HomeMy Public PortalAbout2016-08-04_Audit and Budget_Public Agenda PackageMUNICIPALITY OF THE DISTRICT OF CHESTER
AUDIT AND BUDGET COMMITTEE
THURSDAY, AUGUST 4, 2016 AT 9:30 A.M.
AGENDA
1. MEETING CALLED TO ORDER.
2. MINUTES FROM PREVIOUS MEETING:
2.1 Monday, April 11, 2016
3. MATTERS ARISING.
4. NEW BUSINESS:
4.1 Report from Grant Thornton: (Appointment at 9:30 a.m.)
a) Draft Financial Statements
b) Draft 5-Year Operating Analytical
c) Draft Municipal Indicators
d) Draft Internal Control Letter
5. ADJOURNMENT.
In Camera following regular session under Section 22 of the MGA if required
Municipality of the District of Chester
Financial Results Presentation
August 4, 2016
1. Audit Report
a. Unqualified – awaiting legal conformation, council approval of financial statements and
signed management representations
2. Annual Surplus
a. Consolidated Statement Financial Statements – Page 4
3. Normalized annual surplus from operations
a. Consolidated Statement of Operations 5 Year Analytical
4. Taxes as a percentage of revenue from operations
a. Consolidated Statement of Operations 5 Year Analytical
5. Decrease in Net Debt
a. Consolidated Statement Financial Statements – Page 5
6. Accumulated Surplus
a. Consolidated Statement Financial Statements – Page 6
7. Deficits in the last 5 years
a. Municipal Indicators Summary – Indicator 5
8. Debt Service Ratio
a. Municipal Indicators Summary – Indicator 9
9. 5 Year Contributions to Capital Reserves Ratio with Landfill Removed
a. Municipal Indicators Summary – Indicator 13b
10. Internal Control Letter
a. No changes from prior year
11. Report to those Charged with Governance
a. No significant changes from prior year
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Consolidated Financial Statements
Municipality of the District of Chester
March 31, 2016
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Contents
Page
Management's Report 1
Independent Auditor's Report 2 - 3
Consolidated Statement of Operations 4
Consolidated Statement of Change in Net Debt 5
Consolidated Statement of Financial Position 6
Consolidated Statement of Cash Flows 7
Schedules to Consolidated Statement of Operations 8 - 13
Trust Funds
Trust Funds Balance Sheet 14
Statement of Trust Funds Reserves 14
Notes to the Consolidated Financial Statements 15 - 26
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Municipality of the District of Chester
Consolidated Statement of Operations
Year Ended March 31 2016 2015
Page Budget Actual Actual
Revenue
Taxes 8 $ 10,395,636 $ 10,326,442 $ 9,819,103
Grants in lieu of taxes 9 179,573 169,480 168,260
Sales of services 9 3,629,715 3,851,336 3,415,138
Other revenue from own sources 9 759,233 813,566 765,548
Transfers from Federal and Provincial
governments and agencies
Unconditional 9 229,045 267,821 244,186
Conditional 10 - 126,852 8,774
Grants for capital projects 10 2,101,056 765,849 1,015,882
Interest 10,000 103,515 91,641
Extraordinary and special items - 11,902 14,206
$ 17,304,258 $ 16,436,763 $ 15,542,737
Expenditures
General government services 11 $ 3,327,707 $ 3,242,949 $ 3,031,555
Protective services 12 2,538,596 2,419,780 2,381,228
Transportation services 12 816,068 780,820 846,951
Environmental health services 12 5,490,981 5,709,603 5,366,374
Environmental development services 12 1,481,979 1,389,082 1,186,199
Recreational and cultural services 13 910,625 981,548 902,292
Water utility 13 - - 2,851
$ 14,565,956 $14,523,782 $13,717,450
Annual surplus $ 2,738,302 $ 1,912,981 $ 1,825,287
Accumulated surplus, beginning of the year 18,807,389 16,982,102
Accumulated surplus, end of the year $ 20,720,370 $ 18,807,389
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Consolidated Statement of Change in Net Debt
Year Ended March 31 2016 2015
Budget Actual Actual
Annual Surplus $ 2,738,302 $ 1,912,981 $ 1,825,287
Acquisition of tangible capital assets (2,235,507) (2,018,795) (3,255,155)
Write off of tangible capital assets - 132,425 -
Amortization of tangible capital assets 2,216,705 2,302,931 2,216,705
2,719,500 2,329,542 786,837
Acquisition of prepaids - (101,989) (42,614)
Use of prepaids - 42,615 152,939
- (59,374) 110,325
Decrease in net debt 2,719,500 2,270,168 897,162
Net debt
Beginning of year (4,133,143) (4,133,143) (5,030,305)
End of year $ (1,413,643) $ (1,862,975) $ (4,133,143)
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Consolidated Statement of Financial Position
March 31 2016 2015
Financial Assets
Cash and cash equivalents $ 12,731,294 $ 9,379,951
Receivables (Note 4)2,208,243 2,381,876
14,939,537 11,761,827
Liabilities
Short term borrowings 450,738 2,275,980
Payables and accruals 2,168,255 1,715,973
Deferred revenue (Note 5)294,788 335,288
Landfill closure costs (Note 11)3,763,618 2,999,988
Long term debt (Note 6)10,125,113 8,567,741
16,802,512 15,894,970
NET DEBT (1,862,975)(4,133,143)
Non-Financial Assets
Tangible capital assets (Note 7)22,471,097 22,887,659
Prepaids 101,989 42,614
Other 10,259 10,259
22,583,345 22,940,532
ACCUMULATED SURPLUS (Note 8)$ 20,720,370 $ 18,807,389
Commitments (Note 12)
Contingencies (Note 16)
On behalf of the Municipality of the District of Chester
Warden Clerk
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Consolidated Statement of Cash Flows
Year Ended March 31 2016 2015
Operating activities
Net revenue $ 1,912,981 $ 1,825,287
Amortization 2,302,931 2,216,705
Write off of tangible capital assets 132,425
4,348,337 4,041,992
Changes in non-cash working capital
Decrease (increase) in receivables 173,633 (245,232)
(Decrease) increase in prepaid expenses (59,374) 110,325
Decrease (increase) in payables 452,282 (3,802)
(Decrease) in deferred revenue (40,500) (320,921)
Increase in landfill closure costs 763,630 425,259
5,638,008 4,007,621
Capital transactions
Acquisition of tangible capital assets (2,018,795) (3,255,155)
(2,018,795) (3,255,155)
Financing activities
Proceeds from issuance of short term debt
Capital asset loans 450,738 1,805,263
Proceeds from issuance of long term debt
Capital asset loans 3,000,000 4,005,000
Repayment of short term debt
Capital asset loans (2,275,980) (3,514,088)
Repayment of long term debt
Capital asset loans (1,434,933) (1,109,601)
On behalf of other local governments (7,695) (3,653)
(267,870)1,182,921
Change in net cash and cash equivalents 3,351,343 1,935,387
Cash and cash equivalents
Beginning of year 9,379,951 7,444,564
End of year $ 12,731,294 $ 9,379,951
On behalf of the Municipality of the District of Chester
Warden Clerk
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Schedules to Consolidated Statement
of Operations
Year Ended March 31 2016 2015
REVENUE Budget Actual Actual
Taxes
Residential assessable property $ 9,429,272 $ 9,378,158 $ 9,065,674
Commercial based taxable assessments $ 1,384,864 $ 1,369,194 $ 1,298,710
Resource
Taxable assessments $ 293,197 $ 287,176 $ 281,605
Non-profit acreage 4,153 4,152 3,955
Forest property tax (less than
50,000 acres)27,439 27,439 28,964
Forest property tax (50,000 acres
or more)8,590 8,590 9,209
$ 333,379 $ 327,357 $ 323,733
Area rates
Protective services $ 299,312 $ 276,820 $ 280,496
Transportation services 251,069 258,209 265,444
Environmental Health services 2,251,269 2,207,321 2,239,101
$ 2,801,650 $ 2,742,350 $ 2,785,041
Business property
Based on revenue (Aliant)$ 50,000 $ 49,128 $ 50,507
NS Power HST rebate 50,000 88,676 51,924
$ 100,000 $ 137,804 $ 102,431
Deed Transfer tax $ 800,000 $ 905,458 $ 853,003
Wind Farm Developer tax $ 250,000 $ 174,221 $-
Transfers and collections for other governments
Collection - other governments $ 1,516,072 $ 1,482,269 $ 1,458,507
Transfers to local fire commissions (1,516,072) (1,488,478)(1,464,933)
$- $ (6,209) $ (6,426)
Other
Correction Services (236,441) (236,441) (238,360)
Regional housing authority (20,000) (18,362) (23,367)
Appropriation to school board (4,447,088) (4,447,088)(4,341,336)
$ (4,703,529) $ (4,701,891)$ (4,603,063)
$ 10,395,636 $ 10,326,442 $ 9,819,103
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Schedules to Consolidated Statement
of Operations
March 31 2016 2015
Budget Actual Actual
Grants in lieu of taxes
Federal government $ 61,842 $ 54,396 $ 53,990
Provincial government
Real property 54,852 53,142 52,932
Crown timberland 33,342 33,342 32,277
Fire protection 300 359 269
Conservation 7,000 6,004 7,412
Provincial government agencies
NS Power Incorporated 22,237 22,237 21,380
$ 179,573 $ 169,480 $ 168,260
Sales of services
Collection fees - other local governments $ 2,795,324 $ 2,909,721 $ 2,617,069
Recreation and cultural services 84,050 90,134 82,596
FHCS 28,300 28,314 31,596
Regional economic network 2,391 2,466 -
Wind Energy 719,650 820,701 683,877
$ 3,629,715 $ 3,851,336 $ 3,415,138
Other revenue from own sources
Administrative services $ 148,800 $ 199,826 $ 184,389
Transportation services 7,432 7,721 7,440
Building inspection services 15,000 21,217 17,501
Animal control services 1,850 1,881 1,179
Sewer hookup services - 8,299 -
Solid waste & disposal services 564,251 516,617 526,773
Planning services 16,900 52,951 23,140
Industrial park services 5,000 5,054 5,126
$ 759,233 $ 813,566 $ 765,548
Unconditional transfers from
Federal and Provincial governments
and agencies
Federal government
Employment grants $ 1,300 $ 1,272 $ 1,248
Provincial government
Service Nova Scotia
Assessment Act - farm acreage 6,580 6,699 6,591
Emergency measures 4,500 4,760 4,709
Recreation 120,000 156,899 120,309
Recycling projects 96,665 98,191 111,329
$ 229,045 $ 267,821 $ 244,186
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Schedules to Consolidated Statement
of Operations
March 31 2016 2015
Budget Actual Actual
Conditional transfers from Federal
and Provincial governments and agencies
Other agencies
REN $- $ 126,852 $ 8,774
- 126,852 8,774
Grants for Capital Projects
Infrastructure grant $ 1,237,334 $ 77,782 $-
Gas tax grant 560,000 559,359 946,026
PCAP grant 74,722 88,190 44,856
SNSMR grant 175,000 33,018 25,000
Local agencies grant 54,000 7,500 -
$ 2,101,056 $ 765,849 $ 1,015,882
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Schedules to Consolidated Statement
of Operations
Year Ended March 31 2016 2015
EXPENDITURES
Budget Actual Actual
General government services
Legislative
Council/committee remuneration $ 161,560 $ 159,596 $ 154,648
Administrative expenses 89,789 90,498 78,702
Grants to organizations 200,500 206,732 157,295
$ 451,849 $ 456,826 $ 390,645
CAO/Clerk administrative
Administration salaries $ 362,742 $ 367,262 $ 311,276
Administrative expenses 125,800 106,018 102,094
Town crier 1,000 - -
Surveys/appraisals 1,500 4,901 -
Newsletter/promotions 13,000 9,789 8,055
Joint occupational health and safety 10,000 7,132 4,156
Health & wellness 7,000 2,542 3,199
$ 521,042 $ 497,644 $ 428,780
Finance/property tax administrative
Administration salaries $ 314,922 $ 317,290 $ 309,058
Administrative expenses 177,736 153,151 165,316
Auditor services 30,000 40,623 30,000
ISO Certification 10,000 839 28,956
Property tax administration 288,829 306,488 268,521
$ 821,487 $ 818,391 $801,851
Information services administrative
Administration salaries $ 205,965 $ 175,394 $ 198,061
Administrative expenses 249,104 225,451 168,300
Debenture interest 3,483 3,355 3,646
$ 458,552 $ 404,200 $ 370,007
Municipal property services
Salaries $ 83,950 $ 78,693 $ 105,209
Administrative expenses 40,420 36,195 35,166
Property services 129,080 151,929 128,937
Wharves 16,000 5,127 3,249
Community Development 17,500 21,926 8,083
$ 286,950 $ 293,870 $ 280,644
Public works general
Salaries $ 147,960 $ 149,923 $ 149,406
Administrative expenses 92,000 85,048 69,661
Special Projects 32,610 23,297 24,867
$ 272,570 $ 258,268 $ 243,933
Other general government services
Assessment recovery costs 341,463 341,463 342,922
Regional library 69,056 68,035 68,035
Depreciation 104,738 104,252 104,738
$515,257 $ 513,750 $ 515,695
$ 3,327,707 $ 3,242,949 $ 3,031,555
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Schedules to Consolidated Statement
of Operations
Year Ended March 31 2016 2015
Budget Actual Actual
Protective services
Police services $ 1,682,931 $ 1,673,443 $ 1,635,057
Legal prosecution services 5,000 5,438 7,275
By-law enforcement 46,490 18,753 27,858
Animal control 70,480 65,661 63,381
Emergency measures 40,707 37,943 29,929
$ 1,845,608 $ 1,801,238 $ 1,763,500
Fire services
Fire coordinator/advisory $ 113,066 $ 96,081 $ 94,994
Fire protection agreement 260,104 243,844 249,488
Fire rescue boat 11,768 11,457 9,761
$ 384,938 $ 351,382 $ 354,243
Building/fire inspections
Salaries $ 218,154 $ 202,988 $ 206,441
Administrative expenses 89,896 64,172 57,044
$ 308,050 $ 267,160 $ 263,485
$ 2,538,596 $ 2,419,780 $ 2,381,228
Transportation services
Road transport
Administration $ 34,020 $ 16,914 $ 18,566
Road and sidewalk maintenance 381,024 379,817 428,363
Street lighting 145,450 128,187 140,364
Debenture interest 13,964 15,628 18,048
Depreciation 241,610 240,274 241,610
$ 816,068 $ 780,820 $ 846,951
Environmental health services
Sewage collection and disposal $ 549,572 $ 565,480 $ 513,968
Waste collection and disposal 3,261,881 2,582,044 2,728,022
Recycling project 51,956 44,769 46,028
Debenture interest 141,078 179,286 166,633
Depreciation 1,486,494 1,574,394 1,486,464
$ 5,490,981 $ 4,945,973 $ 4,941,115
Environmental development services
Planning and zoning $ 683,060 $ 573,448 $ 523,051
Economic Development 211,015 155,115 14,283
Tourism development 43,000 43,803 40,307
Eco Park 23,653 10,609 10,806
Regional economic network 45,794 143,415 97,787
Wind Turbine 89,963 78,508 105,227
Debenture interest 95,824 94,896 105,068
Depreciation 289,670 289,288 289,670
$ 1,481,979 $1,389,082 $1,186,199
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Schedules to Consolidated Statement
of Operations
Year Ended March 31 2016 2015
Budget Actual Actual
Recreational and cultural services
Administration $ 606,817 $ 690,805 $ 593,447
Program expenses 38,200 40,262 34,907
Church Memorial Park 50,000 50,000 50,000
Parks & trails 77,600 68,535 78,619
Heritage properties 500 - 8,740
Debenture interest 8,322 7,772 9,465
Forest Heights Community School 37,815 29,450 35,743
Depreciation 91,371 94,724 91,371
$ 910,625 $ 981,548 $ 902,292
Water Utility
Depreciation $- - $ 2,851
$- $ - $ 2,851
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Trust Funds Balance Sheet
Year Ended March 31 2016 2015
Assets
Property in Trust
Library $1 $1
Tax sale surplus 186,479 116,380
$ 186,480 $ 116,381
Reserve
Trust fund reserves
Library $1 $1
Tax sale surplus 186,479 116,380
$ 186,480 $ 116,381
Statement of Trust Funds Reserves
Year Ended March 31 2016 2015
Library Tax Sale
Trust Surplus Total Total
Balance, beginning of year $1 $ 116,380 $ 116,381 $ 115,347
Add
Interest earned - 35 35 34
Tax sale surplus - 70,064 70,064 1,000
Less
Surplus dispersed - - - -
Balance, end of year $1 $ 186,479 $ 186,480 $ 116,381
On behalf of the Municipality of the District of Chester
___________________________________ Warden _____________________________Clerk
See accompanying notes and schedules to the consolidated financial statements.
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Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
1. Significant accounting policies
The consolidated financial statements of the Municipality of the District of Chester are prepared by management in
accordance with Canadian Public Sector Accounting Standards. Significant aspects of the accounting policies
adopted by the Municipality are as follows:
a) Reporting entity
The consolidated financial statements reflect the assets, liabilities, revenues, expenditures and changes in accumulated
surplus and in financial position of the reporting entity. The reporting entity is comprised of all organizations and
enterprises accountable for the administration of their affairs and resources to the Municipality and which are owned
or controlled by the Municipality.
Interdepartmental and organizational transactions and balances are eliminated.
b) Basis of accounting
The accrual basis of accounting followed in the financial statement presentation includes recognizing revenues in the
period in which the transactions or events occurred that gave rise to the revenues and expenditures in the period the
goods and services are acquired and a liability is incurred.
c) Valuation allowance
The Municipality provides a valuation allowance for estimated losses that will be incurred in collecting receivables
outstanding.
d) Cash and cash equivalents
Cash and cash equivalents include cash on hand and balances with banks, bank overdrafts, and highly liquid
temporary money instruments with original maturities of three months or less. Bank borrowings are considered to be
financing activities.
e) Use of Estimates
The presentation of financial statements, in conformity with Canadian Public Sector Accounting Standards,
requires management to make estimates and assumptions that affect the reported amount of assets and liabilities
and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reported period. Actual results could differ from those reported.
f) Landfill Closure Costs
Landfill closure and post closure costs are recognized as the landfill site's capacity is used. Usage is measured
based on tonnes of waste added to the site. Landfill closure and post closure costs are discounted using the
Municipality's average long-term borrowing rate.
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Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
1. Significant accounting policies (continued)
g) Revenue and Expenditure
The accrual basis of accounting is used for all funds. The accrual basis of accounting recognizes revenues as they
are earned and measurable; expenses are recognized as they are incurred and reasurable as a result of legal
obligation to pay.
Tax and Related Revenue
Property tax billings are prepared by the Municipality based on assessment rolls issued by the Property Valuation
Services Corporation. Tax rates are established annually by Council during the budget approval process.
Tax adjustments as a result of appeals and re-assessment are recorded when the result of the appeals process
is known.
Government Transfers
Grant proceeds from other governments are recognized as revenue when the transfer is authorized and eligibility
criteria and stipulations are met. Grant proceeds where eligibility criteria and stipulations are not met are recorded
as deferred revenue.
Other Revenues
Other revenues are recognized as services or goods are provided, the exchange amount is measurable and
collectibility of the amount is reasonably assured.
h) Tangible Capital Assets
Tangible capital assets are recorded at cost, which includes all amounts that are directly attributable to acquisition,
construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets is
amortized on a straight-line basis over the estimated useful life as follows:
Buildings - Plants 20 years
Electronic Data Equipment 3 years
Lagoons 10 years
Land Improvements 20 years
Landfill as estimated capacity is utilized
Machinery and Equipment 5-10 years
Municipal Buildings 40 years
Sewer Lines 50 years
Sidewalks 20 years
Small Equipment 5 years
Streets, Roads & Curbs 25 years
Vehicles 5 years
Wharves 25 years
Wind Turbines 20 years
Full amount of the annual amortization is charged in the year of acquisition except for wind turbines.
Wind turbines are amortized beginning on the date power generation occurs in accordance with the COMFIT agreement.
Assets under construction are not amortized until the asset is available for productive use.
All costs associated with placing an asset in service, including freight, installation costs, site preparation costs,
alterations and professional fees are included in the capitalized value.
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Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
2. Contributions to Boards and Commissions
Lunenburg County Regional Housing Authority
11.00% interest in Western Shore Unit
11.00% interest in New Ross Unit
During 2016, the Municipality incurred costs payable of $18,362 (2015 - $23,367) to the Lunenburg County Regional
Housing Authority as its share of operations.
South Shore Regional Library board - 17.94% interest
During 2016, the Municipality paid $68,035 (2015 - $68,035) to the South Shore Regional Library Board.
3. Contributions to Provincial Government Departments & Agencies
Corrections Contribution
During 2016, the Municipality paid $236,441 (2015 - $238,360) as its share of operations towards corrections
facilities in Lunenburg County.
Education Contribution
The required contribution to the South Shore Regional School Board is calculated using the mandatory municipal
education rate (set by the Minister of Education) times the Municipality's uniform assessment. For 2015/16 the
education tax rate of $.30480 (2014/15 - $.30480) per $100 of uniform assessment times the uniform assessment of
$1,459,018,213 (2014/15 - $1,424,322,673) for a total amount paid of $4,447,088 (2014/15 - $4,341,336).
Assessment Services Contribution
The required contribution for assessment services is calculated first using an amount, set by the Province, to be
recovered from all municipal units for 2015/16 $17,090,000 (2014/15 - $17,090,000). Fifty percent of this recovery
amount is allocated among municipal units using each unit's uniform assessment as a percentage of provincial
uniform assessment. The other fifty percent is allocated using each unit's number of assessment accounts as a
percentage of the provincial assessment accounts. During 2015/16 the Municipality paid $341,463 (2014/15 -
$342,922) to the Province for assessment services.
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Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
4. Receivables 2016 2015
Taxes receivable - rate roll:2014
Current and
Year 2015 Prior Total Total
Balance,
beginning of year $- $ 879,810 $ 363,880 $ 1,243,690 $ 1,109,788
Collections for other
governments 1,482,269 - - 1,482,269 1,458,507
Current year's levy 13,817,059 - - 13,817,059 13,473,158
15,299,328 879,810 363,880 16,543,018 16,041,453
Deduct
Current year's
collections 14,208,886 615,226 268,911 15,093,023 14,554,806
Reduced taxes 244,780 - - 244,780 233,775
Write-offs 16,088 760 3,145 19,993 9,182
14,469,754 615,986 272,056 15,357,796 14,797,763
Balance,
end of year
$ 829,574 $ 263,824 $ 91,824 1,185,222 1,243,690
Allowance for uncollectible taxes & unresolved assessments (92,642) (69,999)
Taxes receivable - interest 108,457 119,937
Billing receivable - water utility (42) (42)
HST receivable 176,094 154,208
Due from Federal Government - -
Due from Provincial Government 196,461 222,934
Due from other local governments 51,096 19,949
Landfill receivable 238,855 358,249
Other 344,742 332,950
Balance, end of year $ 2,208,243 $ 2,381,876
Included in other receivables is a loan receivable in the amounts of $102,000 (2015 - $136,000) and $106,200 (2015 - $141,600)
receivable from the residents serviced by the former Mill Cove Water Utility and the Aspotogan Heritage Trust respectively. The
amounts receivable are for construction of private wells as agreed upon on the decommissioning of the Mill Cove Water Utility.
The amount is scheduled to be repaid by residents over the next 5 years through collection of area rates and over the next four
years from the Aspotogan Heritage Trust.
5. Deferred revenue
Funds received with specific spending criteria and stipulations that result in a liability, are recorded in deferred revenue until these
funds are spent on eligible expenditures.
Prepayment of Taxes 102,587
Other deferred revenue 192,201
Total Deferred Revenue $ 294,788
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Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
6. Long term debt 2016 2015
Capital asset loans
$ 130,664 $ 163,330
625,000 687,500
550,000 600,000
621,182 684,966
236,800 296,000
- 381,200
278,600 557,200
441,000 504,000
567,200 680,850
3,674,667 4,005,000
3,000,000 -
$ 10,125,113 $ 8,560,046
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Municipal Finance Corporation debenture, bearing interest from 5.45% - 5.75%,
repayable in annual instalments of $32,667 plus interest, maturing in 2020. The original
debenture of $490,000 was taken out in 2004 for Recreation and Culture use.
Municipal Finance Corporation debenture, bearing interest from 4.44% - 4.83%,
repayable in annual instalments of $62,500 plus interest, maturing in 2021. The original
debenture of $1,250,000 was taken out in 2006 for environmental health services use.
Municipal Finance Corporation debenture, bearing interest from 4.285% - 4.590%,
repayable in annual instalments of $50,000 plus interest, maturing in 2022. The original
debenture of $1,000,000 was taken out in 2007 for environmental health services use.
Municipal Finance Corporation debenture, bearing interest from 1.330% - 2.979%,
repayable in annual instalments of $113,650 plus interest, maturing in 2024. The original
debenture of $794,500 was taken out in 2013 for environmental health services use.
Municipal Finance Corporation debenture, bearing interest from 1.011% - 1.833%,
repayable in annual instalments of $600,000 plus interest, maturing in 2021. The original
debenture of $3,000,000 was taken out in 2016 for environmental health.
Municipal Finance Corporation debenture, bearing interest from 1.245% - 3.792%,
repayable in annual instalments of $330,333 plus interest, maturing in 2030. The original
debenture of $4,005,000 was taken out in 2015 for environmental health and
environmental development services use.
Municipal Finance Corporation debenture, bearing interest from 4.565% - 5.480%,
repayable in annual instalments of $63,784 plus interest, maturing in 2024. The original
debenture of $1,067,670 was taken out in 2008 for environmental health services use.
Municipal Finance Corporation debenture, bearing interest from 3.212% - 4.889%,
repayable in annual instalments of $59,200 plus interest, maturing in 2020. The original
debenture of $592,000 was taken out in 2009 for environmental health and
transportation services use.
Municipal Finance Corporation debenture, bearing interest from 3.15% - 3.430%,
repayable in annual instalments of $381,200 plus interest, maturing in 2016. The original
debenture of $1,906,000 was taken out in 2010 for environmental health services use.
Municipal Finance Corporation debenture, bearing interest from 2.491% - 3.115%,
repayable in annual instalments of $278,600 plus interest, maturing in 2017. The original
debenture of $1,393,000 was taken out in 2011 for environmental health services use.
Municipal Finance Corporation debenture, bearing interest from 1.905% - 3.480%,
repayable in annual instalments of $63,000 plus interest, maturing in 2023. The original
debenture of $630,000 was taken out in 2012 for environmental health and general
government services use.
DR
A
F
T
Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
6. Long term debt (continued)2016 2015
Other - payable on behalf of other local governments
Demand loan, bearing interest at 5.75%
repayable in annual instalments of $3,000 plus interest
maturing in 2018.$- $ 7,695
- 7,695
$ 10,125,113 $ 8,567,741
Principal repayments during the next five years are due as follows:
2017 $ 1,653,733
2018 $ 1,375,133
2019 $ 1,375,133
2020 $ 1,306,733
2021 $ 1,432,367
All long term debt outstanding at year end has been properly authorized by Service Nova Scotia and Municipal
Relations.
Interest expensed on long term debt during the year was $285,751 (2015 - $270,441).
20
DR
A
F
T
Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
7. Capital assets Opening Cost Additions Disposals Transfers Ending Cost
Buildings - Plants $ 6,923,079 $ 124,038 $ - $ 930,192 $ 7,977,309
Electronic Data Equipment 888,443 30,871 - - 919,314
Lagoons - 113,516 113,516
Land 1,747,498 3,963 (55,000) - 1,696,461
Land Improvements 1,861,848 134,176 - - 1,996,024
Landfill 11,429,039 409,186 - 17,560 11,855,785
Machinery and Equipment 3,152,219 72,335 - - 3,224,554
Municipal Buildings 2,715,494 - - - 2,715,494
Sewer Lines 7,222,091 82,711 - - 7,304,802
Sidewalks 2,483,122 - - - 2,483,122
Small Equipment 280,966 22,020 - - 302,986
Streets, Roads & Curbs 5,599,773 41,669 - - 5,641,442
Vehicles 357,500 34,585 - - 392,085
Wharves 154,749 - - 36,461 191,210
Wind Turbine 5,088,198 35,695 - - 5,123,893
Work in Progress 1,111,763 914,030 (77,425) (984,213) 964,155
$ 51,015,782 $ 2,018,795 $ (132,425) $- $ 52,902,152
Opening Amortization Ending
Accumulated During Amortization Accumulated
Amortization the Year on Disposals Amortization
Buildings - Plants $ 4,616,353 $ 251,318 $ - $ 4,867,671
Electronic Data Equipment 634,198 59,283 - 693,481
Lagoons - 11,352 11,352
Land - - - -
Land Improvements 832,235 103,656 - 935,891
Landfill 8,747,490 699,938 - 9,447,428
Machinery and Equipment 1,960,667 380,777 - 2,341,444
Municipal Buildings 1,067,310 68,302 - 1,135,612
Sewer Lines 4,971,573 146,022 - 5,117,595
Sidewalks 1,112,963 120,738 - 1,233,701
Small Equipment 274,325 6,622 - 280,947
Streets, Roads & Curbs 3,257,795 161,838 - 3,419,633
Vehicles 291,969 29,044 - 321,013
Wharves 85,702 7,648 - 93,350
Wind Turbines 275,542 256,393 - 531,935
$ 28,128,122 $ 2,302,931 $- $ 30,431,053
NBV 2016 NBV 2015
Buildings - Plants $ 3,109,638 $ 2,306,726
Electronic Data Equipment 225,833 254,245
Lagoons 102,164 -
Land 1,696,461 1,747,498
Land Improvements 1,060,133 1,029,613
Landfill 2,408,356 2,681,549
Machinery and Equipment 883,110 1,191,552
Municipal Buildings 1,579,882 1,648,184
Sewer Lines 2,187,207 2,250,518
Sidewalks 1,249,421 1,370,159
Small Equipment 22,039 6,641
Streets, Roads & Curbs 2,221,809 2,341,978
Vehicles 71,072 65,531
Wharves 97,859 69,047
Wind Turbines 4,591,958 4,812,656
Work in Progress 964,155 1,111,762
$ 22,471,097 $ 22,887,659
21
DR
A
F
T
Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
8. Accumulated Surplus
2016 2015
Investment in Capital Assets
Balance, beginning of year $ 12,140,149 $ 12,284,620
Capital fund acquisitions 2,018,795 3,255,155
Capital fund write off (132,425) -
Debt proceeds (3,450,738)(5,810,263)
Repayment of debt 3,710,913 4,623,689
Repayment of capital reserve loan - 3,653
Amortization (2,302,931)(2,216,705)
Investment in Capital Assets
Balance, end of year $ 11,983,763 $ 12,140,149
Reserve Funds 9,095,726 4,807,642
Unrestricted Surplus (359,119) 1,859,598
Accumulated Surplus $ 20,720,370 $ 18,807,389
Included in the cost of capital acquisitions was $64,846 of interest paid on temporary borrowing for capital additions.
9. District School Board
On January 31, 1982, the Municipality of the District of Chester joined with the other Municipality
and Towns of Lunenburg County to form the South Shore District School Board.
Under the agreement, all school buildings on hand at December 31, 1981, will remain assets of
the Municipality, but will be under the control of the District School Board until such time as the
Board no longer requires the asset for school purposes. At that time, control will revert to the Municipality.
The South Shore District School Board was subsequently amalgamated with other boards to become the South Shore
Regional School Board.
10. Pension plans
Defined Contribution Plan
The Municipality of the District of Chester currently makes contributions to a pension plan on
behalf of employees who have opted to participate in the plan. The pension plan is a defined
contribution plan and is administered by Standard Life Assurance Company on behalf of the Municipality.
Contributions to this plan are shared by the Municipality and its employees with both contributing 5% of
base salary. During the year the municipality contributed $135,118 (2015 - $120,481) to the pension plan.
22
DR
A
F
T
Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
11. Landfill closure costs
Landfill closure costs include estimated expenses for capping the cell sites as well as ongoing
environmental monitoring and care. The liability for closure costs is accrued each year based on
the total tonnes of garbage delivered to the landfill compared to the estimated tonnes of
landfill capacity. The estimated total of landfill closure and post closure costs at the start of
the second generation landfill was $6,755,143. Management continued the process of revisiting
the landfill closure and post closure costs during the current year. The Municipality uses
an engineering report dated July 2014 to update estimated landfill closure and post closure costs.
Management will continue to monitor its estimate in future years. Based on information currently
available, management estimates that the total landfill closure and post closure costs are
$13,284,150 when site capacity is completely utilized. The total liability recognized to date of
$3,763,618 is based on the capacity of the site utilized to date. The remaining $9,520,532
will be recognized as the landfill capacity is utilized each year.
The estimated remaining capacity of the site is 450,210 tonnes which is currently expected
to be filled over the next 12 years.
A portion of the total current cost of landfill closure and post-closure care is being transferred
into the Special Reserve Fund - Capital Reserve Section in each period the landfill accepts
solid waste in the amount of $550,000 per year. The total amount for landfill closure costs
in reserve is $4,172,779.
The estimated time for post closure care is 25 years.
Estimated closure and post closure costs as well as landfill capacity are examined annually.
The calculated liability is revised annually based on the capacity of the landfill utilized during the year
and any revisions for estimated closure and post closure costs. Any changes in the estimates used
to calculate the accrued landfill closure and post closure costs, including cost, total capacity and
discount rate, could result in a material change to the financial statements.
12. Commitments
Solid Waste
The Municipality of the District of Chester has contractually entered into agreements with the
Valley Region Solid Waste Authority, the Town of Lunenburg and the Lunenburg Regional Solid
Waste Management Committee to accept solid waste at its second generation landfill site for the
next 11 years. Fees charged to Valley Region Solid Waste Authority are a proportionate share of
operating costs calculated annually on the basis of tonnes delivered to the site as a percentage
of total tonnes accepted from all sources. Fees charged to the Town of Lunenburg and the Lunenburg
Regional Solid Waste Management Committee are based on a per tonne charge which is adjusted
annually for inflation. The Municipality of the District of Chester collects a host community fee from users
based on the number of tonnes delivered to the landfill site.
In order to fulfill the terms associated with these arrangements it is estimated the Municipality
will be required to complete construction of two solid waste cells for the duration of the agreements.
Waste Collection
During the prior year, the Municipality signed a contract for waste collection services with a 5 year term.
Total payments remaining over the next 4 years amount to $2,909,910 plus HST.
23
DR
A
F
T
Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
13. Remuneration
Councilor Salary Mileage Expenses Total
Brad Armstrong $ 18,621 $ 152 $- $ 18,773
Sharon Church-Cornelius 18,621 644 - 19,265
Tina Connors 18,621 4,219 180 23,020
Robert Myra 18,621 2,059 494 21,174
Floyd Shatford 21,282 1,707 33 23,022
Andre Veinotte 18,621 - 353 18,974
Allen Webber 39,238 1,044 - 40,282
Staff
Tammy Wilson 143,231 2,034 1,127 146,392
$ 296,856 $ 11,859 $ 2,187 $ 310,902
14. Segmented Information
The Municipality of the District of Chester is a diversified municipal unit that provides a wide range of services to
it's citizens. For management reporting purposes the Municipality's operations and activities are organized and
reported by fund. Funds were created for the purpose of recording specific activities to attain certain objectives in
accordance with special regulations, restrictions or limitations.
Municipal services are provided by departments and their activity is reported in these funds. The services provided
by these departments are as follows.
General government services
This department is responsible for the overall financial and local government administration. Its tasks include tax
billings and payments, accounts payable and receivables, budgets and financial statements, the Municipal
Government Act, administration and maintenance of bylaws and change of address.
Protective services
This department is responsible for overseeing police and legal services, animal control, fire protection issuing
building permits and fire safety inspections.
Transportation servicers
This department is responsible for the development and maintenance of roads, sidewalks and street lighting.
Environmental health services
This department is responsible for the maintenance and operations of waste and sewer services provided to
residents and other customers. Its tasks include waste collection, recycling, composting and sewer hook-up.
Environmental development services
This department is responsible for planning and development within the municipality. Its tasks include operations
of the wind turbine, issuing development permits, developing strategies, economic development and planning reports.
Recreational and cultural services
This department is responsible for promoting and offering recreation opportunities and activities to the
Municipality's residents.
24
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)
(1
,
5
5
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,
0
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9
)
(1,467,153)
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(
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$
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4
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$
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25
DR
A
F
T
Municipality of the District of Chester
Notes to the Consolidated Financial Statements
March 31, 2016
15. Loan guarantees
The Municipality has guaranteed a loan for the Hubbards and District Fire Commission for the purchase of a
fire vehicle in the amount of $350,000.
The balance outstanding as of March 31, 2016 is $117,456 (2015 - $147,042). Interest is calculated at prime and
principal payments are $29,586 per year. The loan matures on June 4, 2019.
16. Contingency
The Municipality is required to comply with new environmental legislation related to waste water treatment. As a result
the Municipality is required to complete upgrades to their current waste water treatment system over the next 4 years.
Currently the Municipality has not entered into any contracts to complete the necessary upgrades. Internal engineering
staff have estimated that the costs to be incurred over the next four years will be approximately $3,700,000.
17. Comparative figures
Certain of the 2015 comparative figures have been reclassified to conform to the financial statement presentation
adopted for the current year.
26
DRAFT
Mu
n
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69%
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2
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1
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DR
A
F
T
Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
1a. Reliance on Transfers
2016 2015 2014
Transfers from other governments
Transfers from Federal and Provincial
governments and agencies
Unconditional 267,821 244,186 252,086
Conditional 126,852 8,774 77,998
394,673 252,960 330,084
Total revenue 16,436,763 15,542,737 14,873,056
Threshold 15% or less 2.40% 1.63% 2.22%
Met Met Met
1b. Reliance on Transfers
2016 2015 2014
Transfers from other governments
Transfers from Federal and Provincial
governments and agencies
Unconditional 267,821 244,186 252,086
Conditional 126,852 8,774 77,998
Grants for capital projects 765,849 1,015,882 1,646,051
1,160,522 1,268,842 1,976,135
Total revenue 16,436,763 15,542,737 14,873,056
Threshold 15% or less 7.06% 8.16% 13.29%
Met Met Caution
This ratio provides an indication of a municipality’s financial independence.
A low score may indicate higher self‐sufficiency; therefore, might provide council increased autonomy in making decisions.
A high score may indicate a higher dependency on government transfers which could limit councils’ autonomy in making decisions.
Municipalities with transfers exceeding 15% of total revenue are more likely to be restricted in making major financial decisions as a
result of a reliance on intergovernmental transfers and weaker relative fiscal capacity.
DR
A
F
T
Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
2. Uncollected taxes ratio
2016 2015 2014
Total taxes billed but not yet paid 1,185,222 1,243,690 1,109,788
Total taxes billed this year
Collections for other governments 1,482,269 1,458,507 1,474,574
Current year's levy 13,817,059 13,473,158 13,629,812
15,299,328 14,931,665 15,104,386
Threshold 10% or less of taxes billed 7.75% 8.33% 7.35%
Met Met Met
Municipalities utilize a number of tools to ensure that property taxes are collected on a timely basis. Failure to collect taxes can
significantly impact actual revenue, cash flow, and thereby could hinder their ability to provide services.
It is important to identify increasing uncollected taxes early in order to improve the municipality's collections process. The potential
lost revenue could threaten the financial health of the municipality.
A low percentage indicates the municipality is adequately managing tax revenue collection.
A high percentage may indicate the municipality is experiencing difficulty monitoring and collecting overdue tax accounts.
Because the amount of uncollected taxes can accumulate over several years, it is possible to exceed 100% uncollected taxes in
situations of extreme financial distress. While municipalities must be diligent with collecting revenue, they must also be cognizant of
their economic climate. High levels of unemployment or a high tax burden ratio may contribute to high scores on this indicator.
DR
A
F
T
Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
3. Three‐Year Change in Tax Base Ratio
2016 2015 2014
Tax base this year
Residential ($), with cap adjustments 1,376,536,000 1,326,107,800 1,289,963,500
Commercial ($) 90,514,000 87,032,900 86,817,000
Resource ($), with cap adjustments 42,802,500 41,984,400 42,587,400
1,509,852,500 1,455,125,100 1,419,367,900
Tax base 3 years before
Residential ($), with cap adjustments 1,250,270,000 1,187,815,700 1,128,912,700
Commercial ($) 86,242,000 82,866,300 78,172,900
Resource ($), with cap adjustments 40,830,000 40,172,100 35,851,300
Bus Occupancy ($) 1,009,500 1,024,400 1,670,500
1,378,351,500 1,311,878,500 1,244,607,400
Tax base 3 years before 1,378,351,500 1,311,878,500 1,244,607,400
9.54% 10.92% 14.04%
Nova Scotia CPI Change over prior year
Y1 0.40%1.70%1.20%
Y2 1.70%1.20%2.00%
Y3 1.20%2.00%3.80%
3.30%4.90%7.00%
Threshold exceeds the sum of the NS CPI 6.24%6.02%7.04%
over the previous 3 years Met Met Met
This indicator illustrates the growth in property assessment . Municipalities rely heavily on the property tax to fund services;
therefore, healthy growth in property tax is important to a municipality’s financial position. Uniform assessment is also used in the
calculation of particular municipal grants and contributions, which may impact municipal revenues and expenditures.
A percentage higher than the threshold indicates property assessments are growing faster than the inflation.
A percentage lower than the threshold indicates property assessments are growing slower than inflation.
If growth in assessments does not keep pace with inflation, it is a sign that the municipality may have trouble maintaining the
current service levels without raising the tax rate. A negative percentage indicates a decrease in assessment value, which usually
indicates serious economic concerns in the region, either as a result of the loss of a major employer or persistent economic and
demographic decline.
DR
A
F
T
Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
4. Commercial Assessment Ratio
2016 2015 2014
Value of commercial assessment 90,514,000 87,032,900 86,817,000
Total value of all types of assessment combined
Tax base 1,509,852,500 1,455,125,100 1,419,367,900
Non‐Profit Acreage 130 130 130
Forest property tax
Less than 50,000 acres 109,757 116,552 116,741
50,000 acres and more 21,476 23,023 45,715
1,509,983,863 1,455,264,805 1,419,530,486
Threshold 10% or more of total assessment 5.99%5.98%6.12%
Investigate Investigate Investigate
This indicator provides a measurement of economic activity in the municipality. Commercial tax rates are generally higher than
residential tax rates; therefore, commercial assessment provides more revenue per assessment dollar than other types of
assessment.
A lower percentage indicates that the municipality has a smaller amount of commercial assessment in its total tax base.
A higher percentage indicates that the municipality has a greater amount of commercial assessment in its total tax base.
DR
A
F
T
Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
5. Deficits in the last 5 Years
2016 2015 2014
CY 1,912,981 1,825,287 628,718
PY 1 1,825,287 628,718 602,760
PY 2 628,718 602,760 (287,174)
PY 3 602,760 (287,174) 1,514,638
PY 4 (287,174) 1,514,638 1,136,587
Threshold 1 or less in the last 5 years 111
Met Caution Caution
Deficits are an important indication of financial health for municipalities. All municipalities are required to prepare balanced
operating budgets. Any deficits incurred are required to be repaid in the following budget year.
Several deficits in a short period may indicate financial difficulty. However, results should be interpreted in context; unpredictable
events beyond the control of a municipality can significantly affect its budgeted revenues or expenditures. Further investigation is
required to determine the size and cause of any deficit.
DR
A
F
T
Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
6. Budgeted Expenditures Accuracy
2016 2015 2014
Budgeted expenditures
Total expenditures 14,565,956 13,510,536 13,401,305
Amortization (2,216,705) (2,123,185) (2,216,705)
Principal payments 1,439,780 1,112,601 1,057,690
13,789,031 12,499,952 12,242,290
Actual expenditures
Total expenditures 14,523,782 13,717,450 14,244,338
Principal payments 1,442,628 1,113,254 1,112,575
Amortization (2,302,931) (2,216,705) (3,423,422)
Recovery on Landfill Accrual ‐ ‐ 635,585
‐ ‐ (761,710)
‐ ‐ (140,082)
13,663,479 12,613,999 11,667,284
Budgeted expenditures 13,789,031 12,499,952 12,242,290
Between ‐5% and 5% (inclusive) 0.91%‐0.91% 4.70%
Met Met Caution
It is important that municipalities are able to accurately project revenues and expenditures. Difficulty projecting revenues and
expenditures may lead to future deficits, and can make longer term budgeting decisions and strategic planning challenging.
The larger the number (either positive or negative), the bigger the discrepancy between budgeted and actual expenditures.
A negative number means that actual expenditures were greater than budgeted.
A positive number means that actual expenditures were less than budgeted.
DR
A
F
T
Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
7. Liquidity Ratio
2016 2015 2014
Short term assets
Cash and cash equivalents 12,731,294 9,379,951 7,444,564
Receivables 2,208,243 2,381,876 2,136,644
Prepaids 101,989 42,614 152,939
15,041,526 11,804,441 9,734,147
Short term liabilities
Short term borrowings 450,738 2,275,980 3,984,806
Payables and accruals 2,168,255 1,715,973 1,719,775
Deferred revenue 294,788 335,288 656,209
Current portion of long term debt 1,653,733 1,437,933 1,112,601
4,567,514 5,765,174 7,473,391
Threshold of 1 or more 3.29 2.05 1.30
Met Met Caution
Liquidity is a key short term financial performance score. Low liquidity scores can indicate a cash flow problem, and may indicate
concern in other areas such as revenue collection.
A liquidity score below 1.0 indicates that the municipality has less cash and assets that are easily converted to cash on hand than
the amount required to pay current obligations.
A municipality with an exceptionally high liquidity score may be better served by investing in instruments that will earn interest
revenue. Liquidity varies with the day‐to‐day operations of a municipality, and is reported based on the last day of the fiscal year.
This point is just prior to the next year’s tax levy, so cash on hand is likely to be at its lowest point. As a result, the liquidity score is
likely conservative compared to other times throughout the fiscal year.
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Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
8. Operating Reserves Ratio
2016 2015 2014
Reserve fund balance 9,095,726 4,807,642 3,300,540
Total operating expenditures
Total expenditures 14,523,782 13,717,450 14,244,338
Principal payments 1,442,628 1,113,254 1,112,575
Amortization (2,302,931) (2,216,705) (3,423,422)
‐ ‐ (761,710)
‐ ‐ (140,082)
Total expenditures 13,663,479 12,613,999 11,031,699
Threshold 5% or more 66.57% 38.11% 29.92%
Met Met Met
This indicator shows the total value of funds held in operating reserves compared to a single year’s operating budget. Reserves can
play an important role in prudent budget planning. To ensure that the municipality is prepared should contingencies arise, the NS
Municipal Finance Corporation recommends it holds 5% or more of the operating budget in operating reserves.
A high percentage indicates more funds are held in operating reserves which may indicate financial strength.
A low percentage may not necessarily indicate a financially weak municipality. It may simply reflect council policy to keep tax rates
at a minimum, rather than building reserves.
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Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
9. Debt Service
2016 2015 2014
Total Debt Payments
Principal paid on capital asset loans 1,434,933 1,109,601 1,098,415
Principal paid on behalf of other local governments 7,695 3,653 14,160
Interest paid on long term debt 285,641 270,441 220,245
1,728,269 1,383,695 1,332,820
Total own source revenue
Taxes 10,326,442 9,819,103 9,141,575
Grants in lieu of taxes 169,480 168,260 166,389
Sales of services 3,851,336 3,415,138 2,673,758
Other revenue from own sources 813,566 765,548 770,992
Water utility ‐ 2,851 40,390
Interest 103,515 91,641 96,433
15,264,339 14,262,541 12,889,537
Threshold 15% or less 11.32%9.70%10.34%
Caution Met Met
Municipalities are not allowed to incur debt as a result of operating deficits, but they are allowed to borrow funds to
purchase/construct capital assets. The debt service ratio provides an indication of how much of a municipality’s revenue is devoted
to debt repayment. Own source revenue is used instead of total revenue to allow analysis of only the revenue within council’s
control.
A high number may indicate the municipality has borrowed a large amount debt. This could limit its ability to borrow in the future,
and paying the debt expense will tie up operating revenue. However, it is important to note that a municipality with an aggressive
debt repayment schedule will have a higher debt service ratio due to the larger principal payments.
A low number may indicate that the municipality has deferred capital projects to keep budgets low. This could negatively impact
asset planning and the quality of infrastructure in the community. Additional investigation into the municipality’s debt management
policies should be made before drawing conclusions regarding it’s responsible debt and capital asset management performance.
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Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
10. Outstanding Debt Ratio
2016 2015 2014
Total outstanding long term debt 10,125,113 8,567,741 5,675,994
Total tax base 1,509,852,500 1,455,125,100 1,419,367,900
Threshold 3.5% or less of tax base 0.67% 0.59% 0.40%
Met Met Met
Municipalities are not allowed to incur debt as a result of operating deficits, but they are allowed to borrow for the purchase and
construction of capital assets. This indicator gives an indication of how much debt a municipality is carrying in relation to their tax
base.
A high percentage may indicate that a municipality has a high debt load relative to their revenue base and are limited in the
amount of new infrastructure investments they can make. It may also reflect that the municipality has recently made significant
investments in infrastructure which would increase performance on the undepreciated assets indicator.
A low percentage may indicate that a municipality is achieving its long‐term infrastructure planning without a high reliance on
borrowing. It may also indicate that a municipality has not been making significant investments in capital assets. Additional
investigation into the municipality’s debt management policies should be made before drawing conclusions regarding a
municipality’s responsible debt and capital asset management performance.
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Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
11a. Undepreciated Assets Ratio
2016 2015 2014
Net book value of all capital assets 22,471,097 22,887,659 21,849,209
Total original cost to purchase the assets 52,902,152 51,015,782 47,760,627
Threshold 60% or more of Net Book Value 42.48% 44.86% 45.75%
Investigate Investigate Investigate
11b. Undepreciated Assets Ratio Windmill and Landfill Removed
2016 2015 2014
Net book value of all capital assets 22,471,097 22,887,659 21,849,209
Net book value of wind turbine (4,591,958) (4,812,656) ‐
Net book value of landfill (2,408,356) (2,681,549) (548,489)
15,470,783 15,393,454 21,300,720
Total original cost to purchase the assets 52,902,152 51,015,782 47,760,627
Total original cost of wind turbine (5,123,893) (5,088,198) ‐
Total original cost of landfill (11,855,785) (11,429,039) (8,606,621)
35,922,474 34,498,545 39,154,006
Threshold 60% or more of Net Book Value 43.07% 44.62% 54.40%
Investigate Investigate Investigate
This indicator provides an estimate of the useful life left in the municipality’s capital assets. Municipalities across Canada are facing
significant infrastructure challenges. Therefore, it is important to keep informed of the age and condition of its capital assets to
ensure they are making timely and appropriate investments.
A lower percentage indicates older infrastructure.
A higher percentage indicates newer infrastructure.
Caution should be used when interpreting this indicator: Data includes all capital assets of the municipality; therefore, new
purchases that expand services can mask highly depreciated assets in other areas. Additionally, the indicator provides an
accounting estimate only, and not an assessment of the condition of the assets. Greater analysis of the condition of assets and
replacement plans is needed to draw conclusions regarding a municipality’s asset management planning.
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Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
12. Five‐year Capital Purchases Ratio
2016 2015 2014
Annual investment in capital assets
Y1 2,018,795 3,255,155 7,297,000
Y2 3,255,155 7,297,000 2,342,146
Y3 7,297,000 2,342,146 2,688,147
Y4 2,342,146 2,688,147 2,315,112
Y5 2,688,147 2,315,112 3,012,435
17,601,243 17,897,560 17,654,840
Annual depreciation on capital assets
Y1 2,302,931 2,216,705 3,423,422
Y2 2,216,705 3,423,422 1,786,800
Y3 3,423,422 1,786,800 2,092,283
Y4 1,786,800 2,092,283 1,905,307
Y5 2,092,283 1,905,307 1,911,686
11,822,141 11,424,517 11,119,498
Threshold 100% or more 148.88%156.66%158.77%
Met Met Met
This indicator provides a comparison of how fast a municipality is investing in capital assets and how quickly their assets are aging.
Regular capital investment is a key part of sound asset management and is necessary to mitigate risk of interrupted service delivery
as a result of failing infrastructure.
A percentage less than 100% indicates that the municipality’s assets are aging faster than it is investing in new assets.
A percentage more than 100% indicates that capital investment is at least as high as annual depreciation.
A very high percentage usually indicates that the municipality made a major capital investment within the 5‐year period.
Caution should be used when interpreting this indicator: Municipalities may be taking other approaches such as building capital
reserves to address the need to replace capital assets. Additional information is required to gain a complete understanding of a
municipality’s capital investment and asset management plans.
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Municipality of the District of Chester
Municipal Indicators Summary ‐ For Discussion Purposes Only
March 31, 2016
These calculations are prepared from consolidated financial information for information purposes only.
Therefore, these calculations may not agree with provincial calculations released at a future date.
13a. Five‐year Contributions to Capital Reserves Ratio
2016 2015 2014
Total contributions to capital reserves
Y1 803,450 550,000 332,500
Y2 550,000 332,500 320,000
Y3 332,500 320,000 448,450
Y4 320,000 448,450 347,250
Y5 448,450 347,250 320,000
2,454,400 1,998,200 1,768,200
Annual depreciation on capital assets
Y1 2,302,931 2,216,705 3,423,422
Y2 2,216,705 3,423,422 1,786,800
Y3 3,423,422 1,786,800 2,092,283
Y4 1,786,800 2,092,283 1,905,307
Y5 2,092,283 1,905,307 1,911,686
11,822,141 11,424,517 11,119,498
Threshold 10% or more 20.76%17.49%15.90%
Met Met Met
13b. Five‐year Contributions to Capital Reserves Ratio Landfill Removed
2016 2015 2014
Total contributions to capital reserves
Y1 483,450 230,000 12,500
Y2 230,000 12,500 ‐
Y3 12,500 ‐ 128,450
Y4 ‐ 128,450 27,250
Y5 128,450 27,250 ‐
854,400 398,200 168,200
Annual depreciation on capital assets
Y1 1,602,993 1,527,346 1,298,622
Y2 1,527,346 1,298,622 1,174,554
Y3 1,298,622 1,174,554 1,103,412
Y4 1,174,554 1,103,412 1,098,135
Y5 1,103,412 1,098,135 1,114,388
6,706,927 6,202,069 5,789,111
Threshold 10% or more 12.74%6.42%2.91%
Met Investigate Investigate
This indicator shows how quickly a municipality is accumulating capital reserves compared to how quickly their assets are aging.
Because the cost to replace an asset will be higher than the original cost to purchase the asset (due to new technology, new
standards, and inflation), municipalities should be accumulating reserves in anticipation of the replacement of capital assets and
plans for new infrastructure.
A lower percentage indicates a slower rate of transfers to reserves compared to depreciation.
A higher percentage indicates a faster rate of contribution, which may indicate greater financial capacity and good capital and
asset management.
Caution should be used when interpreting this indicator: Municipalities use multiple approaches to capital planning and investment,
including capital purchasing from operating and borrowing to address capital funding. Additional information is required to gain a
complete understanding of a municipality’s capital investment and asset management plans.
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August 4, 2016
Warden Allen Webber
Municipality of the District of Chester
151 King Street
Chester NS B0J 1J0
Dear Warden Webber:
Re: Internal control findings from the 2016 audit
Receiving observations and findings on your financial reporting processes and controls is one
of the benefits of an annual financial statement audit. Over the past years, Grant Thornton LLP
began implementing new processes and technology to address the changing standards of
conducting a financial statement audit. This approach includes an increased emphasis on
internal control. Our procedures identified a number of items that we need to bring to your
attention.
Our audit is planned and conducted to enable us to express an audit opinion on the annual
financial statements. The matters dealt with in this letter came to our attention during the
conduct of our normal examination, and as a result, this letter does not necessarily include all
matters that would be uncovered through a more extensive or special engagement.
The standards of the public accounting profession require us to report annually to you our
findings on certain weaknesses and deficiencies in your internal controls. We have categorized
our findings as follows:
• Material weaknesses (individual or aggregated deficiencies that could result in a
material misstatement in the financial statements due to fraud or error)
• Significant deficiencies
• Other deficiencies and advisory comments
Material weaknesses
There were no material weaknesses identified during audit procedures.
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Significant deficiencies
1. Segregation of Duties
The Municipality continues to improve its segregation of duties controls, as evidenced by
placing access rights on accounting software that control who can post general journal entries.
However, the Municipality still has some duties that are not adequately segregated. The staff of
the finance department performs various tasks, such as approvals and reconciliations, for which
they prepared and approved the original transactions or entries. Ideally, the following processes
should be performed by different individuals: initiation, recording, reporting, authorization and
custody of assets. A lack of segregation of duties increases the risk of errors and fraud going
undetected. The Municipality has mitigated this concern from previous years by utilizing
additional staff.
As the Municipality continues to move forward and address changes in its internal controls and
internal processes, we are available to assist the Municipality in designing new processes to help
meet its changing needs.
Other deficiencies and advisory comments
1. Financial reporting process
The year end audited financial statements are prepared with the assistance of Grant Thornton
during the audit process, which usually results in adjustments to apply Canadian Public Sector
accounting standards. The monthly internal budget to actual trial balances prepared for
department heads and administrative staff may be sufficient for expenditure controls and
decision making purposes. However, these statements may not have amounts recorded such as
amortization and accruals in accordance with Canadian Public Sector Accounting Standards.
While the audit process itself provides management with a level of assurance regarding the
above, this only occurs at year end.
It is management’s responsibility to weigh the costs of implementing controls against the
benefits that the controls will achieve. The purpose of this letter is to provide you with the
information related to the identified risks so that you can make the necessary decisions.
Observations not addressed from the prior year have been repeated to allow management to
challenge past judgments in the current operating environment.
Often there are practical ways for Municipalities, such as yours, to improve their financial
reporting process. As your auditor and advisor, it would be a pleasure to further discuss our
findings with you and provide you with appropriate guidance to improve your controls.
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The matters discussed herein are those that have been noted as of our audit date, July 14, 2016.
In addition, this communication is prepared solely for the information of management and is
not intended for any other purposes; we accept no responsibility to a third party who uses this
communication.
To complete our files, please provide us with a copy of your response to our comments.
Thank you for the opportunity to contribute to the present and future success of the
Municipality of the District of Chester.
Yours sincerely,
Grant Thornton LLP
Jeff D. Sabean, CPA, CA, CBV
Partner