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HomeMy Public PortalAbout2020 Tweed Consolidated FSCORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020 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 - 15 Schedule of Tangible Capital Assets 16 Schedules of Segment Disclosure 17 - 18 TRUST FUNDS Independent Auditor's Report 19 Statement of Financial Position 21 Statement of Continuity 21 Notes to the Financial Statements 22 LOCAL BOARD Tweed Public Library Board 23 - 33 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, 2020 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 CA reasurer April 27, 2021 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, 2020, 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, 2020, 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. 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 April 27, 2021 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At December 31, 2020 2020 2019 $$ FINANCIAL ASSETS Cash 1,088,021 5,012,166 Investments (note 2)2,218,669 788,332 Accounts receivable 1,882,119 438,877 Taxes receivable 866,688 900,113 Long term loans (note 8)5,000 10,000 TOTAL FINANCIAL ASSETS 6,060,497 7,149,488 LIABILITIES Accounts payable and accrued liabilities 866,130 845,756 Deferred revenue - obligatory reserve funds (note 4)89,634 633,306 Deferred revenue - other (note 6)7,291 37,532 Long term debt (note 8)5,000 10,000 Landfill closure and post-closure liability (note 9)1,267,803 1,329,572 TOTAL LIABILITIES 2,235,858 2,856,166 NET FINANCIAL ASSETS 3,824,639 4,293,322 NON-FINANCIAL ASSETS Tangible capital assets (note 11)29,854,952 27,484,347 Inventories of supplies 80,900 57,786 Prepaid expenses 31,548 23,156 TOTAL NON-FINANCIAL ASSETS 29,967,400 27,565,289 ACCUMULATED SURPLUS (note 12)33,792,039 31,858,611 The accompanying notes are an integral part of these financial statements 1 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS For the Year Ended December 31, 2020 Budget Actual Actual 2020 2020 2019 $$$ (Unaudited) REVENUES Property taxation 4,233,036 4,213,730 4,159,619 User charges 1,363,404 1,409,844 1,517,384 Government of Canada 937,300 804,824 29,557 Province of Ontario 2,942,055 2,996,279 2,963,304 Penalties and interest on taxes 118,000 103,571 118,031 Investment income 74,900 67,128 110,339 Donations 13,250 40,037 54,737 Other grants 104,700 101,410 51,659 Parkland fees earned 40,000 40,000 - Federal gas tax earned 929,604 884,197 525,008 TOTAL REVENUES 10,756,249 10,661,020 9,529,638 EXPENSES General government 1,090,192 1,157,256 1,078,563 Protection services 1,707,061 1,676,777 1,639,129 Transportation services 3,692,530 3,405,307 3,737,215 Environmental services 1,239,200 1,156,273 1,731,938 Recreation and cultural services 1,022,834 1,023,187 962,883 Planning and development 366,354 308,792 265,131 TOTAL EXPENSES 9,118,171 8,727,592 9,414,859 ANNUAL SURPLUS 1,638,078 1,933,428 114,779 ACCUMULATED SURPLUS - beginning of year 31,858,611 31,743,832 ACCUMULATED SURPLUS - end of year 33,792,039 31,858,611 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, 2020 Budget Actual Actual 2020 2020 2019 $$$ (Unaudited) ANNUAL SURPLUS 1,638,078 1,933,428 114,779 Amortization of tangible capital assets 2,050,312 1,972,274 2,246,329 Purchase of tangible capital assets (4,858,294)(4,397,264)(1,722,705) Loss on disposal of tangible capital assets -10,593 62,837 Proceeds on sale of tangible capital assets -43,792 - Change in inventories of supplies -(23,114)(43,672) Change in prepaid expenses -(8,392)(22,465) INCREASE/(DECREASE) IN NET FINANCIAL ASSETS (1,169,904)(468,683)635,103 NET FINANCIAL ASSETS - beginning of year 4,293,322 4,293,322 3,658,219 NET FINANCIAL ASSETS - end of year 3,123,418 3,824,639 4,293,322 The accompanying notes are an integral part of these financial statements 3 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended December 31, 2020 2020 2019 $$ CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Annual surplus 1,933,428 114,779 Items not involving cash Amortization of tangible capital assets 1,972,274 2,246,329 Loss on disposal of tangible capital assets 10,593 62,837 Change in landfill closure and post-closure liability (61,769)503,572 Change in non-cash assets and liabilities Accounts receivable (1,443,242)652,627 Taxes receivable 33,425 (15,800) Inventories of supplies (23,114)(43,672) Prepaid expenses (8,392)(22,465) Accounts payable and accrued liabilities 20,374 (1,095,953) Deferred revenue - obligatory reserve funds (543,672)250,757 Deferred revenue - other (30,241)(49,010) Net change in cash from operating activities 1,859,664 2,604,001 CAPITAL ACTIVITIES Purchase of tangible capital assets (4,397,264)(1,722,705) Proceeds on disposal of tangible capital assets 43,792 - Net change in cash from capital activities (4,353,472)(1,722,705) INVESTING ACTIVITIES Redemption of investments 303,224 6,716 Purchase of investments (1,733,561)(36,586) Net change in cash from investing activities (1,430,337)(29,870) FINANCING ACTIVITIES Debt principal repayments (5,000)(8,159) Long term loans receipts 5,000 8,159 Net change in cash from financing activities -- NET CHANGE IN CASH (3,924,145)851,426 CASH - beginning of year 5,012,166 4,160,740 CASH - end of year 1,088,021 5,012,166 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, 2020 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. Initial costs for tangible capital assets that were acquired or developed prior to 2009 were obtained using historical cost information or using current fair market values discounted by a relevant inflation factor to the point of acquisition. 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 Underground 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, 2020 1.SIGNIFICANT ACCOUNTING POLICIES, continued (d) Inventories of Supplies Inventories of supplies are recorded at the lower of cost, as determined by the first-in, first out method, and market. (e) 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. 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. (f) 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. 6 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 1.SIGNIFICANT ACCOUNTING POLICIES, continued (g) 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. (h) 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. (i) 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 of tangible capital assets are based on estimates of useful life and residual values; and •The amount recorded as allowance for doubtful accounts receivable is based on management's estimate of future payments on receivable account balances. 2.INVESTMENTS Investments are recorded at cost and consist of the following: Market Value Actual 2020 Actual 2019 $$$ One Fund Investments - Bond Fund 1,050,912 1,084,431 653,877 One Fund Investments - High Interest Savings 1,007,803 1,007,803 - Guaranteed investment certificates, maturity dates from October 3, 2021 to October 10, 2023, interest rates ranging from 0.75% to 3.00% per annum 126,435 126,435 134,455 2,185,150 2,218,669 788,332 7 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 3.CREDIT FACILITY AGREEMENT The Municipality has a revolving credit facility agreement with its main financial institution. The amount available at any time is limited to $500,000 via an operating loan. Any balance borrowed will accrue interest at the bank’s prime lending rate plus 0.50% per annum. At December 31, 2020 there was no balance outstanding (2019 - $Nil). 4.DEFERRED REVENUE - OBLIGATORY RESERVE FUNDS A requirement of the Chartered Professional Accountants Canada Public Sector Accounting Handbook, is that obligatory reserve funds be reported as deferred revenue. This requirement is in place as legislation and external agreements restrict how these funds may be used and under certain circumstances these funds may possibly be refunded. The balances in the obligatory reserve funds of the Municipality are summarized below: 2020 2019 $$ Federal gas tax 51,530 564,768 Parkland 38,104 68,538 89,634 633,306 The continuity of deferred revenue - obligatory reserve funds is as follows: 2020 2019 $$ Balance - beginning of year 633,306 382,549 Add amounts received: Federal gas tax 366,704 759,733 Parkland 9,000 8,250 Interest 4,821 7,782 380,525 775,765 Less transfer to operations: Federal gas tax 884,197 525,008 Parkland 40,000 - 924,197 525,008 Balance - end of year 89,634 633,306 8 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 5.PENSION AGREEMENTS Certain employees of the Municipality are eligible members of the Ontario Municipal Employees Retirement System (OMERS), a multi-employer pension plan. The Actuarial Opinion contained in the 2020 Annual Report disclosed total actuarial liabilities of $113,055 million in respect of benefits accrued for service with actuarial assets of $109,844 million indicating an actuarial deficit of $3,211 million. Because OMERS is a multi-employer plan, any pension plan surpluses or deficits are a joint responsibility of Ontario municipal organizations and their employees. As a result, the Municipality does not recognize any share of the OMERS pension surplus or deficit. The Municipality's required contributions to OMERS in 2020 were $122,538 (2019 -$108,227). 6.DEFERRED REVENUE - OTHER Included in deferred revenue - other are the following amounts: 2020 2019 $$ Deposits and other 7,291 31,832 Association of Municipalities of Ontario -5,700 7,291 37,532 The continuity of deferred revenue - other is as follows: 2020 2019 $$ Balance - beginning of year 37,532 86,542 Add:Deposits and other 7,291 26,511 Less transfer to operations: Association of Municipalities of Ontario 5,700 32,292 Deposits and other 31,832 21,105 Government transfers -22,124 37,532 75,521 Balance - end of year 7,291 37,532 7.TRUST FUNDS Trust funds administered by the Municipality amounting to $11,108 (2019 -$10,989) have not been included in the Consolidated Statement of Financial Position nor have their operations been included in the Consolidated Statement of Operations and Accumulated Surplus. As such balances are held in trust by the Municipality for the benefit of others, they are not presented as part of the Municipality's financial position or operations. 9 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 8.LONG TERM DEBT 2020 2019 $$ Tile drainage loans due August 1, 2021 5,000 10,000 (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, 2020 is $5,000 (2019 -$10,000). (b)Interest paid during the year on long term debt amounted to $1,793 (2019 -$1,793). (c)The long term debt reported in (a) of this note is repayable as follows: Principal Interest Total $$$ 2021 5,000 1,794 6,794 5,000 1,794 6,794 9.LANDFILL CLOSURE AND POST-CLOSURE LIABILITY The estimated liability for landfill closure and post-closure costs for both of the sites the Municipality operates is $1,267,803 (2019 -$1,329,572). The closure costs include final cover, vegetation and additional monitoring wells. Post-closure costs include monitoring, maintenance of control systems and consulting fees for 25 years after the site is closed.The landfill closure and post-closure liability will be funded from taxation and a reserve fund.A reserve fund of $1,394,948 (2019 - $1,146,853) has been established to provide for this liability. The reported liability is based upon estimates and assumptions with respect to events extending over the remaining life of the landfill. The remaining capacity of the solid waste landfill sites is estimated at 175,764 m3 (2019 -180,598 m3) which is 31.3% (2019 -32.2%) of the site’s total capacity. The total discounted future cash flows for closure and post-closure cost is estimated at $1,941,797 (2019 -$2,048,167) as at December 31, 2020 using an inflation rate of of 1.64% (2019 - 2.19%) and a discount rate of 2.46% (2019 - 2.76%).The landfills are expected to reach capacity in 2037 and 2055. 10.CONTINGENT LIABILITIES The Municipality, in the course of its operations, has been named in several lawsuits the outcomes of which are indeterminable at this time. No amounts in connection with these items have been reflected in these financial statements. 10 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 11.TANGIBLE CAPITAL ASSETS The net book value of the Municipality's tangible capital assets are: 2020 2019 $$ General Land and land improvements 1,837,377 1,930,353 Buildings 2,875,296 2,712,175 Vehicles 1,204,632 1,369,891 Machinery and equipment 1,258,529 971,774 Infrastructure Buildings 987,822 1,097,597 Roads 8,295,154 8,891,913 Underground and other networks 3,706,278 3,803,727 Bridges and other structures 7,523,229 6,147,864 27,688,317 26,925,294 Assets under construction 2,166,635 559,053 29,854,952 27,484,347 For additional information, see the Consolidated Schedule of Tangible Capital Assets. During the year there were no write-downs of assets (2019 -$Nil) and no interest capitalized (2019 -$Nil). Tangible capital assets allocated by segment are as follows: 2020 2019 $$ General government 8,606,711 1,517,361 Protection services -874,723 Transportation services 15,818,383 16,646,416 Environmental services 4,694,100 5,667,228 Recreation and cultural services 728,306 2,770,755 Planning and development 7,452 7,864 29,854,952 27,484,347 11 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 12.ACCUMULATED SURPLUS Accumulated surplus consists of the following: 2020 2019 $$ Surplus/(Deficit) Unfunded landfill closure and post-closure costs (1,267,803)(1,329,572) Library board 1,601 2,260 (1,266,202)(1,327,312) Invested In Capital Assets Tangible capital assets - net book value 29,854,952 27,484,347 Unfunded capital (36,367)- 29,818,585 27,484,347 Surplus 28,552,383 26,157,035 Reserves Working funds 950,174 1,170,315 General government 154,394 581,178 Protection services 279,593 185,572 Transportation services 447,185 659,279 Water and sewer 1,203,417 1,209,407 Recreation services 545,443 369,091 Community improvement plan 48,919 71,945 Total Reserves 3,629,125 4,246,787 Reserve Funds Transportation services 215,583 137,236 Water -170,700 Landfill 1,394,948 1,146,853 Total Reserve Funds 1,610,531 1,454,789 33,792,039 31,858,611 13.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. 12 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 14.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 2020 2020 2019 $$$ (Unaudited) Salaries and benefits 2,418,958 2,473,546 2,304,212 Interest charges 1,794 1,793 1,793 Materials 2,485,516 2,121,773 2,739,959 Contracted services 1,787,704 1,763,372 1,725,434 Rents and financial 84,410 89,315 48,079 External transfers 289,477 294,926 286,217 Amortization 2,050,312 1,972,274 2,246,329 Loss (gain) on disposal of tangible capital assets -10,593 62,836 9,118,171 8,727,592 9,414,859 15.OPERATIONS OF SCHOOL BOARDS AND THE COUNTY OF HASTINGS During 2020, requisitions were made by the County of Hastings and School Boards requiring the Municipality to collect property taxes and payments in lieu of property taxes on their behalf. The amounts collected and remitted are as follows: School Boards County $$ Property taxes 1,229,723 1,803,093 Taxation from other governments 1,557 7,620 Amounts requisitioned and remitted 1,231,280 1,810,713 These amounts have not been included in the Consolidated Statement of Operations and Accumulated Surplus. 16.COMMITMENT Subsequent to the year end, the Municipality committed to a contract for $4,474,000 plus HST as part of the sewer lagoon system upgrades project. This project will be funded from long term debt, reserves and sewer operations. In connection with this project, the Municipality was approved for long term debt financing in 2021 of $3,100,000 from the Ontario Infrastructure and Lands Corporation. This debt will begin as construction advances and then be converted to a 30 year amortizing debenture once the project is complete, currently estimated as September 30, 2022. Interest rates will be determined based on the prevailing rate at interest payment date for the construction advances and at a prevailing fixed rate once the advances are converted to a debenture. 13 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 17.COMPARATIVE FIGURES Certain comparative figures were restated, where required, to conform with the current year presentation. 18.BUDGET FIGURES The budget, approved by the Municipality, for 2020 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 8,497,922 8,123,180 Capital 4,325,194 4,699,936 Total Council approved budget 12,823,116 12,823,116 Less: Tangible capital assets capitalized -(4,858,294) Add: Amortization of tangible capital assets -2,050,312 Less: Long term receivable receipts (5,000)- Less: Principal repayment of long term debt -(5,000) Less: Transfers to/from reserves and reserve funds (2,099,665)(943,761) Library Board budget 52,798 52,798 Reallocate tax write offs (15,000)(15,000) Adjusted budget per Consolidated Statement of Operations 10,756,249 9,104,171 19.UNCERTAINTY CAUSED BY COVID-19 In March 2020, the World Health Organization categorized COVID-19 as a pandemic. The potential economic effects within the Municipality's environment and in the global markets, possible disruption in supply chains, and measures being introduced at various levels of government to curtail the spread of the virus (such as travel restrictions, closures of non-essential municipal and private operations, imposition of quarantines and social distancing) could have a material impact on the Municipality's operations. The extent of the impact of this outbreak and related containment measures on the Municipality's operations cannot be reliably estimated at this time. 14 CORPORATION OF THE MUNICIPALITY OF TWEED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended December 31, 2020 20.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. 15 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED SCHEDULE OF TANGIBLE CAPITAL ASSETS For the Year Ended December 31, 2020 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 $$$$$$$$$$ COST Balance, beginning of year 2,474,140 4,413,626 3,554,912 2,023,881 2,947,125 21,668,686 5,789,030 8,835,588 559,053 52,266,041 Add: additions during the year 8,970 344,381 58,776 457,700 -358,015 25,338 -3,144,084 4,397,264 Less: disposals during the year -73,166 131,972 66,707 -904,489 2,745 3,734 -1,182,813 Internal transfers -------1,536,502 (1,536,502)- Balance, end of year 2,483,110 4,684,841 3,481,716 2,414,874 2,947,125 21,122,212 5,811,623 10,368,356 2,166,635 55,480,492 ACCUMULATED AMORTIZATION Balance, beginning of year 543,787 1,701,451 2,185,021 1,052,107 1,849,528 12,776,773 1,985,303 2,687,724 -24,781,694 Add: additions during the year 101,946 134,228 219,573 169,774 109,775 954,774 121,067 161,137 -1,972,274 Less: disposals during the year -26,134 127,510 65,536 -904,489 1,025 3,734 -1,128,428 Balance, end of year 645,733 1,809,545 2,277,084 1,156,345 1,959,303 12,827,058 2,105,345 2,845,127 -25,625,540 NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS 1,837,377 2,875,296 1,204,632 1,258,529 987,822 8,295,154 3,706,278 7,523,229 2,166,635 29,854,952 16 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED SCHEDULE OF SEGMENT DISCLOSURE For the Year Ended December 31, 2020 General Government Protection Services Transportation Services Water and Sewer Other Environmental Services Recreation and Cultural Services Planning and Development Consolidated $$$$$$$$ Revenues Property taxation 351,783 1,150,617 1,802,644 -197,618 593,485 117,583 4,213,730 User charges 159,992 26,620 21,955 881,637 212,912 94,124 12,604 1,409,844 Government transfers - operating 363,721 583,014 913,395 -100,133 393,375 59,579 2,413,217 Government transfers - capital --1,387,886 ----1,387,886 Penalties and interest on taxes 103,571 ------103,571 Investment income 30,219 -2,400 882 33,627 --67,128 Donations -2,780 2,552 --34,705 -40,037 Other grants -----90,610 10,800 101,410 Parkland fees earned -----40,000 -40,000 Federal gas tax earned --884,197 ----884,197 Total revenues 1,009,286 1,763,031 5,015,029 882,519 544,290 1,246,299 200,566 10,661,020 Expenses Salaries and benefits 636,353 103,517 855,763 102,151 192,466 455,222 128,074 2,473,546 Interest charges ------1,793 1,793 Materials 361,749 177,114 1,019,523 63,422 50,301 279,551 170,113 2,121,773 Contracted services 49,244 1,091,518 221,505 309,082 92,023 --1,763,372 Rents and financial 72,336 -5,949 -2,621 9 8,400 89,315 External transfers -205,307 --82,487 7,132 -294,926 Amortization 31,267 99,321 1,339,396 260,000 -241,878 412 1,972,274 Loss (gain) on disposal of tangible capital assets 6,307 -(36,829)1,720 -39,395 -10,593 Total expenses 1,157,256 1,676,777 3,405,307 736,375 419,898 1,023,187 308,792 8,727,592 Net surplus/(deficit)(147,970)86,254 1,609,722 146,144 124,392 223,112 (108,226)1,933,428 17 CORPORATION OF THE MUNICIPALITY OF TWEED CONSOLIDATED SCHEDULE OF SEGMENT DISCLOSURE For the Year Ended December 31, 2019 General Government Protection Services Transportation Services Water and Sewer Other Environmental Services Recreation and Cultural Services Planning and Development Consolidated $$$$$$$$ Revenues Property taxation -1,602,853 1,317,396 -201,012 794,793 243,565 4,159,619 User charges 202,529 77,120 28,477 853,127 189,061 148,205 18,865 1,517,384 Government transfers - operating 2,778,209 ----45,009 -2,823,218 Government transfers - capital --169,643 ----169,643 Penalties and interest on taxes 118,031 ------118,031 Investment income 57,923 -10,618 3,402 38,396 --110,339 Donations -----54,737 -54,737 Other grants 50,000 ----1,659 -51,659 Federal gas tax earned --525,008 ----525,008 Total revenues 3,206,692 1,679,973 2,051,142 856,529 428,469 1,044,403 262,430 9,529,638 Expenses Salaries and benefits 612,679 114,808 823,134 91,476 148,309 398,904 114,902 2,304,212 Interest charges ------1,793 1,793 Materials 272,488 144,049 1,135,329 103,507 633,510 311,418 139,658 2,739,959 Contracted services 51,175 1,095,401 180,766 315,369 82,723 --1,725,434 Rents and financial 32,066 -5,132 -2,469 12 8,400 48,079 External transfers 12,000 189,314 --77,206 7,697 -286,217 Amortization 35,319 95,557 1,592,854 277,369 -244,852 378 2,246,329 Loss (gain) on disposal of tangible capital assets 62,836 ------62,836 Total expenses 1,078,563 1,639,129 3,737,215 787,721 944,217 962,883 265,131 9,414,859 Net surplus/(deficit)2,128,129 40,844 (1,686,073)68,808 (515,748)81,520 (2,701)114,779 18 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, 2020, 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, 2020, 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. 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 April 27, 2021 CORPORATION OF THE MUNICIPALITY OF TWEED TRUST FUNDS STATEMENT OF FINANCIAL POSITION At December 31, 2020 Recreation Associations Santa Claus Parade Fund 2020 Total 2019 Total $$$$ FINANCIAL ASSETS Cash -1,008 1,008 508 Investments (note 2)10,347 -10,347 10,214 Accounts receivable 3 -3 517 10,350 1,008 11,358 11,239 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable -250 250 250 FUND BALANCES 10,350 758 11,108 10,989 10,350 1,008 11,358 11,239 TRUST FUNDS STATEMENT OF CONTINUITY For the Year Ended December 31, 2020 Recreation Associations Santa Claus Parade Fund 2020 Total 2019 Total $$$$ BALANCES - beginning of year 10,231 758 10,989 11,011 RECEIPTS Donations ---1,500 Interest 119 -119 78 119 -119 1,578 EXPENSES Parade costs ---1,600 BALANCES - end of year 10,350 758 11,108 10,989 The accompanying notes are an integral part of these financial statements 21 CORPORATION OF THE MUNICIPALITY OF TWEED TRUST FUNDS NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2020 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 0.25% and maturity of November 15, 2021. 22 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD FINANCIAL STATEMENTS DECEMBER 31, 2020 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, 2020, the statements of operations and accumulated surplus, change in net financial assets 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, 2020, 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, other fees and donations, 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, other fees and donations revenue, 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. 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 April 27, 2021 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF FINANCIAL POSITION At December 31, 2020 2020 2019 $$ FINANCIAL ASSETS Cash 28,226 46,097 Accounts receivable 4,304 5,287 TOTAL FINANCIAL ASSETS 32,530 51,384 LIABILITIES Accounts payable and accrued liabilities -537 Due to Municipality (note 6)31,752 44,981 Deferred revenue -4,297 TOTAL LIABILITIES 31,752 49,815 NET FINANCIAL ASSETS 778 1,569 NON-FINANCIAL ASSETS Tangible capital assets (note 4)728,306 756,566 Prepaid expenses 823 691 TOTAL NON-FINANCIAL ASSETS 729,129 757,257 ACCUMULATED SURPLUS (note 5)729,907 758,826 The accompanying notes are an integral part of these financial statements 26 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS For the Year Ended December 31, 2020 Budget Actual Actual 2020 2020 2019 $$$ (Unaudited) REVENUES Municipality of Tweed (note 6)151,000 165,936 151,000 Province of Ontario 18,132 19,334 12,676 Government of Canada 2,456 -1,629 Other grants 16,200 1,610 3,659 Donations 11,250 11,283 10,504 Fines and other fees 4,760 1,450 4,267 Other -1,297 1,581 TOTAL REVENUES 203,798 200,910 185,316 EXPENSES Salaries and benefits 146,856 150,478 126,413 Electronic and other resources 1,781 3,172 3,517 Internet sustainability 1,300 1,266 1,242 Professional development 1,500 1,379 1,153 Supplies and maintenance 18,500 11,373 13,813 Office and administration 5,160 5,329 6,273 Specific projects -883 1,221 Utilities 13,701 9,839 11,144 Amortization 44,894 46,110 44,894 TOTAL EXPENSES 233,692 229,829 209,670 ANNUAL DEFICIT (29,894)(28,919)(24,354) ACCUMULATED SURPLUS - beginning of year 758,826 783,180 ACCUMULATED SURPLUS - end of year 729,907 758,826 The accompanying notes are an integral part of these financial statements 27 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF CHANGE IN NET FINANCIAL ASSETS For the Year Ended December 31, 2020 Budget Actual Actual 2020 2020 2019 $$$ (Unaudited) ANNUAL DEFICIT (29,894)(28,919)(24,354) Amortization of tangible capital assets 44,894 46,110 44,894 Acquisition of tangible capital assets (15,000)(17,850)(14,012) Change in prepaid expenses -(132)- CHANGE IN NET FINANCIAL ASSETS/(NET DEBT)-(791)6,528 NET FINANCIAL ASSETS/(NET DEBT) - beginning of year 1,569 1,569 (4,959) NET FINANCIAL ASSETS - end of year 1,569 778 1,569 The accompanying notes are an integral part of these financial statements 28 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD STATEMENT OF CASH FLOWS For the Year Ended December 31, 2020 2020 2019 $$ CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Annual deficit (28,919)(24,354) Items not involving cash Amortization of tangible capital assets 46,110 44,894 Change in non-cash assets and liabilities Accounts receivable 983 (1,048) Prepaid expenses (132)- Accounts payable and accrued liabilities (537)(11,290) Due to Municipality (13,229)35,788 Deferred revenue (4,297)- Net change in cash from operating activities (21)43,990 CAPITAL ACTIVITIES Acquisition of tangible capital assets (17,850)(14,012) NET CHANGE IN CASH (17,871)29,978 CASH - beginning of year 46,097 16,119 CASH - end of year 28,226 46,097 The accompanying notes are an integral part of these financial statements 29 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2020 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 of tangible capital assets are based on estimates of useful life and residual values. (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. Initial costs for tangible capital assets that were acquired or developed prior to 2009 were obtained using historical cost information or using current fair market values discounted by a relevant inflation factor to the point of acquisition. 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. 30 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2020 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 2020 is reflected on the Statement of Operations and Accumulated Surplus and the Statement of Change in Net Financial Assets. 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. 31 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2020 4.TANGIBLE CAPITAL ASSETS The net book value of the Board's tangible capital assets are: Buildings Equipment Computers Books 2020 Totals 2019 Totals $$$$$$ COST Balance, beginning of year 876,450 147,979 10,053 78,863 1,113,345 1,111,916 Add: additions during the year -407 4,926 12,517 17,850 14,012 Less: disposals during the year --1,288 11,328 12,616 12,583 Balance, end of year 876,450 148,386 13,691 80,052 1,118,579 1,113,345 ACCUMULATED AMORTIZATION Balance, beginning of year 219,065 96,705 4,474 36,535 356,779 324,468 Add: additions during the year 21,911 9,865 2,898 11,436 46,110 44,894 Less: disposals during the year --1,288 11,328 12,616 12,583 Balance, end of year 240,976 106,570 6,084 36,643 390,273 356,779 NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS 635,474 41,816 7,607 43,409 728,306 756,566 5.ACCUMULATED SURPLUS Accumulated surplus consists of the following: 2020 2019 $$ Surplus Operations 1,601 2,260 Invested In Capital Assets Tangible capital assets - net book value 728,306 756,566 729,907 758,826 32 CORPORATION OF THE MUNICIPALITY OF TWEED TWEED PUBLIC LIBRARY BOARD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended December 31, 2020 6.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 inter-entity expense transactions are as follows: 2020 2019 $$ Unallocated costs: Water and sewer 846 968 846 968 In addition, the following services are provided to the Board by the Municipality at no cost: •Payroll services •Rental of land •Cooling system upgrades 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. 7.UNCERTAINTY CAUSED BY COVID-19 In March 2020, the World Health Organization categorized COVID-19 as a pandemic. The potential economic effects within the Board's environment and in the global markets, possible disruption in supply chains, and measures being introduced at various levels of government to curtail the spread of the virus (such as travel restrictions, closures of non-essential municipal and private operations, imposition of quarantines and social distancing) could have a material impact on the Board's operations. The extent of the impact of this outbreak and related containment measures on the Board's operations cannot be reliably estimated at this time. 33