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HomeMy WebLinkAboutFinancial Statements - 2023THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Financial Statements December 31, 2023 THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Financial Statements Year Ended December 31, 2023 Table of Contents PAGE Management Responsibility for Financial Reporting 1 Independent Auditors' Report 2 - 3 Consolidated Statement of Financial Position 4 Consolidated Statement of Operations and Accumulated Surplus 5 Consolidated Statement of Changes in Net Financial Assets 6 Consolidated Statement of Remeasurement Gains and Losses 7 Consolidated Statement of Cash Flows 8 Notes to the Consolidated Financial Statements 9 - 25 Consolidated Schedule of Segment Disclosure 26 - 27 INDEPENDENT AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of The Corporation of the Municipality of Bayham : Opinion We have audited the consolidated financial statements of The Corporation of the Municipality of Bayham, which comprise the consolidated statement of financial position as at December 31, 2023, and the consolidated statement of operations and accumulated surplus, consolidated statement of changes in net financial assets, consolidated statement of remeasurement gains and losses, and consolidated statement of 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 Municipality's consolidated financial statements present fairly, in all material respects, the financial position of the Municipality as at December 31, 2023, and the results of its operations and its 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 Auditors' Responsibilities for the Audit of the 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. Auditors' 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. - 2 - INDEPENDENT AUDITORS' REPORT (CONTINUED) Auditors' Responsibilities for the Audit of the Consolidated Financial Statements (Continued) 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. 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. St. Thomas, Ontario Graham Scott Enns LLP June 6, 2024 CHARTERED PROFESSIONAL ACCOUNTANTS Licensed Public Accountants - 3 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Statement of Financial Position As At December 31, 2023 2023 2022 $ $ ASSETS FINANCIAL ASSETS Cash 2,509,920 3,182,072 Investments (Note 3)7,742,341 6,266,372 Taxes receivable (Note 4)777,390 594,691 Accounts receivable (Note 5)921,149 1,244,366 11,950,800 11,287,501 LIABILITIES Deferred revenue - obligatory reserve funds (Note 10)589,358 805,318 Accounts payable and accrued liabilities 833,040 876,491 Security and grading deposits 790,347 497,192 Net long-term liabilities (Note 7) 4,387,672 4,609,816 6,600,417 6,788,817 NET FINANCIAL ASSETS 5,350,383 4,498,684 NON-FINANCIAL ASSETS Tangible capital assets (Note 6)59,796,812 58,690,193 Prepaid expenses and inventory 94,576 143,612 59,891,388 58,833,805 ACCUMULATED SURPLUS (NOTE 8) 65,241,771 63,332,489 ACCUMULATED REMEASUREMENT GAINS AND LOSSES (PAGE 7) -- 65,241,771 63,332,489 See accompanying notes to the consolidated financial statements. - 4 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Statement of Operations and Accumulated Surplus Year Ended December 31, 2023 Budget Actual Actual (Note 12)2023 2022 $ $ $ REVENUES Property taxation 5,553,840 5,559,083 5,139,135 Taxation from other governments 189,263 189,263 175,049 User charges 3,012,363 2,994,791 3,155,337 Transfer payments Federal 1,316,361 1,320,761 335,302 Provincial 1,750,500 1,712,301 1,864,441 Other municipalities 508,418 524,688 444,594 Investment income 323,792 469,283 182,117 Penalties and interest on taxes 93,000 81,977 91,422 Recoveries from benefiting landowners 127,000 89,185 100,369 Other 100,867 78,203 147,165 Gain (loss) on disposal of investments -(460,283)- Total Revenues 12,975,404 12,559,252 11,634,931 EXPENSES General government 1,216,419 1,357,818 1,256,610 Protection to persons and property 1,964,986 1,981,182 1,870,154 Transportation services 2,941,145 3,494,155 3,375,512 Environmental services 2,949,902 3,074,329 3,151,198 Health services 54,311 56,465 41,594 Social and family services 7,000 5,300 2,000 Recreation and cultural services 353,377 384,626 401,588 Planning and development 284,237 292,218 276,792 Loss (gain) on disposal of tangible capital assets -3,877 (367,263) Total Expenses (Note 16) 9,771,377 10,649,970 10,008,185 ANNUAL SURPLUS 3,204,027 1,909,282 1,626,746 ACCUMULATED SURPLUS, BEGINNING OF YEAR 63,332,489 63,332,489 61,705,743 ACCUMULATED SURPLUS, END OF YEAR (NOTE 8)66,536,516 65,241,771 63,332,489 See accompanying notes to the consolidated financial statements. - 5 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Statement of Changes in Net Financial Assets Year Ended December 31, 2023 Budget Actual Actual (Note 12)2023 2022 $ $ $ ANNUAL SURPLUS 3,204,027 1,909,282 1,626,746 Acquisition of tangible capital assets (3,109,018)(3,109,018)(2,253,110) Amortization of tangible capital assets 1,986,559 1,986,559 2,243,700 Proceeds on disposal of tangible capital assets -11,963 516,723 Change in prepaid expenses and inventory -49,036 (62,105) Loss (gain) on disposal of tangible capital assets -3,877 (367,263) CHANGE IN NET FINANCIAL ASSETS 2,081,568 851,699 1,704,691 NET FINANCIAL ASSETS, BEGINNING OF YEAR 4,498,684 4,498,684 2,793,993 NET FINANCIAL ASSETS, END OF YEAR 6,580,252 5,350,383 4,498,684 See accompanying notes to the consolidated financial statements. - 6 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Statement of Remeasurement Gains and Losses Year Ended December 31, 2023 2023 2022 $ $ ACCUMULATED REMEASUREMENT GAINS AND (LOSSES), BEGINNING OF YEAR (NOTE 1) (482,154)- Unrealized gains attributable to investments 21,871 - Amounts reclassified to statement of operations through realization of (gain) loss on sale 460,283 - Change in accumulated remeasurement gains 482,154 - ACCUMULATED REMEASUREMENT GAINS AND (LOSSES), END OF YEAR -- See accompanying notes to the consolidated financial statements. - 7 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Statement of Cash Flows Year Ended December 31, 2023 2023 2022 $ $ OPERATING ACTIVITIES Annual surplus 1,909,282 1,626,746 Add (deduct) items not involving cash: Amortization of tangible capital assets 1,986,559 2,243,700 Loss on disposal of investments 460,283 - Loss (gain) on disposal of tangible capital assets 3,877 (367,263) 4,360,001 3,503,183 Change in non-cash items related to operations (Note 16[b]) 223,298 156,954 4,583,299 3,660,137 CAPITAL Acquisition of tangible capital assets (3,109,018)(2,253,110) Proceeds on disposal of tangible capital assets 11,963 516,723 (3,097,055)(1,736,387) INVESTING Purchase of investments (7,029,928)(2,500,000) Redemption of investments 5,349,929 - Investment income reinvested (256,253)(103,523) (1,936,252)(2,603,523) FINANCING Long-term debt repayment (222,144)(228,506) NET CHANGE IN CASH (672,152)(908,279) CASH, BEGINNING OF THE YEAR 3,182,072 4,090,351 CASH, END OF THE YEAR 2,509,920 3,182,072 See accompanying notes to the consolidated financial statements. - 8 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 The Corporation of the Municipality of Bayham (the "Municipality") is a municipality in the Province of Ontario. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act, Municipal Affairs Act and related legislation. 1. CHANGE IN ACCOUNTING POLICIES On January 1, 2023, the Municipality adopted accounting policies to conform to new standards issued under Canadian public sector accounting standards. The Municipality adopted the following standards which had the following impact: PS 1201 - Financial Statement Presentation - resulting in presentation of a new statement of remeasurement gains and losses. This change has been applied prospectively. PS 3280 - Asset Retirement Obligations - require reporting of any asset retirement obligations as tangible capital assets and their liabilities and associated policies. It is managements opinion that no asset retirement obligations exist as at December 31, 2023. This change has been applied prospectively. PS 3450 - Financial Instruments - reporting new disclosures regarding financial instrument risks and the restatement of the opening accumulated surplus. This change has been applied prospectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of the Municipality 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: Reporting Entity The consolidated financial statements include the assets, liabilities, revenues and expenses 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 100% owned or controlled by the Municipality. Consolidated Entities The following local boards are consolidated: - Various Cemetery Boards Proportionate Consolidation The Elgin Area Primary Water Board and Port Burwell Water Board have been consolidated on a proportionate basis. The Water Boards are proportionately consolidated based upon the water flow used by our Municipality in proportion to the entire flows provided by the joint boards. - 9 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Accounting for School Board Transactions Although the Municipality collects taxation on behalf of the School Boards, the taxation, other revenues, expenses, assets and liabilities with respect to the operations of the school boards are not reflected in these statements. Trust Funds Trust funds and their related operations administered by the Municipality are not included in these consolidated financial statements. Basis of Accounting The consolidated financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the creation of a legal obligation to pay. Deferred Revenue Government transfers, contributions and other amounts are received from third parties pursuant to legislation, regulation or agreement and may only be used in the conduct of certain programs, in the completion of specific work. In addition, certain user charges and fees which have been collected but for which the related services have yet to be performed. Revenue is recognized in the period when the related expense are incurred, services preformed. Investments Investment income consists of interest, dividends and realized gains or losses on sale of investments is recognized as revenue in the period when it is earned. Unrealized gains and losses on investments are recognized in the accumulated remeasurement gains and losses until settlement. Once realized, these gains and losses are recognized as revenue or expenses in the consolidated statement of operations. When required by funding government or related Act, investment income earned on deferred revenue is added to the investment and forms part of the deferred revenue balance. Financial Instruments The Municipality, upon initial recognition, classifies it's financial instruments into two categories: i. fair value or; ii. cost or amortized cost; Long-term debt is initially recorded at fair value and subsequently measured at amortized cost using the effective interest rate method. Transaction costs related to the issuance of long-term debt are capitalized and amortized over the term of the debt. - 10 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial Instruments (continued) Other financial instruments including cash, accounts receivable, accounts payable and accrued liabilities are initially measured at fair value and subsequently measured at cost. Investments are initially recorded at fair value and subsequently measured at fair value with the fair value determined as follows: i. Level 1 - Fair value measurements are those derived from quoted prices (in active markets); ii. Level 2 - Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the assets, either directly (i.e. as prices) or indirectly (i.e. derived from prices); iii. Level 3 - Fair value measurements are those derived from valuation techniques that include inputs for the asset that are not based on observable data (unobservable inputs). Unrealized gains and losses from changes in the fair value of financial instruments are recognized in the statement of remeasurement gains and losses. All financial assets are tested annually for impairment. When financial assets are impaired, impairment losses are recorded in the statement of operations. Use of Estimates The preparation of consolidated financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. In addition, the Municipality's implementation of the Public Sector Accounting Handbook PS3150 has required management to make estimates of historical cost and useful lives of tangible capital assets. These estimates and assumptions are based on the best information and judgment and may differ significantly from actual results. Government Transfers Government transfers are recognized in the consolidated financial statements as revenues in the financial period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met including performance and return requirements, and reasonable estimates of the amounts can be determined. Any amount received but restricted is recorded as deferred revenue and recognized as revenue in the period in which the resources are used for the purpose specified. In addition, the Municipality periodically receives senior government capital funding in the form of infrastructure grants and receives ongoing funding from both senior levels of government as a result of an allocation of the gas tax funds. - 11 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Non-Financial Assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the Change in Net Financial Assets for the year. i) Tangible capital assets Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets are amortized on a straight-line basis over their estimated useful lives as follows: Building and components 20 to 75 years Vehicles 5 to 25 years Machinery and equipment 5 to 27 years Land improvements 18 to 25 years Plants and facilities 20 to 75 years Roads 20 to 60 years Bridges and other structures 15 to 80 years Underground and other networks 17 to 100 years No amortization is charged in the year of acquisition and a full year of amortization is charged in the year of disposal. Assets under construction are not amortized until the asset is available for productive use. ii) Contributions of tangible capital assets Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and also are recorded as revenue. iii) Works of art and cultural and historic assets Works of art and cultural and historic assets are not recorded as assets in these financial statements. iv) Interest capitalization The Municipality does not capitalize interest costs associated with the acquisition or construction of a tangible capital asset. vi) Inventories of supplies Inventories of supplies held for consumption are recorded at the lower of cost and replacement cost. - 12 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Tax Revenues In 2023, the Municipality received $5,748,346 (2022 - $5,314,184) in property tax revenues for municipal purposes. The authority to levy and collect property taxes is established under the Municipal Act 2001, the Assessment Act, the Education Act, and other legislation. The amount of the total annual property tax levy is determined each year through Council's approval of the annual budget. Municipal tax rates are set annually by Council for each class or type of property, in accordance with legislation and Council-approved policies, in order to raise the revenue required to meet operating budget requirements. Education tax rates are established by the Province each year in order to fund costs of education on a Province-wide basis. Taxation revenues are recorded at the time billings are issued. Additional property tax revenue can be added throughout the year, related to new properties that become occupied, or that become subject to property tax, after the return of the annual assessment roll used for billing purposes. The Municipality may receive supplementary assessment rolls over the course of the year from MPAC that identify new or omitted assessments. Property taxes for these supplementary/omitted amounts are then billed according to the approved tax rate for the property class. Taxation revenues in any year may also be reduced as a result of reductions in assessment value rising from assessment and/or tax appeals. Each year, an amount is identified to cover the estimated amount of revenue loss attributable to assessment appeals, tax appeals or other deficiencies in tax revenue (e.g. uncollectible amounts, write-offs, etc.). Employee Benefit Plans The Municipality accounts for its participation in the Ontario Municipal Employees Retirement System (OMERS), a multi-employer public sector pension fund, as a defined contribution plan. The OMERS plan specifies the retirement benefits to be received by the employees based on the length of service and pay rates. The fund is a contributory defined benefit pension plan. As this is a multi- employer plan, no liability is recorded in the Municipality's consolidated financial statements. The employers contribution to a multi-employer defined benefit plan are expensed as the obligations arise. Environmental Provisions and Contaminated Sites The Municipality may be exposed to litigation or other costs of remediation due to contaminated properties in it's jurisdiction. A liability for remediation is recognized in the financial statements when an environmental standard exists, contamination exceeds the standard, the government is responsible for the remediation and a reasonable estimate of the liability can be made. As at December 31, 2023 there were no properties that the Municipality was responsible to remedy and as such no liability has been accrued. - 13 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Related Party Transactions Related parties exist when one party has the ability to control or has shared control over another party. Individuals that are key management personnel or close family members may also be related parties. Disclosure is made when the transaction or events between related parties occur at a value different from what would have been recorded if they were not related and the transaction could have a material financial impact on the consolidated financial statements. Inter-Entity Transactions Transactions between related parities are recorded at carrying amounts with the exception of the following: i. Transactions in the normal course of business or with fair consideration are recorded at exchange amount; ii. Transfer of an asset or liability at nominal amounts or no consideration ares recorded by the provider at carrying amounts and the recipient has the choice or either carrying amount or fair value; iii. Cost allocations are reported using the exchange amounts and revenues and expenses are reported on a gross basis; iv. Unallocated costs for the provision of goods or services maybe recorded by the provider at cost, fair value or another amount dictated by policy, accountability structure or budget practice. Asset Retirement Obligations The Municipality may be exposed to obligations of remediation associated with their tangible capital assets. If a legal obligation exists of remediation for a tangible capital asset then the Municipality would be required to set up an estimated future cost and liability associated with these obligations. As at December 31, 2023 there were no tangible capital assets that Municipality has controlled, constructed, owned or used that would have a legal obligation of remediation. Future Accounting Pronouncements PS 3400 - Revenue Management is currently evaluating the impact of this accounting standard on future financial statements. This standard establishes a framework to categorize revenues to enhance the consistency of revenue recognition and its measurement. This standard is effective for fiscal years beginning on or after April 1, 2023 which for the Municipality is the December 31, 2024 year end. - 14 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 3. INVESTMENTS Investments are comprised of the following: 2023 2022 $ $ $ $ Cost Market Cost Market Guaranteed investment certificates 7,742,341 7,742,341 -- One fund pooled bond securities --3,720,211 3,238,058 Guaranteed investment certificates --2,546,161 2,546,161 7,742,341 7,742,341 6,266,372 5,784,219 The investments consist of guaranteed investment certificates and cash which are recorded at their fair market value. The certificates mature between February 2024 and October 2024 and yield interest rates from 3.10% to 5.75%. All of the above investments are valued as Level 1 investments. 4. TAXES RECEIVABLE 2023 2022 $ $ Current taxes receivable 570,617 448,663 Arrears taxes receivable 135,417 95,424 Penalties and interest 71,356 50,604 777,390 594,691 5. ACCOUNTS RECEIVABLE 2023 2022 $ $ Accounts receivable 469,531 510,993 Government grants and funding 91,105 232,884 Debentures, interest at 2.97%, due 2034 189,349 207,757 Government remittances receivable 171,164 292,732 921,149 1,244,366 - 15 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 6. TANGIBLE CAPITAL ASSETS December 31, 2023 Disposals and Cost Opening Additions Adjustments Ending Infrastructure Linear - Roadways 46,072,591 941,291 -47,013,882 Linear - Water Services 10,326,535 1,288,772 (15,742)11,599,565 Linear - Waste Water Services 16,546,027 --16,546,027 Infrastructure Total 72,945,153 2,230,063 (15,742)75,159,474 General Land 1,063,805 - -1,063,805 Land Improvements 1,857,073 209,025 -2,066,098 Buildings 11,860,892 24,541 -11,885,433 Machinery and Equipment 4,495,686 103,463 (24,365)4,574,784 Vehicles 2,780,849 52,845 (23,414)2,810,280 General Total 22,058,305 389,874 (47,779)22,400,400 Work in Progress 167,255 490,653 (1,572)656,336 Total Cost 95,170,713 3,110,590 (65,093)98,216,210 Accumulated Amortization Disposals and Opening Amortization Adjustments Ending Infrastructure Linear - Roadways 18,131,271 858,317 -18,989,588 Linear - Water Services 3,546,334 259,704 (15,742)3,790,296 Linear - Waste Water Services 3,922,957 201,726 -4,124,683 Infrastructure Total 25,600,562 1,319,747 (15,742)26,904,567 General Land Improvements 1,040,735 67,332 -1,108,067 Buildings 5,649,867 250,923 -5,900,790 Machinery and Equipment 2,258,856 130,939 (8,525)2,381,270 Vehicles 1,930,500 217,618 (23,414)2,124,704 General Total 10,879,958 666,812 (31,939)11,514,831 Total Accumulated Amortization 36,480,520 1,986,559 (47,681)38,419,398 Net Book Value Opening Ending Infrastructure Linear - Roadways 27,941,320 28,024,294 Linear - Water Services 6,780,201 7,809,269 Linear - Waste Water Services 12,623,070 12,421,344 47,344,591 48,254,907 General Land 1,063,805 1,063,805 Land Improvements 816,338 958,031 Buildings 6,211,025 5,984,643 Machinery and Equipment 2,236,830 2,193,514 Vehicles 850,349 685,576 11,178,347 10,885,569 Work in Progress 167,255 656,336 Total Net Book Value 58,690,193 59,796,812 - 16 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 6. TANGIBLE CAPITAL ASSETS (CONTINUED) December 31, 2022 Disposals and Cost Opening Additions Adjustments Ending Infrastructure Linear - Roadways 43,938,108 2,134,483 -46,072,591 Linear - Water Services 10,317,727 14,372 (5,564)10,326,535 Linear - Waste Water Services 16,546,027 --16,546,027 Infrastructure Total 70,801,862 2,148,855 (5,564)72,945,153 General Land 1,063,805 - -1,063,805 Land Improvements 1,826,468 30,605 -1,857,073 Buildings 12,053,384 30,179 (222,671)11,860,892 Machinery and Equipment 4,345,535 150,151 -4,495,686 Vehicles 2,702,516 175,666 (97,333)2,780,849 General Total 21,991,708 386,601 (320,004)22,058,305 Work in Progress 449,601 151,980 (434,326)167,255 Total Cost 93,243,171 2,687,436 (759,894)95,170,713 Accumulated Amortization Disposals and Opening Amortization Adjustments Ending Infrastructure Linear - Roadways 17,354,512 776,759 -18,131,271 Linear - Water Services 3,292,685 259,213 (5,564)3,546,334 Linear - Waste Water Services 3,721,231 201,726 -3,922,957 Infrastructure Total 24,368,428 1,237,698 (5,564)25,600,562 General Land Improvements 973,417 67,318 -1,040,735 Buildings 5,429,838 296,485 (76,456)5,649,867 Machinery and Equipment 2,135,108 123,748 -2,258,856 Vehicles 1,506,137 518,451 (94,088)1,930,500 General Total 10,044,500 1,006,002 (170,544)10,879,958 Total Accumulated Amortization 34,412,928 2,243,700 (176,108)36,480,520 Net Book Value Opening Ending Infrastructure Linear - Roadways 26,583,596 27,941,320 Linear - Water Services 7,025,042 6,780,201 Linear - Waste Water Services 12,824,796 12,623,070 46,433,434 47,344,591 General Land 1,063,805 1,063,805 Land Improvements 853,051 816,338 Buildings 6,623,546 6,211,025 Machinery and Equipment 2,210,427 2,236,830 Vehicles 1,196,379 850,349 11,947,208 11,178,347 Work in Progress 449,601 167,255 Total Net Book Value 58,830,243 58,690,193 - 17 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 7. LONG-TERM LIABILITIES a) The balance of long-term liabilities reported on the Consolidated Statement of Financial Position is made up of the following: 2023 2022 $ $ TD loan, 2.71%, repayable in blended monthly payments of $27,557, due March 2025 (Project Ojibwa)4,343,940 4,553,818 Consolidated water board debt, interest rates ranging from 1.5% to 3.20%, maturing September 2020 to March 2027 43,732 55,998 4,387,672 4,609,816 Principal repayments are summarized as follows: Tax User Revenue Charges Total 2024 215,309 12,613 227,922 2025 4,128,631 12,890 4,141,521 2026 - 13,181 13,181 2027 - 5,048 5,048 Beyond --- Total 4,343,940 43,732 4,387,672 b) All long-term liabilities issued on or before December 31, 1992 have received approval of the Ontario Municipal Board. Long-term liabilities issued after January 31, 1993 have been approved by by-law. The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs and Housing. c) Interest expense on long-term liabilities in 2023 amounted to $122,076 (2022 - $128,313). - 18 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 8. ACCUMULATED SURPLUS The accumulated surplus balance is comprised of current fund, capital fund, balances in reserves and discretionary reserve funds, unfunded liabilities to be recovered in the future and investment in tangible capital assets. 2023 2022 $ $ SURPLUS Municipality - current fund -- Cemetery boards - current fund 169,987 181,752 Benefiting landowners - current fund (313,418)(103,001) Invested in tangible capital assets - capital fund 59,796,812 58,690,193 Reserves 6,175,074 5,151,453 Reserve funds 3,800,988 4,021,908 69,629,443 67,942,305 AMOUNTS TO BE RECOVERED Net long-term debt (Note 7)(4,387,672)(4,609,816) ACCUMULATED SURPLUS 65,241,771 63,332,489 RESERVES AND RESERVE FUNDS CONSIST OF THE FOLLOWING: 2023 2022 $ $ Reserves set aside for specific purposes by Council: - for working capital 59,096 79,528 - for capital purposes 1,160,411 923,700 - for waterworks purposes 2,479,130 2,586,474 - for debt reduction purposes 1,400,000 300,000 - for other purposes 1,076,437 1,261,751 Total reserves 6,175,074 5,151,453 Reserve funds set aside for specific purposes by Council: - for water system - consolidated 192,095 166,472 - for sanitary sewers 3,305,883 3,366,957 - for recreation and cultural service purposes 303,010 488,479 Total reserve funds 3,800,988 4,021,908 - 19 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 9. TRUST FUNDS Trust funds administered by the Municipality amounting to $254,540 (2022 - $279,084) have not been included in the Consolidated Statement of Financial Position nor have their operations been included in the Consolidated Statement of Operations. 10. DEFERRED REVENUE - OBLIGATORY RESERVE FUNDS A requirement of the public sector accounting principles of the Canadian Institute of Chartered Professional Accountants is that obligatory reserve funds be reported as deferred revenue. This requirement is in place as provincial legislation restricts how these funds may be used and under certain circumstances these funds may be refunded. The balances in the obligatory reserve funds of the Municipality are summarized below: 2023 2022 $ $ Development charges 107,189 31,217 Canada Community Building Fund 252,406 481,021 OCIF 135,456 226,658 Parkland 94,307 66,422 589,358 805,318 11. PENSION AGREEMENTS The Municipality makes contributions to the Ontario Municipal Employees Retirement Fund (OMERS), which is a multi-employer plan, on behalf of its staff. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. Each year, an independent actuary determines the funding status of OMERS Primary Pension Plan (the Plan) by comparing the actuarial value of invested assets to the estimated present value of all pension benefits the members have earned to date. The most recent actuarial valuation of the Plan was conducted December 31, 2023, and the results of this valuation disclosed actuarial liabilities of $136.2 billion in respect of benefits accrued for service with actuarial assets at that date of $132 billion leaving an actuarial deficit of $4.2 billion. Since any surpluses or deficits are a joint responsibility of all Ontario municipalities and their employees, the Municipality does not recognize any share of the OMERS Pension surplus or deficit in these consolidated financial statements. The amount contributed to OMERS for 2023 was approximately $183,000 (2022 - $185,000). - 20 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 12. BUDGET FIGURES The operating budget approved by the council of the Municipality for 2023 is reflected on the consolidated statement of operations. Budget figures have been reclassified for the purposes of these financial statements to comply with PSAB reporting requirements. These adjustments include reserve transfers, capital expenditures, amortization and debt financing and repayment. Approved PSAB Budget Adjustments Budget $ $ $ REVENUES Property taxation 5,553,840 - 5,553,840 Taxation from other governments 189,263 - 189,263 User charges 2,284,292 728,071 3,012,363 Transfer payments: Federal 2,957,600 (1,641,239) 1,316,361 Provincial 1,750,500 - 1,750,500 Other municipalities 508,418 - 508,418 Investment income 35,000 288,792 323,792 Penalties and interest on taxes 93,000 - 93,000 Recoveries from benefiting landowners 127,000 - 127,000 Other 82,500 18,367 100,867 Capital reserve transfers 765,251 (765,251)- Total Revenues 14,346,664 (1,371,260)12,975,404 EXPENSES General government 1,405,574 (189,155) 1,216,419 Protection to persons and property 1,829,461 135,525 1,964,986 Transportation services 1,843,440 1,097,705 2,941,145 Environmental services 1,892,343 1,057,559 2,949,902 Health services 17,500 36,811 54,311 Social and family services 7,000 - 7,000 Recreation and cultural services 241,979 111,398 353,377 Planning and development 252,370 31,867 284,237 Reserve transfers 524,497 (524,497) - Capital 6,332,500 (6,332,500)- Total Expenses 14,346,664 (4,575,287)9,771,377 BUDGETED ANNUAL SURPLUS -3,204,027 3,204,027 - 21 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 13. OPERATION OF SCHOOL BOARDS AND THE COUNTY OF ELGIN During 2023, requisitions were made by the school boards and the County of Elgin requiring the municipality to collect property taxes and payments in lieu of property taxes on their behalf. The amounts collected and remitted are summarized below: School Boards County $ $ Taxation and user charges 1,547,219 5,274,732 Share of payments in lieu of taxes 6,379 174,366 Amounts requisitioned 1,553,598 5,449,098 14. CONTINGENCIES As at December 31, 2023, certain legal actions are pending against the Municipality. The final outcome of the outstanding claims cannot be determined at this time. However, management believes that ultimate disposition of these matters will not materially exceed the amounts recorded in these consolidated financial statements. As at December 31, 2023, the Municipality also has a Writ of Seizure and Sale registered against the assets of the Elgin Military Museum. Although the Municipality expects no further recoveries from the assets of the Elgin Military Museum, the Municipality will ensure the Writ of Seizure and Sale is registered on title indefinitely. Estimated costs to settle claims are based on available information and projections of estimated future expenses developed based on the Municipality's historical experience. Claims are reported as an operating expense in the year of the loss, where the costs are deemed to be likely and can be reasonable determined. Claim provisions are reported as a liability in the consolidated statement of financial position. 15. FINANCIAL INSTRUMENTS .Risks and Concentrations The Municipality is exposed to various risks through its financial instruments. The following analysis provides a measure of the Municipality’s risk exposure and concentrations at the balance sheet date. Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The Municipality is mainly exposed to interest and price risk. - 22 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 15. FINANCIAL INSTRUMENT RISKS (CONTINUED) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Municipality is exposed to interest rate risk on its fixed rate long-term debt. As the interest rates are fixed the Municipality doesn't believe that interest rate risk is a significant risk. Price Risk Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Municipality is exposed to price risk through its investments in quoted One Fund investments. These investments were redeemed in the year and price risk is no longer considered a significant risk. It is management's opinion that the Municipality is not exposed to significant currency risk. Liquidity Risk Liquidity risk is the risk that a Municipality will encounter difficulty in meeting obligations associated with financial liabilities. The Municipality is exposed to this risk mainly in respect of its accounts payable, accrued liabilities and long-term debt. The Municipality doesn't believe that liquidity risk is a significant risk. Credit Risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Municipality’s main credit risks relate to its accounts receivable and taxes receivable. The Municipality manages this risk by monitoring active receivable balances and forces tax sale on properties considered unrecoverable. At year end, the Municipality had approximately $200,967 (2022 - $147,570) in accounts receivable over 90 days of which the Municipality has deemed no allowance is necessary. The balances of taxes and utility receivables (water and sewer) are normally collectible from the property owner and the Municipality is able to force tax sale on properties to recover. In some instances the property owner may challenge property values which will in impact future recovery of taxes and potential repayments to the property owners. The Municipality actively monitors these assessment challenges and provides provisions when reasonable estimates can be made. At year end, the Municipality has provided an allowance of $nil (2022 - $nil) for these assessment challenges and $nil (2022 - $nil) in potential uncollectible tax assessments. - 23 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 16. SUPPLEMENTARY INFORMATION 2023 2022 $ $ [a] Current fund expenses by object: Salaries, wages and employees benefits 2,617,774 2,402,413 Long-term debt interest 122,076 128,313 Materials 3,491,877 3,178,542 Contracted services 2,322,739 2,323,131 Amortization 1,986,559 2,243,700 External transfers to others 105,068 99,349 Loss (gain) on disposal of tangible capital assets 3,877 (367,263) 10,649,970 10,008,185 [b] Cash flow information: Taxes receivable (182,699)307,237 Accounts receivable 323,217 (110,249) Inventories and prepaid expenses 49,036 (62,104) Accounts payable and accrued liabilities (43,451)(259,057) Security and grading deposits 293,155 170,135 Deferred revenue-obligatory reserve funds (215,960)110,992 223,298 156,954 - 24 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Notes to the Consolidated Financial Statements Year Ended December 31, 2023 17. SEGMENTED INFORMATION The Municipality is a diversified municipal government institution that provides a wide range of services to its citizens, including fire, roads, sewer and water. For management reporting purposes the Government’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 activities are reported in these funds. Certain departments that have been separately disclosed in the segmented information, along with the services they provided, are as follows. Public Works The Public Works department is responsible for the delivery of municipal public works services related to the planning, development and maintenance of roadway systems, the maintenance of parking and open space, and street lighting. The Water and Waste Funds The water and wastewater department provides drinking water to citizens of the municipality, as well as, collection and treatment of wastewater. This department is responsible for the operation and maintenance of both systems in accordance with government regulations under the Safe Drinking Water Act and other pieces of legislation. Other segments This segment includes the remaining departments and activities of the Municipality. Some of the larger activities in this segment include general government, fire, police, public health services, recreation and cultural services, planning and development and solid waste collection and disposal. 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. Therefore, certain allocation methodologies are employed in the preparation of segmented financial information. The General Revenue Fund reports on municipal services that are funded primarily by taxation such as property and business tax revenues. Taxation and payments-in-lieu of taxes are apportioned to General Revenue Fund services based on the Fund’s net surplus. Certain government transfers, transfer from other funds, and other revenues have been apportioned based on a percentage of budgeted expenses. The accounting policies used in these segments are consistent with those followed in the preparation of the consolidated financial statements as disclosed in Note 2. For additional information see the Consolidated Schedule of Segment Disclosure and Schedule of Segment Disclosure. - 25 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Schedule of Segment Disclosure Year Ended December 31, 2023 Water and Public Other Total Waste Funds Works Segments Consolidated $ $ $ $ REVENUE Taxation - 1,254,550 4,493,795 5,748,345 Sales of service and regulatory fees 2,468,972 110,890 414,929 2,994,791 Government transfer - 503,857 3,053,893 3,557,750 Other 52,168 -206,198 258,366 2,521,140 1,869,297 8,168,815 12,559,252 EXPENSES Salaries, wages and employee benefits 487,269 776,919 1,353,586 2,617,774 Long-term debt interest 1,267 - 120,809 122,076 Materials 825,519 1,591,983 1,074,375 3,491,877 Contracted services 586,631 27,548 1,708,560 2,322,739 Amortization 597,996 1,097,705 290,858 1,986,559 Loss (gain) on disposal of tangible capital assets - - 3,877 3,877 Transfer to others --105,068 105,068 2,498,682 3,494,155 4,657,133 10,649,970 ANNUAL SURPLUS (DEFICIT)22,458 (1,624,858)3,511,682 1,909,282 - 26 - THE CORPORATION OF THE MUNICIPALITY OF BAYHAM Consolidated Schedule of Segment Disclosure Year Ended December 31, 2022 Water and Public Other Total Waste Funds Works Segments Consolidated $ $ $ $ REVENUE Taxation - 1,413,084 3,901,100 5,314,184 Sales of service and regulatory fees 2,523,559 55,619 576,159 3,155,337 Government transfer - 475,157 2,169,180 2,644,337 Other 106,926 -414,147 521,073 2,630,485 1,943,860 7,060,586 11,634,931 EXPENSES Salaries, wages and employee benefits 445,311 739,495 1,217,607 2,402,413 Long-term debt interest 1,899 - 126,414 128,313 Materials 850,027 1,281,168 1,047,347 3,178,542 Contracted services 595,331 37,375 1,690,425 2,323,131 Amortization 628,214 1,317,474 298,012 2,243,700 Loss on disposal of tangible capital assets - (36,756) (330,507)(367,263) Transfer to others --99,349 99,349 2,520,782 3,338,756 4,148,647 10,008,185 ANNUAL SURPLUS (DEFICIT)109,703 (1,394,896)2,911,939 1,626,746 - 27 -