Loading...
HomeMy Public PortalAbout2018 Financial StatementsCORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 TABLE OF CONTENTS Page Number MANAGEMENT REPORT INDEPENDENT AUDITOR'S REPORT CONSOLIDATED FINANCIAL STATEMENTS Statement of Financial Position 1 Statement of Operations and Accumulated Surplus 2 Statement of Change in Net Financial Assets 3 Statement of Cash Flows 4 Notes to the Financial Statements 5 - 16 Schedule of Tangible Capital Assets 17 Schedules of Segment Disclosure 18 - 19 TRUST FUNDS Independent Auditor's Report 20 Statement of Financial Position 22 Statement of Continuity 23 Notes to the Financial Statements 24 LOCAL BOARD Tweed Public Library Board 25 - 36 The Corporation of the MUNICIPALITY OF TWEED 255 Metcalf St., Postal Bag 729 Tweed, ON KOK 3J0 Tel.: (613) 478-2535 Fax: (613) 478-6457 CORPORATION OF THE MUNICIPALITY OF TWEED For The Year Ended December 31, 2018 MANAGEMENT REPORT Email: info@twp.tweed.on.ca Website: www.tweed.ca facebook.com/tweedontario The accompanying consolidated financial statements of the Corporation of the Municipality of Tweed are the responsibility of management and have been approved by Council. The consolidated financial statements have been prepared by management in accordance with Canadian Public Sector Accounting Standards. Financial statements are not precise since they include certain amounts based on estimates and judgements. When alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances, in order to ensure that the financial statements are presented fairly, in all material respects. The Municipality maintains systems of internal accounting and administrative controls of high quality, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and the Municipality's assets are appropriately accounted for and adequately safeguarded. The Municipality's Council is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving financial statements. Council reviews and approves the Municipality's financial statements for issuance to the members of Council, inhabitants and ratepayers of the Corporation of the Municipality of Tweed. Council meets periodically with management, as well as the external auditor, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, to satisfy themselves that each party is properly discharging their responsibilities and to review the financial statements and the independent auditor's report. The consolidated financial statements have been audited by Baker Tilly KDN LLP in accordance with Canadian generally accepted auditing standards on behalf of the Municipality. Baker Tilly KDN LLP has full and free access to Council. Mayor CAO/Clerk-Treasurer 72(xee Ybeir-,(2 Date ©G�o%}G/ ;4.22, „2-011 Date o hec .2A ;o/ 9 INDEPENDENT AUDITOR'S REPORT To the Members of Council, Inhabitants and Ratepayers of the Municipality of Tweed Baker Tilly KDN LLP 272 Charlotte St. Peterborough, ON Canada K9J 2V4 T: (705) 742-3418 F: (705) 742-9775 www.bakertilly.ca Opinion We have audited the consolidated financial statements of the Corporation of the Municipality of Tweed and its local board (the Municipality), which comprise the consolidated statement of financial position as at December 31, 2018, the consolidated statements of operations and accumulated surplus,change in net financial assets and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Municipality as at December 31, 2018, and the results of its consolidated operations and its consolidated cash flows for the year then ended in accordance with Canadian Public Sector Accounting Standards. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Municipality in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matter The consolidated financial statements of the Municipality for the year ended December 31, 2017 were audited by another auditor who expressed an unmodified opinion on those statements on November 14, 2018. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Canadian Public Sector Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Municipality's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Municipality or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Municipality's financial reporting process. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Municipality's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Municipality's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Municipality to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the consolidated financial information of the entities or business activities within the Municipality to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Baker Tilly KDN LLP Chartered Professional Accountants Licensed Public Accountants Peterborough, Ontario October 22, 2019 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At December 31, 2018 2018 2017 $$ FINANCIAL ASSETS Cash 4,160,323 3,567,005 Investments (note 5)758,462 747,493 Accounts receivable 1,091,504 555,367 Taxes receivable 884,313 996,004 Long term loans (note 8)18,159 23,540 TOTAL FINANCIAL ASSETS 6,912,761 5,889,409 LIABILITIES Accounts payable and accrued liabilities 1,941,709 796,159 Deferred revenue - obligatory reserves (note 6)382,549 457,781 Deferred revenue - other (note 7)86,542 49,757 Long term debt (note 8)18,159 23,540 Landfill closure and post-closure liability (note 9)826,000 970,000 TOTAL LIABILITIES 3,254,959 2,297,237 NET FINANCIAL ASSETS 3,657,802 3,592,172 NON-FINANCIAL ASSETS Tangible capital assets (note 10)28,070,808 27,190,374 Inventories of supplies 14,114 6,272 Prepaid expenses 1,108 4,089 TOTAL NON-FINANCIAL ASSETS 28,086,030 27,200,735 ACCUMULATED SURPLUS (note 11)31,743,832 30,792,907 The accompanying notes are an integral part of these financial statements 1 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS For the Year Ended December 31, 2018 Budget Actual Actual 2018 2018 2017 $$$ (Unaudited) REVENUES Property taxation 4,022,655 4,027,588 3,949,832 User charges 1,311,353 1,575,461 1,421,345 Government of Canada 39,689 35,406 107,504 Province of Ontario 3,544,093 3,511,818 2,053,824 Penalties and interest on taxes 132,000 124,732 131,453 Investment income 20,000 74,208 45,185 Donations 11,250 20,647 13,962 Parkland fees earned 4,250 5,935 13,162 Federal gas tax earned 375,840 458,575 436,438 Provincial gas tax earned 5,000 -- Other grants -5,000 67,489 TOTAL REVENUES 9,466,130 9,839,370 8,240,194 EXPENSES General government 963,736 1,225,144 956,083 Protection services 1,667,179 1,668,043 1,591,163 Transportation services 3,587,933 3,773,745 3,683,009 Environmental services 1,180,627 988,451 1,393,922 Recreation and cultural services 1,025,764 1,006,239 921,318 Planning and development 237,000 226,823 181,436 TOTAL EXPENSES 8,662,239 8,888,445 8,726,931 ANNUAL SURPLUS/(DEFICIT)803,891 950,925 (486,737) ACCUMULATED SURPLUS - beginning of year 30,792,907 31,279,644 ACCUMULATED SURPLUS - end of year 31,743,832 30,792,907 The accompanying notes are an integral part of these financial statements 2 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS For the Year Ended December 31, 2018 Budget Actual Actual 2018 2018 2017 $$$ (Unaudited) ANNUAL SURPLUS/(DEFICIT)803,891 950,925 (486,737) Amortization of tangible capital assets 1,910,218 2,005,418 1,910,218 Purchase of tangible capital assets (2,642,450)(2,925,863)(1,377,026) Loss on disposal of tangible capital assets --410,067 Proceeds on sale of tangible capital assets -40,011 14,407 Change in inventories of supplies -(7,842)3,169 Change in prepaid expenses -2,981 (1,171) INCREASE IN NET FINANCIAL ASSETS 71,659 65,630 472,927 NET FINANCIAL ASSETS - beginning of year 3,592,172 3,592,172 3,119,245 NET FINANCIAL ASSETS - end of year 3,663,831 3,657,802 3,592,172 The accompanying notes are an integral part of these financial statements 3 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended December 31, 2018 2018 2017 $$ CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Annual surplus/(deficit)950,925 (486,737) Items not involving cash Amortization of tangible capital assets 2,005,418 1,910,218 Loss on disposal of tangible capital assets -410,067 Landfill closure and post-closure liability (144,000)281,000 Change in non-cash assets and liabilities Accounts receivable (536,137)211,348 Taxes receivable 111,691 9,896 Inventories of supplies (7,842)3,169 Prepaid expenses 2,981 (1,171) Accounts payable and accrued liabilities 1,145,550 102,186 Deferred revenue - obligatory reserves (75,232)(74,982) Deferred revenue - other 36,785 1,254 Net change in cash from operating activities 3,490,139 2,366,248 CAPITAL ACTIVITIES Purchase of tangible capital assets (2,925,863)(1,377,026) Proceeds on disposal of tangible capital assets 40,011 14,407 Net change in cash from capital activities (2,885,852)(1,362,619) INVESTING ACTIVITIES Redemption of investments 8,594 - Purchase of investments (19,563)(20,674) Net change in cash from investing activities (10,969)(20,674) FINANCING ACTIVITIES Debt principal repayments (5,381)(5,076) Long term loans receipts 5,381 5,076 Net change in cash from financing activities -- NET CHANGE IN CASH 593,318 982,955 CASH - beginning of year 3,567,005 2,584,050 CASH - end of year 4,160,323 3,567,005 The accompanying notes are an integral part of these financial statements 4 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 The Municipality of Tweed is a lower tier municipality in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act, Municipal Affairs Act and related legislation. 1. SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements have been prepared in accordance with the standards in the Chartered Professional Accountants Canada Public Sector Accounting (PSA) Handbook. Significant aspects of the accounting policies are as follows: (a) Reporting Entity These consolidated financial statements reflect the assets, liabilities, revenues and expenses and accumulated surplus of the reporting entity. The reporting entity is comprised of all organizations, committees and local boards accountable for the administration of their financial affairs and resources to the Municipality and which are owned and controlled by the Municipality. These consolidated financial statements include: Tweed Public Library Board All interfund assets and liabilities and revenues and expenses are eliminated. (b) Trust Funds Trust funds and their related operations administered by the Municipality are not included in these consolidated financial statements but are reported on separately on the Trust Funds Statement of Continuity and Statement of Financial Position. (c) 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, if any, of tangible capital assets is amortized on a straight-line basis, over the expected useful life of the asset, as follows: Land improvements 20 years Buildings 40-50 years Roads 7-50 years Bridges and other structures 20-75 years Undergound and other networks 50-75 years Vehicles 5-10 years Machinery and equipment 4-20 years Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and are also recorded as revenue. Tangible capital assets categorized as assets under construction are not amortized until they are put into service. 5 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 1.SIGNIFICANT ACCOUNTING POLICIES, continued (d) Recognition of Revenues and Expenses Revenues and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues in the period in which the transactions or events occurred that give rise to the revenue; expenses are recognized in the period the goods or services are acquired and a legal liability is incurred or transfers are due. Taxation Property tax billings are prepared by the Municipality based on assessment rolls issued by the Municipal Property Assessment Corporation (MPAC) and in accordance with the provisions of the Municipal Act, 2001. The Municipality's Council establishes the tax rates annually, incorporating amounts to be raised for local services, and amounts the Municipality is required to collect on behalf of the County and School Boards. From time to time property assessments are adjusted by MPAC through the reconsideration process or by the Assessment Review Board through the appeal process. Additional assessments, referred to as supplementary and omitted assessment can also be issued by MPAC in accordance with the Assessment Act. These adjustments and additional assessments are reported in the financial statements when amounts can be reasonably determined. The Municipality is entitled to collect interest and penalties on overdue taxes. These revenues are recorded in the period the interest and penalties are levied. Government Funding Government funding is recognized in the financial statements as revenues in the period in which events giving rise to the transfers occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates of the amounts can be made. Other revenue User charges are recognized as revenue in the year the goods and services are provided, with the exception of building permits that are recognized when the permits are issued. Investment income is recorded when earned. Federal gas tax and parkland fees are recognized in the period in which the related expenditures are recorded. Donations are recognized when received. (e) Non-financial Assets Tangible capital and other non-financial assets are accounted for as assets by the Municipality because they can be used to provide services in future periods. These assets do not normally provide resources to discharge the liabilities of the Municipality unless they are sold. (f) Reserves and Reserve Funds Certain amounts, as approved by Council, are set aside in reserves and reserve funds for future operating and capital purposes. Transfers to and/or from reserves and reserve funds are an adjustment to the respective fund when approved. 6 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 1.SIGNIFICANT ACCOUNTING POLICIES, continued (g) Deferred Revenue Deferred revenue represents grants, user charges and fees which have been collected but for which the related services have yet to be performed. These amounts will be recognized as revenues in the fiscal year the services are performed. (h) Use of Estimates Certain items recognized in the consolidated financial statements are subject to measurement uncertainty. The recognized amounts of such items are based on the Municipality's best information and judgment. By their nature, these estimates are subject to measurement uncertainty and the effect on the consolidated financial statements or changes in such estimates in future periods could be significant. The Municipality's significant estimates include: The amounts recorded for landfill closure and post-closure care depend on estimates of usage, remaining life and capacity. The provision for future closure and post-closure costs also depends on estimates of such costs; The amounts recorded for amortization and opening costs of tangible capital assets are based on estimates of useful life, residual values and valuation rates; and The amount recorded as allowance for doubtful accounts receivable is based on management's estimate of future payments on receivable account balances. 2.OPERATIONS OF SCHOOL BOARDS AND THE COUNTY OF HASTINGS During 2018, requisitions were made by the County of Hastings and School Boards requiring the Municipality to collect property taxes and payments in lieu of property taxes on their behalf. The amounts collected and remitted are as follows: School Boards County $$ Property taxes 1,273,002 1,656,363 Taxation from other governments 1,727 9,635 Amounts requisitioned and remitted 1,274,729 1,665,998 These amounts have not been included in the Consolidated Statement of Operations and Accumulated Surplus. 7 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 3.CHANGES IN ACCOUNTING POLICIES The Municipality has implemented the following PSA sections which are now effective under the PSA Handbook: 3320 Contingent Assets, 3380 Contractual Rights, 2200 Related Party Disclosures and 3420 Inter-Entity Transactions. Under Section 3320, a contingent asset is a potential asset that exists at the financial statement date but requires confirmation or disproval at a future date that is not in the control of the public- sector entity. If the contingent asset is deemed to be likely to exist, then this should be disclosed in the notes to the financial statements. Disclosure should include the nature, extent (except in those cases where extent cannot be measured or disclosure would have an adverse effect on the outcome), the reason for any non-disclosure of extent, and when an estimate of the amount has been made, the basis for that estimate. This section has been applied prospectively.The adoption of this standard did not have an impact on the Municipality's consolidated financial statements. Under Section 3380, a contractual right arises out of a contract or agreement where it will result in the Municipality having both an asset and future revenue. The contract or agreement must be between two or more parties and be enforceable under contract law. Contractual rights are assets and revenues that will occur in the future due to an enforceable agreement in effect at the financial statement date. If a contractual right exists, it should be disclosed in the notes or schedules to the statements and include descriptions about nature, extent and timing. This section has been applied prospectively.The adoption of this standard did not have an impact on the Municipality's consolidated financial statements. Section 3240 establishes the standards and requirements on how to account for and Section 2200 establishes the standards and requirements on how to report transactions between public sector entities that comprise the government’s reporting entity.These sections have been applied retroactively with restatement of prior periods.The adoption of these standards did not have an impact on the Municipality's consolidated financial statements. 4.CREDIT FACILITY AGREEMENT The Municipality has a revolving credit facility agreement with its main financial institution. The amount available at any time is limited to $500,000 via an operating loan. Any balance borrowed will accrue interest at the bank’s prime lending rate plus 0.50% per annum. At December 31, 2018 there was no balance outstanding. 5.INVESTMENTS Investments are recorded at cost and consist of the following: Market Value Actual 2018 Actual 2017 $$$ One Fund Investments 586,304 640,330 627,204 Guaranteed investment certificates, maturity dates from September 30, 2019 to November 2, 2021, interest rates ranging from 0.85% to 3.00% per annum.118,132 118,132 120,289 704,436 758,462 747,493 8 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 6.DEFERRED REVENUE - OBLIGATORY RESERVE FUNDS A requirement of the Chartered Professional Accountants Canada Public Sector Accounting Handbook, is that obligatory reserve funds be reported as deferred revenue. This requirement is in place as legislation and external agreements restrict how these funds may be used and under certain circumstances these funds may possibly be refunded. The balances in the obligatory reserve funds of the Municipality are summarized below: 2018 2017 $$ Federal gas tax 323,513 406,608 Parkland 59,036 51,173 382,549 457,781 The continuity of deferred revenue - obligatory reserve funds is as follows: 2018 2017 $$ Balance - beginning of year 457,781 532,763 Add amounts received: Federal gas tax 368,304 362,795 Parkland 12,750 6,000 Interest 8,224 5,823 389,278 374,618 Less transfer to operations: Federal gas tax 458,575 436,438 Parkland 5,935 13,162 464,510 449,600 Balance - end of year 382,549 457,781 9 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 7.DEFERRED REVENUE - OTHER Included in deferred revenue - other are the following amounts: 2018 2017 $$ Government transfers 22,124 22,124 Other 26,426 27,633 Association of Municipalities of Ontario 37,992 - 86,542 49,757 The continuity of deferred revenue - other is as follows: 2018 2017 $$ Balance - beginning of year 49,757 48,503 Add amounts received: Association of Municipalities of Ontario 42,992 - Other -10,983 42,992 10,983 Less transfer to operations: Association of Municipalities of Ontario 5,000 - Other 1,207 9,729 6,207 9,729 Balance - end of year 86,542 49,757 10 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 8.LONG TERM DEBT 2018 2017 $$ Tile drainage loans due August 1, 2021 18,159 23,540 (a)The Municipality acts as a collection agency for the Province of Ontario for tile drainage loans for individual ratepayers. The value of these loans outstanding at December 31, 2018 is $18,159 (2017 -$23,540). (b)Interest paid during the year on long term debt amounted to $1,412 (2017 -$1,717). (c)The long term debt reported in (a) of this note is repayable as follows: Principal Interest Total $$$ 2019 5,704 1,090 6,794 2020 6,046 748 6,794 2021 6,409 385 6,794 18,159 2,223 20,382 9.LANDFILL CLOSURE AND POST-CLOSURE LIABILITY The liability for landfill closure and post-closure costs of $826,000 (2017 -$970,000) has been estimated using discounted future cash flows associated with closure and post-closure care activities for both of the sites the Municipality operates. The closure costs include final cover, vegetation and additional monitoring wells. Post-closure costs include monitoring, maintenance of control systems and consulting fees for 25 years after the site is closed.A reserve fund of $1,157,084 (2017 - $1,169,663) has been established to provide for this liability. The reported liability is based upon estimates and assumptions with respect to events extending over the remaining life of the landfill.The remaining capacity of the solid waste landfill sites is estimated at 195,101 m3 (2017 -199,935 m3) which is 34.7% (2017 -35.6%) of the site’s total capacity. The total discounted future cash flows for closure and post-closure cost is estimated at $1,329,769 (2017 -$1,592,383) as at December 31, 2018.The landfills are expected to reach capacity in 2037 and 2055. 11 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 10.TANGIBLE CAPITAL ASSETS The net book value of the Municipality's tangible capital assets are: 2018 2017 $$ General Land and land improvements 2,024,293 2,000,176 Buildings 2,786,599 2,824,751 Vehicles 1,601,240 1,203,450 Machinery and equipment 641,267 660,318 Infrastructure Buildings 1,207,372 1,314,225 Roads 9,203,718 8,437,268 Underground and other networks 3,937,920 4,029,815 Bridges and other structures 6,242,444 6,382,545 27,644,853 26,852,548 Assets under construction 425,955 337,826 28,070,808 27,190,374 For additional information, see the Consolidated Schedule of Tangible Capital Assets. During the year there were no write-downs of assets (2017 -$Nil) and no interest capitalized (2017 -$Nil). Tangible capital assets allocated by segment are as follows: 2018 2017 $$ General government 1,532,821 1,494,872 Protection services 947,418 766,662 Transportation services 16,753,299 15,981,191 Environmental services 5,865,947 5,870,186 Recreation and cultural services 2,971,323 3,077,463 28,070,808 27,190,374 12 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 11.ACCUMULATED SURPLUS Accumulated surplus consists of the following: 2018 2017 $$ Surplus/(Deficit) Operating 472,442 785,722 Unfunded landfill closure and post-closure costs (826,000)(970,000) Library board (4,268)5,310 (357,826)(178,968) Invested In Capital Assets Tangible capital assets - net book value 28,070,808 27,190,374 Surplus 27,712,982 27,011,406 Reserves Working funds 319,147 301,418 General government 79,032 89,829 Protection services 103,742 221,399 Transportation services 789,386 691,982 Water and sewer 989,115 716,494 Recreation services 252,876 311,255 Community improvement plan 53,780 30,000 Total Reserves 2,587,078 2,362,377 Reserve Funds Transportation services 118,132 120,289 Water 168,556 129,172 Landfill 1,157,084 1,169,663 Total Reserve Funds 1,443,772 1,419,124 31,743,832 30,792,907 13 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 12.EXPENSES BY OBJECT The expenses for the year reported on the Consolidated Statement of Operations and Accumulated Surplus by object are as follows: Budget Actual Actual 2018 2018 2017 $$$ (Unaudited) Salaries and benefits 2,235,617 2,340,104 2,198,260 Interest charges -1,412 1,717 Materials 2,404,698 2,383,149 2,171,055 Contracted services 1,770,286 1,704,141 1,673,050 Rents and financial 72,520 169,382 85,036 External transfers 268,900 284,839 277,528 Amortization 1,910,218 2,005,418 1,910,218 Loss (gain) on disposal of tangible capital assets --410,067 8,662,239 8,888,445 8,726,931 13.PENSION AGREEMENTS Certain employees of the Municipality are eligible members of the Ontario Municipal Employees Retirement System (OMERS), a multi-employer pension plan. The Actuarial Opinion contained in the 2018 Annual Report disclosed total actuarial liabilities of $100,081 million in respect of benefits accrued for service with actuarial assets of $95,890 million indicating an actuarial deficit of $4,191 million. Because OMERS is a multi-employer plan, any pension plan surpluses or deficits are a joint responsibility of Ontario municipal organizations and their employees. As a result, the Municipality does not recognize any share of the OMERS pension surplus or deficit. The Municipality's required contributions to OMERS in 2018 were $108,227 (2017 -$102,320). 14.TRUST FUNDS Trust funds administered by the Municipality amounting to $11,011 (2017 -$10,566) have not been included in the Consolidated Statement of Financial Position nor have their operations been included in the Consolidated Statement of Operations and Accumulated Surplus. As such balances are held in trust by the Municipality for the benefit of others, they are not presented as part of the Municipality's financial position or operations. 14 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 15.BUDGET FIGURES The budget, approved by the Municipality, for 2018 is reflected on the Consolidated Statement of Operations and Accumulated Surplus and the Consolidated Statement of Change in Net Financial Assets. The budget established for capital investment in tangible capital assets are on a project- oriented basis, the costs of which may be carried out over one or more years and, therefore, may not be comparable with current year’s actual amounts. Budget figures have been reclassified for the purposes of these financial statements to comply with PSA reporting requirements. Budget figures are not subject to audit. The following is a reconciliation of the Council approved budget amounts to the PSA amounts: (Unaudited)(Unaudited) Revenue Expenses $$ Council approved budget: Operating 7,683,849 7,530,548 Capital 2,489,149 2,642,450 Total Council approved budget 10,172,998 10,172,998 Less: Tangible capital assets capitalized -(2,642,450) Add: Amortization of tangible capital assets -1,910,218 Less: Principal repayment of long term debt -(6,793) Less: Transfers to/from reserves and reserve funds (676,949)(771,734) Less: Long term loans receivable receipts (6,793)- Less: Board surplus (23,126)- Adjusted budget per Consolidated Statement of Operations 9,466,130 8,662,239 16.COMPARATIVE FIGURES Certain comparative figures were restated, where required, to conform with the current year presentation. 17.CONTINGENT LIABILITIES The Municipality, in the course of its operations, has been named in several lawsuits the outcomes of which are indeterminable at this time. No amounts in connection with these items have been reflected in these financial statements. 18.BUILDING SERVICES CONTRACTUAL AGREEMENT The Municipality of Tweed, the Township of Stirling-Rawdon, the Town of Deseronto, the Township of Tyendinaga and the Township of Madoc have entered into an agreement for joint building services to be provided by the Township of Stirling-Rawdon. The joint building services agreement came into effect April 1, 2005. No revenues or expenses have been included in the Consolidated Statement of Operations and Accumulated Surplus. 15 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2018 19.SEGMENTED INFORMATION The Municipality of Tweed is a municipal government organization that provides a range of services to its residents. Municipality services are reported by function and their activities are separately disclosed in the segmented information. For each reported segment, revenues and expenses represent both amounts that are directly attributable to the segment and amounts that are allocated on a reasonable basis. Certain allocation methodologies are employed in the preparation of segmented financial information. Taxation, payments-in-lieu of taxes and certain unconditional government transfers are apportioned based on each segment’s net requirements. The accounting policies used in these segments are consistent with those followed in the preparation of the consolidated financial statements as disclosed in Note 1. For additional information see the Consolidated Schedule of Segment Disclosure. General Government General government consists of the activities of Council and general financial and administrative management of the Municipality and its programs and services. Protection Services Protection services include police, fire, conservation authority and protective inspection and control. The Municipality of Tweed and the Township of Stirling-Rawdon have entered into an agreement for joint fire services. The joint fire services agreement came into effect January 1, 2016. Transportation Services The activities of the transportation function include construction and maintenance of the Municipality's roads and bridges, winter control and street lighting. Water and Sewer This function is responsible for providing water and sewer services to the Municipality. Other Environmental Services This function is responsible for providing waste collection, waste disposal and recycling services to ratepayers. Recreation and Cultural Services The recreation and cultural services function provides indoor and outdoor recreational facilities and programs and library services. Planning and Development The planning and development services function manages commercial, industrial and residential development within the Municipality. 16 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED SCHEDULE OF TANGIBLE CAPITAL ASSETS For the Year Ended December 31, 2018 General Infrastructure Land and Land Improvement s Buildings Vehicles Machinery and Equipment Buildings Roads Underground and Other Networks Bridges and Other Structures Assets Under Construction Totals $$$$$$$$$$ COST Balance, beginning of year 2,344,309 4,297,042 3,075,144 1,453,136 2,947,125 23,123,338 5,814,998 8,750,940 337,826 52,143,858 Add: additions during the year 158,582 76,584 612,245 98,283 -1,863,908 28,132 -88,129 2,925,863 Less: disposals during the year 40,011 --14,385 -817,317 ---871,713 Balance, end of year 2,462,880 4,373,626 3,687,389 1,537,034 2,947,125 24,169,929 5,843,130 8,750,940 425,955 54,198,008 ACCUMULATED AMORTIZATION Balance, beginning of year 344,133 1,472,291 1,871,694 792,818 1,632,900 14,686,070 1,785,183 2,368,395 -24,953,484 Add: additions during the year 94,454 114,736 214,455 117,334 106,853 1,097,458 120,027 140,101 -2,005,418 Less: disposals during the year ---14,385 -817,317 ---831,702 Balance, end of year 438,587 1,587,027 2,086,149 895,767 1,739,753 14,966,211 1,905,210 2,508,496 -26,127,200 NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS 2,024,293 2,786,599 1,601,240 641,267 1,207,372 9,203,718 3,937,920 6,242,444 425,955 28,070,808 17 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED SCHEDULE OF SEGMENT DISCLOSURE For the Year Ended December 31, 2018 General Government Protection Services Transportation Services Water and Sewer Other Environmental Services Recreation and Cultural Services Planning and Development Consolidated $$$$$$$$ Revenues Property taxation 441,529 1,058,454 1,700,525 -248,202 428,812 150,066 4,027,588 User charges 149,631 60,838 9,485 907,175 257,442 161,992 28,898 1,575,461 Government transfers - operating 233,872 559,260 876,666 -112,122 247,196 79,291 2,108,407 Government transfers - capital --1,407,817 --31,000 -1,438,817 Penalties and interest on taxes 124,732 ------124,732 Investment income 50,547 -1,635 22,026 ---74,208 Donations -----20,647 -20,647 Parkland fees earned -----5,935 -5,935 Federal gas tax earned --458,575 ----458,575 Other grants --5,000 ----5,000 Total revenues 1,000,311 1,678,552 4,459,703 929,201 617,766 895,582 258,255 9,839,370 Expenses Salaries and benefits 614,419 133,303 841,146 89,400 143,741 399,139 118,956 2,340,104 Interest charges ------1,412 1,412 Materials 388,594 165,438 1,312,023 81,659 (42,175)379,555 98,055 2,383,149 Contracted services 45,031 1,087,760 180,985 312,591 77,774 --1,704,141 Rents and financial 153,907 -4,749 -2,305 21 8,400 169,382 External transfers 3,400 194,616 -6,615 75,722 4,486 -284,839 Amortization 19,793 86,926 1,434,842 218,140 22,679 223,038 -2,005,418 Total expenses 1,225,144 1,668,043 3,773,745 708,405 280,046 1,006,239 226,823 8,888,445 Net surplus/(deficit)(224,833)10,509 685,958 220,796 337,720 (110,657)31,432 950,925 18 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED SCHEDULE OF SEGMENT DISCLOSURE For the Year Ended December 31, 2017 General Government Protection Services Transportation Services Water and Sewer Other Environmental Services Recreation and Cultural Services Planning and Development Consolidated $$$$$$$$ Revenues Property taxation 428,622 1,039,132 1,670,227 -243,539 420,985 147,327 3,949,832 User charges 161,127 24,708 7,477 847,126 171,475 194,969 14,463 1,421,345 Government transfers - operating 211,146 532,915 835,369 -106,841 251,604 75,556 2,013,431 Government transfers - capital --57,998 --89,899 -147,897 Penalties and interest on taxes 131,453 ------131,453 Investment income 19,459 -7,088 16,921 --1,717 45,185 Donations -----13,962 -13,962 Parkland fees earned -----13,162 -13,162 Federal gas tax earned --436,438 ----436,438 Other grants 9,734 ----57,755 -67,489 Total revenues 961,541 1,596,755 3,014,597 864,047 521,855 1,042,336 239,063 8,240,194 Expenses Salaries and benefits 586,057 105,335 806,294 89,400 134,911 370,221 106,042 2,198,260 Interest charges ------1,717 1,717 Materials 209,096 128,175 923,851 121,927 368,507 354,222 65,277 2,171,055 Contracted services 56,169 1,076,129 177,835 293,187 69,730 --1,673,050 Rents and financial 70,503 -3,696 -2,043 394 8,400 85,036 External transfers 9,650 180,093 -7,501 75,703 4,581 -277,528 Amortization 22,870 93,177 1,375,928 231,013 -187,230 -1,910,218 Loss (gain) on disposal of tangible capital assets 1,738 8,254 395,405 --4,670 -410,067 Total expenses 956,083 1,591,163 3,683,009 743,028 650,894 921,318 181,436 8,726,931 Net surplus/(deficit)5,458 5,592 (668,412)121,019 (129,039)121,018 57,627 (486,737) 19 INDEPENDENT AUDITOR'S REPORT To the Members of Council, Inhabitants and Ratepayers of the Municipality of Tweed Baker Tilly KDN LLP 272 Charlotte St. Peterborough, ON Canada K9J 2V4 T: (705) 742-3418 F: (705) 742-9775 www.bakertilly.ca Opinion We have audited the financial statements of the Trust Funds of the Corporation of the Municipality of Tweed (the Trust Funds), which comprise the statement of financial position as at December 31, 2018, the statement of continuity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Trust Funds as at December 31, 2018, and the continuity of the Trust Funds for the year then ended in accordance with Canadian Public Sector Accounting Standards. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Trust Funds in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matter The financial statements of the Trust Funds for the year ended December 31, 2017 were audited by another auditor who expressed an unmodified opinion on those statements on November 14, 2018. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian Public Sector Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Trust Funds' ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Trust Funds or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Trust Funds' financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust Funds' internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust Funds' ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Trust Funds to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Baker Tilly KDN LLP Chartered Professional Accountants Licensed Public Accountants Peterborough, Ontario October 22, 2019 CORPORATION OF THE MUNICIPALITY OF TWEED TRUST FUNDS STATEMENT OF FINANCIAL POSITION At December 31, 2018 Recreation Associations Santa Claus Parade Fund 2018 Total 2017 Total $$$$ FINANCIAL ASSETS Cash -858 858 458 Investments (note 2)10,153 -10,153 10,108 10,153 858 11,011 10,566 FUND BALANCES 10,153 858 11,011 10,566 The accompanying notes are an integral part of these financial statements 22 CORPORATION OF THE MUNICIPALITY OF TWEED TRUST FUNDS STATEMENT OF CONTINUITY For the Year Ended December 31, 2018 Recreation Associations Santa Claus Parade Fund 2018 Total 2017 Total $$$$ BALANCES - beginning of year 10,108 458 10,566 11,115 RECEIPTS Donations -2,000 2,000 1,000 Interest 45 -45 51 45 2,000 2,045 1,051 EXPENSES Parade costs -1,600 1,600 1,600 BALANCES - end of year 10,153 858 11,011 10,566 The accompanying notes are an integral part of these financial statements 23 CORPORATION OF THE MUNICIPALITY OF TWEED TRUST FUNDS NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2018 1.SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with the standards in the Chartered Professional Accountants Canada Public Sector Accounting (PSA) Handbook. (a)Basis of Accounting Revenue and expenses are reported on the accrual basis of accounting which recognizes revenues as they become available and measurable; expenses are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. (b)Use of Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions 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 revenue and expenses during the period and are based on the Municipality's best information and judgment. Actual results could differ from these estimates. (c)Revenue Recognition Donations are recognized when they are received. Interest income is recognized when earned. 2.INVESTMENTS Investments consist of a GIC with interest rate of 0.6% and maturity of November 14, 2019. 24 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD FINANCIAL STATEMENTS DECEMBER 31, 2018 INDEPENDENT AUDITOR'S REPORT To the Members of the Tweed Public Library Board, the Members of Council, Inhabitants and Ratepayers of the Municipality of Tweed Baker Tilly KDN LLP 272 Charlotte St. Peterborough, ON Canada K9J 2V4 T: (705) 742-3418 F: (705) 742-9775 www.bakertilly.ca Qualified Opinion We have audited the financial statements of the Tweed Public Library Board of the Corporation of the Municipality of Tweed (the Board), which comprise the statement of financial position as at December 31, 2018, the statements of operations and accumulated surplus, change in net financial assets (liabilities) and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Board as at December 31, 2018, and the results of its operations and cash flows for the year then ended in accordance with Canadian Public Sector Accounting Standards. Basis for Qualified Opinion In common with many Public Library Boards, the Board derives revenue from fines and other fees, donations and other revenue, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, verification of these revenues was limited to the amounts recorded in the records of the Board. Therefore, we were not able to determine whether any adjustments might be necessary to fines and other fees, donations and other revenues, annual deficit, assets and accumulated surplus. We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Board in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Other Matter The financial statements of the Board for the year ended December 31, 2017 were audited by another auditor who expressed an unmodified opinion on those statements on November 14, 2018. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian Public Sector Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Board's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Board or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Board's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Board's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Board to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Baker Tilly KDN LLP Chartered Professional Accountants Licensed Public Accountants Peterborough, Ontario October 22, 2019 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF FINANCIAL POSITION At December 31, 2018 2018 2017 $$ FINANCIAL ASSETS Cash 16,119 5,801 Accounts receivable 4,239 11,984 TOTAL FINANCIAL ASSETS 20,358 17,785 LIABILITIES Accounts payable and accrued liabilities 11,827 5,570 Due to Municipality 9,193 4,562 Deferred revenue 4,297 5,503 TOTAL LIABILITIES 25,317 15,635 NET FINANCIAL ASSETS/(LIABILITIES)(4,959)2,150 NON-FINANCIAL ASSETS Tangible capital assets (note 4)787,448 814,239 Prepaid expenses 691 3,160 TOTAL NON-FINANCIAL ASSETS 788,139 817,399 ACCUMULATED SURPLUS (note 5)783,180 819,549 The accompanying notes are an integral part of these financial statements 28 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS For the Year Ended December 31, 2018 Budget Actual Actual 2018 2018 2017 $$$ (Unaudited) REVENUES Municipality of Tweed 145,000 147,382 126,000 Province of Ontario 15,676 16,216 15,656 Government of Canada 14,689 10,406 16,405 Other grants 2,500 2,617 504 Donations 7,250 13,589 8,297 Fines and other fees 5,145 4,068 4,478 Other 6,065 1,941 6,513 TOTAL REVENUES 196,325 196,219 177,853 EXPENSES Salaries and benefits 147,660 140,949 135,059 Tapes, video and programs 2,781 3,099 1,478 Internet sustainabilty 1,500 1,177 2,670 Professional development 2,000 1,755 957 Supplies and maintenance 24,211 23,514 17,747 Office and administration 3,500 7,178 5,735 Specific projects 3,000 601 4,937 Utilities 13,800 9,511 10,331 Amortization 43,972 44,804 43,972 TOTAL EXPENSES 242,424 232,588 222,886 ANNUAL DEFICIT (46,099)(36,369)(45,033) ACCUMULATED SURPLUS - beginning of year 819,549 864,582 ACCUMULATED SURPLUS - end of year 783,180 819,549 The accompanying notes are an integral part of these financial statements 29 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF CHANGE IN NET FINANCIAL ASSETS (LIABILITIES) For the Year Ended December 31, 2018 Budget Actual Actual 2018 2018 2017 $$$ (Unaudited) ANNUAL DEFICIT (46,099)(36,369)(45,033) Amortization of tangible capital assets 43,972 44,804 43,198 Acquisition of tangible capital assets (21,000)(18,013)(7,140) Change in prepaid expenses -2,469 (592) DECREASE IN NET FINANCIAL ASSETS (LIABILITIES)(23,127)(7,109)(9,567) NET FINANCIAL ASSETS - beginning of year 2,150 2,150 11,717 NET FINANCIAL ASSETS (LIABILITIES) - end of year (20,977)(4,959)2,150 The accompanying notes are an integral part of these financial statements 30 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF CASH FLOWS For the Year Ended December 31, 2018 2018 2017 $$ CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Annual deficit (36,369)(45,033) Items not involving cash Amortization of tangible capital assets 44,804 43,198 Change in non-cash assets and liabilities Accounts receivable 7,745 (10,088) Prepaid expenses 2,469 (592) Accounts payable and accrued liabilities 6,257 (14,753) Due to Municipality 4,631 - Deferred revenue (1,206)1,254 Net change in cash from operating activities 28,331 (26,014) CAPITAL ACTIVITIES Acquisition of tangible capital assets (18,013)(7,140) NET CHANGE IN CASH 10,318 (33,154) CASH - beginning of year 5,801 38,955 CASH - end of year 16,119 5,801 The accompanying notes are an integral part of these financial statements 31 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2018 1.SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with the standards in the Chartered Professional Accountants Canada Public Sector Accounting (PSA) Handbook. Significant aspects of the accounting policies adopted by the Board are as follows: (a)Recognition of Revenue and Expenses Revenue and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenue in the period in which the transactions of events occurred that give rise to the revenue; expenses are recognized in the period the goods or services are acquired and a legal liability is incurred or transfers are due. Government funding is recognized in the financial statements as revenues in the period in which events giving rise to the transfers occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates of the amounts can be made. Fines and other fees are recognized as revenue in the year the goods and services are provided. Donations and other revenue is recognized when the amounts are received. Contributions from the Municipality of Tweed are recognized as approved by the Municipality. (b)Use of Estimates Certain items recognized in the financial statements are subject to measurement uncertainty. The recognized amounts of such items are based on the Board's best information and judgment. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. The Board's significant estimates include: The amounts recorded for amortization and opening costs of tangible capital assets are based on estimates of useful life, residual values and valuation rates. (c)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, if any, of tangible capital assets is amortized on a straight-line basis, over the expected useful life of the asset, as follows: Buildings 40 years Equipment 15 years Computers 5 years Books 7 years Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and are also recorded as revenue. 32 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2018 1.SIGNIFICANT ACCOUNTING POLICIES, continued (d)Deferred Revenue Deferred revenue represents grants, user charges and fees which have been collected but for which the related services have yet to be performed. These amounts will be recognized as revenues in the fiscal year the services are performed. (e)Non-Financial Assets Tangible capital assets and other non-financial assets are accounted for as assets by the Board because they can be used to provide services in future periods. These assets do not normally provide resources to discharge the liabilities of the Board unless they are sold. (f)Inter-Entity Transactions The Tweed Public Library Board is a Board of the Municipality of Tweed and is consolidated with the Municipality's financial statements. Allocated costs and recovery of costs are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Unallocated costs are measured at the carrying amount, which is the amount recorded in the records of the Municipality. 2.BUDGET FIGURES The operating budget, approved by the Board, for 2018 is reflected on the Statement of Operations and Accumulated Surplus and the Statement of Change in Net Financial Assets (Liabilities). The budgets established for capital investment in tangible capital assets are on a project-oriented basis, the costs of which may be carried out over one or more years and, therefore, may not be comparable with current year’s actual expenditure amounts. Budget figures have been reclassified for the purposes of these financial statements to comply with PSA reporting requirements. Budget figures are not subject to audit. 3.COMPARATIVE FIGURES Certain comparative figures were restated, where required, to conform with the current year presentation. 33 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2018 4.TANGIBLE CAPITAL ASSETS The net book value of the Board's tangible capital assets are: Buildings Equipment Computers Books 2018 Totals 2017 Totals $$$$$$ COST Balance, beginning of year 876,450 147,979 3,769 80,090 1,108,288 1,113,051 Add: additions during the year --7,968 10,045 18,013 7,140 Less: disposals during the year --2,482 11,903 14,385 11,903 Balance, end of year 876,450 147,979 9,255 78,232 1,111,916 1,108,288 ACCUMULATED AMORTIZATION Balance, beginning of year 175,242 76,975 3,254 38,578 294,049 262,754 Add: additions during the year 21,912 9,865 1,851 11,176 44,804 43,198 Less: disposals during the year --2,482 11,903 14,385 11,903 Balance, end of year 197,154 86,840 2,623 37,851 324,468 294,049 NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS 679,296 61,139 6,632 40,381 787,448 814,239 5.ACCUMULATED SURPLUS Accumulated surplus consists of the following: 2018 2017 $$ Surplus/(Deficit) Operations (4,268)5,310 Invested In Capital Assets Tangible capital assets - net book value 787,448 814,239 783,180 819,549 34 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2018 6.CHANGES IN ACCOUNTING POLICIES The Board has implemented the following PSA sections which are now effective under the PSA Handbook: 3320 Contingent Assets, 3380 Contractual Rights, 2200 Related Party Disclosures and 3420 Inter-Entity Transactions. Under Section 3320, a contingent asset is a potential asset that exists at the financial statement date but requires confirmation or disproval at a future date that is not in the control of the public- sector entity. If the contingent asset is deemed to be likely to exist, then this should be disclosed in the notes to the financial statements. Disclosure should include the nature, extent (except in those cases where extent cannot be measured or disclosure would have an adverse effect on the outcome), the reason for any non-disclosure of extent, and when an estimate of the amount has been made, the basis for that estimate. This section has been applied prospectively.The adoption of this standard did not have an impact on the Board's financial statements. Under Section 3380, a contractual right arises out of a contract or agreement where it will result in the Board having both an asset and future revenue. The contract or agreement must be between two or more parties and be enforceable under contract law. Contractual rights are assets and revenues that will occur in the future due to an enforceable agreement in effect at the financial statement date. If a contractual right exists, it should be disclosed in the notes or schedules to the statements and include descriptions about nature, extent and timing. This section has been applied prospectively.The adoption of this standard did not have an impact on the Board's financial statements. Section 3240 establishes the standards and requirements on how to account for and Section 2200 establishes the standards and requirements on how to report transactions between public sector entities that comprise the government’s reporting entity.These sections have been applied retroactively with restatement of prior periods.The adoption of these standards resulted in additional dislosure in note 7. 7.INTER-ENTITY TRANSACTIONS During the year, the Board entered into transactions with the Municipality of Tweed. As part of the budgeting process, the Municipality approves a contribution to the Board which is identified on the Statement of Operations and Accumulated Surplus. Details of the related party expense transactions are as follows: 2018 2017 $$ Unallocated costs: Water and sewer 745 715 745 715 In addition, the following services are provided to the Board by the Municipality at no cost: Payroll services Rental of land Cooling system upgrades 35 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2018 7..INTER-ENTITY TRANSACTIONS, continued All balances with the Municipality of Tweed have been identified on the Statement of Financial Position.Due from (to) balances are unsecured, without interest and have no terms of repayment. 36