Interest on long-term debt amounted to $295,745 (2018 - $391,373).
The County's total interest paid in 2019 was $300,226 (2018 - $395,760).
10. 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 2020, while post-closure
costs associated on another are not expected until 2028.
The estimated closure and post-closure costs for the landfill are $340,388 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, 2019
11. Accumulated surplus:
Equity in
tangible
Unrestricted capital Restricted Total Total
net assets assets (1) Surplus (2) 2019 2018
Beginning
balance $ 3,130,730 $184,347,313 $90,900,368 $278,378,411 $269,674,354
Annual surplus
(deficit) 12,266,757 -- -- 12,266,757 8,704,057
Transfers to
restricted surplus (17,009,796) -- 17,009,796 -- --
Transfers from
restricted surplus 11,080,010 -- (11,080,010) -- --
Amortization of
tangible capital
assets 7,037,486 (7,037,486) -- --Net book value
of assets disposed 177,977 (177,977) -- -- --
Capital assets
internally
funded (3,319,320) 3,319,320 -- -- --
Debt paid - capital (5,233,923) 5,233,923 -- -- --
Total $ 8,129,921 $185,685,093 $96,830,154 $290,645,168 $278,378,411
(1)Equity in tangible capital assets:
2019 2018
Tangible capital assets (note 6) $ 277,753,204 $275,077,806
Accumulated amortization (note 6) (82,419,778) (75,848,238)
Long-term debt—capital (note 9) (9,648,333) (14,882,255)
$ 185,685,093 $184,347,313
16
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
11. Accumulated surplus (continued):
(2) Restricted surplus is comprised of funds internally restricted as follows:
2019 2018
Paving $ 3,971,925 $ 1,851,997
Infrastructure 49,231,522 46,001,809
Future Projects 10,232,443 15,711,327
Vehicles, Machinery & Equipment 12,129,527 10,972,276
Regional Enhancement 2,258,874 2,258,874
Stabilization 5,000,000 3,150,000
Facilities 3,357,238 3,114,988
Fire Apparatus 4,453,508 3,756,959
Recreation 4,233,046 2,825,027
Tilley 50,662 50,662
Unexpended Budget Appropriation 1,911,408 1,206,449
$96,830,154 $ 90,900,368
12. Net municipal property taxes:
Budget 2019 2018
Taxation:
Real property taxes $ 16,981,675 $ 16,779,251 $ 17,683,991
Linear property taxes 29,663,407 26,204,690 28,442,234
Government grants in place of property
taxes 388,143 376,684 380,191
47,003,225 43,360,625 46,506,416
Requisitions:
Alberta School Foundation Fund 12,722,041 12,573,774 12,517,231
Newell Foundation 901,241 901,241 901,696
Designated Industrial Property 232,052 232,052 104,874
13,855,334 13,707,067 13,523,801
Net municipal property taxes $ 33,147,891 $29,653,558 $ 32,982,614
17
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
13. Government transfers:
Budget 2019 2018
Transfers for operating:
Provincial government $ 387,247 $ 3,867,691 $ 448,368
Local government 389,739 281,555 237,520
776,986 4,149,246 685,888
Transfers for capital:
Provincial government 861,563 842,805 99,880
Local government - - -
861,563 842,805 99,880
$ 1,638,549 $ 4,992,051 $ 785,768
14. Expenses by object:
Budget 2019 2018
Salaries, wages and benefits $ 8,635,436 $ 7,933,001 $ 7,893,075
Contracted and general services 4,773,619 3,430,120 3,793,283
Materials, goods, supplies and utilities 5,585,296 4,690,632 4,497,636
Transfers to organizations 1,883,887 1,874,628 1,608,763
Bank charges and short-term interest 8,500 11,502 6,407
Interest on long-term debt 300,226 295,746 423,942
Other expenditures 40,000 561,018 49,120
Amortization 7,153,441 7,037,486 6,916,087
$ 28,380,405 $25,834,134 $ 25,188,315
18
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
15. 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:
2019 2018
Benefits &
Salary (1) Allowances (2) Total Total
Council:
Division 1 -Amulung $ 30,378 $ 5,380 $ 35,758 $ 36,317
Division 2 - Kallen 29,655 6,487 36,141 32,996
Division 3 - Philipsen 31,822 6,641 38,462 40,786
Division 4 - Hammergren 24,915 3,411 28,326 27,624
Division 5 - Fyfe 24,142 6,097 30,239 32,326
Division 6 - Christman 25,670 6,207 31,877 32,783
Division 7 - Unruh 26,347 6,252 32,599 37,848
Division 8 - De Jong 28,804 2,195 30,999 30,262
Division 9 - Douglass 42,636 3,212 45,848 46,057
Division 10 -Juss 24,942 6,153 31,095 32,578
$ 298,309 $ 52,035 $ 341,344 $ 349,577
Chief Administrative Officer $ 229,620 $ 51,776 $ 281,396 $ 273,545
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, 2019
16. 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:
2019 2018
Total debt limit $62,518,217 $ 60,325,292
Total debt (9,648,333) (14,882,255)
Unused debt limit $52,869,884 $ 45,443,037
2019 2018
Debt servicing limit $ 10,419,703 $ 10,054,215
Debt servicing (3,861,241) (5,534,150)
Unused debt servicing limit $ 6,558,462 $ 4,520,065
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.
17. 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 265,813
people and about 421 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 9.39% of
pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension
Plan and 13.84% on pensionable earnings above this amount. Employees of the County are
required to make current service contributions of 8.39% of pensionable salary up to the year's
maximum pensionable salary and 12.84% on pensionable salary above this amount.
Total current service contributions by the County to the LAPP in 2019 were $541,429 (2018 -
$591,344). Total current service contributions by the employees of the County to the LAPP in
2019 were $491,755 (2018 - $541,737).
At December 31, 2018, the LAPP disclosed an actuarial surplus of$3.5 billion.
20
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
18. Contingent liabilities:
The County of Newell is a member of the Alberta Municipal Insurance Exchange (MUNIX). Under
the terms of membership, 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 liability incurred would be
accounted for as a current transaction in the year the losses are determined.
19. Contractual Obligations:
The County of Newell has entered into an agreement with the Province of Alberta to upgrade the
roadway surface of Highway 876 to a paved standard. Under the terms of the agreement the
County and the Province agree to share the project costs on a 50/50 basis. Remaining estimated
costs for the project total $12,000,000. The project is expected to be finished in 2020 with the
County's share of the remaining costs estimated around $6,000,000.
The County has agreed to provide funding of up to $850,000 to the City of Brooks for the Hort
Main Pipeline Expansion project which is expected to be complete in 2020.
20. 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, 2021.
(b) Foreign currency translation:
This section establishes 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, 2021.
21
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
20. Recent accounting pronouncements (continued):
(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, 2021.
(d) Asset retirement obligations:
Under this new standard, an asset retirement obligation (ARO) is a legal obligation
associated with the retirement of a tangible capital asset controlled by a public sector entity.
An ARO will include post-retirement operation, maintenance, and monitoring costs. A liability
will be recognized when specific criteria are met, with a corresponding increase to the
carrying amount of the related tangible capital asset, and expensing the amount in a rational
and systematic manner. This new standard will replace the current standard for "Liability for
Contaminated Sites" and will be effective for fiscal years beginning on or after April 1, 2021.
(e) Revenue:
The new standard establishes overall guidance on how to account for and report revenue.
The standard makes a distinction between transactions that include performance obligations
(exchange transactions) and those that do not (non- exchange transactions). A performance
obligation is an enforceable promise to provide specific goods or services to a specific payor.
Revenue from transactions with performance obligations is recognized as the public sector
entity satisfies a performance obligation by providing the goods or services to a payor. Once
a performance obligation is identified, an assessment is needed to determine whether
revenue recognition occurs over a period of time or at a point in time. This standard is
effective for fiscal years beginning on or after April 1, 2022.
Management is assessing the impact of the adoption of these standards which is not known or
reasonably estimable at this time.
22
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2019
21. 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.
22. Comparative information:
Certain comparative information has been reclassified from those previously presented to
conform to the presentation of the 2019 financial statements.
23. Budget information:
The budget information presented in these consolidated financial statements is based upon the
2019 budget approved by Council on April 11, 2019.
24. Subsequent event:
COVI D-19
The global coronavirus pandemic has had a significant impact on global financial markets and
will have significant accounting, disclosure, and internal control implications for many entities.
Some of the key impacts include, but are not limited to, interruptions of production and supply
chains, unavailability of personnel, reductions in revenue, decline in value of financial
investments, disruptions or stoppages in non-essential travel, and the closure of facilities and
businesses.
The situation is changing rapidly and the future impact on the County is not readily determinable
at this time.
25. Approval of financial statements:
These financial statements were approved by Council and Management.
23
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