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HomeMy WebLinkAbout2002-12-31 Year End Audited Financial Satements COUNTY OF NEWELL NO. 4 Financial Statements For the Year Ended December 31, 2002 COUNTY OF NEWELL NO. 4 TABLE OF CONTENTS For the year ended December 31, 2002 1 AUDITORS’ REPORT FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION2 CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES AND CHANGE IN FUND BALANCES3 CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION4 SCHEDULE OF FINANCIAL ACTIVITIES AND CHANGE IN FUND BALANCE - OPERATING5 SCHEDULE OF FINANCIAL ACTIVITIES AND CHANGE IN FUND BALANCE - CAPITAL6 SCHEDULE OF CHANGE IN FUND BALANCE - RESERVES7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS8 - 17 AUDITORS' REPORT To: the Reeve and Council of the County of Newell No. 4 We have audited the consolidated statement of financial position of the County of Newell No. 4 as at December 31, 2002, the consolidated statement of financial activities and change in fund balances, and the consolidated statement of changes in financial position for the year then ended. These consolidated financial statements are the responsibility of the municipal administration. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by administration, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the County as at December 31, 2002 and the results of its financial activities and the changes in its financial position for the year then ended in accordance with the disclosed basis of accounting described in Note 1. Lethbridge, Alberta February 20, 2003Chartered Accountants 1 COUNTY OF NEWELL NO. 4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31, 2002 20022001 ASSETS Financial assets Cash and temporary investments (Note 2)$ 7,465,193$ 6,476,742 Taxes and grants in place of taxes receivable (Note 3)586,023479,664 Trade and other receivables668,9881,713,202 Land held for resale1,27545,873 Prepaid expenses62,02989,900 Investments1,519,771- 10,303,2798,805,381 Physical assets Inventory for consumption523,565594,472 Physical assets (Note 4)16,751,91915,657,483 17,275,48416,251,955 $ 27,578,763$ 25,057,336 LIABILITIES AND MUNICIPAL EQUITY Liabilities Accounts payable and accrued liabilities$ 774,717$ 669,849 Vacation accrual112,15793,726 Long-term debt (Note 5)754,440855,012 Provision for landfill closure and post-closure costs (Note 6)651,300300,000 2,292,6141,918,587 Municipal equity Fund balances Operating - Schedule 1831,248829,448 Capital - Schedule 2(89,919)(135,471) Reserves - Schedule 3 (Note 7)8,547,3417,642,301 9,288,6708,336,278 Equity in physical assets15,997,47914,802,471 25,286,14923,138,749 $ 27,578,763$ 25,057,336 See accompanying notes2 COUNTY OF NEWELL NO. 4 CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES AND CHANGE IN FUND BALANCES For the year ended December 31, 2002 Budget (Unaudited)20022001 Revenue Net municipal property taxes (Note 8)$ 7,767,400$ 7,942,161$ 7,194,034 Special levies238,050237,983217,626 User fees and sale of goods 425,2601,126,768441,559 Gain on sale of land held for resale50034,2326,968 Government transfers (Note 9)1,227,8501,120,5174,827,495 Penalties and costs of taxes100,250101,113114,501 Investment income217,540260,504474,898 Licenses and permits45,00061,60660,710 Proceeds from local improvements151,695203,567151,698 Proceeds on disposal of physical assets125,500171,4531,321,609 Other47,90068,45462,904 10,346,94511,328,35814,874,002 (Note 10) Expenditures Legislative320,295353,371237,684 Administration936,600887,619720,988 General178,880241,799375,737 Fire and bylaw enforcement351,650330,569284,864 Ambulance services and first aid153,445153,44693,104 Disaster and emergency measures27,5508,3941,345 Roads, streets, walks, and lighting6,439,2156,494,65614,382,374 Water and wastewater16,11020,310108,797 Waste management299,000535,474101,174 Family and community support153,450147,046116,233 Municipal planning282,830240,571274,896 Community and agricultural services629,535606,201720,272 Subdivision land and development5003,3812,745 Recreation and parks217,510217,295202,444 Culture and library35,25535,26241,086 10,041,82510,275,39417,663,743 305,1201,052,964(2,789,741) Excess (deficiency) of revenue over expenditures Capital financing transaction Repayment of long-term debt(100,575)(100,572)(95,111) $ 204,545$ 952,392$ (2,884,852) Change in fund balances See accompanying notes3 COUNTY OF NEWELL NO. 4 CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION For the year ended December 31, 2002 20022001 Cash flows from operating activities Excess (deficiency) of revenue over expenditures$ 1,052,964$ (2,789,741) Change in non-cash working capital items Taxes and grants in place of taxes receivable(106,359)41,789 Trade and other receivables1,044,214(984,340) Land held for resale44,598169,514 Inventory for consumption70,907(82,159) Prepaid expenses27,871(2,120) Accounts payable and accrued liabilities104,868(328,388) Vacation accrual18,4313,841 Provision for landfill closure and post closure351,300300,000 2,608,794(3,671,604) Cash flows from investing activities Increase in investments(1,519,771)- Cash flows from financing activities Long-term debt repaid(100,572)(95,111) 988,451(3,766,715) Change in cash and equivalents during the year 6,476,74210,243,457 Cash and temporary investments, beginning of year $ 7,465,193$ 6,476,742 Cash and temporary investments, end of year See accompanying notes4 COUNTY OF NEWELL NO. 4 SCHEDULE 1 SCHEDULE OF FINANCIAL ACTIVITIES AND CHANGE IN FUND BALANCE - OPERATING For the Year Ended December 31, 2002 Budget (Unaudited)20022001 Revenue Net municipal property taxes (Note 8)$ 7,767,400$ 7,942,161$ 7,194,034 Special levies238,050237,983217,626 User fees and sale of goods425,2601,126,768441,559 Gain on sale of land held for resale50034,2326,968 Government transfers 1,227,8501,104,4644,763,778 Penalties and costs of taxes100,250101,113114,501 Investment income217,540260,504472,950 Licenses and permits45,00061,60660,710 Proceeds from local improvements151,695150,330151,698 Other47,90068,45462,904 10,221,44511,087,61513,486,728 (Note 10) Expenditures Legislative320,295353,371237,684 Administration915,200852,509666,222 General178,880241,799375,737 Fire and bylaw enforcement351,650330,569284,864 Ambulance services and first aid153,445153,44693,104 Disaster and emergency measures6,9508,3941,345 Roads, streets, walks, and lighting4,874,1154,876,5869,413,091 Water and wastewater 16,11020,31013,921 Waste management299,000535,474101,174 Family and community support153,450147,046116,233 Municipal planning282,830240,571274,896 Community and agricultural services553,625533,291492,997 Subdivision land and development5003,3812,745 Recreation and parks217,510217,295202,444 Culture and library35,25535,26241,086 8,358,8158,549,30412,317,543 1,862,6302,538,3111,169,185 Excess of revenue over expenditures Net interfund transfers Transfer to capital - repayment of long-term debt(100,575)(100,572)(95,111) Transfer to capital(1,529,010)(1,528,207)(2,797,625) Transfer from (to) reserves(233,045)(907,732)1,732,373 - 1,8008,822 Change in fund balance 829,448829,448820,626 Fund balance, beginning of year $ 829,448$ 831,248$ 829,448 Fund balance, end of year See accompanying notes5 COUNTY OF NEWELL NO. 4 SCHEDULE 2 SCHEDULE OF FINANCIAL ACTIVITIES AND CHANGE IN FUND BALANCE - CAPITAL For the year ended December 31, 2002 Budget (Unaudited)20022001 Revenue Government transfers$ - $ 16,053$ 63,717 Local improvement levy- 53,237- Investment income- - 1,948 Proceeds from disposal of physical assets125,500171,4531,321,609 125,500240,7431,387,274 (Note 10) Expenditures Administration21,40035,11054,766 Roads, streets, walks, and lighting1,565,1001,618,0704,969,283 Disaster and emergency services20,600- - Water and wastewater - - 94,876 Community and agricultural services75,91072,910227,275 1,683,0101,726,0905,346,200 (1,557,510)(1,485,347)(3,958,926) Excess of expenditures over revenue Capital financing transactions and net interfund transfers Repayment of long-term debt(100,575)(100,572)(95,111) Transfer from operating - repayment of long-term debt100,575100,57295,111 Transfer from operating1,529,0101,528,2072,797,625 Transfer from reserves28,5002,6921,130,140 - 45,552(31,161) Change in fund balance (135,471)(135,471)(104,310) Fund balance, beginning of year $ (135,471)$ (89,919)$ (135,471) Fund balance, end of year See accompanying notes6 COUNTY OF NEWELL NO. 4 SCHEDULE 3 SCHEDULE OF CHANGE IN FUND BALANCE - RESERVES For the year ended December 31, 2002 Budget (Unaudited)2,0022001 $ 7,642,301$ 7,642,301$ 10,504,814 Fund balance, beginning of year Net interfund transfers Transfer from (to) operating233,045907,732(1,732,373) Transfer to capital(28,500)(2,692)(1,130,140) 204,545905,040(2,862,513) Change in fund balance $ 7,846,846$ 8,547,341$ 7,642,301 Fund balance, end of year See accompanying notes7 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 1.Significant Accounting Policies The consolidated financial statements of the County of Newell No. 4 are the representations of management prepared in accordance with local government accounting standards established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the County are as follows: (a) Reporting entity The consolidated financial statements reflect the assets, liabilities, revenue and expenditures, changes in fund balances and change in financial position of the reporting entity which comprises all of 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. Taxes levied also includes operating requisitions for many educational, health care, social and other external organizations that are not part of the municipal reporting entity. The statements exclude trust assets that are administered for the benefit of external parties. Interdepartmental and organizational transactions and balances are eliminated. (b) Basis of accounting The basis of accounting followed in the financial statement presentation includes revenue recognized in the period in which the transactions or events occurred that gave rise to the revenue, and expenditures recognized in the period the goods and services are acquired and a liability is incurred or transfers are due, with the exception of pension expenditures as disclosed in Note 1(i). (c) Fund accounting Management funds consist of the operating, capital and reserve funds. Transfers between funds are recorded as adjustments to the appropriate equity account. Gains or losses from land sales are recorded as operating fund revenue or expenditures. (d) Government transfers Government transfers are recognized in the financial statements as revenue in the period that the events giving rise to the transfer occurred, providing the transfers are authorized, any eligibility criteria have been met by the County, and reasonable estimates of the amounts can be made. (e) Investments Investments are recorded at cost. (f) Inventories Inventories of materials and supplies are valued at the lower of cost and net realizable value with cost determined by the average cost method. Land held for resale is recorded at the lower of cost or net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping, and levelling charges. Related development costs incurred to provide infrastructure such as water and wastewater services, road, sidewalks, and street lighting are recorded as physical assets under their respective function. (g) Physical assets Physical assets are reported as expenditures in the period they are acquired. Physical assets are recorded at cost except for donated assets, which are recorded at their estimated fair value. 8 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 1.Significant accounting policies (continued) (g) Physical assets (continued) Government contributions for the acquisition of physical assets are recorded as capital revenue and do not reduce the related physical asset costs. Physical assets are not depreciated. (h) Prepaid local improvements charges Construction and borrowing costs associated with local improvement projects are recovered through annual special property assessments during the period of the related borrowing. These levies are collectable from property owners for work performed by the County. Where a taxpayer has elected to prepay the outstanding local improvement charges, such amounts are recorded as deferred revenue. Deferred revenue is amortized to revenue on a straight-line basis over the remaining term of the related borrowing. In the event that the prepaid amounts are applied against the related borrowing, the deferred revenue is amortized to revenue by an amount equal to the debt repayment. (i) Local authorities pension plan Employees of the County of Newell No. 4 participate in the Local Authorities Pension Plan (LAPP), which is covered by the Public Sector Pension Plans Act. This is a multi-employer defined benefit pension plan and is accounted for as a defined contribution plan. The Plan serves about 133,000 people and about 389 employers. It is financed by employer and employee contributions and investment earnings of the LAPP Fund. The County of Newell No. 4 is required to make current service contributions to the Plan of 5.025% of pensionable earnings up to the Canada Pension Plan Year's Maximum Pensionable Earnings and 6.9% for the excess. Total current service contributions by the County of Newell No. 4 to the Local Authorities Pension Plan in 2002 were $86,856 (2001 - $76,881). Total current service contributions by the employees of the County of Newell No. 4 to the Local Authorities Pensions Plan in 2002 were $70,613 (2001 - $61,671). At December 31, 2001, the Plan disclosed an actuarial surplus of $635.0 million. (j) Reserves for future expenditures Reserves are established at the discretion of Council to set aside funds for future operating and capital expenditures. Transfers to and/or from reserves are reflected as an adjustment to the respective fund. (k) Equity in physical assets - Equity in physical assets represents the County of Newell's net investment in its total physical assets, after deducting work in progress, the portion financed by third parties through debenture, bond and mortgage debts, long term capital borrowing, capitalized leases, and other capital liabilities. 9 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 1.Significant accounting policies (continued) (l) Measurement uncertainty Financial statements, by their nature,contain estimates and are subject to measurement uncertainty. Accounts receivable are stated after evaluation as to their collectibility and an appropriate allowance for doubtful accounts is provided based on management's best information available at the time. Pension plan obligations are based on actuarial valuations extrapolated to the reporting date. The effect on the financial statements of changes in such estimates in future periods could be significant. (m) Landfill closure and post-closure liability Pursuant to the Alberta Environmental Protection and Enhancement Act, the County is required to fund the closure of its landfill site and provide for post-closure care of the facility. 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. 2.Cash and temporary investments 20022001 Cash $ 1,257,724$ 511,069 Temporary investments6,207,4695,965,673 $ 7,465,193$ 6,476,742 The temporary investments are comprised of term deposits with interest rates ranging from 2% to 4%. The investments mature within the next year. The market value of these investments approximates the cost. 3.Taxes and grants in place of taxes receivable 20022001 Current year$ 285,035$ 306,422 Arrears447,405317,202 732,440623,624 Allowance for uncollectible taxes(146,417)(143,960) $ 586,023$ 479,664 10 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 4.Capital assets 20022001 Land$ 968,988$ 970,838 Buildings1,040,5101,033,985 Distribution system - water and sewer3,096,2453,088,561 Other engineering structures960,605960,605 Machinery, equipment and furnishings8,867,6358,124,306 Vehicles1,817,9361,479,188 $ 16,751,919$ 15,657,483 5.Long-term debt 20022001 Tax supported debentures$ 754,440$ 855,012 Current portion$ 106,359$ 100,572 Principal and interest repayments are as follows: PrincipalInterestTotal 2003$ 106,359$ 44,774$ 151,133 2004112,49238,641151,133 2005113,41932,139145,558 2006119,95925,599145,558 2007125,82211,888137,710 Thereafter176,38938,156214,545 $ 754,440$ 191,197$ 945,637 Debenture debt is repayable to Alberta Municipal Financing Corporation and bears interest at rates ranging from 5.375% to 11.75% per annum, before Provincial subsidy, and matures in periods 2004 through 2017. The average annual interest rate is 5.9% for 2002 (2001 - 5.9%). For qualifying debentures, the Province of Alberta rebates 60% of interest in excess of 8%, 9% and 11% to a maximum annual rate of 12.5%, depending on the date borrowed. Debenture debt is issued on the credit and security of the County of Newell No. 4 at large. 6.Provision for landfill closure and post-closure costs The accrued liability for closure and post-closure care of the County’s landfill is based on an estimate of future costs. The estimated closure and post-closure costs are $651,300 all of which have been accrued in the financial statements. 11 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 7.Reserves Reserves for operating and capital activities changed as follows: 2001IncreaseDecrease2002 Operating Hard surface$ 453,134$ 12,044$ - $ 465,178 Debt reduction1,236,31317,569- 1,253,882 Municipal surplus2,247,113930,72142,4593,135,375 Secondary highway 862214,8836,110- 220,993 Public transportation152,5984,299- 156,897 Special road project193,1384,825- 197,963 Office renovations133,6982,457- 136,155 Fire truck30,00030,819- 60,819 Road work245,506- 245,5006 Public works - other35,033819- 35,852 Gravel crushing50,0001,228- 51,228 Garbage pits480,9948,599140,000349,593 Agriculture Service Board94,8861,638- 96,524 Planning25,00064,819- 89,819 Future expenditures1,168,84522,113- 1,190,958 Purchase of gravel100,0002,460- 102,460 6,861,1411,110,520427,9597,543,702 Capital Scandia water reservoir4,879128- 5,007 Patricia sewer1,74146- 1,787 Scandia sewer23,686624- 24,310 Rolling Hills water & sewer6,297158- 6,455 Rolling Hills sewage lagoon2,04455992,000 Patricia water system3,958104- 4,062 Rainier water system133- 3598 Lake Newell road prepaid4,8121043484,568 Future expenditures - general administration116,58268,5202,692182,410 Machinery and equipment496,546152,961- 649,507 Vehicle replacement120,4822,953- 123,435 781,160225,6533,1741,003,639 $ 7,642,301$ 1,336,173$ 431,133$ 8,547,341 12 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 8.Net municipal property taxes Budget (Unaudited)20022001 Taxation Real property taxes$ 5,795,935$ 5,781,795$ 5,526,275 Linear property taxes11,118,84011,308,22810,611,239 Government grants in place of property taxes178,805178,836190,744 17,093,58017,268,85916,328,258 Requisitions Alberta School Foundation Fund9,274,0709,274,1349,082,117 Newell Foundation52,11052,56452,107 9,326,1809,326,6989,134,224 $ 7,767,400$ 7,942,161$ 7,194,034 9.Government transfers Budget (Unaudited)20022001 Provincial transfers Shared-cost agreements and grants$ 1,219,200$ 1,112,919$ 4,818,842 Local government transfers Shared-cost agreements and grants8,6507,5988,653 $ 1,227,850$ 1,120,517$ 4,827,495 Total government transfers 13 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 10.Expenditures by object Budget (Unaudited)20022001 OPERATING Salaries, wages and benefits$ 2,897,415$ 2,971,773$ 2,538,555 Contracted and general services2,945,9202,659,9047,549,613 Materials, goods, supplies and utilities1,550,7101,924,8251,346,360 Provisions for allowances- 17,913 Transfers to organizations886,660853,597708,259 Bank charges and short term interest1,7505161,708 Interest on long term debt50,56050,56156,022 Other expenditures25,80070,215117,026 8,358,8158,549,30412,317,543 CAPITAL Purchase of physical assets1,683,0101,726,0905,346,200 $ 10,041,825$ 10,275,394$ 17,663,743 11.Trust funds Trust funds administered by the County on behalf of others consist of the following: 20022001 Tax Sale Surplus$ 17,919$ 19,877 Public Reserve541,744554,326 Scholarships126,353122,256 $ 686,016$ 696,459 The above trust funds are not recorded in the financial statements (Note 1(a)). 14 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 12.Salary and benefits disclosure Disclosure of salaries and benefits for municipal officials, the chief administrative officer and designated officers as required by Alberta Regulation 313/2000 is as follows: (2) No. of(1)Benefits &2002No. of2001 PersonsSalaryAllowancesTotalPersonsTotal Reeve Wayne Daniels1$ 3,825$ - $ 3,8251$ 1,800 Councillors Division 1- Wayne Daniels120,8501,44522,295115,331 Division 2 - Vince Fabian122,95028323,233116,950 Division 3 - Jan-Sep - Norma Berg-- - - 17,287 Division 3 - Gordon Musgrove124,1501,53625,68613,897 Division 4 - Chris Vermeeren122,8751,49824,373116,977 Division 5 - Jack Harbinson121,6751,45723,132117,594 Division 6 - Jan-Sep - Ruth Steinbach-- - - 18,907 Division 6 - Ed Moss120,2504020,29013,375 Division 7 - Marg Loewen 123,1001,50224,602117,131 Division 8 - Art Eckert123,55090424,454116,800 Division 9 - Jan-Sep - Margaret Douglas-- - - 18,775 Division 9 - Allan Pickett116,0501,28317,33313,907 Division 10 - Cory Baksa126,5501,60828,158119,986 $ 225,825$ 11,556$ 237,381$ 158,717 Chief Administrative Officer - Alan Martens1$ 93,000$ 12,394$ 105,3941$ 90,934 Designated Officers -2169,333 - John Dell164,7758,77573,550- - Steve Wylie158,6049,57568,179- - Trevor Schulz115,9692,11918,088- - Scott Simpson131,4374,32135,758- $ 263,785$ 37,184$ 300,969$ 577,701 (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 Canada Pension Plan, Employment Insurance, pension, health care, dental coverage, vision coverage, group life insurance, accidental disabilityand 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. 15 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 13.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 of Newell No. 4 be disclosed as follows: 20022001 Total debt limit$ 16,888,602$ 22,215,427 Total debt754,440855,012 Total unused debt limit$ 16,134,162$ 21,360,415 Debt servicing limit$ 2,814,767$ 3,702,571 Debt servicing151,133151,133 Amount of unused service on debt$ 2,663,634$ 3,551,438 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. The calculation taken alone does not represent the financial stability of the County. Rather, the financial statements must be interpreted as a whole. 14.Contingencies (a)The County of Newell No. 4 is a member of the Alberta Local Authorities Reciprocal Insurance Exchange. Under the terms of membership, the County of Newell No. 4 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. (b)Employees of the County of Newell No. 4 are allowed to accrue sick leave to a maximum of 90 days or 60 days depending on job title. As at December 31, 2002, the amount of accumulated sick leave was approximately $310,000. The amount was not recorded in the financial statements as there is no certainty the full amount will be used. The amount of accumulated sick leave is not paid out to employees of the County when they leave their position. (c)The County of Newell No. 4 is responsible for the reclamation of open gravel pit sites. The total estimated costs of reclaiming the pits is $60,000. This amount was not recorded in the financial statements as at December 31, 2002 as the County does not intend to close them in the next fiscal year. However, the County is liable for these reclamation costs in the future. 15.Financial instruments The County’s financial instruments consist of cash and temporary investments, receivables, bank overdrafts, accounts payable, accrued liabilities and long term debt. It is management’s opinion that the County is not exposed to significant interest, currency or credit risk arising from these financial statements. Unless otherwise noted, the fair value of these financial instruments approximates their carry values. 16 COUNTY OF NEWELL NO. 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2002 16.Comparative figures Where necessary the comparative figures for the 2001 year have been reclassified to conform with 2002 financial statement presentation. 17.Approval of Financial Statements These financial statements were approved by Council and Management. 17