financial statements december 31, 2017...united counties of leeds and grenville five year financial...

FINANCIAL STATEMENTSDECEMBER 31, 2017

CONTENTS

Five Year Financial Review.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 2

Management’s Responsibility for the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Independent Auditor’s Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 - 5

Statement of Financial Position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Statement of Operations .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Statement of Changes in Net Financial Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Statement of Cash Flows.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 - 24

Schedule 1 < Continuity of Reserves and Reserve Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Schedule 2 < Tangible Capital Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 - 27

Independent Auditor’s Report < Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 - 29

Trust Fund < Statement of Financial Position and Statement of Financial Activities.. . . . . . . . . . . . . . . 30

Trust Fund < Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

The Corporation of theUnited Counties of

Leeds and GrenvilleFinancial Statements

December 31, 2017

United Counties of Leeds and GrenvilleFive Year Financial Review

(not subject to audit)

December 31 2017 2016 2015 2014 2013

Population (MPAC) 58,341 58,797 59,770 60,162 59,668

Number of Households (MPAC) 35,137 35,017 34,839 34,568 33,798

Taxable Assessment (000's)Residential

Multi-residential Commercial

Industrial Pipeline

Farmland

$ 9,115,583

29,508 463,253

68,807 88,401

377,602

$ 9,076,124

28,295 386,253

80,865 85,454

297,271

$ 8,695,004

25,819 372,584

74,693 83,137

291,776

$ 8,298,141

24,386 359,754

71,386 80,712

284,462

$ 7,891,283

23,209 337,834

67,084 78,237

280,175

Total 10,143,154 9,954,262 9,543,013 9,118,841 8,677,822

Rates of Taxation< residential (municipal)< multi-residential (municipal)< commercial (municipal)< industrial (municipal)< large industrial (municipal)

0.370869 0.370869 0.499338 0.671792 1.039731

0.363579 0.363579 0.489523 0.658587

1.019294

0.367257 0.367257 0.494474 0.665249

1.029604

0.367257 0.367257

0.494474 0.665249

1.029604

0.373523 0.373523

0.502912 0.676600

1.047173

Revenues for County Purposes (000's)< Taxation

< Government transfers < Other

< Revenues related to capital assets

$ 37,826 47,077

7,790 2,119

$ 36,927

43,112 7,483

2,773

$ 36,238

41,477 7,193

4,166

$ 34,614 39,981

6,886

2,300

$ 33,481 36,765

7,474

2,642

Total 94,812 90,295 89,074 83,781 80,362

Expenditures (000's)< Operations

< Amortization 94,881 14,571

89,454 14,529

86,680

14,087

84,802

13,774

79,905

13,383

Net Financial Assets (Net Debt)< % of Operating Revenue (> (20%)) **< % of Taxation and User Charges (> (50%)) **

19.70%46.06%

15.30%

34.63%

11.79%

26.15%

8.38%

18.75%

7.13%

15.71%

** Represents the Provincial Low Risk Indicator.(Note: All dollar amounts are in thousands of dollars.)

1

United Counties of Leeds and GrenvilleFive Year Financial Review

(not subject to audit)

December 31 2017 2016 2015 2014 2013

$ $ $ $ $

Long Term Debt< Net long term debt (000's)

< Long term debt charges (000's)

< Total annual repayment limit (000's)

< Long term debt per household

7,558

1,564

11,301

215

8,687

1,604

10,810

248

9,791

1,699

10,761

281

10,940

1,627

10,383

316

11,037

1,570

9,944

327

Municipal Equity (000's)< Surplus and Reserves

< Invested in capital assets

< Asset consumption ratio

< Reserves as % of Operating Expenses (>20%) **

26,511

148,512

70.53%

27.94%

22,480

152,612

69.08%

25.13%

20,269

153,982

67.90%

23.38%

18,018

153,840

67.07%

21.25%

17,981

154,898

65.89%

22.50%

Financial Indicators< Sustainability

< financial assets to liabilities

< financial assets to liabilitiesexcluding long term debt

< long term debt to tangible capital assets

< capital reserves to accumulated amortization

1.91

3.07

4.86%

3.23%

1.70

3.10

5.41%

2.71%

1.55

3.32

6.00%

2.63%

1.32

2.75

6.66%

2.53%

1.25

2.51

6.64%

2.80%

< Flexibility< Debt charges to total operating revenue (< 5%) **

< Total operating revenue to taxable assessment

< Working capital to operating expenses (> 10%) **

1.69%

0.91%

26.48%

1.83%

0.88%

24.68%

2.00%

0.89%

22.84%

2.00%

0.89%

20.96%

2.02%

0.90%

20.75%

< Vulnerability< Operating government transfers

< to operating revenue

< by department< social and family services< Homes for Senior Citizens< ambulance< other programs

< Total government transfers< to total revenues

43.91%

34.26%3.18%6.36%0.10%

43.15%

42.50%

32.71%

3.26%6.46%

0.07%

44.04%

41.94%

32.46%

2.97%6.39%0.12%

44.65%

41.60%

30.73%

3.37%6.29%1.21%

43.20%

39.92%

28.66%

3.54%6.35%1.37%

41.85%

2

United Counties of Leeds and Grenville Statement of Financial Position

December 31 2017 2016

$ $

ASSETS

Financial Assets

Cash and short term deposits

Accounts receivable Investments (note 6)

Long term receivable (note 4)

19,104,909 3,118,924

15,401,591 691,738

14,391,568

2,194,628 15,241,807

779,733

38,317,162 32,607,736

LIABILITIES

Financial Liabilities

Accounts payable and accrued liabilitiesEmployee future benefit obligations (note 5)

Other current liabilities Deferred revenues (note 7)

Long term liabilities (note 8)

6,398,728 3,572,638

188,003 2,336,909 7,557,833

6,020,327 3,155,815

177,079 1,175,308

8,686,921

20,054,111 19,215,450

NET FINANCIAL ASSETS 18,263,051 13,392,286

NON-FINANCIAL ASSETS

Tangible capital assets (note 18)

Inventories 155,378,308

1,381,796

160,518,743

1,180,201

156,760,104 161,698,944

Commitments (note 15) and Contingent Liabilities (note 12)

MUNICIPAL EQUITY (note 9) 175,023,155 175,091,230

The accompanying notes are an integral part of these financial statements.

6

United Counties of Leeds and Grenville Statement of Operations

For the year ended December 31(Note 20)

Budget 2017 2016

$ $ $

REVENUES

Taxation < requisition on local municipalities< share of supplementary taxes (write offs)

User charges < Homes for Senior Citizens < Other

Government grants < Social and Family Services < Homes for Senior Citizens

< Ambulance < Other Provincial grants

< Federal grants < Other municipalities

Deferred revenues earned (note 7) Provincial offences fines

Investment income Other income < rent

< other

37,555,705 200,000

1,409,786 368,128

28,828,821 2,864,792

5,869,300 115,998

1,436,639 5,276,612

--- 1,925,000

509,358 2,968,183

48,798

37,792,392 33,745

1,389,525 431,532

30,324,365 2,943,487 5,898,367

96,670 1,436,639 6,377,615

68,164 2,140,443

400,260 3,162,320

198,193

36,789,615 136,967

1,387,573 354,927

27,175,755 2,854,283

5,653,347 63,030

1,454,254 5,911,178

6,467 2,156,250

755,145 2,811,144

11,041

TOTAL REVENUES 89,377,120 92,693,717 87,520,976

EXPENDITURES

General government

Protection to persons and property Transportation services

Environmental services Health services

Social and family services Recreation and cultural services

Planning and development

3,323,902

2,218,172 21,981,294

239,909 13,615,442

50,665,137 20,862

1,872,508

3,227,515 2,198,462

22,795,640 279,094

13,885,614 51,025,406

23,263 1,446,235

2,234,069

2,334,860 21,667,985

170,721 12,761,380

48,815,239 20,913

1,449,185

TOTAL EXPENDITURES 93,937,226 94,881,229 89,454,352

NET EXPENDITURESFROM OPERATIONS (4,560,106) (2,187,512) (1,933,376)

OTHER

Grants and transfers related to capitalDeferred revenues earned (note 7)Government transfers

Gain on disposal of assets

83,069 3,139,319

---

22,205 2,097,232

---

103,313 2,463,143

206,335

3,222,388 2,119,437 2,772,791

ANNUAL (DEFICIT) SURPLUS

MUNICIPAL EQUITY, BEGINNING OF YEAR

(1,337,718)

175,091,230

(68,075)

175,091,230

839,415

174,251,815

MUNICIPAL EQUITY, END OF YEAR 173,753,512 175,023,155 175,091,230


7

United Counties of Leeds and GrenvilleStatement of Changes in Net Financial Assets


Budget 2017 2016

$ $ $

ANNUAL (DEFICIT) SURPLUS (1,337,718) (68,075) 839,415

Amortization of tangible capital assets

Acquisition of tangible capital assets Disposition of tangible capital assets

Acquisition of supplies inventories

14,460,788

(12,713,146)---

---

14,571,329 (9,451,237)

20,343 (201,595)

14,529,493

(12,029,374)219,047

(173,495)

1,747,642 4,938,840 2,545,671

INCREASE IN NET FINANCIAL ASSETS 409,924 4,870,765 3,385,086

NET FINANCIAL ASSETS, BEGINNING OF YEAR 13,392,286 13,392,286 10,007,200

NET FINANCIAL ASSETS, END OF YEAR 13,802,210 18,263,051 13,392,286


8

United Counties of Leeds and GrenvilleStatement of Cash Flows

For the year ended December 31 2017 2016

$ $

OPERATING ACTIVITIES

Annual (deficit) surplus for the year

Amortization (68,075)

14,571,329

839,415

14,529,493

14,503,254 15,368,908

Net Change in Non-Cash Working Capital BalancesAccounts receivable

Accounts payable and accrued liabilities Employee future benefit obligations

Other current liabilities Deferred revenues

Inventories

(924,296)378,401 416,823

10,924 1,161,601 (201,595)

479,436

1,811,596 129,602

(168,194)230,801

(173,495)

841,858 2,309,746

Working Capital from Operations 15,345,112 17,678,654

INVESTING ACTIVITIES

Increase in investments

Decrease in long term receivables (159,784)

87,995

(527,064)

85,515

Net increase in investments (71,789) (441,549)

CAPITAL ACTIVITIES

Acquisition of tangible capital assets

Disposal of tangible capital assets (9,451,237)

20,343

(12,029,374)

219,047

Net investment in tangible capital assets (9,430,894) (11,810,327)

FINANCING ACTIVITIES

Debt principal repayments (1,129,088) (1,103,660)

Net decrease in cash from financing activities (1,129,088) (1,103,660)

NET INCREASE IN CASH

CASH, BEGINNING OF YEAR

4,713,341

14,391,568

4,323,118

10,068,450

CASH, END OF YEAR 19,104,909 14,391,568


9

United Counties of Leeds and GrenvilleNotes to the Financial Statements

December 31, 2017

1. Status of the United Counties of Leeds and Grenville

The United Counties of Leeds and Grenville (the ‘Counties’) was incorporated January 28, 1850 andassumed its responsibilities under the authority of the Municipal Act. The Counties operate as anupper tier government in the United Counties of Leeds and Grenville, in the Province of Ontario,Canada and provides municipal services such as emergency measures, public works, public healthservices, ambulance services, social and family assistance, planning and development and othergeneral government operations.

2. Significant Accounting Policies

The financial statements of the Corporation of the United Counties of Leeds and Grenville are therepresentations of management and have been prepared in all material respects in accordance withCanadian Public Sector Accounting Standards. Significant aspects of the accounting policies adoptedby the Counties are as follows:

Basis of Consolidation

The financial statements reflect financial assets, liabilities, operating revenues and expenditures,reserves, reserve funds and changes in investment in tangible capital assets of the Counties. Thereporting entity is comprised of all organizations, committees and local boards accountable for theadministration of their financial affairs and resources to the Counties and which are owned or controlledby the Counties. Interdepartmental and inter-organizational transactions and balances between theseorganizations are eliminated.

The taxation, other revenues, expenditures, assets and liabilities with respect to the operations of theschool boards are not reflected in the municipal fund balances of these financial statements.

Basis of Accounting

(i) The financial statements are prepared using the accrual basis of accounting. The accrual basisof accounting records revenue as it is earned and measurable. Expenditures are recognized asthey are incurred and measurable based on receipt of goods and services and/or the creation ofa legal obligation to pay.

(ii) Non-financial assets are not available to discharge existing liabilities and are held for use in theprovision of services. They have useful lives extending beyond the current year, and are notintended for sale in the ordinary course of operations. The change in non-financial assets duringthe year, together with the excess of revenues over expenses, provides the change in netfinancial assets for the year.

(iii) Trust funds and their related operations administered by the Counties are not included in thesefinancial statements but are reported separately on the Trust Funds Statement of FinancialActivities and Financial Position.

10


December 31, 2017

2. Significant Accounting Policies / continued

Tangible Capital Assets

Tangible capital assets are recorded at historical cost or where historical cost records were notavailable, other methods determined to provide a best estimate of historical cost and accumulatedamortization of the assets. In certain cases the Counties used replacement costs and appropriateindices to deflate the replacement cost to an estimated historical cost at the year of acquisition. Costsinclude all amounts that are directly attributable to acquisition, construction, development or bettermentof the asset. The cost of the tangible capital assets are amortized on a straight line basis over theirestimated useful lives as follows:

Land Land ImprovementsBuildingsMachinery, Equipment, Furniture and FixturesVehiclesLinear Assets

RoadsBridges and Culverts

10 years15 - 40 years

7 - 30 years5 - 12 years

35 - 50 years75 years

Amortization is charged from the month following the date of acquisition. Assets under constructionare not amortized until the asset is available for productive use, at which time they are capitalized.

The Counties have a capitalization threshold of $10,000 for vehicles and equipment and $50,000 forlinear assets so that individual capital assets of lesser value are expensed.

Tangible capital assets received as contributions are recorded at their fair value at the date of receipt,and that fair value is also recorded as revenue. Similarly, transfers of assets to third parties arerecorded as an expense equal to the net book value of other asset as of the date of transfer.

When tangible capital assets are disposed of, either by way of a sale, destruction or loss, orabandonment of the asset, the asset’s net book value, historical cost less accumulated amortization,is written off. Any resulting gain or loss, equal to the proceeds on disposal less the asset’s net bookvalue, is reported on the statement of operations in the year of disposal. Transfers of assets to thirdparties are recorded as an expense equal to the net book value of the asset as of the date of transfer.

When conditions indicate that a tangible capital asset no longer contributes to the Counties’ ability toprovide services or the value of the future economic benefits associated with the tangible capital assetare less than its net book value, and the decline is expected to be permanent, the cost andaccumulated amortization of the asset are reduced to reflect the revised estimate of the value of theasset’s remaining service potential. The resulting net adjustment is reported as an expense on thestatement of operations.

Leases

Leases are classified as capital or operating leases. Leases which transfer substantially all of thebenefits and risks incidental to ownership of property are accounted for as capital leases. All otherleases are accounted for as operating leases and the related lease payments are charged to expensesas incurred.

11


December 31, 2017


Inventories and Prepaid Expenses

Inventories and prepaid expenses held for consumption are recorded at the lower of cost orreplacement cost.

Pension and Employee Benefits

The Counties accounts for its participation in the Ontario Municipal Employees Retirement System(‘OMERS’), a multi-employer public sector pension fund, as a defined benefit plan. The OMERS planspecifies the retirement benefits to be received by employees based on length of service and pay rates.

Employee benefits include vacation entitlement and sick leave benefits. Vacation entitlements areaccrued as entitlements are earned. Sick leave benefits are accrued in accordance with the Counties’policy.

Cash and Cash Equivalents

The Counties consider cash and cash equivalents to be highly liquid investments with originalmaturities of three months or less.

Government Transfers

Government transfers are recognized in the financial statements as revenues in the period in whichevents giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteriahave been met, and reasonable estimates of the amounts can be made.

Deferred Revenues

The Counties defers recognition of user charges and fees which have been collected but for which therelated services have yet to be performed. Government transfers of gas taxes, are reported asdeferred revenues in the Statement of Financial Position. These amounts will be recognized asrevenues in the fiscal year the services are performed.

The Counties receives restricted contributions under the authority of Federal and Provincial legislationand Counties by-laws. These funds by their nature are restricted in their use and until applied toapplicable costs are recorded as deferred revenue. Amounts applied to qualifying expenses arerecorded as revenue in the fiscal period they are expended.

Deferred revenue represents certain user charges and fees which have been collected but for whichthe related services have yet to be performed. Deferred revenue also represents contributions that theCounties has received pursuant to legislation, regulation or agreement that may only be used forcertain programs or in the completion of specific work. These amounts are recognized as revenue inthe fiscal year the services are performed or related expenses incurred.

Investments

Short-term and long-term investments are recorded at cost plus accrual interest. If the market valueof investments become lower than cost and the decline in value is considered to be other thantemporary, the investments are written down to market value.

12


December 31, 2017


Investments / continued

Investment income earned on surplus current funds, capital funds, reserves and reserve funds (otherthan obligatory reserve funds) are reported as revenue in the period earned.

Liability for Contaminated Sites

Contaminated sites are a result of contamination being introduced into air, soil, water or sediment ofa chemical, organic or radioactive material or live organism that exceeds an environmental standard. The liability is recorded net of any expected recoveries. A liability for remediation of contaminatedsites is recognized when a site is not in productive use and all the following criteria are met:

(a) an environmental standard exists;(b) contamination exceeds the environmental standard;(c) the Counties:

(i) is directly responsible; or(ii) accepts responsibility

(d) it is expected that future economic benefit will be given up; and(e) a reasonable estimate of the amount can be made.

The liability is recognized as management’s estimate of cost of pos-remediation including operation,maintenance and monitoring that are an integral part of the remediation strategy for a contaminatedsite.

Financial Instruments

All financial instruments are initially recognized at fair value on the statement of financial position. TheCounties have classified each financial instrument into one of the following categories: held-for-tradingfinancial assets and liabilities, loans and receivables, held-to-maturity financial assets and otherfinancial liabilities. Subsequent measurement of financial instruments is based on their classification.

Held-for-trading financial assets and liabilities are subsequently measured at fair value with changesin those fair values recognized in net revenues.

Loans and receivables, held-to-maturity financial assets and other financial liabilities are subsequentlymeasured at amortized cost using the effective interest method.

The Counties classify cash and cash equivalents as held-for-trading financial assets, accountsreceivable as loans and receivables and accounts payable and accrued liabilities as other financialliabilities.

Measurement Uncertainty

The preparation of financial statements requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenue and expenditures duringthe period. Actual results could differ from these estimates. These estimates are reviewed periodicallyand as adjustments become necessary, they are recorded in the financial statements in the period inwhich they become known.

13


December 31, 2017

3. Service Contract with the Ministry of Community and Social Services and the Ministry ofEducation

The United Counties of Leeds and Grenville has a service contract with the Ministry of Community andSocial Services and the Ministry of Education. A reconciliation report summarizes by service, allrevenues and expenditures and identifies any resulting surplus or deficit that relates to the servicecontract.

A review of the report shows various Child Care Programs to be in a surplus or deficit position as atDecember 31, 2017. The net surplus amount is reflected in accounts payable.

4. Long Term Receivable

The long term receivable is due from lower tier municipalities. The funds were advanced to financethe purchase of fire communications systems. The receivable was funded with equivalent borrowingfrom Ontario Infrastructure and Lands Corporation (OILC). The funds were borrowed at 2.88% and arerepayable over ten years and mature October 2024.

5. Employee Future Benefit Obligations

(a) Liability for Vacation, Overtime and Statutory Holiday Credits:

Vacation, overtime and statutory holiday expense are accrued for employees as entitlement tothese payments is earned in accordance with the Counties` benefit plan.

(b) Sick Leave Credits

The Counties previously provided a sick leave benefit plan, now discontinued, that would allowunused sick leave to accumulate such that employees became entitled to cash payment whenthey leave the Municipality’s employment. The liability for these accumulated days, to the extentthey were vested and could be taken in cash by an employee on termination is set out below.

(c) The Counties are a Schedule 2 employer under the Workplace Safety and Insurance Act and assuch assume full responsibility for financing its workplace safety insurance costs. The accruedobligation represents the present value of future benefits on existing claims.

The liability was determined by an actuarial valuation undertaken as at December 31, 2015. Theestimate is based on a number of assumptions about future events including interest rates,inflation rates, salary and wage rates and claim rates. The valuation estimated claims at 2.09%of salaries and wages, a discount rate of 3.75% and a rate of inflation of 2.00%.

Future actuarial valuations may result in increases or decreases to the liability. The actuarial gainor loss will be amortized over the expected average remaining service life.

14


December 31, 2017

5. Employee Future Benefit Obligations / continued

(c) The Counties have established reserves to mitigate the future impact of the obligation and thishas been reported on Schedule 1 < Continuity of Reserves and Reserve Funds. Reserves relatingto the liability is as follows:

2017 2016

$ $

Workplace Safety and Insurance 2,201,767 2,387,197

(d) Employee benefit obligations are comprised of:

2017 2016

Gross Funded Unfunded Gross Funded Unfunded

$ $ $ $ $ $

Sick leaveVacation, Overtime and Statutory Holiday CreditsWSIB

23,400

498,660 3,050,578

23,400

498,660 3,050,578

---

--- ---

23,056

449,703

2,683,056

23,056

449,703

2,683,056

---

--- ---

3,572,638 3,572,638 --- 3,155,815 3,155,815 ---

6. Long Term Investments

Long term investments, which consist of bonds in chartered banks and investment banks, are recordedon the Statement of Financial Position at cost plus accrued interest. They have a market value of$15,114,178 at December 31, 2017 (2016 $14,901,513).

7. Deferred Revenues

A requirement of public sector accounting standards of the Chartered Professional Accountants ofCanada is that obligatory reserve funds be reported as deferred revenues. This requirement is in placeas Provincial legislation restricts how these funds may be used and under certain circumstances thesefunds may possibly be refunded.

15


December 31, 2017

7. Deferred Revenues / continued

The transactions for the year are summarized as follows:

Infrastructure Grant

Social Service

Program Federal

Gas Tax Total

$ $ $ $

January 1, 2017 90,369 1,081,754 3,185 1,175,308

InterestGovernment grantsTransfer to operating fund

Transfer to capital fund

--- ---

(68,164)

(22,205)

--- 380,354

---

---

5,386 866,230

---

---

5,386 1,246,584

(68,164)(22,205)

December 31, 2017 --- 1,462,108 874,801 2,336,909

8. Long Term Liabilities

(a) The balance of long term liabilities reported on the " Statement of Financial Position” is comprisedof the following:

2017 2016

$ $

Serial DebenturesMapleview Lodge < 2.64%, due October 2022St. Lawrence Lodge < 5.60% & 4.71%, due September

2024 and September 2025 Fire Communications Systems < 2.88% due October 2024

Debenture Payable

Road construction < 3.82%, due December 2019

1,782,500

4,683,594 691,739

400,000

2,139,000

5,168,187

779,734

600,000

Net long term liabilities at the end of the year 7,557,833 8,686,921

(b) Total debt includes two mortgages held by the City of Brockville on behalf of the St. LawrenceLodge. St. Lawrence Lodge receives capital funding in the amount of $10.35 per resident dayfrom the Ministry of Health and Long Term Care which equates to $70,516 per month which issent to the City of Brockville to be applied towards the capital debt. The remaining amountspayable towards the outstanding mortgage balance was paid by the Municipal partners on thefollowing approximate percentage basis:

City of BrockvilleUnited Counties of Leeds and GrenvilleTown of PrescottTown of Gananoque

60%29%

9%2%

16


December 31, 2017

8. Long Term Liabilities / continued

(c) Principal payments fall due as follows:

Other Municipalities

General Revenues Total

$ $ $

2018201920202021 20222023 to 2026

90,549

93,175 95,876

98,658 101,521

211,959

1,065,189

1,090,491 917,062

944,957 974,252

1,874,144

1,155,738 1,183,666 1,012,938 1,043,615 1,075,773 2,086,103

691,738 6,866,095 7,557,833

(d) Interest expense on long term liabilities in 2017 amounted to $434,804 (2016 $500,419).

(e) These payments are within the annual debt repayment limit prescribed by the Ministry ofMunicipal Affairs and Housing.

9. Municipal Equity

Municipal equity consists of:

2017 2016

$ $

Investment in tangible capital assetsTangible capital assets

Long term liabilities Debt recoverable from lower tiers

155,378,308 (7,557,833)

691,738

160,518,743 (8,686,921)

779,733

148,512,213 152,611,555

Reserves (Schedule 1) 26,510,942 22,479,675

Total Municipal Equity 175,023,155 175,091,230

17


December 31, 2017

10. Pension Contributions

The Counties make contributions to the Ontario Municipal Employees Retirement System (“OMERS”),which is a multi-employer plan, on behalf of all permanent members of its staff. The plan is a definedbenefit plan which specifies the amount of the retirement benefit to be received by the employeesbased on the length of service and rates of pay. Employers and employees contribute to the plan. Since any surpluses or deficits are a joint responsibility of all Ontario municipalities and theiremployees, the Counties does not recognize any share of the OMERS pension surplus or deficit inthese consolidated financial statements.

The amount contributed to OMERS was $1,874,300 (2016 $1,857,007) for current services and isincluded as an expenditure on the Statement of Operations classified under the appropriate functionalexpenditure. Contributions by employees were a similar amount.

11. Trust Funds

Trust funds administered by the Counties amounting to $6,553 (2016 $6,655) are presented in aseparate financial statement of trust fund balances and operations. As such balances are held in trustby the Counties for the benefit of others, they are not presented as part of the Counties’ financialposition or financial activities.

12. Contingent Liabilities

(a) Community Housing

Under the provision of a transfer order prepared under authority of The Social Housing ReformAct, 2000, the United Counties of Leeds and Grenville were the recipient of assets, liabilities,rights and obligations previously owned by the Ontario Housing Corporation (OHC). The transferincluded all social housing units, including land and buildings, which were transferred to theCounties at no cost.

The majority of Ontario public housing projects were originally financed by OHC debenturesissued by the OHC in favour of Canada Mortgage and Housing Corporation. OHC continues tohold these debentures and the debt charges associated with these debentures are to be paid fromFederal funding directly by the Province to the debenture holder. As a result, these debenturesare not included as part of the consideration of the Counties’ into these financial statements. Total debentures outstanding at December 31, 2017 amount to $3,055,138 (2016 $3,492,550).

Effective on the date of transfer, the Counties as service manager is responsible for themanagement and operation of the housing projects transferred and are bound by the requirementsas set out in the legislation.

(b) The nature of municipal activities is such that there may be litigation pending or in prospect at anytime. With respect to claims as at December 31, 2017, management believes that the Countieshave valid defences and appropriate insurance coverages in place.

In the event any claims are successful, management believes that such claims are not expectedto have a material effect on the Counties’ financial position.

18


December 31, 2017

13. Contributions to Joint Boards and Health Unit

(a) The assets and liabilities of St. Lawrence Lodge Home for the Aged have not been consolidated. The Counties’ contributions to the Lodge for 2017 are $628,413 (2016 $554,469) and are reportedon the Statement of Operations.

(b) The assets and liabilities of the Leeds, Grenville and Lanark District Health Unit have not beenconsolidated. The Counties made the following contributions to the Health Unit for 2017$1,266,578 (2016 $1,266,578).

14. Provincial Offences Administration

The Counties have assumed the administration of the Provincial Offences office for all United Countiesof Leeds and Grenville resident municipalities. The transfer of administration from the Ministry of theAttorney General to the Counties was a result of the Provincial Offences Act (POA) 1997, whichprovides the framework for the transfer of responsibility and administration of POA courts.

The POA is a procedural law for administering and prosecuting provincial offences, including thosecommitted under the Highway Traffic Act, Compulsory Automobile Insurance Act, Trespass to PropertyAct, Liquor Licence Act, Municipal By-Laws and minor federal offences. The POA governs all aspectsof legal process from serving notice to a defendant, to conducting trials, including sentencing andappeals.

The Counties’ share of net revenues arising from operation of the POA office have been included withthese financial statements. The revenue of the court office consists of fines levied under Parts I, II and III (including delay penalties) for POA charges filed in the Counties court.

If fines are paid at other court offices, the receipt is recorded in the Integrated Courts OperationNetwork System (“ICON”) operated by the Province of Ontario. Revenue is recognized when receiptof funds is recorded by the provincial ICON system regardless of the location where payment is made.

The United Counties of Leeds and Grenville shares net POA revenues based on the cost sharingagreement established in 2000. Gross revenues for POA charges total $2,140,443 (2016 $2,156,250).

15. Commitments

(a) The Counties have entered into an agreement with the Ontario Provincial Police for the provisionof 911 Central Emergency Reporting Bureau services. The contract is based on population withthe rate fixed for the period of the agreement at $51,489 per year. The contract expiresNovember 2018. The amounts paid under the contract were $50,836 (2016 $50,836).

(b) The Counties have entered into an agreement with the City of Brockville to provide centraldispatch services to all organized fire departments in the Counties. The contract fees are basedon a per capita cost. The contract expires December 2021. The amounts paid under the contractwere $267,610 (2016 $276,564).

(c) The Counties have entered into an agreement with Bell Mobility Radio Division for a serviceagreement for system upgrades for the fire radio communication system. The contract is for aten year period from 2017 to 2026. The annual fee under the contract is $106,500. The Countieshave an agreement with the City of Brockville to fund approximately 20% of the annual costs.

19


December 31, 2017

15. Commitments / continued

(d) The Counties have entered into a loan agreement with Marguerita Residence Corporation for theconstruction of the Wall Street Village Project up to a maximum of $534,112 after Provincialfunding. The term of the loan will not exceed ten years and the interest rate will be determinedby the rate charged by the Counties’ chartered bank for a line of credit (currently prime less0.25%).

16. Cost Sharing Allocations

The Joint Operating Agreement (signed May 25, 2000) sets out formulae under which the costs forSocial Services, Child Care, Social Housing, Provincial Offences and Land Ambulance are sharedbetween the United Counties of Leeds and Grenville, the City of Brockville, the Town of Gananoqueand the Town of Prescott.

Program costs are shared between the parties as follows:

Social Housing

Ambulance

Provincial Offences

Social Services

weighted assessment

weighted assessment

25% ticket revenue, 25% households25% population, 25% weighted assessment

50% caseload, 50% weighted assessment

17. Risk Management

In the normal course of operations, the Counties are exposed to a variety of financial risks which areactively managed by the Counties.

The Counties’ financial instruments consist of cash, investments, accounts receivable, accountspayable and accrued liabilities. The fair values of cash, investments, accounts payable and accruedliabilities approximate their carrying values because of their expected short term maturity andtreatment on normal trade terms.

The Counties’ exposure to and management of risk has not changed materially from December 31,2016.

Credit Risk

Credit risk arises from the possibility that the entities to which the Counties provide services to may experience difficulty and be unable to fulfill their obligations. The Counties are exposed to financialrisk that arises from the credit quality of the entities to which it provides services. The Counties do nothave a significant exposure to any individual customer or counter party. As a result, the requirementfor credit risk related reserves for accounts receivable is minimal.

20


December 31, 2017

17. Risk Management / continued

Interest Rate Risk

Interest rate risk arises from the possibility that the value of, or cash flows related to, a financialinstrument will fluctuate as a result of changes in market interest rates. The Counties are exposed tofinancial risk that arises from the interest rate differentials between the market interest rate and therates on its cash and cash equivalents and operating loan. Changes in variable interest rates couldcause unanticipated fluctuations in the Counties’ operating results.

Liquidity Risk

Liquidity risk is the risk that the Counties will not be able to meet its obligations as they fall due. TheCounties require working capital to meet day-to-day operating activities. Management expects thatthe Counties’ cash flows from operating activities will be sufficient to meet these requirements.

18. Tangible Capital Assets

2017 2016

$ $

Land

Land Improvements Buildings Machinery, Equipment, Furniture and Fixtures

Vehicles Linear Assets

Roads Bridges and Culverts

Construction in Progress

323,664 307,304

30,614,514 6,567,119 2,662,857

91,190,387 19,566,682

4,145,781

324,569 246,654

30,511,687 6,527,486

2,556,674

98,671,625 17,071,405

4,608,643

155,378,308 160,518,743

For additional information, see Schedule 2 < Tangible Capital Assets.

19. Segmented Information

The Counties are a diversified municipal government that provides a wide range of services to itscitizens. The services are provided by departments and their activities are reported in the statementof operations.

Departments have been separately disclosed in the segmented information, along with the service theyprovide, as set out in the schedule below.

For each reported segment, expenditures represent both amounts that are directly attributable to thesegment and amounts that are allocated on a reasonable basis. Therefore, certain allocationmethodologies are employed in the preparation of segmented financial information.

21


December 31, 2017

19. Segmented Information / continued

The accounting policies used in these segments are consistent with those followed in the preparation of thefinancial statements as disclosed in note 2.

2017Salaries, Wages &

Employee Benefits

Debenture Debt

Interest Materials

& Services External

Transfers

Interfunc- tional

Adjustments Amortization Total

$ $ $ $ $ $ $

General GovernmentGovernanceCorporate Management & Program Support

279,083

1,892,490

---

55,746

89,993

3,760,075

---

123,000

26,978

(3,442,401)

---

442,551

396,054

2,831,461

Protection to Persons and Property

Emergency MeasuresProvincial Offences

110,826 435,806

66,805 ---

650,610 382,334

--- 307,228

22,194 118,635

103,293 731

953,728 1,244,734

TransportationRoadways 3,453,464 20,668 6,611,196 --- 571,876 12,138,436 22,795,640

EnvironmentalWaste diversion 6,624 --- 262,508 --- 4,021 5,941 279,094

Health ServicesPublic Health ServicesEmergency Medical Services

---

9,730,325

---

---

---

1,369,650

1,266,578

222,335

---

624,651

---

672,075

1,266,578

12,619,036

Social and FamilyAssistance

General AssistanceAssistance to Aged Persons

Child CareCommunity Housing

4,631,367

4,773,639 1,218,640 1,887,411

---

291,585 --- ---

478,237

1,399,171 177,071

4,074,118

15,599,606

628,413 7,018,611 5,757,268

572,291

434,296 221,571 678,010

---

290,805 ---

893,296

21,281,501

7,817,909 8,635,893

13,290,103

Recreation & Cultural 6,321 --- 14,490 --- 357 2,095 23,263

Planning and DevelopmentPlanning & ZoningCommercial & IndustrialAgriculture & Reforestation

447,925 308,329

187,192

--- ---

---

91,800 166,100

55,262

--- ---

---

74,066 65,925

27,530

2,455 ---

19,651

616,246 540,354

289,635

2017 29,369,442 434,804 19,582,615 30,923,039 --- 14,571,329 94,881,229

22


December 31, 2017

19. Segmented Information / continued

2016Salaries, Wages &

Employee Benefits

Debenture Debt

Interest Materials

& Services External

Transfers

Interfunc- tional

Adjustments Amortization Total

$ $ $ $ $ $ $

General GovernmentGovernanceCorporate Management & Program Support

272,903

1,759,212

---

64,187

95,426

2,938,600

22,000

---

28,637

(3,419,634)

---

472,738

418,966

1,815,103

Protection to Persons and Property

Emergency MeasuresProvincial Offences

148,501 478,301

84,404 ---

682,863 366,958

2,070 317,421

28,043 122,275

103,293 731

1,049,174 1,285,686

TransportationRoadways 3,335,664 28,384 5,584,412 --- 582,190 12,137,335 21,667,985

EnvironmentalWaste diversion 11,096 --- 156,181 --- 3,444 --- 170,721

Health ServicesPublic Health ServicesEmergencyMedical Services

---

8,800,246

---

---

---

1,449,187

1,266,578

---

---

621,438

---

623,931

1,266,578

11,494,802

Social and FamilyAssistance

General AssistanceAssistance to Aged Persons

Child CareCommunity Housing

4,795,223

4,781,499 1,145,548 1,824,848

---

323,444 --- ---

472,191

1,222,188 165,324

3,692,489

14,913,085

554,469 6,717,905 5,203,121

281,395

431,413 214,720 906,829

---

291,550 ---

877,998

20,461,894

7,604,563 8,243,497

12,505,285

Recreation & Cultural 2,195 --- 16,828 --- 342 1,548 20,913

Planning and DevelopmentPlanning & ZoningCommercial & IndustrialAgriculture & Reforestation

460,878 294,387

184,391

--- ---

---

97,485 114,019

78,748

--- ---

---

88,924 72,459

37,525

4,694 ---

15,675

651,981 480,865

316,339

2016 28,294,892 500,419 17,132,899 28,996,649 --- 14,529,493 89,454,352

23


December 31, 2017

20. Budget Figures

The 2017 approved budget was prepared on a cash based approach with a reconciliation to a budgetbased on Public Sector Accounting Standards. The cash based approach includes capitalexpenditures, repayment of long term debt and transfers to and from reserves which are removed inthe year end Statement of Operations. The revenues attributable to these items continue to beincluded in the Statement of Operations, resulting in a significant variance. The following analysis isprovided to assist readers in their understanding of differences between the approved budget and theaudited financial statements.

Budget Actual

$ $

Total RevenuesTotal Expenditures

89,377,120 (93,937,226)

92,895,231 (95,082,743)

Net ExpendituresAmortization

(4,560,106)14,460,788

(2,187,512)14,571,329

Adjusted Net RevenuesCapital Revenues

9,900,682 3,222,388

12,383,817 2,119,437

Funds Available

Capital ExpendituresDisposal of Tangible Capital AssetsLong Term Receivable RepaymentsPrincipal Repayments

13,123,070

(12,713,146)---

87,995 (1,129,089)

14,503,254

(9,451,237)20,343 87,995

(1,129,088)

(Decrease) Increase in Operating Surplus (631,170) 4,031,267

Allocated As Follows:Net Transfer (to) from Reserves (631,170) 4,031,267

24

United Counties of Leeds and GrenvilleSchedule 1 < Continuity of Reserves and Reserve Funds


Budget 2017 2016

$ $ $

Net Transfers From / (To) Other FundsTransfers from operations

Transfers to capital acquisitions 9,371,588

(10,002,758)11,915,160 (7,883,893)

12,257,533

(10,047,328)

Total Net Transfers (631,170) 4,031,267 2,210,205

Reserves and Reserve Fund Balances,Change in Year (631,170) 4,031,267 2,210,205

Reserves and Reserve Fund Balances,Beginning of Year 22,479,675 22,479,675 20,269,470

Reserves and Reserve Fund Balances, End of Year 21,848,505 26,510,942 22,479,675

Composition of Reserves and Reserve Funds


$ $

Reserves set aside for specific purposes by Council:< for working capital < for contingencies

< for insurance < for WSIB claims

< for planning < for road maintenance< for social and family services

3,758,247 5,851,417 1,326,216 2,201,767

179,717 735,699 438,890

3,633,588 4,751,137

1,265,621 2,387,197

126,677 165,189

438,890

14,491,953 12,768,299

For Capital Purposes< for capital projects < for emergency medical services < for road capital projects

< for social housing < for equipment replacement

< for Maple View Lodge projects < for emergency measures

< for dedicated infrastructure

1,949,469 1,949,181 2,462,675 2,857,073

799,446 1,279,525

358,261 363,359

2,435,851

1,961,635 1,276,748

2,313,567 697,212

776,228 250,135

---

12,018,989 9,711,376

Total Reserves and Reserve Funds 26,510,942 22,479,675

The accompany notes are an integral part of these financial statements.

25

United Counties of Leeds and GrenvilleSchedule 2 < 2017 Tangible Capital Assets

Asset ClassCost

01/01/17 Additions (Disposals)Cost

31/12/17

$ $ $ $

Land 337,696 --- --- 337,696

Land Improvements 1,525,110 93,286 --- 1,618,396

Buildings 49,846,167 1,574,141 --- 51,420,308

Vehicles 5,191,513 949,339 (487,619) 5,653,233

Machinery & Equipment 11,258,471 753,009 (745,840) 11,265,640

Linear AssetsRoadsBridges and Culverts

419,603,688 26,732,800

3,486,618 3,057,706

--- ---

423,090,306 29,790,506

Construction in Progress 4,608,643 (462,862) --- 4,145,781

519,104,088 9,451,237 (1,233,459) 527,321,866

Asset Class

Accumulated Amortization

01/01/17 Amortization (Disposals)


31/12/17

Net Book Value

31/12/17

$ $ $ $ $

Land 13,127 905 --- 14,032 323,664

Land Improvements 1,278,456 32,636 --- 1,311,092 307,304

Buildings 19,334,480 1,471,314 --- 20,805,794 30,614,514

Vehicles 2,634,839 843,156 (487,619) 2,990,376 2,662,857

Machinery & Equipment 4,730,985 693,033 (725,497) 4,698,521 6,567,119


320,932,063 9,661,395

10,967,856 562,429

--- ---

331,899,919 10,223,824

91,190,387 19,566,682

Construction in Progress --- --- --- --- 4,145,781

358,585,345 14,571,329 (1,213,116) 371,943,558 155,378,308


26

United Counties of Leeds and GrenvilleSchedule 2 < 2016 Tangible Capital Assets

Asset ClassCost

01/01/16 Additions (Disposals)Cost

31/12/16

$ $ $ $

Land 224,875 112,821 --- 337,696

Land Improvements 1,499,166 25,944 --- 1,525,110

Buildings 48,463,215 1,646,575 (263,623) 49,846,167

Machinery & Equipment 5,108,734 843,758 (760,979) 5,191,513

Vehicles 11,068,862 635,585 (445,976) 11,258,471


411,760,224 25,941,578

7,843,464 791,222

--- ---

419,603,688 26,732,800

Construction in Progress 4,478,638 130,005 --- 4,608,643

508,545,292 12,029,374 (1,470,578) 519,104,088

Asset Class


01/01/16 Amortization (Disposals)


31/12/16

Net Book Value

31/12/16

$ $ $ $ $

Land 12,222 905 --- 13,127 324,569

Land Improvements 1,251,782 26,674 --- 1,278,456 246,654

Buildings 17,982,912 1,432,250 (80,682) 19,334,480 30,511,687

Machinery & Equipment 2,604,046 755,666 (724,873) 2,634,839 2,556,674

Vehicles 4,462,919 714,042 (445,976) 4,730,985 6,527,486


309,846,835 9,146,667

11,085,228 514,728

--- ---

320,932,063 9,661,395

98,671,625 17,071,405

Construction in Progress --- --- --- --- 4,608,643

345,307,383 14,529,493 (1,251,531) 358,585,345 160,518,743


27

United Counties of Leeds and GrenvilleTrust Fund

Statement of Financial Position

December 31 2017 2016

$ $

ASSETS

Cash 6,553 6,655

FUND BALANCES 6,553 6,655

Statement of Financial Activities


$ $

REVENUES

Residents’ deposits 6,577 5,900

EXPENDITURES

Residents’ withdrawals 6,679 5,170

NET (EXPENDITURES) REVENUES FOR THE YEAR (102) 730

BALANCE AT THE BEGINNING OF THE YEAR 6,655 5,925

BALANCE AT THE END OF THE YEAR 6,553 6,655


30

United Counties of Leeds and GrenvilleTrust Fund

Notes to the Financial Statements

December 31, 2017

1. Significant Accounting Policies

Reporting Entity

Expenditures are reported on the cash basis of accounting with the exception of administrative expenseswhich are reported on the accrual basis of accounting, which recognizes expenditures as they areincurred and measurable as a result of the receipt of goods or services and the creation of a legalobligation to pay.

31

financial statements december 31, 2017...united counties of leeds and grenville five year financial...

Documents