HomeMy WebLinkAboutFinancial Statements - 2018THE CORPORATION OF THE
MUNICIPALITY OF BAYHAM
Consolidated Financial Statements
December 31, 2018
THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Consolidated Financial Statements
Year Ended December 31, 2018
Table of Contents PAGE
Independent Auditors' Report 1 - 2
Consolidated Statement of Financial Position 3
Consolidated Statement of Operations and Accumulated Surplus 4
Consolidated Statement of Changes in Net Financial Debt 5
Consolidated Statement of Cash Flows 6
Notes to the Consolidated Financial Statements 7 - 21
Consolidated Schedule of Segment Disclosure 22 - 23
Schedule of Segment Disclosure 24
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, 2018, and the consolidated
statement of operations and accumulated surplus, consolidated statement of changes in net financial debt and
consolidated statement of cash flows for the year then ended, and notes to the 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, 2018, and the results of its operations and its cash flows
for the year then ended in accordance with Canadian accounting standards for public sector entities.
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 accounting standards for public sector entities, 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.
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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
May 16, 2019 CHARTERED PROFESSIONAL ACCOUNTANTS
Licensed Public Accountants
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Consolidated Statement of Financial Position
As At December 31, 2018
2018 2017
$ $
ASSETS
FINANCIAL ASSETS
Cash 1,197,722 612,408
Investments (Note 2)3,479,981 3,407,977
Taxes receivable (Note 3)762,384 872,513
Accounts receivable (Note 4)937,508 1,801,987
6,377,595 6,694,885
LIABILITIES
Deferred revenue - obligatory reserve funds (Note 9)100,105 156,064
Accounts payable and accrued liabilities 951,979 1,047,015
Net long-term liabilities (Note 6) 5,938,082 6,204,420
6,990,166 7,407,499
NET FINANCIAL DEBT (612,571)(712,614)
NON-FINANCIAL ASSETS
Tangible capital assets (Note 5)57,636,099 57,744,165
Prepaid expenses and inventory 80,954 53,295
57,717,053 57,797,460
ACCUMULATED SURPLUS (NOTE 7) 57,104,482 57,084,846
See accompanying notes to the consolidated financial statements.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Consolidated Statement of Operations and Accumulated Surplus
Year Ended December 31, 2018
Budget Actual Actual
(Note 11)2018 2017
$ $ $
REVENUES
Property taxation 3,994,601 4,035,113 3,876,787
Taxation from other governments 158,900 158,900 149,733
User charges 2,082,745 2,283,514 2,272,222
Transfer payments
Federal 354,000 353,824 636,165
Provincial 1,493,600 1,434,352 2,629,971
Other municipalities 448,559 424,829 449,272
Investment income 103,094 106,867 103,230
Penalties and interest on taxes 95,000 137,369 120,309
Recoveries from benefiting landowners 137,000 304,783 109,537
Other 129,076 159,454 196,824
Total Revenues 8,996,575 9,399,005 10,544,050
EXPENSES
General government 1,134,520 1,453,468 1,226,400
Protection to persons and property 1,778,413 1,827,005 1,760,314
Transportation services 2,967,818 3,062,991 2,454,846
Environmental services 2,113,941 2,286,217 2,226,160
Health services 39,473 45,298 26,306
Social and family services 10,000 7,883 8,132
Recreation and cultural services 349,816 347,714 441,036
Planning and development 211,769 348,398 278,205
(Gain) loss on disposal of tangible capital assets -395 (307,987)
Total Expenses (Note 15) 8,605,750 9,379,369 8,113,412
ANNUAL SURPLUS 390,825 19,636 2,430,638
ACCUMULATED SURPLUS, BEGINNING OF YEAR 57,084,846 57,084,846 54,654,208
ACCUMULATED SURPLUS, END OF YEAR (NOTE 7)57,475,671 57,104,482 57,084,846
See accompanying notes to the consolidated financial statements.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Consolidated Statement of Changes in Net Financial Debt
Year Ended December 31, 2018
Budget Actual Actual
(Note 11)2018 2017
$ $ $
ANNUAL SURPLUS 390,825 19,636 2,430,638
Acquisition of tangible capital assets (2,110,662)(2,110,662)(3,546,379)
Amortization of tangible capital assets 2,218,333 2,218,333 1,700,874
Proceeds on disposal of tangible capital assets --372,442
Change in prepaid expenses and inventory -(27,659)36,447
(Gain) loss on disposal of tangible capital assets -395 (307,987)
CHANGE IN NET FINANCIAL DEBT 498,496 100,043 686,035
NET FINANCIAL DEBT, BEGINNING OF YEAR (712,614)(712,614)(1,398,649)
NET FINANCIAL DEBT, END OF YEAR (214,118)(612,571)(712,614)
See accompanying notes to the consolidated financial statements.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Consolidated Statement of Cash Flows
Year Ended December 31, 2018
2018 2017
$ $
OPERATING ACTIVITIES
Annual surplus (deficit)19,636 2,430,638
Add (deduct) items not involving cash:
Amortization of tangible capital assets 2,218,333 1,700,874
Loss (gain) on disposal of and transfer of assets 395 (307,987)
2,238,364 3,823,525
Change in non-cash items related to operations (Note 15[b]) 795,954 (1,329,397)
3,034,318 2,494,128
CAPITAL
Acquisition of tangible capital assets (2,110,662)(3,546,379)
Proceeds on disposal of tangible capital assets -372,442
(2,110,662)(3,173,937)
INVESTING
Investment income reinvested (72,004)(74,514)
FINANCING
Long-term debt repayment (266,338)(202,213)
NET CHANGE IN CASH AND CASH EQUIVALENTS 585,314 (956,536)
OPENING CASH AND CASH EQUIVALENTS 612,408 1,568,944
CLOSING CASH AND CASH EQUIVALENTS 1,197,722 612,408
SUPPLEMENTARY INFORMATION:
Cash paid for interest on debt 165,387 177,234
Cash received for interest on investments 106,867 103,230
See accompanying notes to the consolidated financial statements.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
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. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Municipality are prepared by management in accordance
with Canadian accounting standards for public sector entities, as recommended by the Public Sector
Accounting Board of the Canadian Institute of Chartered Professional Accountants. 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
Inter-departmental and inter-organizational transactions and balances between these organizations
are eliminated.
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.
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.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Use of Estimates
The preparation of consolidated financial statements in conformity with Canadian accounting
standards for public sector entities 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.
Investments
Investments, consisting of one fund pooled bond securities, are recorded at the lower of cost plus
accrued interest and fair market value. Investment income earned on available funds is reported as
revenue in the period earned.
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 in accordance with Section 3100 of the Public Sector Accounting
Handbook 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.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
1. 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.
v) Leased tangible capital assets
Leases are classified as capital or operating leases. Leases which transfer substantially all of the
benefits and risks incidental to ownership of property are accounted for as capital leases. All other
leases are accounted for as operating leases and the related lease payments are charged to expenses
as incurred.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
vi) Inventories of supplies
Inventories of supplies held for consumption are recorded at the lower of cost and replacement cost.
Investment Income
Investment income is reported as revenue in the period earned. 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.
Tax Revenues
In 2018, the Municipality received $4,194,013 (2017 - $4,026,520) 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. Employee benefits include post employment benefits. Post employment
benefits are subject to actuarial valuations and are accrued in accordance with the projected benefit
method, prorated on service and management's best estimate of salary escalation and retirement ages
of employees. Any actuarial gains and losses related to past service of employees are amortized over
the expected average remaining service period.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments
The Municipality's financial instruments consist of cash and cash equivalents, accounts receivable,
taxes receivable, accounts payable and accrued liabilities and long-term liabilities. Unless otherwise
noted, it is management's opinion that the Municipality is not exposed to significant interest,
currency, or credit risk arising from these financial instruments.
Environmental Provisions and Contaminated Sites
The Municipality's 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, 2018 there were no properties that the Municipality was responsible to remedy and as
such no liability has been accrued.
2. INVESTMENTS
Investments are comprised of the following:
2018 2017
$ $ $ $
Cost Market Cost Market
One fund pooled bond securities 3,479,981 3,215,998 3,407,977 3,168,119
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
3. TAXES RECEIVABLE
2018 2017
$ $
Current taxes receivable 336,865 459,768
Arrears taxes receivable 306,233 306,574
Penalties and interest 119,286 106,171
762,384 872,513
The Municipality makes annual estimates and allowances for potential exposure to property tax
appeals, reassessments, environmental and collection issues. Included in the taxes receivable is
$427,420 (2017 - $434,585) of taxes, penalties and interest that is due from one specific gas pipeline
property that is under going various appeals and financial restructuring. The Municipality's exposure
to loss on these balances is estimated to be between 25% to 30% if it is determined that nothing is
recoverable from this property. At year end, the Municipality made an assessment of the exposure
based on current information and didn't make any significant allowances for these amounts in the
financial statements. The Municipality is vigorously attempting various forms of collection to
mitigate the Municipalitys' exposure to loss.
4. ACCOUNTS RECEIVABLE
2018 2017
$ $
Accounts receivable 443,304 411,142
Government grants and funding 46,808 829,804
Debentures, interest at 2.97%, due 2034 281,390 300,316
Government remittances 166,006 260,725
937,508 1,801,987
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
5. TANGIBLE CAPITAL ASSETS
December 31, 2018 Disposals and
Cost Opening Additions Adjustments Ending
Infrastructure
Linear - Roadways 40,905,284 1,566,582 -42,471,866
Linear - Water Services 10,261,133 15,739 -10,276,872
Linear - Waste Water Services 15,118,609 6,674 -15,125,283
Infrastructure Total 66,285,026 1,588,995 -67,874,021
General
Land 1,096,843 - -1,096,843
Land Improvements 1,165,880 173,250 -1,339,130
Buildings 10,808,166 532,972 (367)11,340,771
Machinery and Equipment 3,793,191 139,557 (17,194)3,915,554
Vehicles 2,252,727 -(30,145)2,222,582
General Total 19,116,807 845,779 (47,706)19,914,880
Work In Progress 419,235 94,542 (418,654)95,123
Total Cost 85,821,068 2,529,316 (466,360)87,884,024
Accumulated Amortization Disposals and
Opening Amortization Adjustments Ending
Infrastructure
Linear - Roadways 15,288,252 774,140 -16,062,392
Linear - Water Services 2,435,298 159,669 -2,594,967
Linear - Waste Water Services 2,993,507 149,571 -3,143,078
Infrastructure Total 20,717,057 1,083,380 -21,800,437
General
Land Improvements 563,912 44,558 -608,470
Buildings 4,202,888 355,262 (367)4,557,783
Machinery and Equipment 1,864,155 125,768 (17,194)1,972,729
Vehicles 728,891 609,365 (29,750)1,308,506
General Total 7,359,846 1,134,953 (47,311)8,447,488
Total Accumulated Amortization 28,076,903 2,218,333 (47,311)30,247,925
Net Book Value Opening Ending
Infrastructure
Linear - Roadways 25,617,032 26,409,474
Linear - Water Services 7,825,835 7,681,905
Linear - Waste Water Services 12,125,102 11,982,205
45,567,969 46,073,584
General
Land 1,096,843 1,096,843
Land Improvements 601,968 730,660
Buildings 6,605,278 6,782,988
Machinery and Equipment 1,929,036 1,942,825
Vehicles 1,523,836 914,076
11,756,961 11,467,392
Work in Progress 419,235 95,123
Total Net Book Value 57,744,165 57,636,099
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
5. TANGIBLE CAPITAL ASSETS (CONTINUED)
December 31, 2017 Disposals and
Cost Opening Additions Adjustments Ending
Infrastructure
Linear - Roadways 39,801,505 1,103,779 -40,905,284
Linear - Water Services 8,780,244 1,486,275 (5,386)10,261,133
Linear - Waste Water Services 15,079,869 38,740 -15,118,609
Infrastructure Total 63,661,618 2,628,794 (5,386)66,285,026
General
Land 1,106,107 -(9,264)1,096,843
Land Improvements 1,053,074 127,711 (14,905)1,165,880
Buildings 10,705,040 297,221 (194,095)10,808,166
Machinery and Equipment 3,707,160 91,160 (5,129)3,793,191
Vehicles 2,220,214 146,308 (113,795)2,252,727
General Total 18,791,595 662,400 (337,188)19,116,807
Work in Progress 164,050 260,662 (5,477)419,235
Total Cost 82,617,263 3,551,856 (348,051)85,821,068
Accumulated Amortization Disposals and
Opening Amortization Adjustments Ending
Infrastructure
Linear - Roadways 14,509,083 779,169 -15,288,252
Linear - Water Services 2,213,824 226,860 (5,386)2,435,298
Linear - Waste Water Services 2,844,323 149,184 -2,993,507
Infrastructure Total 19,567,230 1,155,213 (5,386)20,717,057
General
Land Improvements 538,222 38,880 (13,190)563,912
Buildings 4,082,431 273,896 (153,439)4,202,888
Machinery and Equipment 1,761,144 105,628 (2,617)1,864,155
Vehicles 705,121 127,257 (103,487)728,891
General Total 7,086,918 545,661 (272,733)7,359,846
Total Accumulated Amortization 26,654,148 1,700,874 (278,119)28,076,903
Net Book Value Opening Ending
Infrastructure
Linear - Roadways 25,292,422 25,617,032
Linear - Water Services 6,566,420 7,825,835
Linear - Waste Water Services 12,235,546 12,125,102
44,094,388 45,567,969
General
Land 1,106,107 1,096,843
Land improvements 514,852 601,968
Buildings 6,622,609 6,605,278
Machinery and Equipment 1,946,016 1,929,036
Vehicles 1,515,093 1,523,836
11,704,677 11,756,961
Work in Progress 164,050 419,235
Total Net Book Value 55,963,115 57,744,165
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
6. LONG-TERM LIABILITIES
a) The balance of long-term liabilities reported on the Consolidated Statement of Financial Position is
made up of the following:
2018 2017
$ $
TD loan, 2.71%, repayable in blended monthly payments
of $27,557, due March 2025 (Project Ojibwa)5,338,383 5,521,702
RBC loan, 2.75%, repayable in blended semi-annual
payments of $32,500, due July 2026 (Fire Hall)449,867 501,430
Consolidated water board debt, interest rates ranging from
1.5% to 5.75%, maturing August 2018 to March 2027 149,832 181,289
5,938,082 6,204,421
Principal repayments are summarized as follows:
Tax User
Revenue Charges Total
2019 241,339 22,864 264,203
2020 247,587 23,352 270,939
2021 254,782 23,861 278,643
2022 261,787 24,393 286,180
2023 268,984 12,349 281,333
Beyond 4,513,771 43,013 4,556,784
Total 5,788,250 149,832 5,938,082
b) Interest expense on long-term liabilities in 2018 amounted to $165,387 (2017 - $177,234).
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
7. 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.
2018 2017
$ $
Operating fund:
Municipality --
Cemetery boards 177,950 177,883
Benefiting landowners (187,824)(209,263)
(9,874)(31,380)
Invested in tangible capital assets 57,636,099 57,744,165
Capital fund (5,513)(21,299)
Reserves 2,430,368 2,913,134
Reserve funds 2,991,484 2,684,646
63,042,564 63,289,266
AMOUNTS TO BE RECOVERED
Net long-term debt (Note 6)(5,938,082)(6,204,420)
ACCUMULATED SURPLUS 57,104,482 57,084,846
RESERVES AND RESERVE FUNDS CONSIST OF THE FOLLOWING:
2018 2017
$ $
Reserves set aside for specific purposes by Council:
- for working capital 128,496 97,427
- for capital purposes 346,483 468,599
- for waterworks purposes 1,271,942 957,527
- for rate stabilization 213,866 213,866
- for other purposes 469,581 1,175,715
Total reserves 2,430,368 2,913,134
Reserve funds set aside for specific purposes by Council:
- for water system 109,162 103,450
- for construction of sanitary sewers 2,696,218 2,399,163
- for recreation and cultural service purposes 186,104 182,033
Total reserve funds 2,991,484 2,684,646
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
8. TRUST FUNDS
Trust funds administered by the Municipality amounting to $260,737 (2017 - $253,837) have not
been included in the Consolidated Balance Sheet nor have their operations been included in the
Consolidated Statement of Operations.
9. 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:
2018 2017
$ $
Development charges 28,807 28,177
Gasoline tax 54,030 98,860
Parkland 17,268 29,027
100,105 156,064
10. 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, 2018, and the results of this valuation
disclosed actuarial liabilities of $100.1 billion in respect of benefits accrued for service with actuarial
assets at that date of $95.9 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 2018 was $143,064 (2017 - $134,405).
- 17 -
THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
11. BUDGET FIGURES
The operating budget approved by the council of the Municipality for 2018 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 3,994,601 - 3,994,601
Taxation from other governments 158,900 - 158,900
User charges 1,835,452 247,293 2,082,745
Transfer payments:
Federal 354,000 - 354,000
Provincial 1,493,600 - 1,493,600
Other municipalities 448,559 - 448,559
Investment income 33,000 70,094 103,094
Penalties and interest on taxes 95,000 - 95,000
Recoveries from benefiting landowners 137,000 - 137,000
Other 107,035 22,041 129,076
Capital reserve transfers 429,667 (429,667)-
Total Revenues 9,086,814 (90,239)8,996,575
EXPENSES
General government 1,298,789 (164,269) 1,134,520
Protection to persons and property 1,680,321 98,092 1,778,413
Transportation services 1,643,112 1,324,706 2,967,818
Environmental services 1,500,110 613,831 2,113,941
Health services 17,500 21,973 39,473
Social and family services 10,000 - 10,000
Recreation and cultural services 260,667 89,149 349,816
Planning and development 182,996 28,773 211,769
Reserve transfers 755,652 (755,652) -
Capital 1,737,667 (1,737,667)-
Total Expenses 9,086,814 (481,064)8,605,750
BUDGETED ANNUAL SURPLUS -390,825 390,825
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
12. OPERATION OF SCHOOL BOARDS AND THE COUNTY OF ELGIN
During 2018, 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 1,506,930 4,037,706
Share of payments in lieu of taxes 964 149,618
Amounts requisitioned 1,507,894 4,187,324
13. ACCRUED LIABILITY ARISING FROM LOAN GUARANTEES
The Municipality had guaranteed the debt of the Elgin Military Museum for an amount of
$6,000,000. In 2014, management had determined that a contingent liability in the amount of
$6,000,000 should be recognized in the financial statements for that fiscal year-end. The Elgin
Military Museum defaulted on its loan in March 2015 and the Municipality was required to cover the
full $6,000,000 loan guarantee. The guarantee has been funded by long-term debt with an interest
rate at 2.71%, in blended monthly payments of $27,557, and is due in March, 2025 (Note 6).
In relation to this loan guarantee and the long-term debt, the Municipality has been named in a
statement of claim for approximately $1,200,000 from a specific vendor of the Elgin Military
Museum. During the year, the statement of claim from the specific vendor was settled for $200,000
and has been expensed in current year operations. This $200,000 expense was funded by an
offsetting transfer from the liability reserve. In 2016, the Municipality received judgment in the
amount of $6,000,000 against the Elgin Military Museum in an attempt to recover some of these
expenses and long-term debt repayments. The Municipality expects no further recoveries or
significant expenses from the assets of the Elgin Military Museum, but the Municipality will ensure
the Writ of Seizure and Sale is registered on title indefinitely.
14. CONTINGENT LIABILITIES
As at December 31, 2018 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.
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.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
15. SUPPLEMENTARY INFORMATION:
2018 2017
$ $
[a] Current fund expenses by object:
Salaries, wages and employees benefits 2,117,188 1,986,102
Long-term debt interest 165,387 177,234
Materials 2,431,535 2,360,587
Contracted services 2,357,590 2,113,662
Amortization 2,218,333 1,700,874
External transfers to others 88,941 82,940
(Gain) loss on disposal and transfer of assets 395 (307,987)
9,379,369 8,113,412
[b] Cash flow information:
Decrease (increase) in taxes receivable 110,129 (102,949)
Decrease (increase) in accounts receivable 864,479 (439,952)
(Increase) decrease in inventories and prepaid expenses (27,659)36,447
(Decrease) in accounts payable and accrued liabilities (95,036)(706,637)
(Decrease) in deferred revenue-obligatory reserve funds (55,959)(116,306)
795,954 (1,329,397)
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Notes to the Consolidated Financial Statements
Year Ended December 31, 2018
16. 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 1. For additional information see the
Consolidated Schedule of Segment Disclosure and Schedule of Segment Disclosure.
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THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Consolidated Schedule of Segment Disclosure
Year Ended December 31, 2018
Water and Public Other Total
Waste Funds Works Segments Consolidated
$ $ $ $
REVENUE
Taxation - 1,643,112 2,550,901 4,194,013
Sales of service and regulatory fees 1,745,441 71,511 466,562 2,283,514
Government transfer 22,759 424,829 1,765,417 2,213,005
Other 121,481 -586,992 708,473
1,889,681 2,139,452 5,369,872 9,399,005
EXPENSES
Salaries, wages and employee benefits 336,360 555,382 1,225,446 2,117,188
Long-term debt interest 4,583 - 160,804 165,387
Materials 329,342 1,142,818 959,375 2,431,535
Contracted services 475,451 40,085 1,842,054 2,357,590
Amortization 609,248 1,324,706 284,379 2,218,333
Loss on disposal of tangible assets - - 395 395
Transfer to others --88,941 88,941
1,754,984 3,062,991 4,561,394 9,379,369
ANNUAL SURPLUS (DEFICIT)134,697 (923,539)808,478 19,636
- 22 -
THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Consolidated Schedule of Segment Disclosure
Year Ended December 31, 2017
Water and Public Other Total
Waste Funds Works Segments Consolidated
$ $ $ $
REVENUE
Taxation - 1,555,278 2,471,242 4,026,520
Sales of service and regulatory fees 1,684,535 41,218 546,469 2,272,222
Government transfer 39,322 449,272 3,226,814 3,715,408
Other 150,779 -379,121 529,900
1,874,636 2,045,768 6,623,646 10,544,050
EXPENSES
Salaries, wages and employee benefits 305,141 520,106 1,160,855 1,986,102
Long-term debt interest 5,144 - 172,090 177,234
Materials 392,279 1,064,710 903,598 2,360,587
Contracted services 435,728 32,314 1,645,620 2,113,662
Amortization 585,762 837,716 277,396 1,700,874
Gain on disposal of assets - - (307,987)(307,987)
Transfer to others --82,940 82,940
1,724,054 2,454,846 3,934,512 8,113,412
ANNUAL SURPLUS (DEFICIT)150,582 (409,078)2,689,134 2,430,638
- 23 -
THE CORPORATION OF THE MUNICIPALITY OF BAYHAM
Schedule of Segment Disclosure
Year Ended December 31, 2018
Budget Actual Actual
WATER AND WASTE WATER 2018 2018 2017
$ $ $
Revenue
Sales of services and regulatory fees 1,482,267 1,745,441 1,684,535
Government transfers -22,759 39,322
Benefiting land owners 137,000 100,789 109,537
Other 15,820 20,692 41,242
Total Revenues 1,635,087 1,889,681 1,874,636
Expenses
Salaries, wages and employees benefits 320,296 336,360 305,141
Long-term debt interest -4,583 5,144
Materials 305,995 329,342 392,279
Contracted services, rents and financial expenses 382,591 475,451 435,728
Amortization 609,248 609,248 585,762
Total Expenditures 1,618,130 1,754,984 1,724,054
Annual Surplus 16,957 134,697 150,582
Budget Actual Actual
PUBLIC WORKS 2018 2018 2017
$ $ $
Revenue
Taxation 1,643,112 1,643,112 1,555,278
Sales of services and regulatory fees 24,000 71,511 41,218
Government transfers 448,559 424,829 449,272
Total Revenues 2,115,671 2,139,452 2,045,768
Expenses
Salaries, wages and employees benefits 717,679 555,382 520,106
Materials 882,033 1,142,818 1,064,710
Contracted services and rents 43,400 40,085 32,314
Amortization 1,324,706 1,324,706 837,716
Total Expenditures 2,967,818 3,062,991 2,454,846
Annual (Deficit)(852,147)(923,539)(409,078)
- 24 -