Loading...
HomeMy WebLinkAbout2020-12-31 2020 Year End Audited Financial StatementsConsolidated Financial Statements of COUNTY OF NEWELL Year ended December 31, 2020 INDEPENDENT AUDITORS' REPORT To:The Reeve 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, 2020, 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, 2020, 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: 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, Alberta April 8, 2021 Chartered Professional Accountants 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 3 4 COUNTY OF NEWELL Consolidated Statement of Financial Position December 31, 2020, with comparative information for 2019 2020 2019 Financial Assets: Cash and cash equivalents (note 2)$ 11,564,795 $ 26,681,744 Taxes and grants in place of taxes receivable (note 3)1,087,977 1,321,064 Trade and other receivables (note 4)7,422,804 7,417,461 Land held for resale 19,749 19,748 Investments (note 5)91,273,931 72,655,027 Total Financial Assets 111,369,256 108,095,044 Financial Liabilities: Accounts payable and accrued liabilities 3,240,987 2,205,551 Employee benefit obligations (note 7)1,546,624 1,470,819 Unearned revenue (note 8)687,952 230,488 Long-term debt - capital (note 9)5,996,703 9,648,333 Provision for landfill closure and post-closure costs (note 10)331,035 340,388 Provision for gravel pit closure and post-closure costs (note 10)416,059 416,059 Deposit liabilities (note 2)272,155 307,215 Other financial liabilities 34,406 83,156 Total Financial Liabilities 12,525,921 14,702,010 Net Financial Assets 98,843,335 93,393,034 Non-Financial Assets: Prepaid expenses 123,383 145,106 Tangible capital assets (note 6)193,577,678 195,333,426 Inventory for consumption 2,649,265 1,773,602 Total Non-Financial Assets 196,350,326 197,252,134 Contingent liabilities (note 18) Accumulated surplus (note 11)$295,193,661 $290,645,168 The accompanying notes are an integral part of these consolidated financial statements. 5 COUNTY OF NEWELL Consolidated Statement of Financial Activities Year ended December 31, 2020, with comparative information for 2019 Budget 2020 2019 Revenues: Net municipal property taxes (note 12)$ 30,814,808 $ 30,819,752 $ 29,653,558 Special levies 117,476 117,475 118,918 User fees and sale of goods 2,567,785 3,053,936 3,939,006 Government transfers (note 13)640,048 600,370 4,149,246 Penalties and cost of taxes 191,000 288,153 321,397 Investment income 1,116,000 2,919,828 2,788,328 Licenses and permits 155,500 215,277 185,448 Other revenue 126,967 379,013 558,461 Gain (loss) on disposal of tangible capital assets -(17,950)(35,551) Total Revenues 35,729,584 38,375,854 41,678,811 Expenses (note 14): Legislative 545,228 342,334 478,695 Administration 4,696,994 4,255,174 4,245,460 Corporate safety services 495,970 471,669 428,417 Police 214,547 227,481 - Fire and by-law enforcement 1,464,461 1,265,257 1,725,647 Disaster and emergency services 294,134 220,033 221,852 Roads, streets, walks and lighting 12,401,805 10,805,690 11,133,537 Airport 82,947 64,096 115,718 Water and wastewater 3,077,940 3,001,461 2,878,882 Waste management 341,596 342,572 335,958 Family and community support 68,070 67,070 65,755 Municipal planning 540,335 511,565 545,420 Community and agricultural services 2,154,135 1,718,743 1,808,897 Subdivision land and development 201,691 151,375 197,438 Recreation and parks 1,039,983 1,645,492 915,686 Culture and library 161,576 181,725 161,745 Other 295,000 3,225,955 575,027 Total Expenses 28,076,412 28,497,692 25,834,134 Annual surplus before the undernoted 7,653,172 9,878,162 15,844,677 Other: Contributed to other governments (7,801,500)(6,369,690)(4,420,725) Government transfers (note 13)1,168,149 1,040,021 842,805 Annual surplus 1,019,821 4,548,493 12,266,757 Accumulated surplus, beginning of year 290,645,168 290,645,168 278,378,411 Accumulated surplus, end of year $291,664,989 $295,193,661 $ 290,645,168 The accompanying notes are an integral part of these consolidated financial statements. 6 COUNTY OF NEWELL Consolidated Statement of Change in Net Financial Assets December 31, 2020, with comparative information for 2019 Budget 2020 2019 Annual surplus $ 1,019,821 $ 4,548,493 $ 12,266,757 Acquisition of tangible capital assets (8,735,724)(5,507,222)(3,319,320) Contributed (transferred) tangible capital assets --- Proceeds on disposal of tangible capital assets 217,000 344,221 142,425 Amortization of tangible capital assets 7,027,632 6,900,798 7,037,486 (Gain) loss on disposal of tangible capital assets -17,950 35,551 (471,271)6,304,240 16,162,899 Use (acquisition) of inventories for consumption (3,100,000)(875,663)365,925 Use (acquisition) of prepaid expenses -21,723 (13,475) Change in net financial assets (3,571,271)5,450,300 16,515,349 Net financial assets, beginning of year 93,393,034 93,393,034 76,877,685 Net financial assets, end of year $89,821,763 $ 98,843,335 $ 93,393,034 The accompanying notes are an integral part of these consolidated financial statements. 7 COUNTY OF NEWELL Consolidated Statement of Cash Flows Year ended December 31, 2020, with comparative information for 2019 2020 2019 Cash provided by (used in): Operations: Annual surplus $ 4,548,493 $ 12,266,757 Items not involving cash: Amortization 6,900,798 7,037,486 Loss (gain) on disposal of tangible capital assets 17,950 35,551 Change in non-cash financial assets and liabilities: Taxes and grants in place of taxes receivable 233,087 379,158 Trade and other receivables (5,344)4,732,103 Other financial assets -6,495 Prepaid expenses 21,723 (13,475) Inventory for consumption (875,663)365,925 Accounts payable and accrued liabilities 1,035,436 (2,006,831) Employee benefit obligations 75,805 (109,279) Unearned revenue 457,464 (67,476) Landfill closure and post-closure costs (9,354)(20,989) Other financial liabilities (48,751)83,156 12,351,645 22,688,582 Capital activities: Proceeds on disposal of tangible capital assets 344,221 142,425 Purchase of tangible capital assets (5,507,222)(3,319,320) (5,163,001)(3,176,895) Investing activities: Decrease (increase) in investments (18,618,904)9,016,556 (18,618,904)9,016,556 Financing activities: Repayment of long-term debt: - capital (3,651,630)(5,233,923) Increase (decrease) in deposit liabilities (35,060)37,924 (3,686,690)(5,195,999) Increase (decrease) in cash and cash equivalents (15,116,950)23,332,244 Cash and cash equivalents, beginning of year 26,681,744 3,349,499 Cash and cash equivalents, end of year (note 2)$ 11,564,795 $ 26,681,744 Cash and cash equivalents is comprised of: Cash $ 11,564,795 $ 26,681,744 $ 11,564,795 $ 26,681,744 The accompanying notes are an integral part of these consolidated financial statements. 8 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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. 9 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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. 10 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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. (j) 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. (l) 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. 11 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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: 2020 2019 Cash $ 11,564,795 $ 26,681,744 $ 11,564,795 $ 26,681,744 Included in cash are amounts aggregating $272,155 (2019 - $307,214) not available for current use. 2020 2019 Tax sale surplus $29,162 $28,125 Public reserve 231,583 267,781 Bow City Cemetery Perpetual Care Fund 11,410 11,308 $ 272,155 $ 307,214 12 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 3. Taxes and grants in place of taxes receivable: 2020 2019 Current $ 694,095 $ 998,879 Arrears 868,882 981,685 1,562,977 1,980,564 Allowance for uncollectible taxes (475,000)(659,500) $ 1,087,977 $ 1,321,064 4. Trade and other receivables: 2020 2019 Grants $ 495,219 $ 495,219 Local improvement taxes 4,567,606 4,930,592 Other 2,359,979 1,991,650 $ 7,422,804 $ 7,417,461 Local improvement taxes carry annual interest rates ranging from 2.64% - 4.44% and are due between 2030 – 2041. 5. Investments: 2020 2019 Fixed income securities $ 88,203,668 $ 69,584,764 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 $ 91,273,931 $ 72,655,027 Fixed income securities have effective interest rates of 1.65% to 3.05% with maturity dates from September 2021 through December 2030. The fixed income securities have an aggregate market value of $89,821,927 (2019 - $69,887,759). 13 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 6. Tangible capital assets: Cost 2019 Additions Disposals 2020 Land $ 5,358,661 $6,786 $(700) $ 5,364,747 Land improvements 2,057,429 48,529 - 2,105,958 Buildings 21,124,038 -- 21,124,038 Engineered structures 228,581,935 3,228,770 (1,646,615) 230,164,090 Machinery and equipment 11,296,228 982,381 (354,449) 11,924,160 Vehicles 6,301,624 1,243,283 (390,676) 7,154,231 Work in progress, net of transfers 3,033,288 (2,527)- 3,030,761 Total $ 277,753,203 $ 5,507,222 $ (2,392,440) $ 280,867,985 Accumulated Amortization amortization 2019 Disposals expense 2020 Land improvements $ 1,226,400 $-$82,763 $ 1,309,163 Buildings 2,422,967 - 354,925 2,777,892 Engineered structures 69,211,600 (1,601,642) 5,116,239 72,726,193 Machinery and equipment 6,724,214 (257,988) 835,969 7,302,196 Vehicles 2,834,597 (170,639) 510,902 3,174,862 Total $ 82,419,777 $ 2,030,269 $ 6,900,798 $ 87,290,306 Net book value 2020 2019 Land $ 5,364,747 $ 5,358,661 Land improvements 796,795 831,029 Buildings 18,346,146 18,701,071 Engineered structures 157,437,897 159,370,339 Machinery and equipment 4,621,964 4,572,013 Vehicles 3,979,369 3,467,025 Work in progress 3,030,761 3,033,288 Total $ 193,577,678 $ 195,333,426 Contributed tangible capital assets are recognized at fair value at the date of contribution. 14 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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: 2020 2019 Government contributions $ 107,095 $83,392 Prepaid taxes 491,630 107,878 Other 89,227 39,218 Total $ 687,952 $ 230,488 Government contributions in unearned revenue consist of the following: Recognized as Description 2019 Received revenue 2020 ACP $ 63,106 $-$ (3,691) $ 59,415 FGTF 2,106 851,062 (853,168)- Other 18,180 43,136 (13,636)47,680 Total $ 83,392 $ 894,198 $ (870,495) $ 107,095 15 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 9. Long-term debt – capital: 2020 2019 Tax supported debentures $ 5,996,703 $ 9,648,333 Principal and interest repayments are due as follows: Principal Interest Total 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 2025 64,208 32,065 96,273 Thereafter 918,459 219,271 1,137,730 $ 5,996,703 $ 556,504 $ 6,553,207 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 2020 through 2042. The average annual interest rate is 2.60% for 2020 (2019 – 2.357%). Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $206,179 (2019 - $295,745). The County’s total interest paid in 2020 was $209,611 (2019 - $300,226). 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 2021, while post-closure costs associated on another are not expected until 2028. The estimated closure and post-closure costs for the landfills are $331,035 and $416,059 for the gravel pits, all of which have been accrued in the financial statements. 16 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 11. Accumulated surplus: Equity in tangible Unrestricted capital Restricted Total Total net assets assets (1)Surplus (2)2020 2019 Beginning balance $ 8,129,921 $185,685,093 $96,830,154 $290,645,168 $278,378,411 Annual surplus (deficit)4,548,493 --4,548,493 12,266,757 Transfers to restricted surplus (17,549,172)-17,549,172 -- Transfers from restricted surplus 14,825,708 - (14,825,708)-- Amortization of tangible capital assets 6,900,798 (6,900,798)--- Net book value of assets disposed 362,170 (362,170)--- Capital assets internally funded (5,507,222)5,507,222 --- Debt paid - capital (3,651,629)3,651,629 --- Total $ 8,059,067 $187,580,976 $99,553,618 $295,193,661 $290,645,168 (1)Equity in tangible capital assets: 2020 2019 Tangible capital assets (note 6)$ 280,867,985 $ 277,753,204 Accumulated amortization (note 6)(87,290,306)(82,419,778) Long-term debt – capital (note 9)(5,996,703)(9,648,333) $ 187,580,976 $ 185,685,093 17 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 11. Accumulated surplus (continued): (2) Restricted surplus is comprised of funds internally restricted as follows: 2020 2019 Paving $ 5,861,505 $ 3,971,925 Infrastructure 53,090,121 49,231,522 Future Projects 6,447,953 10,232,443 Vehicles, Machinery & Equipment 12,177,665 12,129,527 Regional Enhancement 2,151,337 2,258,874 Stabilization 5,000,000 5,000,000 Facilities 3,575,932 3,357,238 Fire Apparatus 4,629,076 4,453,508 Recreation 5,202,501 4,233,046 Tilley 50,662 50,662 Unexpended Budget Appropriation 1,366,866 1,911,408 $ 99,553,618 $ 96,830,154 12. Net municipal property taxes: Budget 2020 2019 Taxation: Real property taxes $ 17,073,458 $ 17,078,027 $ 16,779,251 Linear property taxes 26,640,673 26,606,568 26,204,690 Government grants in place of property taxes 396,124 384,357 376,684 44,110,255 44,068,952 43,360,625 Requisitions: Alberta School Foundation Fund 12,733,565 12,687,318 12,573,774 Newell Foundation 361,580 361,580 901,241 Designated Industrial Property 200,302 200,302 232,052 13,295,447 13,249,200 13,707,067 Net municipal property taxes $ 30,814,808 $ 30,819,752 $ 29,653,558 18 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 13. Government transfers: Budget 2020 2019 Transfers for operating: Provincial government $ 293,009 $ 290,620 $ 3,867,691 Local government 347,039 309,750 281,555 640,048 600,370 4,149,246 Transfers for capital: Provincial government 950,976 949,205 842,805 Local government 217,173 90,816 - 1,168,149 1,040,021 842,805 $ 1,808,197 $ 1,640,391 $ 4,992,051 14. Expenses by object: Budget 2020 2019 Salaries, wages and benefits $ 8,496,311 $ 7,838,554 $ 7,933,001 Contracted and general services 4,736,039 3,595,775 3,430,120 Materials, goods, supplies and utilities 5,123,237 4,044,176 4,690,632 Transfers to organizations 2,194,330 2,690,666 1,874,628 Bank charges and short-term interest 9,250 9,433 11,502 Interest on long-term debt 209,613 206,179 295,746 Other expenditures 280,000 3,212,111 561,018 Amortization 7,027,632 6,900,798 7,037,486 $ 28,076,412 $ 28,497,692 $ 25,834,134 19 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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: 2020 2019 Benefits & Salary (1)Allowances (2)Total Total Council: Division 1 - Amulung $ 21,322 $ 4,866 $ 26,188 $ 35,758 Division 2 - Kallen 23,198 6,172 29,371 36,141 Division 3 - Philipsen 25,074 6,297 31,370 38,462 Division 4 - Hammergren 20,730 3,111 23,840 28,326 Division 5 - Fyfe 20,453 5,990 26,444 30,239 Division 6 - Christman 23,826 6,214 30,040 31,877 Division 7 - Unruh 21,184 6,039 27,222 32,599 Division 8 - De Jong 22,290 1,639 23,929 30,999 Division 9 - Douglass 32,358 2,344 34,702 45,848 Division 10 - Juss 22,705 6,140 28,844 31,095 $ 233,140 $ 48,810 $ 281,950 $ 341,344 Chief Administrative Officer $ 243,074 $ 55,472 $ 298,547 $ 281,396 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. 20 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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: 2020 2019 Total debt limit $ 57,563,781 $ 62,518,217 Total debt (5,996,703)(9,648,333) Unused debt limit $ 51,567,078 $ 52,869,884 2020 2019 Debt servicing limit $ 9,593,964 $ 10,419,703 Debt servicing (2,623,837)(3,861,241) Unused debt servicing limit $ 6,970,127 $ 6,558,462 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 274,151 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 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 2020 were $565,882 (2019 - $541,429). Total current service contributions by the employees of the County to the LAPP in 2020 were $514,397 (2019 - $491,755). At December 31, 2019, the LAPP disclosed an actuarial surplus of $7.9 billion. 21 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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 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 2021. The County has agreed to provide operational funding to the City of Brooks for the provision of recreation, parks, and culture services used by County residents. The contribution is $648,640 for 2021. The contributions increase by 1.6 per cent annually. The agreement expires December 31, 2024. 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, 2022. (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, 2022. 22 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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, 2024. (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, 2022. (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. 23 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2020 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. Budget information: The budget information presented in these consolidated financial statements is based upon the 2020 budget approved by Council on April 9, 2020. 23. Approval of financial statements: These financial statements were approved by Council and Management. 24. COVID-19 Events have occurred as a result of the COVID-19 (coronavirus) pandemic that have caused economic uncertainty. The duration and impact of the pandemic, as well as the effectiveness of government responses, remain unclear at this time. Potential impacts on the County’s business could include future decreases in revenue and delays in completing capital project work, temporary declines in investment income, closure of facilities, temporary and/or permanent termination of public employees and mandatory working from home requirements for those able to do so. The County has continued to develop strategies to manage the impacts of the COVID-19 outbreak. Administration continues to monitor revenue, expenses, and projects for the County. Cost saving measures have been instituted where appropriate. The County continues to follow protocols set by the Alberta Government and to make suitable adjustments in the face of the pandemic. Management is not aware of any material impairments, at this time, that will impact the financial assets or liabilities of the County due to the pandemic. The situation is continually changing and the future impact on the County is not readily determinable at this time. COUNTY OF NEWELL Schedule 1 Schedule of Segmented Disclosures Year ended December 31, 2020, with comparative information for 2019 General Government Public Works and Transportation Public Utilities Total 2020 General Government Public Works and Transportation Public Utilities Total 2019 Revenue Net taxes for municipal purposes 30,819,752$-$-$30,819,752$29,653,558$-$-$29,653,558$ Special levies --117,475 117,475 --118,918 118,918 User Fees and sale of goods 1,030,348 306,966 1,716,622 3,053,936 1,958,423 356,937 1,623,646 3,939,006 Government transfers - operating 540,985 -59,385 600,370 4,069,334 25,749 54,163 4,149,246 Penalties and costs of taxes 288,153 --288,153 321,397 --321,397 Investment income 2,919,828 --2,919,828 2,788,328 --2,788,328 License and permits 215,277 --215,277 185,448 --185,448 Other 350,602 1,989 26,422 379,012 430,432 2,116 125,913 558,461 Gain (loss) on disposal of capital assets 37,440 (55,390)-(17,950)(24,311)(7,780)(3,460)(35,551) 36,202,385 253,565 1,919,904 38,375,854 39,382,609 377,022 1,919,180 41,678,812 Expenses Salaries, wages and benefits 5,052,907 2,785,647 -7,838,554 5,167,663 2,765,338 -7,933,001 Contracted and general services 1,490,762 1,157,522 947,491 3,595,775 1,611,737 1,056,843 761,540 3,430,120 Materials, goods, supplies and utilities 1,252,702 1,742,511 1,048,964 4,044,176 1,540,811 2,136,237 1,013,585 4,690,633 Transfers to organizations 2,671,186 -19,480 2,690,666 1,855,148 -19,480 1,874,628 Bank charges and short term interest 9,433 --9,433 11,502 --11,502 Interest on long-term debt --206,179 206,179 --295,746 295,746 Other expenditures 3,211,854 -257 3,212,111 560,868 -150 561,018 Amortization 1,113,563 4,665,573 1,121,662 6,900,798 1,228,515 4,684,632 1,124,339 7,037,486 14,802,407 10,351,253 3,344,033 28,497,693 11,976,244 10,643,050 3,214,840 25,834,135 Annual surplus (deficit) before the undernoted 21,399,978 (10,097,688)(1,424,129)9,878,161 27,406,365 (10,266,028)(1,295,660)15,844,677 Other Contributed to other governments (100,811)(6,268,879)-(6,369,690)-(4,420,725)-(4,420,725) Government transfers - capital -1,040,021 -1,040,021 -842,805 -842,805 Annual surplus (deficit)21,299,167$(15,326,546)$(1,424,129)$4,548,493$27,406,365$(13,843,948)$(1,295,660)$12,266,757$