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HomeMy WebLinkAbout2017 Annual Report - long version 2017 ANNUAL FINANCIAL REPORT FOR THE YEAR ENDING DECEMBER 31, 2017 COUNTY OF NEWELL, ALBERTA, CANADA Photo by M. Berg C OUNTY OF N EWELL, A LBERTA, C ANADA 2017 ANNUAL FINANCIAL REPORT F OR THE FISCAL PERIOD ENDING D ECEMBER 31, 2017 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@newellmail.ca The 2017 Annual Financial Report is available online at www.countyofnewell.ab.ca Cover Photo by C. Bartman Photo by C. Bartman P AGE 2 TABLE OF CONTENTS SECTION 1 I NTRODUCTION Vision, Mission, & Guiding Principles 7 County Council 9 Organizational Chart 10 GFOA Canadian Award for Financial Reporting 11 Report from the Manager of Finance 12 SECTION 2 C ONSOLIDATED F INANCIAL S TATEMENTS ManagementÓs Responsibility for the Consolidated Financial Statements 27 Consolidated Statement of Financial Position 30 Consolidated Statement of Financial Activities 31 Consolidated Statement of Change in Net Financial Assets 32 Consolidated Statement of Cash Flows 33 Notes to Consolidated Financial Statements 34 Schedule of Segmented Disclosures 51 SECTION 3 F INANCIAL & S TATISTICAL S ECTION Demographics & Other Statistics 54 Expenses by Object 55 Expenses by Function 56 Revenues by Source 57 C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 3 Photo by K. Smit P AGE 4 SECTION 1 THE COUNTY OF NEWELL C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 5 Photo by S. Plett P AGE 6 VISION & MISSION STATEMENT VISION STATEMENT To encourage and support sustainable growth and quality of life. MISSION STATEMENT The County of Newell through leadership and policy provides services, structure and stability. GUIDING PRINCIPLES Seeking cooperation with individuals, governments, and organizations Planning for the future growth and development of the municipality Striving for the long-term of the municipality Supporting the development and sustainability of a Providing for agricultural use Promoting between staff, Council and the public C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 7 COUNTY PROFILE The County of Newell is a rural municipality (5900 sq. km.) located in southeast Alberta in an area bounded 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 Î directly or jointly with other municipalities Î to the residents 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. 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 The County has one of AlbertaÓs most 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 CanadaÓs largest man-made lakes, Dinosaur Provincial Park - a UNESCO Business costs are low. Quality of life is high Î with a full range of recreation, health and cultural amenities. P AGE 8C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT COUNTY COUNCIL DIVISION 1 Rolling Hills DIVISION 2 Tilley DIVISION 3 Patricia/Millicent DIVISION 4 Rainier/Scandia/Bow City DIVISION 5 Cassils/Lake Newell Resort Clarence Amulung Councillor Anne Marie PhilipsenCouncillor Tracy Fyfe (403) 362-1777(403) 793-0574(403) 793-2076 amulungc@newellmail.cakallenh@newellmail.caphilipsena@newellmail.cahammergrenw@newellmail.cafyfet@newellmail.ca DIVISION 6 Bassano DIVISION 7 Rosemary DIVISION 8 Duchess DIVISION 9 Gem DIVISION 10 Brooks Councillor Kelly ChristmanCouncillor Ellen UnruhCouncillor Brian de JongReeve Molly DouglassCouncillor Lionel Juss (403) 641-2274(403) 793-3369(403) 363-9203(403) 362-0947 christmank@newellmail.caunruhe@newellmail.cadejongb@newellmail.cadouglassm@newellmail.cajussl@newellmail.ca C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 9 ORGANIZATIONAL CHART DIRECTOR OF MANAGER OF AGRICULTURAL AGRICULTURAL REEVE SERVICES CHIEF SERVICES ADMINISTRATIVE & OFFICER COUNCIL DIRECTOR OF INFORMATION & TECHNOLOGY MANAGER OF PLANNING & EXECUTIVE DEVELOPMENT ASSISTANT MANAGER OF DIRECTOR OF DIRECTOR OF OPERATIONS MUNICIPAL CORPORATE SERVICES MANAGER OF SERVICES CORPORATE SAFETY SERVICES FLEET MANAGER OF SERVICES ENGINEERING SUPERVISOR SERVICES MANAGER OF MUNICIPAL FIRE & ENFORCEMENT EMERGENCY SUPERVISOR MANAGER OF SERVICES FINANCE P AGE 10C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT GFOA CANADIAN AWARD FOR FINANCIAL REPORTING In order to be awarded a Canadian Award for Financial Reporting, a government unit must publish an standards. Such reports should go beyond the minimum requirements of generally accepted accounting needs. A Canadian Award for Financial Reporting is valid for a period of one year only. We believe our current report continues to conform to the Canadian Award for Financial Reporting program requirements, and we are submitting it to GFOA. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 11 REPORT FROM THE MANAGER OF FINANCE I NTRODUCTION activities and available resources. It also provides an opportunity to analyze and comment on the P AGE 12C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE 2017 F INANCIAL H IGHLIGHTS C ONSOLIDATED S TATEMENT OF F INANCIAL P OSITION result in a net decrease in accumulated surplus of $19.0 million for 2017. C ONSOLIDATED S TATEMENT OF F INANCIAL A CTIVITIES Revenues were $1.6 million lower than budgeted or 96.0% of budgeted revenues. This is largely due to local improvement taxes which were budgeted but not recognized as the related project has yet to begin. Revenue increases over prior year amounts were driven by raising additional property tax revenues and increased well-drilling activity in the region which drove higher well-drilling tax revenues. under budget due to lower than expected overtime costs in the Municipal Services and Agricultural Services departments and the vacancy of the Manager of Agricultural Services position. Contracted services were under budget primarily due to lower than expected repairs and maintenance on roads and buildings as well as uncompleted water pond decommissioning and intermunicipal collaboration projects. Materials, goods, supplies and utilities were under budget primarily due to deferring the purchase of AFRRCÓs radios, lower than expected repairs and maintenance costs on vehicles and equipment, lower fuel costs, and less use of road maintenance materials such as gravel and calcium. The County transferred water infrastructure assets with a value of $33.3 million to Newell Regional Services Corporation (NRSC) during the year. These assets were being held in trust for NRSC as part C ONSOLIDATED S TATEMENT OF C HANGE IN N ET F INANCIAL A SSETS end of the year. This indicates the County can afford to settle its liabilities. C ONSOLIDATED S TATEMENT OF C ASH F LOWS Cash and cash equivalents decreased by $347 thousand in 2017. Operations provided cash of $26.7 million, $15.0 million was used to purchase tangible capital assets, $6.9 million was used in investing activities and $5.1 million was used to repay long term debt. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 13 REPORT FROM THE MANAGER OF FINANCE MANAGEMENT REPORTING & CONTROL process, accounting procedures, external audit, and various policies which are described below. On an annual basis, Council considers a proposed operating budget and a ten-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 After the budget is adopted by Council, expenditures are controlled against budget by formal policies The CountyÓs accounting system and related internal controls are designed to provide reasonable loss from unauthorized use or disposition. The CountyÓs Purchasing and Budget Variance policies ensure that controls and reporting requirements are appropriate. Generally accepted accounting principles for local governments are adhered to. Council is required by the Municipal Government Act to engage independent auditors to express an 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. The County ensures that consistent procedures are followed for purchases through Purchasing Policy 2011-PAD-051 which sets expenditure limits for the County. The policy ensures that items purchased have been approved through the budget process or by separate resolution of Council. P AGE 14C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE The CountyÓs excess funds are invested in accordance with Investment Policy 2014-PAD-032. This policy 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 CountyÓs investment policy meets all of these requirements. FINANCIAL INDICATORS DISCUSSION & ANALYSIS The 2017 Consolidated Financial Statements are prepared in compliance with Public Sector Accounting by applying PSAB issued Statement of Recommended Practices (SORP) 4: Indicators of Financial the County in maintaining the programs and services it currently provides, as well as the policy and This SORP is not part of generally accepted accounting principles (GAAP) and there is no requirement for governments to implement its recommendations. Although there are numerous indicators to assess well as a selection of indicators related to each. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 15 REPORT FROM THE MANAGER OF FINANCE SUSTAINABILITY Sustainability measures the ability of the County to maintain its existing programs and services, The following indicators have been selected to assess sustainability. This annual result indicates the extent to which the CountyÓs revenue is more than its expenses during over time, expenses are less than revenues. In essence, this requires current taxpayers to fully meet the cost of services. Newell Regional Services Corporation (NRSC) during the year. These assets were being held in trust P AGE 16C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE This indicator shows the extent to which the CountyÓs future revenues will be required to pay for past revenues or increasing debt to pay for past decisions. Photo by M. Berg C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 17 REPORT FROM THE MANAGER OF FINANCE Every year, a percentage of property owners are unable to pay property taxes for a variety of reasons. If this percentage increases over time, it may indicate an overall decline in the CountyÓs economic health. Additionally, as uncollected property taxes rise, liquidity decreases. P AGE 18C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE FLEXIBILITY Flexibility is the degree to which the County can change its debt burden or raise taxes to respond to to changing circumstances. 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. This ratio is expected to remain relatively consistent until 2019 when it should begin decreasing as debentures for the rural water project are repaid. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 19 REPORT FROM THE MANAGER OF FINANCE Regulation 255/00. The maximum allowable debt the County could hold within this regulation is approximately $57.1 million. The County held outstanding debt balances representing 36.4% of this maximum allowable amount at the end of 2017. This leaves the County with approximately $36.3 million of borrowing room. Debt per capita is expected to decrease steadily moving forward. The last of the debentures support- ing the rural water project is scheduled to be repaid in full by 2023. P AGE 20C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE R ESTRICTED S URPLUS Restricted surplus funds are included as part of the CountyÓs accumulated surplus. Restricted surplus funds are a critical component of the CountyÓs capital plan. The CountyÓs Restricted Surplus Policy Stabilize tax rates in the face of variable and uncontrollable factors (consumption, interest rates, unemployment rates, changes in subsidies) and utility rates Make provisions for replacement or acquisitions of assets and infrastructure that are currently being consumed and amortized Avoid spikes in funding requirements of the capital plan by reducing the reliance on long-term debt borrowings Provide for future liabilities incurred in the current year but paid for in the future - quirements 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 restricted surplus funds required will vary for a number of reasons including: Services provided by the County Economic conditions and projections Internal debt and restricted surplus policies - stricted surplus funds listed below. The County is in compliance with this policy as at December 31, C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 21 REPORT FROM THE MANAGER OF FINANCE The CountyÓs tangible capital assets (TCA) decreased by a net $24,677,902 in 2017 which includes new $536,544 Î Machinery and equipment $257,225 Î Vehicles Net book value of TCA compared to total cost of TCA measures the extent to which the estimated useful lives of the CountyÓs tangible capital assets are available to provide its products and services. As at December 31, 2017 approximately 74% of the CountyÓs assets useful lives remain available to provide future services. P AGE 22C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE VULNERABILITY Vulnerability is the degree to which the County becomes dependent on, and therefore vulnerable to, sources of funding outside its own-source revenue is, the more it relies on This indicator demonstrates the level of government transfers compared to total revenues. The higher the percentage, the more reliance the County puts on receipt of funds from other levels of government. These transfers are dependent on policy decisions which are outside the control of the County. transfers. It is important to note that the majority of these government transfers have been used for part on grant funding from other levels of government. its reliance on government transfers for operating to support its products and services. Respectfully Submitted, Matt Fenske, CA Manager of Finance Photo by S. Plett P AGE 24 SECTION 2 CONSOLIDATED FINANCIAL STATEMENTS C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 25 P AGE 26 CONSOLIDATED FINANCIAL STATEMENTS C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 27 CONSOLIDATED FINANCIAL STATEMENTS P AGE 28C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 29 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Financial Position December 31,2017, with comparative informationfor 2016 20172016 Financial assets: Cash and cash equivalents (note 2)$$ Taxes and grants in place of taxes receivable (note 3)1,312,6761, Trade and other receivables(note 4) Land held for resale 31,49131,491 Investments (note 5)46,452,097 Notes receivable (note 6)1,773,637 Other financial assets195 92,90,941,403 Financial liabilities: Accounts payable and accrued liabilities2,407,2672,201,452 Employee benefit obligations (note )1,604,991 Unearned revenue (note 9)22,000 Long-term debt-operating(note 10)1,537,923 Long-term debt -capital (note 11)20,020,64424,414,424 Provision for landfill closureand post-closure costs (note 12)662,535313,533 Provision for gravel pit closureand post-closure costs (note12)33335,341 Deposit liabilities (note 2) 26,051,20130,727,071 Netfinancial assets 66,110,96760,214,332 Non-financial assets: Prepaid expenses 11 Tangible Capital Assets (note 7)202,274,435 Inventory for consumption 1,170,1231,390,753 7 Contingent liabilities (note 20) Accumulated surplus(note 13)$269,674,354 The accompanying notes are an integral part of these consolidated financial statements. P AGE 30C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Financial Activities Year ended December 31, 2017, with comparative information for 2016 Budget 2017 2016 Revenues: Net municipal property taxes (note 14) $ 32,371,964 $ $ 29,792,314 Special levies 1 User fees and sale of goods 1,917,452 2, Government transfers (note 15) 605,674 6 Penalties and cost of taxes 132,000 210,5 Investment income 1,270,656 1, 1,642,224 Licenses and permits 152,000 255, 153,032 Other revenue 143,533 634,705 Gain (loss) on disposal of tangible capital assets - 143,662 39,706,114 131,62 36,217,193 Expenses (note 16): Legislative 572,510 515,343 Administration 5,057,462 4,3 Corporate safety services 339,779 296,975 Fire and by-law enforcement 1, 1,1 1,297,464 Disaster and emergency services 251,406 244,070 Roads, streets, walks and lighting 1 1 Airport 135,400 115,279 120,979 Water and waste water 3,074,693 2, Waste management 3 313,249 Family and community support 120,466 79,466 64,467 Municipal planning 571,253 495,112 Community and agricultural services 2,063,117 1, 1,600,315 Subdivision land and development 190,737 173,915 Recreation and parks Culture and library 155,326 155,326 154,470 Other 2, 3 3,677,603 31,413,710 26,964,575 27,467,154 Annual surplus before the undernoted 11,167,053 Other: Contributed assets -- -- 904,423 Transfer of assets to Newell Regional Services Corporation -- -- Government transfers (note 15) -- 173,520 Annual surplus (deficit) (4) 13,523,021 Accumulated surplus, beginning of year Accumulated surplus, end of year $29 $269,674,354 $ The accompanying notes are an integral part of these consolidated financial statements. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 31 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Change in Net Financial Assets December 31, 2017, with comparative information for 2016 Budget 2017 2016 Annual surplus (deficit) $ $(4) $ 13,523,021 Acquisition of tangible capital assets (11,273,930) (15,) (11,733,660) Contributed (transferred) tangible capital assets - 33,324,214 (710,756) Proceeds on disposal of tangible capital assets - 556,406 70,432 Amortization of tangible capital assets 6,576,370 6, (Gain) loss on disposal of tangible capital assets - (143,662) 3, Use (acquisition) of inventories for consumption - 220,631 Use (acquisition) of prepaid expenses - ) Change in net financial assets 3, 5 Net financial assets, beginning of year 60,214,332 60,214,332 52,365,506 Net financial assets, end of year $ $ 66,110,967 $ 60,214,332 The accompanying notes are an integral part of these consolidated financial statements. Photo by K. Smit P AGE 32C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Cash Flows Year ended December 31, 2017, with comparative information for 2016 2017 2016 Cash provided by (used in): Operations: Annual surplus (deficit) $(4) $ 13,523,021 Items not involving cash: Amortization Transferred (contributed) assets 33,324,214 (710,756) Loss (gain) on disposal of tangible capital assets (143,662) Change in non-cash financial assets and liabilities: Taxes and grants in place of taxes receivable () (235,672) Trade and other receivables 5,367,626 2,939,662 Land held for resale - 390 Other financial assets 76 (5) Prepaid expenses () Inventory for consumption 220,631 Accounts payable and accrued liabilities 3 (1,327,345) Employee benefit obligations 76,153 1,123,213 Unearned revenue (17 13,701 Landfill closure and post-closure costs 349,002 (4,369) Gravel pit closure and post-closure costs (3,527) (15,254) 22,006,375 Capital activities: Proceeds on disposal of tangible capital assets 556,406 70,432 Purchase of tangible capital assets () (11,733,660) (15,031,469) Investing activities: Decrease (increase) in temporary investments (15,300,412) Increase in investments () Payments received on notes receivable 096 1,221,429 (6,917,273) Financing activities: Repayment of long-term debt: - operating (7) (709,366) - capital (5,034,630) (4,942,931) Proceeds from debt acquired - Increase (decrease) in deposit liabilities 13,534 (45,117) (5,) (5,697,414) Increase (decrease) in cash and cash equivalents (347,101) (13,623,211) Cash and cash equivalents, beginning of year 2,995,636 Cash and cash equivalents, end of year (note 2) $ 2, $ 2,995,636 Cash and cash equivalents is comprised of: Cash and temporary investments $ $ Less investments with original maturities greater than 90 days - $ 2, $ 2,995,636 The accompanying notes are an integral part of these consolidated financial statements. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 33 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. Significant accounting policies: The consolidated financial statements of the County of Newell (the ÐCountyÑ) are the representations of management prepared in accordance with Canadian Public Sector accounting standards. Significant aspects of the accounting policies adopted by the County are as follows: (a) Cash and cash equivalents: Cash and cash equivalents include cash on hand and short-term deposits which are highly liquid with original maturities of less than three months from the date of acquisition. (b)Reporting entity: The consolidated financial statements reflect the assets, liabilities, revenues and expenses, changes in net financial assets and cash flows of the County, which comprises of all the organizations that are owned or controlled by the County and are, therefore accountable to the Council for the administration of their financial affairs and resources. All significant inter-department transactions and balances are eliminated on consolidation. Taxes levied also include requisitions for educational, health care, social and other external organizations that are not part of the County. The statements exclude trust assets that are administered for the benefit of external parties. (c) Basis of accounting: The financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the legal obligation to pay. Funds from external parties and earnings thereon restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified. (d) Investments: Investments are recorded at cost. Where there has been a loss in value of an investment other than a temporary decline, the investment is written down to reflect the loss. (e) Requisition over-levy and under-levy: Over-levies and under-levies arise from the difference between the actual property tax levy made to cover each requisition and the actual amount requisitioned. If the actual levy exceeds the requisition, the over-levy is accrued as a liability and property tax revenue is reduced. Where the actual levy is less than the requisition amount, the under-levy is accrued as a receivable and as property tax revenue. Requisition tax rates in the subsequent year are adjusted for any over-levies for the prior year. P AGE 34C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. (f) Inventories: Land held for resale is recorded at the lower of cost and net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping, and leveling charges. Related development costs incurred to provide infrastructure such as water and waste water services, roads, sidewalks and street lighting are recorded as capital assets under their respective function. (g) Landfill and gravel pit closure and post-closure costs: Pursuant to the Alberta Environment Protection and Enhancement Act, the County is required to fund the closure of its landfill site and provide for post-closure care. Landfill closure and post- closure activities include the final clay cover, landscaping, as well as surface and ground water monitoring, leachate control and visual inspection. The requirement is being provided for over the estimated remaining life of the landfill site based on usage. The County is required to fund the closure of its gravel pits. Reclamation of these sites includes providing final cover and landscaping. The requirement is being provided for on an estimate of expected cost on size of sites. (h) Government transfers: Government transfers are recognized in the financial statements as revenues in the period that the events giving rise to the transfer occurred, providing the transfers are authorized, all eligibility criteria have been met by the County, and reasonable estimates of the amounts can be made. (i) Non-financial assets: Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the normal course of operations. (i) Tangible capital assets: Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets is amortized on a straight-line basis over the estimated useful life as follows: Years Land Improvements 15-45 Buildings 25-70 Engineered structures 15-75 Machinery and equipment 5-40 Vehicles 5-14 Assets under construction are not amortized until the asset is available for productive C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 35 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. (i) Non-financial assets (continued): (ii) Contributions of tangible capital assets: Tangible capital assets received as contributions are recorded at fair value at the date of receipt and recorded as revenue. (iii) Inventories Inventories of materials and supplies held for consumption are recorded at the lower of cost and replacement cost with cost determined by the average cost method. (iv) Cultural and historical tangible capital assets: Works of art for display are not recorded as tangible capital assets but are disclosed. (j) Tax Revenue: Tax revenue results from non-exchange transactions that are paid to governments in accordance with the laws and regulations established to provide revenue to the government for public services. The revenue is recognized when the tax has been authorized and the taxable event has occurred. (k) Pension expenses: The County participates in a multi-employer defined benefit pension plan, wherein contributions for current and past service pension benefits are recorded as expenses in the year in which they become due. (l) Use of estimates: The preparation of the financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the determination of allowance for doubtful accounts, provision for closure and post-closure care, employee benefit obligations and the useful life of tangible capital assets. Contributions of tangible capital assets are recorded at estimated fair value at the date of receipt. Actual results could differ from those estimates. P AGE 36C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. (m) Contaminated sites: Contaminated sites are a result of contamination being introduced into air, soil, water or sediment of a chemical, organic or radioactive or live organism that exceeds an environmental standard. The liability is recorded net of any expected recoveries. A liability for remediation of a contaminated site is recognized when a site is not in productive use and is managementÓs estimate of the cost of post-remediation including operation, maintenance and monitoring. No contaminated sites have been identified. 2. : 2017 2016 Cash $ 2, $ 2,995,636 Temporary investments - $ $ Included in cash are amounts aggregating $ (2016 - $) not available for current use. 2017 2016 Tax sale surplus $ 20,532 $ 12,769 Public reserve $ $ Photo by T. Exner C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 37 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 3. 2017 2016 Current $ 703,962 $ 599,967 Arrears 7 794,415 1,412,676 Allowance for uncollectible taxes (100,000) (100,000) $ 1,312,676 $ 4. : 2017 2016 Grants $ $ 12,990,945 Local improvement taxes 5,656,126 6,132,749 Other 1,354,499 1,064,159 $ $ Local improvement taxes carry annual interest rates ranging from 2.64% - 4.44% and are due between 2017 Î 2041. 5. 2017 2016 Fixed income securities $ 69,479,617 $ Credit Union Common shares 5 5 Newell Regional Services Corporation: Common shares 20 20 Preferred shares 3,070,236 3,070,261 $ $ 46,452,097 Fixed income securities yield interest from 1.74% to 10.22% and mature in periods 20 through 2031. The investments have an average expected yield of 3.15% and an aggregate market value of $69,105,496 (2016 - $46,757,445). P AGE 38C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 6. 2017 2016 Newell Foundation, repayable in annual installments of $ including interest at 5.5%, $ $ 1,537,922 Newell Regional Services Corporation - 235,715 $ $ 1,773,637 7. Tangible capital assets: Cost 2016 Additions Disposals 2017 Land $ $ -- $ (2,000) $ 5,351 Land improvements 2,037,162 -- -- 2,037,162 Buildings 19,160,729 -- 20,969,663 Engineered structures 210,653,643 (35,900) 224,166,399 Machinery and equipment 536,544 () 11, Vehicles 5,095,143 1,335,007 () Work in progress, net of transfers (1,) (33,) 6 Total $ 291,174,700 $ 15,613,297 $ (34,) $272,222,979 Accumulated Amortization amortization 2016 Disposals expense 2017 Land improvements $ $ -- $ 132 $ 965,962 Buildings -- 36 1,715,976 Engineered structures 54,467,144 (35,900) 4,737,061 5 Machinery and equipment 5,165,433 (5) 925,572 5,614,140 Vehicles 2,367,101 () 406,932 2, Total $ 64,222,362 $ (7) $ 6,19 $ 64 C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 39 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 7. Net book value 2017 2016 Land $ 5,351 $ 5, Land improvements 1,071,200 1, Buildings 17,771,039 Engineered structures 1 1 Machinery and equipment 5,973,333 6,720,104 Vehicles 3,603,117 Work in progress Total $ 202,274,435 $ 2 Contributed tangible capital assets are recognized at fair value at the date of contribution. The County donated assets with a carrying value of $33,324,414 to Newell Regional Services Corporation during the year. These assets were held in trust as part of the regional water project. The assets were transferred in exchange for $2,9 difference being recorded as a transfer to Newell Regional Services Commission on the statement of financial activities. 8. s: Vacation The vacation liability is comprised of the vacation that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to these benefits within the next budgetary year. Sick The sick liability is comprised of the sick pay that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to them within the next budgetary year. 9. U Recognized as Description 2016 Received revenue 2017 Street Improvement Grant $ 173,520 -- (173,520) $ -- Other 23,165 22,000 (23,165) 22,000 Total $ $ 22,000 $ () $ 22,000 P AGE 40C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 10. Long-Î 2017 2016 Debenture supported with notes receivable $ $ 1,537,923 Principal and interest repayments are due as follows: Principal Interest Total 201 $ $ 43,425 $ $ $ 43,425 $ Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at 5.5% per issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $74,295 (2016 Î $). The CountyÓs total interest paid in 2017 was $ (2016 - $123,601). 11. Long-Î capital: 2017 2016 Tax supported debentures $ 20,020,644 $ 24,414,424 Principal and interest repayments are due as follows: Principal Interest Total 201 $ 5, $ 395,760 $ 5,534,149 2019 5,233,923 300,227 5,534,150 2020 3,651,630 209,611 2021 2 141,266 2022 1,927,345 Thereafter 333,370 2,002,024 $ 20,020,644 $ 1,462,103 $ C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 41 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 11. Long-Î capital : Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates ranging from 1.124% to 3.406% per annum, before Provincial subsidy, and matures in periods 201 through 2042. The average annual interest rate is 2.095% for 2017 (2016 Î 2.014%). For qualifying 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 $ (2016 - $556,235). The CountyÓs total interest paid in 2017 was $ (2016 - $560,422). 12. - 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 CountyÓs landfill and closure and post-closure costs for the CountyÓs gravel pit s are based on an estimate of future discounted costs. All landfill sites are closed. One site is expected to be reclaimed in 201, while post-closure costs The estimated closure and post-closure costs for the landfill are $662,535 and $ 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. P AGE 42C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 13. Equity in tangible Unrestricted capital Restricted Total Total net assets assets (1) Surplus (2) 2017 2016 Beginning balance $ 1,505,734 $202,537,914 $ $ $ Annual surplus (deficit) () -- -- () 13,523,021 Transfers to restricted surplus (20,721,496) -- 20,721,496 -- -- Transfers from restricted surplus -- () -- -- Amortization of tangible capital assets 6, (6,) -- -- -- Net book value of assets disposed 412,745 (412,745) -- -- -- Capital assets internally funded (14,947,025) 14,947,025 -- -- -- Capital assets debt funded () -- -- -- Transferred assets 33,324,214 (33,324,214) -- -- -- Debt issued -- -- -- Debt paid - capital (5,034,630) 5,034,630 -- -- -- Total $ $ $ $269,674,354 $ (1) Equity in tangible capital assets: 2017 2016 Tangible capital assets (note 7) $ 272,222,979 $ 291,174,700 Accumulated amortization (note 7) (69,4) (64,222,362) Long-term debt Î capital (note 11) (20,020,644) (24,414,424) $ $ 202,537,914 C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 43 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 13. (2) Restricted surplus is comprised of funds internally restricted as follows: 2017 2016 Paving $ $ Infrastructure Future Projects 19,513,713 Vehicles, Machinery & Equipment Regional Enhancement 4, 3,390,161 Stabilization 5,400,277 5,762,969 Facilities 2, Fire Apparatus 3,156,346 3,224,453 Recreation - Tilley 50,662 50,662 Unexpended Budget Appropriation 1,141,591 $ ,612 $ 14. Budget 2017 2016 Taxation: Real property taxes $ 17,375,227 $ $ Linear property taxes 27,734,366 27, Government grants in place of property taxes 367,943 45,477,536 4 43,457,274 Requisitions: Alberta School Foundation Fund 12,207,543 12,207,543 12,754,794 Newell Foundation 910,166 13,105,572 13,105,572 13,664,960 Net municipal property taxes $ 32,371,964 $ $ 29,792,314 P AGE 44C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 15. Budget 2017 2016 Transfers for operating: Provincial government $ $ 405,145 $ Local government 233,365 605,674 Transfers for capital: Provincial government - 173,520 3,757,309 Local government - - 111,250 - 173,520 $ 605,674 $ $ 4,504,557 16. ject: Budget 2017 2016 Salaries, wages and benefits $ $ $ 7,430,179 Contracted and general services 4, 3,455,799 3,725,751 Materials, goods, supplies and utilities 5,799,044 4,796,641 Transfers to organizations 5,146,293 2,920,646 4,264,050 Bank charges and short-term interest 6,014 5,370 Interest on long-term debt 551,044 Other expenditures 20,000 Amortization 6,576,370 6, $ 31,413,710 $ 26,964,575 $ 27,467,154 C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 45 CONSOLIDATED FINANCIAL STATEMENTS Disclosure of salaries and benefits for elected municipal officials and the chief administrative officer as required by provincial regulation is as follows: 2017 2016 Benefits & Salary (1) Allowances (2) Total Total Council: Division 1 - Amulung $ 31,724 $ 5, $ 37,104 $ 35,147 Division 2 - Kallen 6,749 947 7,696 - Division 2 - Simpson 20,577 4,224 Division 3 - Philipsen 5,224 33,655 35,470 Division 4 - 2 2,671 27,497 Division 5 - Fyfe 27,512 5,193 32,705 33,114 Division 6 - Christman 5,346 Division 7 - Unruh 2 5,210 33,093 33,522 - De Jong 2 1,3 27,132 Division 9 - Douglass 2,441 52,522 51,427 Division 10 - Juss 2 5,077 29,954 32,019 $ $ 43,031 $ 341,212 $ 343,260 Chief Administrative Officer $ 220,720 $ 49,115 $ $ 265,601 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 employerÓs share of all employee ben efits 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 employerÓs 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. P AGE 46C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 18. 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: 2017 2016 Total debt limit $ 57,197,442 $ 54,325,790 Total debt () (25,952,347) $ $ 2017 2016 Debt servicing limit $ 9,532,907 $ Debt servicing (6,367,116) (6,336,321) $ 3,165,791 $ 2,717,977 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. 19. 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 2 people and about 417 employers. The LAPP is financed by employer and employee contributions and investment earnings of the LAPP fund. Contributions for current service are recorded as expenditures in the year in which they become due. The County is required to make current service contributions to the Plan of 10.39% of pensionable earnings up to the yearÓs maximum pensionable earnings under t he Canada Pension Plan and 14% on pensionable earnings above this amount. Employees of the County are required to make current service contributions of 9.39% of pensionable salary up to the yearÓs maximum pensionable salary and 13% on pensionable salary above this amount. Total current service contributions by the County to the LAPP in 2017 were $619,332 (2016 - $613,239). Total current service contributions by the employees of the County to the LAPP in 2017 were $571,265 (2016 - $565,546). At December 31, 2016, the LAPP disclosed an actuarial deficiency of $637 million. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 47 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 20. 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. 21. The Public Sector Accounting Board recently announced the following accounting pronouncements: (a) Financial instruments: This section establishes recognition, measurement, and disclosure requirements for derivative and non-derivative instruments. The standard requires fair value measurements of derivative instruments and equity instruments; all other financial instruments can be measured at either cost or fair value depending upon elections made by the government. Unrealized gains and losses will be presented on the new statement of remeasurement gains and losses arising from the adoption of PS 1201. There will also be a requirement to disclose the nature and extent of risks arising from financial instruments and clarification is given for the de-recognition of financial liabilities. As the Municipality does not invest in derivatives or equity instruments based on its investment policy, it is anticipated that the adoption of this standard will have a minimal impact on the Municipality. This standard is effective for fiscal years beginning on or after April 1, 2019. (b) Foreign currency translation: This section establishes guidance on the recognition, measurement, presentation and disclosure of assets and liabilities denominated in foreign currencies. The Section requires monetary assets and liabilities, denominated in a foreign currency and non-monetary items valued at fair value denominated in a foreign currency to be adjusted to reflect the exchange rates in effect at the financial statement date. The resulting unrealized gains and losses are to be presented in the new statement of remeasurement gains and losses. This standard is effective for fiscal years beginning on or after April 1, 2019. (c) Related party transactions: This section provides guidance on the definition of a related party and establishes the disclosure requirements for transactions between related parties. This standard is effective for fiscal years beginning on or after April 1, 2017. P AGE 48C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 21. (d) Financial statement presentation: The implementation of this standard requires a new statement of re-measurement gains and losses separate from the statement of operations. This new statement will include the unrealized gains and losses arising from the remeasurement of financial instruments and items denominated in a foreign currency. This standard is effective for fiscal years beginning on or after April 1, 2019. Management is assessing the impact of the adoption of these standards which is not known or reasonably estimable at this time. 22. Segmented disclosures (Schedule 1) are intended to enable users to better understand the government reporting entity and the major expense and revenue activities of the County. The segments have been selected based upon functional activities provided by the County. For each reported segment, revenues and expenses represent both amounts directly attributable to the segment and amounts that are allocated on a reasonable basis. The functional areas that have been separately disclosed, along with the services they provide are as follows: (a) General government is comprised of Council, Legislative, Corporate Administration, Finance, Information and Computer Services, Planning, Economic Development, Corporate Safety, Agricultural Services, Fire and Disaster Services, Bylaw Enforcement, Community Services, Recreation, Parks and Programs and Library. (b) Public Works and Transportation is comprised of Roads and Engineering Services. (c) Public Utilities is comprised of Water, Wastewater and Solid Waste. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 49 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 23. : The budget information presented in these consolidated financial statements is based upon the 2017 budget approved by Council on April 6, 2017. 24. These financial statements were approved by Council and Management. P AGE 50C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT SCHEDULE OF SEGMENTED DISCLOSURES COUNTY OF NEWELL Schedule 1 Schedule of Segmented Disclosures Year ended December 31, 2017, with comparative information for 2016 Public Works Public Works General and Total General and Total Government Transportation Public Utilities 2016 Government Transportation Public Utilities 2015 Revenue Net taxes for municipal purposes$ $ - $ -$ $ 29,792,314 $ -$ -$ 29,792,314 Special levies - - 311,243 - User Fees and sale of goods 256,573 530,515 257,732 Government transfers - operating 533,510 - 105,000 - 105,000 Penalties and costs of taxes - - - - Investment income - - 1,642,224 - - 1,642,224 License and permits - - 153,032 - - 153,032 Other 46,167 634,705 496,641 97,925 174,195 Gain (loss) on disposal of capital assets 12,217 131,445 - 143,662 10,301 - 33,652,123 192,477 2,372,593 36,217,193 Expenses Salaries, wages and benefits - 2,539,515 - 7,430,179 Contracted and general services 1,656,052 3,455,799 3,725,751 Materials, goods, supplies and utilities 1,392,641 4,796,641 1,243,977 750,333 Transfer to Organization - 22,614 2,920,646 4,241,371 - 22,679 4,264,050 Bank charges and short term interest 6,014 - - 6,014 5,370 - - 5,370 Interest on long-term debt 74,296 - 551,044 - 556,235 Other expenditures - - - - Amortization 4,363,956 990,695 4,336,601 12,972,553 10,403,350 26,964,575 10,427,914 2,913,144 27,467,156 Annual surplus (deficit) before the undernoted (9,969,165) 11,167,053 19,526,025 (10,235,437) (540,551) Other Insurance proceeds - - - - - - - - Contributed assets - - 904,423 - - 904,423 Government transfers - capital - 173,520 - 173,520 - - Other - - - - - - - - Annual surplus (deficit)$ $ (9,795,645)$ $ $ $ (10,235,437)$ $ 13,523,021 C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 51 P AGE 52 SECTION 3 STATISTICAL SECTION C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 53 STATISTICAL SECTION Demographics & Other Statistics Photo by K. Smit P AGE 54C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT STATISTICAL SECTION Expenses by Object ng from a policy change in 2016; Total cost of tangible capital assets has increased from $229million in 2013to $272million in 2017 which has led to the increasing annual amortization expense. C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 55 STATISTICAL SECTION Expenses by Function P AGE 56C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT STATISTICAL SECTION Revenues by Source dependon other levels of government; for the Duchess Soccer Centre which was destroyed from the dissolution of the Village of Tilley in 2013; Special levies, which include local improvement taxes, and depend on local improvement projects completed ontract completion of the Regional Water Project which have C OUNTY OF N EWELL - 2017 A NNUAL F INANCIAL R EPORT P AGE 57 Photo by K. Blaikie