The URL can be used to link to this page

Home My WebLink About2011 Annual Report - long versionI& ,- I I I Am.4:3101. r P I 11L - r F- AMW OR THE YEAR ENDING DECEMBER 31, 2011 0 F NEWELL IN THE PROVINCE OF ALBERTA ;l AV id a 'I � ..hut. =4 ,; n -�� .- _^ f ter. _ ..-• _.[ � ,- _� fes..-- - •'- '�{ ►� �- 1�" `,�_ 7: _'' ='' - .---'_` 2011 ANNUAL FINANCIAL REPORT FOR THE COUNTY OF NEWELL IN THE PROVINCE OF ALBERTA, CANADA for the fiscal period ending December 31, 2011 Produced by the Finance Department in cooperation with all County departments For information on programs and services, or to obtain a copy of this document, contact: ADMINISTRATION Telephone: 403-362-3266 E -Mail: administration@countyofnewell.ab.ca The 2011 Annual Financial Report is available online at www.countyofnewell.ab.ca s. sdor 04 rj TABLE OF CON SECTION 1 THE COUNTY OF NEWELL ❖ Vision & Mission 7 ❖ County Profile 8 ❖ County Council 9 ❖ Organizational Chart 10 SECTION 2 CONSOLIDATED FINANCIAL STATEMENTS ❖ Message from the Manager of Finance 11 ❖ Management's Responsibility for the Consolidated Financial Statements 25 ❖ Consolidated Statement of Financial Position 27 ❖ Consolidated Statement of Financial Activities 28 ❖ Consolidated Statement of Change in Net Financial Assets 29 ❖ Consolidated Statement of Cash Flows 30 ❖ Notes to Consolidated Financial Statements 31 SECTION 3 STATISTICAL SECTION ❖ Demographics & Other Statistics 51 ❖ Expenses by Function 52 ❖ Expenses by Object 52 ❖ Revenues by Source 53 PAGE 3 z"{. + " -. � ` � 'r * ��r f + Ctl•��r +®# �}, ;'+¢b. +*�. I � M i• �:'4 F � { f�1�E� .�`_ Y �ty�✓��r 'r,Y 1, e-., .:I � � iF4 eY�'°T {� `r 'ai k#"f+ e',e?^'4 + . • r `O- s oA qbp`'; i,'" '} e ?� = Pw r 1N" r �� '' .�'•rXw 4 nl�► }' `II.!'r' 4. -. �i'! _, j .-I - �-" { s'Mll /� � �y�'�.�.+�'�r �'"�.:J � )�'. .�r� t...� � �:uR ,t�� yC, _ _ -,ti• F Alw • R.. - , 4 e'er •Y' - 4T" .91 ♦ 4 9 . "1.' r 3- ¢ -,,• { '.`4' 4r • r'� ir'1'r 7"e�YYy�`tj�{ a lw , v 1. 501�y el AL live { •E Y j IF dab. y fd �' SECTION 1 THE COUNTY OF NEWELL PAGE 5 �'ir^I _ •� U " . gsw BOOM, , .11i� Alan ` Aver.ui��'��. �. . � �';_..w.nki t VISION 8 MISSION STATEMENT VISION STATEMENT To encourage and support sustainable growth and MISSION STATEMENT The County of Newell through leadership and policy provides services, structure and stabilit COUNTY PROFILE The County of Newell is a rural municipality (5900 sq. km.) located in southeast Alberta in an area bounded by the City of Calgary 180 km east, 100 km west of the City of Medicine Hat, and 150 km northeast of the City of Lethbridge. The largest urban communities within the County are the City of Brooks and the Town of Bassano. The County provides a number of services — directly orjointly with other municipalities — to the residents of the rural area and Hamlets. These services include general administration and maintenance, fire protection, garbage disposal, planning and development administration, agricultural services, recreation and parks, family and community support services and bylaw enforcement. The County has a dynamic and diverse economy driven by three pillars: Agriculture; Oil and Gas; and Tourism. There are approximately 500 primary agricultural producers in the County, and approximately 1500 non-agricultural business enterprises within the County and its municipalities. County of Newell i AM PAGE 8 The County of Newell has a thriving and extensive agricultural base with ready access to Calgary and its global transportation linkages. With a younger work force and average farm receipts in the range of $100,000 to $249,999, the region is home to some of the most profitable farmers in Alberta. The County has one of Alberta's most active natural gas fields. There are roughly 30,000 wells in the County, which accounts for half of all wells in Alberta, and 37% of all wells in Canada. Approximately 170 production and service companies employ 4,000 to 5,000 people in the energy sector in the region. Key tourism anchors include Lake Newell - one of Canada's largest man- made lakes, Dinosaur Provincial Park - a UNESCO World Heritage Site, and recreation activity as diverse as golfing, boating, camping, fishing, hunting, and wildlife watching. Business costs are low. Quality of life is high — with a full range of recreation, health and cultural amenities. COUNTY COUNCIL Division 1 Rolling Hills COUNTY OF NEWELL COUNCILLORS F Councillor Clarence Amulung (403) 964-2292 Division 2 Tilley Councillor Ike Schroeder (403) 377-2587 Division 3 Patricia/Millicent Councillor Anne Marie Philipsen (403) 378-4724 Division 4 Rainier/Scandia/Bow City Councillor Ryan Andrews (403) 793-8144 Division 5 Cassils/Lake Newell Resort Councillor Mara Nesbitt (403) 362-3037 s Division 6 Bassano Councillor Joel Bulger (403) 641-4469 Division 7 Rosemary Councillor Allen Eastman (403) 378-4280 Division 8 Duchess Councillor Brian de Jong (403) 362-4587 Division 9 Gem Reeve Molly Douglass (403) 641-2562 Division 10 Brooks Councillor Lionel Juss (403) 362-5689 PAGE 9 ORGANIZATIONAL CHART 4w CHIEF ADMINISTRATIVE OFFICER MANAGER OF ASSISTANT AGRICULTURAL SUPERINTENDENT EXECUTIVE FINANCE ADMINISTRATOR FIELDMAN OF PUBLIC WORKS ASSISTANT MANAGER OF PLANNING _ ASSISTANT COMMUNITY PEACE & DEVELOPMENT SUPERINTENDENT OFFICER SUPERVISOR OF PUBLIC WORKS MANAGER OF _ IT & GIS TECHNICAL MANAGER CORPORATE SAFETY _ SUPERVISOR FIRE & EMERGENCY SERVICES COORDINATOR ECONOMIC DEVELOPMENT _ & TOURISM COORDINATOR AW�" --Am PAGE 10 MESSAGE FROM THE MANAGER OF FINANC To the Reeve and Members of Council of the County of Newell: I am pleased to present the Annual Financial Report of the County of Newell for the year ended December 31, 2011. Management at the County of Newell is responsible for the information contained in the annual financial report. The purpose of the report is to provide the reader with an opportunity to assess the County's financial activities and available resources. It also provides an opportunity to analyze and comment on the principal features of the financial information contained in the 2011 audited Consolidated Financial Statements, and to highlight key financial results that occurred during the year. The major components of the County's financial management and control programs include the budgetary process, accounting procedures, external audit, investment and purchasing policies which are described below. BUDGET PROCESS On an annual basis, Council considers a proposed operating budget and a five year capital forecast and adopts the operating and capital budgets for the coming year. The budget process involves council, department heads, staff and the public. Council approves the budget taking into account current economic conditions, provincial policy changes and service needs within the County. It should be noted that under provincial legislation, sufficient revenues must be raised to meet all budgeted expenditures. After the budget is adopted by Council, expenditures are controlled against budget by formal purchasing policies and financial systems designed specifically to prevent budget overruns. FINANCIAL MANAGEMENT The County's accounting system and related internal controls are designed to provide reasonable assurance that financial records are complete and accurate and that assets are safeguarded against loss from unauthorized use or disposition. The County's Purchasing By -Law and Budget variance policy ensure that controls and reporting requirements are appropriate. Generally accepted accounting principles for local governments are adhered to. PAGE 11 MESSAGE FROM THE MANAGER OF FINANC EXTERNAL AUDIT Council is required by the Municipal Government Act to engage independent auditors to express an opinion as to whether the County's financial statements present fairly, in all material respects, the County's operating results and financial position. The auditors have full and free access to all County records and they meet periodically with staff to discuss matters arising from the audit or from new policies and procedures. The auditors also provide the County with a management letter providing comments on internal controls. While Council engages an independent auditor to express an opinion on the financial statements, the County's management is responsible for the preparation of the financial statements and the integrity and objectivity of the financial information and representations contained in the financial statements. INVESTMENT POLICY The County has been in a strong net cash flow position for a number of years. This has allowed for the investment of funds into longer term products with higher yields. Investments are made in accordance with the County's investment policy which has as its objectives the preservation of capital, maintenance of liquidity and the realization of a competitive rate of return. Municipal investments are governed by restrictive legislation under the Municipal Government Act. The County's investment policy meets all of these requirements. PURCHASING POLICY The County ensures that consistent procedures are followed for purchases through its Purchasing policy which sets purchases and expenditure limits for the County. The policy ensures that items purchased have been approved through the budget process or by separate resolution of Council. PAGE 12 MESSAGE FROM THE MANAGER OF FINANC 2011 FINANCIAL STATEMENTS The 2011 Consolidated Financial Statements are prepared in compliance with Public Sector Accounting Standards. The consolidated financial statements provide a snapshot of the County's financial position at its fiscal year end (December 31) and the results of its operations, and changes in both cash flow and net assets for the preceding year. However, the financial position of the County as reflected in the consolidated financial statements is only one factor in determining the financial condition of the County. The consolidated financial statements do not provide a complete indication of the financial health of the County nor indicate how well it is performing in relation to its economic and fiscal environment. In 2009, PSAB issued Statement of Recommended Practices (SORP) 4: Indicators of Financial Condition. The SORP notes that "The main objective of reporting on financial condition is to expand on and explain information in the financial statements by assessing a government's financial condition..." This information may help financial statement users better understand the risks facing a government in maintaining the programs and services it currently provides, as well as the policy and operational decisions it must make in light of its financial health. This SORP is not part of generally accepted accounting principles (GAAP) and there is no requirement for governments to implement its recommendations. There may be numerous indicators to assess a government's financial condition. The SORP recommends that, at a minimum, indicators related to sustainability, flexibility and vulnerability be considered. Definitions of these assessors follow, as well as a selection of indicators related to each. PAGE 13 MESSAGE FROM THE MANAGER OF FINANC SUSTAINABILITY Sustainability measures the ability of a government to maintain its existing programs and services, including maintaining its financial obligations to creditors, without increasing its debt or raising taxes. The following indicators have been selected to assess sustainability. Annual Surplus or Deficit This annual result indicates the extent to which the County's revenue is more than its expenses during that year. A surplus means revenues exceed expenses while a deficit indicates the County has not lived within its means. Long-term financial sustainability is dependent upon ensuring that on average, over time, expenses are less than revenues. In essence, this requires current taxpayers to fully meet the cost of services. Annual Surplus 2008-2011 $30,000,000 $25,000,000 $20,000,000 NJ $15,000,000 $10,000,000 $5,000,000 2008 2009 2010 2011 The presence of an accounting surplus does not necessarily represent financial sustainability. While a surplus is clearly better than a deficit, the accounting surplus may not be large enough for future asset replacement. Amortization expense is based on historic cost and will not reflect increased cost of replacement in the future. Taking into account future replacement costs in determining the appropriate level of surplus is a critical step toward financial sustainability. PAGE 14 MESSAGE FROM THE MANAGER OF FINANC FINANCIAL ASSETS -TO -LIABILITIES This indicator shows the extent to which the County's future revenues will be required to pay for past transactions or events. A ratio greater than one indicates that financial assets are sufficient to meet obligations and to finance future operations while a ratio less than one may mean a reliance on future revenues or increasing debt to pay for past decisions. Financial Assets -to -Liabilities 7.00 6.00 5.88 5.00 4.00 4 71 3.00 2.00 1.00 4.22 4.34 2008 2009 2010 2011 While this ratio has decreased over the last four years the County remains in a strong position at year end with over $4 in assets to cover every $1 in liabilities. PAGE 15 MESSAGE FROM THE MANAGER OF FINANC TAXES RECEIVABLE AS A % OF TAX LEVIES The following chart reflects the total uncollected property taxes as a percentage of total tax levy. Every year, a percentage of property owners are unable to pay property taxes. If this percentage increases over time, it may indicate an overall decline in the municipality's economic health. Additionally, as uncollected property taxes rise, liquidity decreases. Total Tax Levy (includes requisitions) Taxes Receivable (before allowance) Current Arrears Taxes Receivable as a % of the Current Levy Current Arrears Taxable Assessment Municipal Tax Rates Residential and Farmland Non-residential 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% PAGE 16 2008 2009 2010 2011 38, 077, 534 40,131, 740 37, 906, 610 37, 798, 648 297,544 279,540 389,320 427,744 386,589 436,631 532,931 452,891 684,133 716,171 922,251 880,635 0.789/o 0.70% 1.03% 1.13% 1.02% 1.09% 1.41% 1.20% 3,814,704,390 4,151,150,920 3,898,515,520 3,879,853,980 3.33% 3.33% 3.33% 3.33% 6.69% 6.70% 6.70% 6.71% Taxes Receivable as a % of the Current Levy 2008 2009 2010 2011 ■Current ❑Arrears MESSAGE FROM THE MANAGER OF FINANC FLEXIBILITY Flexibility is the degree to which a government can change its debt burden or raise taxes to respond to rising commitments. Increasing debt and taxation reduces flexibility and government's ability to respond to changing circumstances. Debt Servicing Costs -to -Revenues The ratio of debt servicing costs -to -revenues indicates the amount of current revenue that is required to service past borrowing decisions and, as a result, is not available for programs and services. 2008 2009 2010 2011 Debt servicing costs 998,560 998,560 990,667 990,667 Revenues 31,595,642 32,498,399 30,097,819 30,061,642 Ratio 3.16% 3.07% 3.29% 3.30% 3.50% 3.25% 3.00% 2.75% Debt Servicing Costs as a Percentage of Revenue 2008 2009 2010 2011 The County's ratio of debt servicing costs -to -revenues is relatively low for the period under consideration. This ratio will increase in 2012 as the County issues debentures to finance a portion of the rural water project and annual payments on existing debt increase. PAGE 17 MESSAGE FROM THE MANAGER OF FINANC Debt Limits and Debt Payments The County is limited in the amount of debt that it can incur beyond the limitations specified in Alberta Regulation 255/00. The maximum allowable debt the County could hold within this regulation is approximately $45 million, of which the County held outstanding debt balances representing 12% of the maximum allowable amount at the end of 2011. This leaves the County with approximately $39,650,000 of borrowing room. Bylaw 1731-11, authorizing Council to incur indebtedness of up to $22,400,000 to assistwith constructing the rural water distribution system, came into force on September 8, 2011. This borrowing will limit the flexibility of the County in financing future projects as the debt limit used is forecasted to increase to approximately 60% by the end of 2012. PAGE 18 • 2008 2009 2010 2011 Debt limit Maximum allowable debt 48,529,187 48,747,599 45,193,529 45,092,463 Total debt 7,338,304 6,737,971 6,104, 914 5,445,212 Percentage used 15.1% 13.8% 13.5% 12.1% Maximum Allowable Annual Debt Payment Maximum allowable annual debt payment 8,088,198 8,124,600 7,532,255 7,515,411 Annual payments on existing debt 998,560 998,560 990,667 990,667 Percentage used 12.3% 12.3% 13.2% 13.2% Debt Per Capita 1,069 949 860 767 Bylaw 1731-11, authorizing Council to incur indebtedness of up to $22,400,000 to assistwith constructing the rural water distribution system, came into force on September 8, 2011. This borrowing will limit the flexibility of the County in financing future projects as the debt limit used is forecasted to increase to approximately 60% by the end of 2012. PAGE 18 • MESSAGE FROM THE MANAGER OF FINANC RESERVES Reserves are included as part of the accumulated surplus. These balances are disclosed in the notes to the financial statements. Reserves are a critical component of a municipality's long-term financing plan. The purpose of maintaining reserves is to: ❖ Provide stability of tax rates in the face of variable and uncontrollable factors (consumption, interest rates, unemployment rates, changes in subsidies) ❖ Provide financing for one-time or short term requirements without permanently impacting the tax and utility rates ❖ Make provisions for replacement or acquisitions of assets and infrastructure that are currently 58 being consumed and amortized ❖ Avoid spikes in funding requirements of the capital 56 plan by reducing their reliance on long-term debt 54 borrowings 52 ❖ Provide a source of internal financing 50 ❖ Ensure adequate cash flows ❖ Provide flexibility to manage debt levels and 48 protect the municipality's financial position 46 ❖ Provide for future liabilities incurred in the current year but paid for in the future Reserves Balance 2008 2009 2010 2011 Reserves offer liquidity which enhances the County's flexibility in addressing operating requirements and in permitting the County to temporarily fund capital projects internally, allowing it time to access debt markets and take advantage of favourable conditions. The level of reserves required will vary for a number of reasons including: ❖ Services provided by the County ❖ Age and condition of infrastructure, inventory of fleet and vehicles supporting County operations ❖ Internal debt and reserve policies ❖ Targets, ranges established on a reserve by reserve basis ❖ Economic conditions and projections. PAGE 19 MESSAGE FROM THE MANAGER OF FINANC Tangible Capital Assets During 2011, $28,577,959 of capital acquisitions in aggregate occurred. Significant acquisitions included: ❖ $5,336,000 — Regional Water System ❖ $8,016,000 — New County Facilities ❖ $11,762,000 — Paving projects ❖ $1,840,000 — Machinery and equipment In terms of change in assets, the County's TCAs increased by a net $24,365,996 in 2011 which includes new assets offset by $3,538,428 in amortization expense and asset disposals with a net book value of $673,535. Net Book Value of Tangible Capital Assets -to -Cost of Tangible Capital Assets Net book value of tangible capital assets (TCA) compared to total cost of TCA measures the extent to which the estimated useful lives of a government's tangible capital assets are available to provide its products and services'. As illustrated, a significant portion of the County's assets useful lives remain available to provide its services. Net Book Value of Tangible Capital Assets -to -Cost of Tangible Capital Assets 180 c c 160 � 140 120 100 80 60 40 20 2008 2009 2010 2011 NBV OF TCA ❑ COST OF TCA SORP 4 indicates that at least five years of data should be used. Due to the retroactive change in accounting policy, required data is not available prior to 2008; therefore, only four years of data are presented in the following table. 4 PAGE 20 MESSAGE FROM THE MANAGER OF FINANC VULNERABILITY Vulnerability is the degree to which a government becomes dependent on, and therefore vulnerable to, sources of funding outside its control or influence. The lower government's own -source revenue is, the more it relies on fiscal decisions of others. Government Transfers -to -Total Revenue Government Transfers -to -Total Revenue This indicator demonstrates the level of government 50.0% transfers compared to total revenues. The higher the percentage, the more reliance the County puts on 40.0% receipt of funds from other levels of government. These transfers are dependent on policy decisions which are 30.0% transfers the control of the County. 20.0% 10.0% The inset chart illustrates that a significant portion of total 0.0% revenues are attributable to government transfers. It is 2008 2009 2010 2011 important to note that the majority of these government transfers are used for financing major capital projects such as the Regional Water System, the New County Facility and the Rural Water Distribution System. It is clear that the County's ability to undertake such projects is dependent in large part on grant funding from other levels of government. Government transfers for operating represent a significantly smaller portion of total government transfers to the County. It is management's opinion that the County is not exposed to significant risk in terms of its reliance on government transfers for operating to support its products and services. Respectfully Submitted, Matt Fenske, CA Manager of Finance May 2012 PAGE 21 2008 2009 2010 2011 Government transfers for capital 8,426,937 26,771,730 13,323,847 17,648,743 Government transfers for operating 2,141,579 1,733,210 1,601,670 1,198,557 Total transfers 10,568,516 28,504,940 14,925,517 18,847,300 Total revenue 40,733,249 59,894,549 45,089,583 47,816,578 Governmenttransfers4o-total revenue 25.9% 47.6% 33.1% 39.4% Transfers for capital -to -total transfers 79.7% 93.9% 89.3% 93.6% Transfers for operating-to4otal transfers 20.3% 6.1% 10.7% 6.4% Government transfers for operating represent a significantly smaller portion of total government transfers to the County. It is management's opinion that the County is not exposed to significant risk in terms of its reliance on government transfers for operating to support its products and services. Respectfully Submitted, Matt Fenske, CA Manager of Finance May 2012 PAGE 21 SECTION 2 CONSOLIDATED FINANCIAL STATEMENTS PAGE 23 i �� 2 bL CONSOLIDATED FINANCIAL STATEMENTS MANAGEMENT REPORT The accompanying financial statements and other information contained in this Financial Report are the responsibility of the management of the County of Newell. These 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 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 of Newell is responsible for ensuring that management fulfils its responsibilities for financial statements. 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 of reappointment of the external auditors. Council reviews the monthly financial reports. The financial statements have been audited by KPMG LLP, the external auditors, in accordance with Canadian generally accepted auditing standards on behalf of the Council, residents and ratepayers of the County. KPMG LLP has full and free access to Council. County Manager April 19, 2012 PAGE 25 CONSOLIDATED FINANCIAL STATEMENTS KPMG LLP TveG►r4+la 14031 3605700 Cher end Acumnum f$x I4Q3j 300-V61 OD Lwhh+dga Can1�9Tarror fnierne %vwrr kLung.Ca 400 sin A emm Soulh LethhridgUA15 T1,94E1 i anada independent Auditors' Report To the Reeve and Councilors of the County of Newell we have audited the a or'npanying consolidated financial Statements cif the County of Newell ("the Ently), +whicli comprise the consolidated statement of financial position as at December 31, 2011, and the eonsolidat,ed statements of operations, net financial assets and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory informatlon- Managoment's Responsibility for the Coosotrdatad fonanciat statemenIs Management is responsible far the preparation and fair presentation of these consolidated finandial statements in - : . with Canadian .public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error - Auditor's 1Resporlsrbrfir1y Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards- Those standards require that we comply with ethical requirements and plan and perform] an audile to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement - An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our lydgment, including the assessment of the risks of material misstatement of the consolidated financial Statements. whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity's internal control- An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evalualiing the overall presentalipn of the consolidated financial statements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion. Opinjon In our opinion, the consolidated financial statements present fairly, in all material respects, the Financial position of the County of Newell as at December 31. 2041, and the results of its operalions and its cash flows for the year then ended in accordance Mh Canadian public sector accounting standards kw,:-; 14P April 19, 2012 Lethbrklge. Canada ki1147 LF 4 ! C—N&� I n.i. 0. aG61y FrirrrrY pi 1119 a Ir1Y1'4F, IYm el 4hF rrh.vy ar ,**, +w`tM terns ilMuiw. 4%KF AG hlmrwe W EOOW ya resew` Cati+rf+g+c�s ss a<.s WXPkMt 54F PAGE 26 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position December 31, 2011, with comparative figures for 2010 Financial liabilities - Accounts iabilities- Accounts payable and accrued liabilities 2011 2010 Employee benefit obligations (note 8) 233,205 (Restated Unearned revenue 2,552,468 - note 2) Financial assets: 5,095,521 5,679,764 Cash and temporary investments (note 3) $ 26,438,521 $ 39,231,724 Taxes and grants in place of taxes receivable (note 4) 860,635 769,911 Trade and other receivables 7,805,038 5,707,956 Land held for resale 35,139 31,881 Investments (note 5) 27,660,432 16,394,197 Notes receivable (note 6) 6,791,226 7,618,660 Net financial assets 69,590,990 69,754,329 Financial liabilities - Accounts iabilities- Accounts payable and accrued liabilities 6,918,716 5,383,973 Employee benefit obligations (note 8) 233,205 242,902 Unearned revenue 2,552,468 3,945,730 Long-term debt - operating (note 9) 5,095,521 5,679,764 Long-term debt - capital (note 10) 349,691 425,150 Provision for landfill closure and post -closure costs (note 11) 339,507 339,507 Provision for gravel pit closure and post -closure costs (note 11) 293,701 293,701 Deposit liabilities (note 3) 149,067 166,237 Other financial liabilities 99,885 62,432 16,031,761 16,539,395 Net financial assets 53,559,230 53,214,934 Non-financial assets Prepaid expenses 156,570 143,785 Tangible Capital Assets (note 7) 122,813,081 98,447,085 Inventory for consumption 953,362 986,785 123,923,013 99,577,655 Contingent liabilities (note 19) Accumulated surplus (note 12) $177,482,242 $152,792,589 The accompanying notes are an integral part of these consolidated financial statements. PAGE 27 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Activities Year ended December 31, 2011, with comparative figures for 2010 Other Contributed assets - 106,193 1,667,917 Government transfers (note 14) 17,190,807 17,648,743 13,323,847 Excess of revenues over expenses 25,269,940 24,689,653 22,190,324 Accumulated surplus, beginning of year 152,792,589 152,792,589 130,602,265 Accumulated surplus, end of year $178,204,849 $177,482,242 $152,792,589 The accompanying notes are an integral part of these consolidated financial statements. Ci PAGE 28 Budget 2011 2010 (Unaudited) (Restated -note 2) Revenues: Net municipal property taxes (note 13) $ 25,352,870 $ 25,337,414 $ 25,357,073 Special levies 783,825 685,797 784,728 User fees and sale of goods 611,980 828,787 798,453 Government transfers (note 14) 974,890 1,198,557 1,601,670 Penalties and cost of taxes 100,500 167,589 138,669 Investment income 713,185 1,371,013 1,180,134 Licenses and permits 81,000 70,292 30,700 Other revenue 383,730 271,655 114,928 Gain (loss) on disposal of tangible capital assets 3,441,900 130,537 91,464 32,443,880 30,061,642 30,097,819 Expenses (note 15): Legislative 459,500 456,142 438,302 Administration 2,909,895 2,303,142 2,046,183 General 803,438 827,195 854,291 Corporate safety services 269,600 236,523 238,257 Fire and by-law enforcement 978,328 881,245 1,032,879 Disaster and emergency services 169,900 133,965 180,571 Roads, streets, walks and lighting 12,106,050 12,581,127 8,628,420 Airport 39,000 112,297 90,641 Water and waste water 3,301,287 2,906,261 6,612,354 Waste management 315,000 255,619 249,413 Family and community support 43,000 41,668 43,949 Municipal planning 396,700 260,789 224,308 Community and agricultural services 1,488,145 1,048,306 1,140,078 Subdivision land and development 209,040 174,056 171,491 Recreation and parks 733,214 731,661 733,752 Culture and library 142,650 139,473 138,125 Other - 37,454 76,245 24,364,747 23,126,925 22,899,259 Excess of revenues over expenses before the undernoted 8,079,133 6,934,717 7,198,560 Other Contributed assets - 106,193 1,667,917 Government transfers (note 14) 17,190,807 17,648,743 13,323,847 Excess of revenues over expenses 25,269,940 24,689,653 22,190,324 Accumulated surplus, beginning of year 152,792,589 152,792,589 130,602,265 Accumulated surplus, end of year $178,204,849 $177,482,242 $152,792,589 The accompanying notes are an integral part of these consolidated financial statements. Ci PAGE 28 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Change in Net Financial Assets December 31, 2011, with comparative figures for 2010 Net financial assets, end of year $41,659,048 $ 53,559,230 $ 53,214,934 The accompanying notes are an integral part of these consolidated financial statements. PAGE 29 Budget 2011 2010 (Unaudited) (Restated -note 2) Excess of revenues over expenses $25,269,940 $ 24,689,653 $ 22,190,324 Acquisition of tangible capital assets (45,222,526) (28,471,766) (27,515,552) Contributed tangible capital assets - (106,193) (1,667,917) Proceeds on disposal of tangible capital assets - 804,072 1,067,497 Amortization of tangible capital assets 4,954,800 3,538,428 3,329,325 Gain (loss) on disposal of tangible capital assets 3,441,900 (130,537) (91,464) (11,555,886) 323,657 (2,687,787) Use (acquisition) of inventories of supplies - 33,423 (41,563) Use (acquisition) of prepaid expenses - (12,785) 6,679 Change in net financial assets (11,555,886) 344,296 (2,722,671) Net financial assets, beginning of year 53,214,934 53,214,934 55,937,605 Net financial assets, end of year $41,659,048 $ 53,559,230 $ 53,214,934 The accompanying notes are an integral part of these consolidated financial statements. PAGE 29 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Cash Flows Year ended December 31, 2011, with comparative figures for 2010 Capital activities: Proceeds on disposal of tangible capital assets 804,072 1,067,497 Cash used to acquire tangible capital assets (28,471,766) (27,515,552) (27,667,694) (26,448,055) Investing activities Increase in investments (11,266,235) (12,334,346) Notes receivable issued - (1,350,000) Payments received on notes receivable 827,433 757,217 (10,438,802) (12,927,129) Financing activities: Repayment of long-term debt: - operating (584,243) (553,786) - capital (75,459) (79,271) Decrease in deposit liabilities (17,171) (14,009) (676,872) (647,066) Decrease in cash (12,793,203) (9,711,345) Cash and cash equivalents, beginning of year 39,231,724 48,943,069 Cash and cash equivalents, end of year $ 26,438,521 $ 39,231,724 The accompanying notes are an integral part of these consolidated financial statements. PAGE 30 2011 2010 (Restated -note 2) Cash provided by (used in): Operations: Excess of revenues over expenses $ 24,689,653 $ 22,190,324 Items not involving cash: Amortization 3,538,428 3,329,325 Contributed assets (106,193) (1,667,917) Gain on disposal of tangible capital assets (130,537) (91,464) Change in non-cash financial assets and liabilities: Taxes and grants in place of taxes receivable (90,724) (206,080) Trade and other receivables (2,097,082) 4,359,889 Land held for resale (3,258) - Other financial assets - 13,815 Prepaid expenses (12,785) 6,679 Inventory for consumption 33,423 (41,563) Accounts payable and accrued liabilities 1,534,743 (1,526,679) Employee benefit obligations (9,697) (17,195) Unearned revenue (1,393,262) 3,899,682 Provision for landfill and gravel pit closure and post -closure costs - (342) Other financial liability 37,454 62,431 25,990,164 30,310,905 Capital activities: Proceeds on disposal of tangible capital assets 804,072 1,067,497 Cash used to acquire tangible capital assets (28,471,766) (27,515,552) (27,667,694) (26,448,055) Investing activities Increase in investments (11,266,235) (12,334,346) Notes receivable issued - (1,350,000) Payments received on notes receivable 827,433 757,217 (10,438,802) (12,927,129) Financing activities: Repayment of long-term debt: - operating (584,243) (553,786) - capital (75,459) (79,271) Decrease in deposit liabilities (17,171) (14,009) (676,872) (647,066) Decrease in cash (12,793,203) (9,711,345) Cash and cash equivalents, beginning of year 39,231,724 48,943,069 Cash and cash equivalents, end of year $ 26,438,521 $ 39,231,724 The accompanying notes are an integral part of these consolidated financial statements. PAGE 30 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 1. Significant accounting policies: The consolidated financial statements of the County of Newell (the "County") are the representations of management prepared in accordance with accounting principles for local governments as 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, 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 (b) 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. (c) Investments: Investments are recorded at cost. Where there has been a loss in value of an investment other than a temporary decline, the investment is written down to reflect the loss. (d) 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. PAGE 31 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 1. Significant accounting policies (continued): (e) 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. (f) 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 gravel pits and provide for post -closure care. 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 and gravel pit based on usage. (g) 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. (h) 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. r PAGE 32 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 1. Significant accounting policies (continued): (h) 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. (i) Use of estimates: The preparation of the financial statements in conformity with generally accepted accounting principles 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Contributions of tangible capital assets are recorded at estimated fair value at the date of receipt. Actual results could differ from those estimates. PAGE 33 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 2. Change in accounting policies and correction of error: a) The County has implemented Public Sector Accounting Board ("PSAB") section PS3510 Tax Revenue. PS3510 establishes general reporting principles and standards for the disclosure of tax revenue in government financial statements. This change has been applied retrospectively and prior periods have been restated. b) Subsequent to the release of the 2010 financial statements it was determined that grants recorded as revenue in 2010 and prior should have been classified as deferred grant revenue as they related to capital projects which had not been completed. This change in accounting policy and the correction of error has changed amounts reported in the prior period as follows: Accumulated surplus at January 1, 2010, as previously reported $129,687,586 Change in policy Increase in local improvement tax receivable 1,025,799 130,713,385 Correction of error Decrease in grant transfers (111,120) Accumulated surplus January 1, 2010, as restated $ 130,602,265 2010 annual surplus Excess of revenues over expenses, as previously reported $ 26,085,991 Change in policy Increase in local improvement tax receivable -- 26,085,991 Corrections of error Decrease in government transfers (3,895,667) Excess of revenues over expenses, as restated $ 22,190,324 3. Cash and temporary investments: 2011 2010 Cash $ 16,923,576 $ 19,143,611 Temporary investments (effective average yield 1.33%) 9,514,945 20,088,113 $26,438,521 $ 39,231,724 Included in cash are amounts aggregating $149,067 (2010 - $166,237) not available for current use as follows: Tax sale surplus Public reserve PAGE 34 2011 $ 12,114 136,953 2010 $ 13,209 153,028 $ 149,067 $ 166,237 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 4. Taxes and grants in place of taxes receivable: Current year Arrears Allowance for uncollectible taxes 5. Investments: Fixed income securities Credit Union Common shares Newell Regional Services Corporation: Common shares Preferred shares 2011 2010 $ 427,744 $ 389,320 452,891 532,931 880,635 922,251 (20,000) (152,340) $ 860,635 $ 769,911 2011 2010 $ 27,586,947 $ 16,320,717 5 -- 20 20 73,460 73,460 73,480 73,480 $ 27,660,432 $ 16,394,197 Long-term investments consist of fixed income securities with an effective average yield of 3.35% and an aggregate market value of $27,586,947 (2010 - $16,320,717). PAGE 35 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 6. Notes receivable: Newell Foundation, repayable in annual installments of $896,630 including interest at 5.5%, maturing in 2018. Tilley and District Fire Association, repayable in annual installments of $96,327 including interest at 3.497%, maturing in 2020. Newell Regional Services Corporation, non-interest bearing, maturing in 2017. Division 5 & 10, repayable in annual installments of $131,082 including interest at 5.25%, maturing in 2013. Bow Slope Fire Division, repayable in annual installments of $32,113 including interest at 4.39%, maturing in 2013. Rolling Hills Fire Division, repayable in annual installments of $39,585 including interest at 3.954%, maturing in 2014. PAGE 36 2011 2010 $ 5,095,521 $ 5,679,764 731,649 800,000 550,000 550,000 242,873 355,302 60,231 88,461 110,952 145,133 $ 6,791,226 $ 7,618,660 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 7. Tangible capital assets: Cost 2010 Additions Disposals 2011 Land $ 5,292,005 $ 36,650 $ (2,335) $ 5,326,320 Land improvements 997,981 -- -- 997,981 Buildings 1,119,418 -- -- 1,119,418 Engineering structures 93,769,844 4,180,722 (39,300) 97,911,266 Machinery and equipment 8,118,702 2,003,198 (1,157,217) 8,964,683 Vehicles 3,312,481 82,233 -- 3,394,714 Work in progress 25,710,242 22,275,157 -- 47,985,399 Total $138,320,673 $28,577,960 $ (1,198,852) 165,699,781 Accumulated Amortization amortization 2010 Disposals expense 2011 Land improvements $ 173,657 $ -- $ 91,531 $ 265,188 Buildings 397,949 -- 22,872 420,821 Engineering structures 35,045,980 (39,300) 2,475,405 37,482,084 Machinery and equipment 2,765,866 (486,017) 680,935 2,960,784 Vehicles 1,490,136 -- 267,685 1,757,821 Total $ 39,873,588 $ (525,317) $ 3,538,428 $ 42,886,698 Net book value 2011 2010 Land $ 5,326,320 $ 5,292,005 Land improvements 732,794 824,324 Buildings 698,597 721,469 Engineering structures 60,429,181 58,723,864 Machinery and equipment 6,003,898 5,352,836 Vehicles 1,636,892 1,822,345 Work in progress 47,741,982 25,710,242 Total $122,813,081 $ 98,447,085 Contributed assets are recognized at fair market value at the date of contribution. The value of contributed assets, comprised of land and engineered structures, received during the year is $106,193 (2010 - $1,667,917). PAGE 37 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 8. Employee benefit obligation: 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. 9. Long-term debt — operating: 2011 2010 Debenture supported with notes receivable $ 5,095,521 $ 5,679,764 Principal and interest repayments are due as follows: $ 5,095,521 $ 1,180,889 $ 6,276,410 Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at 5.5% per annum, before Provincial subsidy, and matures in 2018. Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $304,567 (2010 — $335,251). The County's total cash payments for interest in 2011 were $312,387 (2010 - $342,845). is PAGE 38 W • Principal Interest Total 2012 $ 616,376 $ 280,254 $ 896,630 2013 650,277 246,353 896,630 2014 686,043 210,587 896,630 2015 723,775 172,855 896,630 2016 763,583 133,047 896,630 Thereafter 1,655,466 137,794 1,793,260 $ 5,095,521 $ 1,180,889 $ 6,276,410 Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at 5.5% per annum, before Provincial subsidy, and matures in 2018. Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $304,567 (2010 — $335,251). The County's total cash payments for interest in 2011 were $312,387 (2010 - $342,845). is PAGE 38 W • CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 10. Long-term debt — capital: 2011 2010 Tax supported debentures $ 349,691 $ 425,150 Principal and interest repayments are due as follows: Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates ranging from 4.307% to 7.125% per annum, before Provincial subsidy, and matures in periods 2015 through 2017. The average annual interest rate is 4.57% for 2011 (2010 — 7.7%). 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 at large. Interest on long-term debt amounted to $21,346 (2010 - $22,659). The County's total cash payments for interest in 2011 were $18,577 (2010 - $22,659). 11. 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 pit is based on an estimate of future discounted costs. The estimated closure and post -closure costs for the landfill are $339,507 and $293,701 for the gravel pits, all of which have been accrued in the financial statements. The County has not designated assets for settling closure and post -closure liabilities. PAGE 39 Principal Interest Total 2012 $ 78,861 $ 15,176 $ 94,037 2013 82,418 11,619 94,037 2014 86,139 7,898 94,037 2015 90,032 4,005 94,037 2016 12,240 1,326 13,566 Thereafter - - - $ 349,691 $ 40,024 $ 389,715 Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates ranging from 4.307% to 7.125% per annum, before Provincial subsidy, and matures in periods 2015 through 2017. The average annual interest rate is 4.57% for 2011 (2010 — 7.7%). 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 at large. Interest on long-term debt amounted to $21,346 (2010 - $22,659). The County's total cash payments for interest in 2011 were $18,577 (2010 - $22,659). 11. 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 pit is based on an estimate of future discounted costs. The estimated closure and post -closure costs for the landfill are $339,507 and $293,701 for the gravel pits, all of which have been accrued in the financial statements. The County has not designated assets for settling closure and post -closure liabilities. PAGE 39 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 12. Accumulated surplus: Equity in tangible Unrestricted capital Total Total net assets assets (1) Reserves (2) 2011 2010 Beginning balance $ -- $98,021,935 $54,770,654 $152,792,589 $130,602,265 Excess of revenues over expenses 24,689,653 -- 24,689,653 22,190,324 Transfer to reserves (23,015,865) -- 23,015,865 -- -- Transfers from reserves 27,084,871 -- (27,084,871) -- -- Amortization of tangible capital assets 3,538,428 (3,538,428) -- -- Net book value of assets disposed 673,535 (673,535) -- -- -- Capital assets internally funded (28,471,766) 28,471,766 -- -- -- Contributed capital assets (106,193) 106,193 -- -- -- Principal payment on capital debt (75,459) 75,459 -- -- -- Total $ 4,317,204 $122,463,390 $50,701,648 $177,482,242 $152,792,589 (1) Equity in tangible capital assets: Tangible capital assets Accumulated depreciation Long-term debt (note 9) PAGE 40 2011 $ 165,699,779 (42,886,698) (349,691) $ 122,463,390 0111f $138,320,673 (39,873,588) (425,150) $ 98,021,935 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 12. Accumulated surplus (continued): (2) Reserves are comprised of funds internally restricted as follows: PAGE 41 2011 2010 Annual Paving Tax $ 13,117,298 $ 16,451,337 Municipal Surplus 9,706,571 13,427,442 Administration 13,042,616 12,410,503 Regional Enhancement 6,370,691 6,856,512 Secondary highway #847 700,145 690,893 Secondary highway #862 -- 209,040 Agriculture Service Board 740,636 635,041 Planning 141,668 139,796 Fire Truck 63,165 29,122 Disaster Services 71,023 61,204 Special Constable 64,928 64,070 Shop 70,212 33,858 Public Works 5,912,339 3,266,803 Public Transportation 136,919 120,884 Economic Development 118,025 119,038 Rolling Hills water and sewer 80,817 80,817 Scandia water reservoir 69,185 69,185 Patricia sewer 73,484 73,484 Lake Newell sewer 31,626 31,626 Corporate Safety 4,300 -- Water 56,000 -- Sewer 108,000 -- Parks 22,000 -- $ 50,701,648 $ 54,770,655 PAGE 41 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 13. Net municipal property taxes: Taxation: Real property taxes Linear property taxes Government grants in place of property taxes Requisitions: Alberta School Foundation Fund Newell Foundation Net municipal property taxes 14. Government transfers: Transfers for operating: Provincial government Federal government Local government Transfers for capital: Provincial government Local government PAGE 42 Budget 2011 2010 (Unaudited) (Restated - $ 12,395,385 $ 12,602,000 $ 12,393,753 25,228,094 24,927,486 25,228,093 286,565 269,162 284,764 37,910,044 37,798,648 37,906,610 11,950,160 11,785,448 11,942,524 607,014 630,438 607,013 12,557,174 12,461,234 12,549,537 $ 25,352,870 $ 25,337,414 $ 25,357,073 Budget 2011 2010 (Unaudited) (Restated - note 2) $ 833,340 $ 1,035,371 $ 1,354,157 4,500 30,969 5,126 137,050 132,217 242,387 974,890 1,198,557 1,601,670 16,525,807 17,076,929 11,315,879 665,000 571,814 2,007,968 17,190,807 17,648,743 13,323,847 $ 18,165,697 $ 18,847,300 $ 14,925,517 • CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 15. Expenditures by object: Budget 2011 2010 (Unaudited) Salaries, wages and benefits $ 6,616,165 $ 6,063,168 $ 5,731,502 Contracted and general services 4,675,013 6,532,596 3,354,805 Materials, goods, supplies and utilities 3,224,569 2,401,879 1,935,961 Transfers to organizations 4,468,740 4,039,138 8,150,298 Bank charges and short-term interest 600 508 497 Interest on long-term debt 335,660 325,913 357,911 Other expenditures 89,200 225,295 38,960 Amortization 4,954,800 3,538,428 3,329,325 $ 24,364,747 $ 23,126,925 $ 22,899,259 PAGE 43 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 16. 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: 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. is PAGE 44 k�,W� 2011 2010 Benefits & Salary (1) Allowances (2) Total Total Council: Reeve $ 6,000 $ - $ 6,000 $ 6,000 Division 1 27,695 5,497 33,192 31,267 Division 2 33,683 608 34,291 29,357 Division 3 34,828 5,741 40,569 39,241 Division 4 21,856 1,080 22,936 23,091 Division 5 22,448 1,104 35,552 27,563 Division 6 25,888 4,700 30,588 27,894 Division 7 28,577 5,485 34,062 28,967 Division 8 31,337 1,466 32,803 28,118 Division 9 37,295 2,010 39,305 36,608 Division 10 29,238 5,513 34,751 31,627 $ 298,845 $ 33,204 $ 344,049 $ 309,733 Chief Administrative Officer $ 188,200 $ 38,111 $ 226,311 $ 197,004 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. is PAGE 44 k�,W� CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 17. 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: 2011 2010 Total debt limit $ 45,092,463 $ 45,193,529 Total debt (5,445,212) (6,104,914) $ 39,647,251 $ 39,088,615 2011 2010 Debt servicing limit $ 7,515,411 $ 7,532,255 Debt servicing (990,667) (990,667) $ 6,524,744 $ 6,541,588 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. 18. 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 189,149 people and about 411 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 9.49% of pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension Plan and 13.13% on pensionable earnings above this amount. Employees of the County are required to make current service contributions of 8.49% of pensionable salary up to the year's maximum pensionable salary and 12.13% on pensionable salary above this amount. Total current service contributions by the County to the LAPP in 2011 were $359,721 (2010 - $344,496). Total current service contributions by the employees of the County to the LAPP in 2011 were $325,775 (2010 - $310,361). At December 31, 2010, the LAPP disclosed an actuarial deficiency of $4,635 million. PAGE 45 CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 19. 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. The County has been named defendant in legal actions. In the opinion of management this matter is without substantial merit and no provision has been made in the accounts. 20. Recent accounting pronouncements: The Public Sector Accounting Board recently announced the following accounting pronouncements: (a) Liability for contaminated sites: This accounting pronouncement establishes standards on how to account for and report a liability associated with the remediation of contaminated sites. It is effective for fiscal years beginning on or after April 1, 2014, with early adoption encouraged. (b) Government transfers: This accounting pronouncement establishes standards on how to account for and report government transfers to individuals, organizations, and other governments from both a transferring government and a recipient government perspective. It is effective for fiscal years beginning on or after April 1, 2012, with early adoption encouraged. (c) Financial instruments: This accounting pronouncement establishes standards on how to account for and report all types of financial instruments including derivatives. Financial instruments include primary instruments and derivative instruments. It is effective for fiscal years beginning on or after April 1, 2015 for governments and for fiscal years beginning on or after April 1, 2012 for government organizations, with early adoption encouraged. (d) Foreign currency translation: This accounting pronouncement establishes standards on how to account for and report transactions that are denominated in a foreign currency in government financial statements. It is effective for fiscal years beginning on or after April 1, 2015 for governments and for fiscal years beginning on or after April 1, 2012 for government organizations, with early adoption encouraged. Management is assessing the impact of the adoption of these standards which is not known or reasonably estimable at this time. PAGE 46 k�� CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements Year ended December 31, 2011 21. Financial instruments: It is management's opinion that the County is not exposed to significant interest, currency or credit risk arising from these financial instruments. Unless otherwise noted, the fair values of these financial instruments approximate their carrying values. 22. Budget data: The unaudited budget data presented in these consolidated financial statements is based upon the 2011 operating and capital budgets approved by Council on December 10, 2010 and any subsequent budget adjustments. 23. Approval of financial statements: These financial statements were approved by Council and Management. PAGE 47 CONSOLIDATED FINANCIAL STATEMENTS Schedule of Segmented Disclosures Year ended December 31, 2011 Revenue Net taxes for municipal purposes Special levies User Fees and sale of goods Government transfers - operating Penalties and costs of taxes Investment income License and permits Other Gain (loss) on disposal of capital assets Salaries, wages and benefits Contracted and general services Materials, goods, supplies and utilities Transfer to Organization Bank charges and short term interest Interest on long-term debt Other expenditures Amortization Excess (deficiency) of revenue over expenses before the undernoted Contributed assets Government transfers - capital Excess (deficiency) of revenue over expenses for the year PAGE 48 Public Works Public Works General and Total General and Total Government Transportation Public Utilities 2011 Government Transportation Public Utilities 2010 $ 25,337,414 $ $ - $ 25,337,414 $ 25,357,073 $ $ $ 25,357,073 624,498 61,299 685,797 629,153 155,575 784,728 427,612 120,924 280,251 828,787 438,387 113,178 246,888 798,453 797,345 401,212 - 1,198,557 893,687 683,183 24,800 1,601,670 167,589 - 167,589 138,669 - - 138,669 1,155,798 215,215 1,371,013 942,230 237,904 1,180,134 70,292 - 70,292 30,700 - 30,700 128,033 31,293 112,329 271,655 87,001 27,927 114,928 9,537 121,000 - 130,537 6,030 85,434 - 91,464 28,718,118 889,645 453,879 30,061,642 28,522,930 1,147,626 427,263 30,097,819 3,079,985 2,983,183 6,063,168 2,751,095 2,973,343 7,064 5,731,502 1,044,504 5,072,805 415,287 6,532,596 924,059 2,052,602 378,144 3,354,805 732,203 1,243,982 425,694 2,401,879 786,264 769,862 379,835 1,935,961 1,844,588 2,194,550 4,039,138 2,184,265 7,065 5,958,968 8,150,298 508 - - 508 497 - - 497 307,336 - 18,577 325,913 335,252 22,659 357,911 35,719 189,576 225,295 104,981 (66,594) 573 38,960 248,109 3,182,547 107,772 3,538,428 232,018 2,982,783 114,524 3,329,325 7,292,952 14,866,643 967,330 23,126,925 7,318,431 8,719,061 6,861,767 22,899,259 21,425,166 (13,976,998) (513,451) 6,934,717 21,204,499 (7,571,435) (6,434,504) 7,198,560 106,193 106,193 - 1,409,518 258,399 1,667,917 8,433,378 2,109,984 7,105,381 17,648,743 357,137 1,174,370 11,792,340 13,323,847 $ 29,964,737 $ (11,867,014) $ 6,591,930 $ 24,689,653 $ 21,561,636 $ (4,987,547) $ 5,616,235 $ 22,190,324 PAGE 48 SECTION 3 STATISTICAL SECTION PAGE 49 + 4 + 1 STATISTICAL SECTION Demographics & Other Statistics 2011 Population* 2009 7,101 Households 6,862 2,857 Area in hectares 2,815 623,537 Continuous full-time employees 623,537 55 Permits Issued: 55 57 Building Permit 557 58 Electrical Permit 166 Gas Permit 67 Plumbing Permit 32 Private Sewage Permit 17 Total Permits Issued 340 *Source: Alberta Municipal Affairs Statistics Profile T�. 2010 2009 2008 7,101 6,862 6,862 2,842 2,815 2,781 623,537 623,537 623,537 54 55 57 69 76 101 201 360 223 61 57 112 30 39 54 17 25 18 378 557 508 PAGE 51 STATISTICAL SECTION Expenses by Function & Expenses Expenses by Function EXPENSES Legislative Administration General Corporate safety services Fire and bylaw enforcement Disaster and emergency services Roads, streets, walks and lighting Airport Water and waste water Waste management Family and community support Municipal planning Community and agricultural services Subdivision land and development Recreation and parks Culture and library Other TOTAL EXPENSES BY FUNCTION Expenses by Object EXPENSES 2008 2009 2010 2011 $ 411,868 $ 419,156 $ 438,302 $ 456,142 1,735,325 1,846,899 2,046,183 2,303,142 3,285,615 2,350,381 854,291 827,195 197,892 216,334 238,257 236,523 926,748 953,991 1,032,879 881,245 91,733 12,314 180,571 133,965 8,503,831 10,142,187 8,628,420 12,581,127 - - 90,641 112,297 2,304,183 13,464,843 6,612,354 2,906,261 233,743 234,308 249,413 255,619 40,880 41,217 43,949 41,668 168,179 216,496 224,308 260,789 1,308,869 1,141,585 1,140,078 1,048,306 15,700 166,050 171,491 174,056 674,439 701,270 733,752 731,661 123,720 137,222 138,125 139,473 51,649 (9,634) 76,245 37,454 $ 20,074,374 $ 32,034,619 $ 22,899,259 $ 23,126,925 2008 2009 2010 2011 Salaries, wages and benefits $ 5,395,633 $ 5,499,995 $ 5,731,502 $ 6,063,168 Contracted and general services 4,314,291 4,850,898 3,354,805 6,532,596 Materials, goods, supplies and utilities 2,217,314 2,009,729 1,935,961 2,401,879 Transfers to organizations 5,932,034 16,327,408 8,150,298 4,039,138 Bank charges and short-term interest 563 528 497 508 Interest on long-term debt 428,683 391,030 357,911 325,913 Other expenditures 104,892 70,262 38,960 225,295 Amortization 1,680,964 2,884,769 3,329,325 3,538,428 TOTAL EXPENSES BY OBJECT $ 20,074,374 $ 32,034,619 $ 22,899,259 $ 23,126,925 PAGE 52 STATISTICAL SECTION Revenues by Source Revenues by Source IVWjAkiLei �*I Net municipal property taxes Special levies User fees and sale of goods Government transfers Penalties and cost of taxes Investment income Licenses and permits Other revenue Gain (loss) on disposal of tangible capital assets Operating revenues Other: Contributed assets Government transfers 11ri111FAN:AMAL1110 2008 2009 2010 2011 $25,368,889 $27,529,024 $25,357,073 $25,337,414 811,565 725,363 784,728 685,797 685,892 800,859 798,453 828,787 2,141, 579 1,733,210 1,601,670 1,198, 557 76,391 112,218 138,669 167,589 2,388,286 1,448,226 1,180,134 1,371,013 31,495 27,125 30,700 70,292 122,375 161,852 114,928 271,655 (30, 830) (39, 478) 91,464 130,537 31, 595, 642 32, 498, 399 30, 097, 819 30, 061, 641 710,670 624,420 1,667,917 106,193 8,426,937 26, 771, 730 13, 323, 847 17, 648, 743 9,137, 607 27, 396,150 14, 991, 764 17, 754, 936 $40,733,249 $59,894,549 $45,089,583 $47,816,577 PACE 53