Town of Perth Consolidated Financial Statements December ...

CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2017

CONTENTS

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

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

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

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

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

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

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

Notes to the Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 - 23

Schedule 1 < Continuity of Reserves and Reserve Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Independent Auditor’s Report < Business Improvement Area Committee.. . . . . . . . . . . . . . . . . . . 25 - 26

Town of Perth Business Improvement Area Committee.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 - 33

Perth and District Union Public Library Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 - 46

Town of PerthConsolidated

Financial StatementsDecember 31, 2017

Town of PerthFive Year Financial Review

(not subject to audit)

December 31 2017 2016 2015 2014 2013

Population (Statistics Canada) 5,930 5,930 5,840 5,840 5,840

Number of Households (MPAC) 3,197 3,172 3,151 3,139 3,139

Taxable Assessment (000's)Residential and farmCommercial and industrial

$ 550,608 125,122

$ 549,334 128,684

$ 528,495 129,141

$ 503,368 126,837

$ 484,960 123,699

Total 675,730 678,018 657,636 630,205 608,659

Commercial, industrial as % of assessment 18.52% 18.98% 19.60% 20.13% 20.32%

Rates of TaxationResidential< for general municipal purposes< for county purposes

< for school board purposes

0.86 0.38 0.18

0.87 0.37

0.19

0.88 0.38

0.20

0.92 0.39

0.20

0.94 0.41

0.21

Total 1.42 1.43 1.46 1.51 1.56

Multi-Residential (total) Commercial (total)

Industrial (total)

3.00 3.48 4.61

3.03 3.40

4.73

3.14 3.44

4.77

3.30 3.52

4.98

3.46 3.59

5.27

Tax Arrears < percentage of current levy (<10%)** 3.74% 3.95% 3.62% 4.36% 4.69%

Taxes Transferred (000's)< County< School Boards

3,169 2,579

3,153 2,766

3,087 2,739

3,071 2,746

3,090 2,761

Revenues (000's)< Taxation and payments in lieu

< Government transfers < Fees and service charges

< Other < Provincial offenses

< Revenues related to capital assets

$ 7,286 2,499 4,108

883 989

3,478

$ 7,346

2,439 4,029

1,059 886

274

$ 7,137

2,445 4,000

814 923

522

$ 7,151 2,465 3,984

1,160 1,159

1,145

$ 7,119 2,441 4,060

737 1,012

526

Total 19,243 16,033 15,841 17,064 15,895

Expenditures (000's)< Operations

< Amortization 14,235

1,677

14,592

1,572

13,857

1,503

14,204

1,429

13,795

1,487

Net Financial Assets (Net Debt)< % of Operating Revenue (>(20%))**

< % of Taxation and User Charges (>(50%))** 41.81%57.85%

59.46%82.38%

54.05%

74.34%

44.31%

61.16%

40.42%

56.17%

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

1

Town of PerthFive 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

< Debt charges (000's)< tax supported< rate supported

372

310

3,217

116

252 58

658

392

3,298

207

334

58

1,011

474

3,297

321

376

98

1,425

513

3,240

454

456

57

1,854

554

3,231

590

497

57

Municipal Equity (000's)

< Surplus and Reserves

< Invested in capital assets

< Asset consumption ratio

< Reserves as % of operating expenses (> 20%)**

8,113

56,005

33.60%

56.61%

10,476

48,634

36.09%

69.17%

10,146

47,523

35.26%

66.89%

8,387

47,298

34.49%

60.13%

8,209

44,615

34.44%

58.24%

Financial Indicators

< Sustainability< financial assets to liabilities< financial assets to liabilities

excluding long term debt

< long term debt to tangible capital assets

< capital reserves to accumulated amortization

1.91

2.02

0.65%

19.11%

2.43

2.70

1.33%

30.35%

2.52

3.09

2.05%

30.30%

2.07

2.66

2.92%

29.16%

1.93

2.67

3.99%

29.73%

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

< Total operating revenue to taxable assessment

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

1.97%

2.33%

48.92%

2.49%

2.32%

68.73%

3.09%

2.33%

67.04%

3.33%

2.53%

57.98%

3.60%

2.53%

58.47%

< Vulnerability< Operating government transfers

< to operating revenue

< Total government transfers< to total revenues

15.85%

29.01%

15.48%

17.55%

15.96%

17.96%

16.04%

21.69%

15.89%

18.51%

2

Town of PerthConsolidated Statement of Financial Position

December 31 2017 2016

$ $

ASSETS

Financial Assets

Cash and short term depositsTaxes receivable (net of allowance $20,000)

User charges receivable (net of allowance $10,000) Accounts receivable (net of allowance $30,000)

Inventory for resale

10,032,165 461,031 372,881

2,446,245 504,132

13,953,229 488,062

346,052 625,115

514,452

13,816,454 15,926,910

LIABILITIES

Financial Liabilities

Accounts payable and accrued liabilitiesPrepaid property taxes

Accrued landfill closure and post closure liability (note 11) Other current liabilities

Employee future benefit obligations Deferred revenues (note 4)

Long term liabilities (note 5)

3,179,443 423,299

1,330,000 787,829 166,717 965,014 372,440

1,459,727 416,382

630,000 649,778

165,807 2,576,350

658,402

7,224,742 6,556,446

NET FINANCIAL ASSETS 6,591,712 9,370,464

NON-FINANCIAL ASSETS

Tangible capital assets (note 15)Inventories

Prepaid expenses

57,377,705 ---

148,636

49,592,139 15,233

132,645

57,526,341 49,740,017

Commitments (note 12) Contingent Liabilities (note 10)

MUNICIPAL EQUITY (note 6) 64,118,053 59,110,481

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

6

Town of PerthConsolidated Statement of Operations

For the year ended December 31(Note 16)

Budget 2017 2016

$ $ $

REVENUES

Taxation < residential< commercial and industrial

< other governments User charges < sewer and water

< environmental < recreation and culture

< transportation < other

Government transfers Licences and permits Deferred revenues earned (note 4) Investment income

Penalties and interest on taxes Provincial offences

Other

5,013,297 2,114,560

125,191 3,013,687

222,322 557,753

176,270 326,750

2,365,035 150,764

--- 164,057

99,801 940,807

399,165

5,055,587 2,108,996

121,386 2,978,269

177,250 593,263 159,060 200,570

2,499,453 160,701

--- 197,576

89,728 988,880 434,592

5,256,098 1,965,409

124,292 2,943,574

203,107 716,399

134,282 31,716

2,438,936 226,374

23,036 152,207

83,859 886,298

573,558

TOTAL REVENUES 15,669,459 15,765,311 15,759,145

EXPENDITURES

General governmentProtection to persons and property

Transportation services Environmental services

Social and family services Recreation and cultural services

Planning and development Landfill closure

1,049,098

3,652,501 1,963,399

5,412,517 20,000

2,519,237 1,191,220

---

984,870 3,635,835 1,811,145 3,620,980

20,000 2,477,270

985,298 700,000

1,135,984 3,708,509

1,961,827 3,976,231

20,000 2,952,586

837,002 ---

TOTAL EXPENDITURES 15,807,972 14,235,398 14,592,139

NET REVENUES (EXPENDITURES)FROM OPERATIONS (138,513) 1,529,913 1,167,006

OTHER

Grants and transfers related to capitalDeferred revenues earned (note 4)Government transfers

Gain (loss) on sale of tangible capital assets Write down of assets Land for resale

1,205,125 2,577,946

--- ---

33,000

1,847,918 1,983,346

--- (423,331)

69,726

--- 375,270

(2,074)(141,770)

42,784

3,816,071 3,477,659 274,210

ANNUAL SURPLUS

MUNICIPAL EQUITY, BEGINNING OF YEAR

3,677,558

59,110,481

5,007,572

59,110,481

1,441,216

57,669,265

MUNICIPAL EQUITY, END OF YEAR 62,788,039 64,118,053 59,110,481


7

Town of PerthConsolidated Statement of Changes in Net Financial Assets


Budget 2017 2016

$ $ $

ANNUAL SURPLUS 3,677,558 5,007,572 1,441,216

Amortization of tangible capital assets

Acquisition of tangible capital assets Loss on write down of capital assets

Proceeds on sale of capital assets Disposal of supplies inventories

(Acquisition) disposal of prepaid expenses

1,517,210

(11,213,621)---

--- ---

---

1,676,563 (9,907,678)

423,331 22,218 15,233

(15,991)

1,572,312

(2,083,073)141,770

5,085 13,052

653

(9,696,411) (7,786,324) (350,201)

(DECREASE) INCREASE IN NET FINANCIAL ASSETS (6,018,853) (2,778,752) 1,091,015

NET FINANCIAL ASSETS, BEGINNING OF YEAR 9,370,464 9,370,464 8,279,449

NET FINANCIAL ASSETS, END OF YEAR 3,351,611 6,591,712 9,370,464


8

Town of PerthConsolidated Statement of Cash Flows

For the year ended December 31 2017 2016

$ $

OPERATING ACTIVITIES

Annual surplus for the yearAmortization

Write down of tangible capital assets

5,007,572 1,676,563

423,331

1,441,216 1,572,312

141,770

7,107,466 3,155,298

Net Change in Non-Cash Working Capital BalancesTaxes receivable

User charges receivable Accounts receivable Inventory for resale Accounts payable and accrued liabilities Prepaid property taxes Accrued landfill closure and post closure

Other current liabilities Employee future benefit obligation

Deferred revenues Inventories for resale

Prepaid expenses

27,031 (26,829)

(1,821,130)10,320

1,719,716 6,917

700,000 138,051

910 (1,611,336)

15,233 (15,991)

(55,351)

13,751 (24,660)

10,320 121,631

(25,734)---

54,937 (3,162)

1,311,538 13,052

653

(857,108) 1,416,975

Working Capital from Operations 6,250,358 4,572,273

CAPITAL ACTIVITIES

Acquisition of tangible capital assets

Disposal of capital assets (9,907,678)

22,218

(2,083,073)

5,085

Net investment in tangible capital assets (9,885,460) (2,077,988)

FINANCING ACTIVITIES

Debt principal repayments (285,962) (352,214)

Net decrease in cash from financing activities (285,962) (352,214)

NET (DECREASE) INCREASE IN CASH

CASH, BEGINNING OF YEAR

(3,921,064)

13,953,229

2,142,071

11,811,158

CASH, END OF YEAR 10,032,165 13,953,229


9

Town of PerthNotes to the Consolidated Financial Statements

December 31, 2017

1. Status of the Town of Perth

The Town of Perth (the ‘Town’) was incorporated in 1854. The Town operates as a lower tiergovernment in the County of Lanark, in the Province of Ontario, Canada and provides municipalservices such as police, fire, public works, planning, parks and recreation, library and other generalgovernment operations.

2. Significant Accounting Policies

The consolidated financial statements of the Corporation of the Town of Perth (the ‘Town’) 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 Town are as follows:

Reporting Entity

(i) The consolidated financial statements reflect financial assets, liabilities, operating revenues andexpenditures, reserves, reserve funds and changes in investment in tangible capital assets of theTown. The reporting entity is comprised of all organizations, committees and local boardsaccountable for the administration of their financial affairs and resources to the Town and whichare owned or controlled by the Town. Interdepartmental and inter-organizational transactions andbalances between these organizations are eliminated. These consolidated financial statementsinclude:

< Business Improvement Area Committee< Public Library Board (proportionate)

(ii) The taxation, other revenues, expenditures, assets and liabilities with respect to the operationsof the school boards are not reflected in the municipal fund balances of these consolidatedfinancial statements.

Basis of Accounting

(i) The consolidated financial statements are prepared using the accrual basis of accounting. Theaccrual basis of accounting records revenue as it is earned and measurable. Expenditures arerecognized as they are incurred and measurable based on receipt of goods and services and/or the creation of a 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 Town are not included in theseconsolidated financial statements but are reported separately on the Trust Funds Statement ofFinancial Activities and Financial Position.

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December 31, 2017

2. Significant Accounting Policies / continued

Taxation and Related Revenues

Property tax billings are prepared by the Town based on assessment rolls issued by the MunicipalProperty Assessment Corporation (‘MPAC’). Tax rates are established by the Town Council,incorporating amounts to be raised for local services, amounts to be raised on behalf of County ofLanark for regional services, and amounts the Town is required to collect on behalf of the Province ofOntario in respect of education taxes. Taxation revenues are recorded at the time tax billings areissued. Adjustments to taxation revenue can occur during the year related to the issuance ofsupplementary tax billings and/or assessment appeals. These adjustments are recorded when theamount of the adjustments can be quantified. The Town is entitled to collect interest and penalties onoverdue taxes. These revenues are recorded in the period in which the interest and penalties areapplied.

Tangible Capital Assets

Tangible capital assets are recorded at cost, which include all amounts that are directly attributable toacquisition, construction, development or betterment of the asset. The cost, less residual value, of thetangible capital assets are amortized on a straight line basis over their estimated useful lives as follows:

Land Land InfrastructureLand ImprovementsBuildingsLeasehold ImprovementsVehiclesEquipment & MachineryLinear Assets

StructuresRoads < Asphalt SurfaceRoads < Sidewalks & CurbsUnderground WaterUnderground SewerUnderground Storm

Construction in Progress

25 years20 - 50 yearsterm of lease

3 - 25 years3 - 25 years

50 years25 years65 years65 years65 years65 years

Amortization is charged from the month following acquisition. Assets under construction are notamortized until the asset is available for productive use, at which time they are capitalized.

The Town has a capitalization threshold of $5,000 for buildings, vehicles and equipment and $25,000for linear 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 the 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 consolidated statement of operations in the year of disposal. Transfers ofassets to third parties are recorded as an expense equal to the net book value of the asset as of thedate of transfer.

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December 31, 2017


Tangible Capital Assets / continued

When conditions indicate that a tangible capital asset no longer contributes to the Town’s 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 theconsolidated statement 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.

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 Town 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 Town’spolicy.

The Town accrues its obligation for employee benefit plans. The cost of post-retirement benefitsearned by employees is actuarially determined using the projected benefit method pro-rated onservices and management’s best estimate of salary escalation, retirement ages of employees andexpected health care costs.

Actual gains (losses) which can arise from changes in the actuarial assumptions used to determine theaccrued benefit obligation will be amortized over the average remaining service period of activeemployees.

Cash and Cash Equivalents

The Town considers cash and cash equivalents to be highly liquid investments with original maturitiesof three months or less.

Government Transfers

Government transfers are recognized in the consolidated financial statements as revenues in theperiod in which events giving rise to the transfer occur, providing the transfers are authorized, anyeligibility criteria have been met, and reasonable estimates of the amounts can be made.

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December 31, 2017


Deferred Revenues

The Town 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, development chargescollected under the Development Charges Act, 1997, and recreational land collected under thePlanning Act are reported as deferred revenues in the Consolidated Statement of Financial Position. These amounts will be recognized as revenues in the fiscal year the services are performed.

The Town receives restricted contributions under the authority of Federal and Provincial legislation andTown by-laws. These funds by their nature are restricted in their use and until applied to applicablecosts are recorded as deferred revenue. Amounts applied to qualifying expenses are recorded asrevenue 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 theTown has received pursuant to legislation, regulation or agreement that may only be used for certainprograms or in the completion of specific work. These amounts are recognized as revenue in the fiscalyear the services are performed or related expenses incurred.

Investment Income

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. Investment incomeearned on development charges and parkland obligatory reserve funds is added to the fund balanceand forms part of respective deferred revenue balances.

Landfill Closure and Post-Closure Liabilities

The Town accrues landfill closure and post-closure care requirements that have been defined inaccordance with industry standards and include final covering and landscaping of the landfill, pumpingof ground water and leachates from the site, and ongoing environmental monitoring, site inspection andmaintenance. The reported liability is based on estimates and assumptions with respect to eventsextending over a twenty-five year period using the best information available to management.

Future events may result in significant changes to the estimated total expenditures, capacity used ortotal capacity and the estimated liability, and would be recognized prospectively, as a change inestimate, when applicable.

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.

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December 31, 2017


Liability for Contaminated Sites / continued

A liability for remediation of contaminated sites is recognized when a site is not in productive use andall the following criteria are met:

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

(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 consolidated statement of financialposition. The Town has classified each financial instrument into one of the following categories: held-for-trading financial assets and liabilities, loans and receivables, held-to-maturity financial assets andother financial liabilities. Subsequent measurement of financial instruments is based on theirclassification.

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 Town classifies cash and cash equivalents as held-for-trading financial assets, accounts receivableas loans and receivables, and accounts payable and accrued liabilities as other financial liabilities.

Measurement Uncertainty

The preparation of consolidated financial statements requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the consolidated financial statements and the reported amounts ofrevenue and expenditures during the period. Actual results could differ from these estimates. Theseestimates are reviewed periodically and as adjustments become necessary, they are recorded in theconsolidated financial statements in the period in which they become known.

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December 31, 2017

3. Operations of the School Boards and County of Lanark

During 2017, the Town collected and made property tax transfers including payments in lieu of propertytaxes, to the County of Lanark and School Boards as follows:

School Boards $

County $

Property taxesTaxation from other governments

2,579,047 ---

3,128,040 41,252

Amounts requisitioned and paid 2,579,047 3,169,292

4. Deferred Revenues

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

The transactions for the year are summarized below:

Infrastructure Funding

Development Charges Parkland Total

$ $ $ $

January 1, 2017 1,100,000 1,450,306 26,044 2,576,350

Contributions from developersInterestGovernment grantsTransfer to capital fund

--- ---

62,251 (1,100,000)

149,797 20,667

--- (747,918)

3,500 367

--- ---

153,297 21,034 62,251

(1,847,918)

December 31, 2017 62,251 872,852 29,911 965,014

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December 31, 2017

5. Long Term Liabilities

(a) The balance of debt reported on the "Consolidated Statement of Financial Position” is comprisedof the following:

2017 2016

$ $

Fixed rate bank loan with the Bank of Montreal (5.70%), maturing2018. 92,384 270,329

Fixed rate bank loan with the Royal Bank of Canada, (4.02%),maturing June 2020, repayable in blended monthly payments of$10,137. 280,056 388,073

Net long term liabilities at the end of the year 372,440 658,402

(b) Principal payments fall due as follows:

User Charges

General Revenues

Total Revenues

$ $ $

2018 20192020

12,841 13,354

5,731

192,182 103,788

44,544

205,023 117,142

50,275

31,926 340,514 372,440

(c) Interest expense on long term liabilities in 2017 amounted to $24,370 (2016 $39,772).

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

6. Municipal Equity

Municipal equity consists of:

2017 2016

$ $

Investment in tangible capital assetsTangible capital assetsLong term liabilities

Unfinanced Capital Projects

To be funded from taxation or user charges

57,377,705 (372,440)

(1,000,000)

49,592,139

(658,402)

(300,000)

56,005,265 48,633,737

Unrestricted surplus 54,562 383,062

Reserves (Schedule 1) 8,039,686 10,075,390

Reserve Funds (Schedule 1) 18,540 18,292

Total Municipal Equity 64,118,053 59,110,481

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December 31, 2017

7. Pension Contributions

The Town makes 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 Village does not recognize any share of the OMERS pension surplus or deficit in theseconsolidated financial statements.

The amount contributed to OMERS was $300,274 (2016 $303,921) for current services and is includedas an expenditure on the Consolidated Statement of Operations classified under the appropriatefunctional expenditure. Contributions by employees were a similar amount.

8. Provincial Offences Administration (POA)

The Town of Perth has assumed the administration of the Provincial Offences office for all County ofLanark resident municipalities. The transfer of administration from the Ministry of the Attorney Generalto the Town was a result of the Provincial Offences Act (POA) 1997, which provides the framework forthe 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 Town’s share of net revenues arising from operation of the POA office have been consolidatedwith these consolidated financial statements. The revenue of the court office consists of fines leviedunder Parts I and III (including delay penalties) for POA charges filed in the Perth 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 Town of Perth shares net POA revenues based on weighted assessment.

9. Contingent Liability – Contaminated Sites

The Town has identified a potential liability for two contaminated sites. One site was previously usedas a landfill and the other attached to an industrial property with environmental issues. The Town hascompleted environmental assessments on both sites. An estimate of the liability for the contaminatedsites could not be reasonably estimated. Both sites are currently vacant. A liability for thecontaminated sites will be recognized in the consolidated financial statements, if required, when afuture use of the site is known.

17


December 31, 2017

10. Contingent Liabilities

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 Town has validdefences and appropriate insurance coverages in place.

In the event any claims are successful, the amount of any potential liability is not determinable,therefore, no amount has been accrued in the consolidated financial statements.

11. Landfill Closure and Post Closure Liability

The Environment Protection Act sets out the regulatory requirements to properly close and maintainall active and inactive landfill sites. Under environmental law, there is a requirement for closure andpost-closure care of solid waste landfill sites. This requirement is to be provided for over the estimatedremaining life of the landfill site based on usage.

Landfill closure and post-closure care requirements have been defined in accordance with industrystandards and include final covering and landscaping of the landfill, pumping of ground water andleachates from the site, and ongoing environmental monitoring, site inspection and maintenance. Thereported liability is based on estimates and assumptions with respect to events extending over atwenty-five year period using the best information available to management. Future events may resultin significant changes to the estimated total expenditures, capacity used or total capacity and theestimated liability, and would be recognized prospectively, as a change in estimate, when applicable.

The Town currently has one active site. The Perth site is still in operation and has an estimated lifeof approximately 5 years. The anticipated closure plan, based on information provided by R. J.Burnside and Associated Limited (February 2018), involves placement of low permeability native soilsover the buried wastes, landscaping and revegetation and ongoing annual monitoring and maintenanceat an estimated capital cost of $922,000. Annual post closure maintenance and monitoringrequirements are estimated to be $30,000 per annum and are expected to occur for approximately 50years.

Estimated total expenditures represent the sum of the discounted future cash flows for closure andpost-closure care activities discounted at the Town’s average long term borrowing rate of 6.0% andusing an assumed rate of 0.0% for inflation. The estimated total landfill closure and post-closure careexpenditures are calculated to be approximately $1,630,000.

12. Commitments

(a) The Town has negotiated a long term contract with Glenview Iron and Metal Ltd. for the collectionof waste and source-separated organics and the collection and processing of recyclables. Thecontract commenced June 1, 2015 and will expire on May 31, 2020. All collection charges arebased on the number of households while the processing of recyclables is a charge per tonne. Charges are adjusted annually for inflation. The contract also provides for the Town to receiveall proceeds from the sale of recyclables. Payments under the contract for 2017 were $337,978(2016 $364,383).

18


December 31, 2017

12. Commitments / continued

(b) The Town has entered into a long term contract with the Ontario Provincial Police for theprovision of policing services. The contract period is April 2013 to April 2018. Annual chargesare determined based on levels of service and are reconciled to actual costs in the following year. Payments under the contract for 2017 were $1,762,206 (2016 $1,738,720).

(c) The Town negotiated a three year contract with the Corps of Commissionaires for parking by-lawenforcement for a three year period January 2016 to December 2018. Payments for 2017 were$87,101 (2016 $92,700).

(d) The Town has entered into significant contractual obligations as follows:

For improvements to the water treatment system for a total cost of $2,120,063. Costsincurred to December 31, 2017 were $905,192. The project is expected to be completed in2018.

For improvements to the wastewater system for a total cost of $9,473,167. Costs incurredto December 31, 2017 were $5,491,728. The project is expected to be completed in 2018.

13. Risk Management

In the normal course of operations, the Town is exposed to a variety of financial risks which are activelymanaged by the Town.

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

The Town’s 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 Town provides services to may experience difficulty and be unable to fulfill their obligations. The Town is exposed to financial risk thatarises from the credit quality of the entities to which it provides services. The Town does not have asignificant exposure to any individual customer or counter party. As a result, the requirement for creditrisk related reserves for accounts receivable is minimal.

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 Town is 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 Town’s operating results.

19


December 31, 2017

13. Risk Management / continued

Liquidity Risk

Liquidity risk is the risk that the Town will not be able to meet its obligations as they fall due. The Townrequires working capital to meet day-to-day operating activities. Management expects that the Town’scash flows from operating activities will be sufficient to meet these requirements.

14. Segmented Information

The Town is a diversified municipal government that provides a wide range of services to its citizens. The services are provided by departments and their activities are reported in the consolidatedstatement of operations.

The accounting policies used in these segments are consistent with those followed in the preparationof the consolidated financial statements as disclosed in note 2.

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.

20


December 31, 2017

14. Segmented Information / continued

2017Salaries,Wages &

EmployeeBenefits

DebentureDebt

Interest

Materials&

ServicesExternal

Transfers

Interfunctional

Adjustments Amortization Total

$ $ $ $ $ $ $

General GovernmentGovernanceCorporate Management & Program Support

262,790

808,747

---

134

24,519

856,520

---

---

58,027

(1,127,766)

---

101,899

345,336

639,534

Protection to Persons & PropertyFirePoliceEmergency MeasuresConservation AuthorityProtective InspectionPOA

269,876 82,086 30,506

--- 120,523 253,139

--- --- --- --- --- ---

96,032 1,797,569

797 ---

28,028 104,447

--- --- ---

47,582 ---

501,028

89,920 6,449

19,217 ---

20,761 82,118

85,757 --- --- --- --- ---

541,585 1,886,104

50,520 47,582

169,312 940,732

TransportationRoadwaysWinter ControlParkingStreet Lighting

201,605 89,875 58,884 6,497

17,566 --- ---

432

245,186 128,968 156,952 81,351

--- --- --- ---

64,947 16,839 57,886

---

604,051 10,091 9,423

60,592

1,133,355 245,773 283,145 148,872

EnvironmentalSanitary SewerStorm SewersWaterworksWaste ServicesLandfill Closure

262,555 22,946

526,097 269,372

---

--- 2,197 4,041

--- ---

221,925 47,748

540,212 685,865 700,000

--- --- --- --- ---

137,560 ---

49,597 262,511

---

164,770 134,219 273,200 16,165

---

786,810 207,110

1,393,147 1,233,913

700,000

Social and FamilyChild Care --- --- --- 20,000 --- --- 20,000

Recreation & Cultural ServicesParksRecreation Facilities & ProgramsLibraryCultural Services

222,364

818,379 167,018 187,113

---

--- --- ---

119,237

361,906 59,624 45,615

---

66,621 6,065

---

37,835

130,831 ---

38,266

34,469

131,695 40,146 10,086

413,905

1,509,432 272,853 281,080

Planning and DevelopmentPlanning & ZoningCommercial & Industrial

158,451 238,426

--- ---

81,419 428,400

--- 23,600

24,815 30,187

--- ---

264,685 720,613

2017 5,057,249 24,370 6,812,320 664,896 --- 1,676,563 14,235,398

21


December 31, 2017

15. Tangible Capital Assets

Asset ClassCost

01/01/17 Additions (Disposals)Cost

31/12/17

$ $ $ $

Land 1,681,974 --- --- 1,681,974

Land Infrastructure 28,683 --- --- 28,683

Land Improvements 820,711 73,234 (39,336) 854,609

Buildings 10,338,780 361,403 --- 10,700,183

Vehicles 3,409,573 221,005 (111,252) 3,519,326

Equipment & Machinery 3,554,878 98,989 --- 3,653,867

Linear AssetsStructuresRoadsUnderground WaterUnderground SewerUnderground Storm

4,159,058 22,422,829 11,479,260 10,104,249 8,753,076

1,002,927 214,185 125,384 123,774 80,186

(637,811)(115,427)(13,439)(20,840)(17,594)

4,524,174 22,521,587 11,591,205 10,207,183 8,815,668

Construction in ProgressAdministrationRoadsWater & SewerRecreation & Culture

24,711 13,614 46,088 41,412

26,505 13,920

7,277,671 221,538

--- --- --- ---

51,216 27,534

7,323,759 262,950

Library Board(proportionate share) 722,257 66,957 (141,082) 648,132

77,601,153 9,907,678 (1,096,781) 86,412,050

Asset Class

Accumulated Amortization

01/01/17 Amortization (Disposals)


31/12/17

Net Book Value

31/12/17

$ $ $ $ $

Land --- --- --- --- 1,681,974

Land Infrastructure --- --- --- --- 28,683

Land Improvements 526,569 31,169 (40,516) 517,222 337,387

Buildings 4,555,695 198,729 --- 4,754,424 5,945,759

Vehicles 1,322,501 153,346 (49,975) 1,425,872 2,093,454

Equipment & Machinery 707,026 163,368 --- 870,394 2,783,473

Linear AssetsStructuresRoadsUnderground WaterUnderground SewerUnderground Storm

2,104,189 8,072,653 3,743,652 3,353,436 3,108,670

81,988 542,391 176,208 154,999 134,219

(355,141)(38,596)(6,463)(8,610)

(10,849)

1,831,036 8,576,448 3,913,397 3,499,825 3,232,040

2,693,138 13,945,139 7,677,808 6,707,358 5,583,628

Construction in ProgressAdministrationRoadsWater & SewerRecreation & Culture

--- --- --- ---

--- --- --- ---

--- --- --- ---

--- --- --- ---

51,216 27,534

7,323,759 262,950

Library Board (proportionate share) 514,623 40,146 (141,082) 413,687 234,445

28,009,014 1,676,563 (651,232) 29,034,345 57,377,705

22


December 31, 2017

16. Budget Figures

The 2017 budget amounts that were approved were not prepared on a basis consistent with that usedto report actual results (Public Sector Accounting Board Standards). The budget included capital itemssuch as infrastructure replacements and estimated costs for constructed assets, as program expenses,but the actual expenses have been removed in the Statement of Operations. The revenues attributableto these items continue to be included in the Statement of Operations, resulting In a significant variance. The following analysis is provided to assist readers in their understanding of differences between theapproved budget and the audited financial statements:

Budget Actual

$ $

Year End Surplus Before Public SectorAccounting Standards Adjustments --- 54,562

OperatingReserve Fund IncomeAmortizationUnfunded Landfill Closure LiabilityConsumption of Inventory

--- (1,517,210)

--- ---

248 (1,676,563)

(700,000)(15,233)

CapitalAcquisition of Capital AssetsProceeds from Disposal of Tangible Capital AssetsWrite Down of Tangible Capital Assets

11,213,621 --- ---

9,907,678 (22,218)

(423,331)

Financing Repayment of Long Term DebtProceeds of Long Term DebtPrior Year SurplusTransfers from Reserves < Town ReservesTransfers from Reserves < Library ReservesTransfers from Reserves

373,847 (2,287,674)

(367,829)(5,281,399)

--- 1,544,202

285,962 ---

(367,829)(4,126,030)

(35,474)2,125,800

Annual Surplus on Consolidated Statement of Operations 3,677,558 5,007,572

23

Town of PerthSchedule 1 < Continuity of Reserves and Reserve Funds


Budget 2017 2016

$ $ $

RevenuesInterest --- 248 703

Total Net Revenues --- 248 703

Net Transfers From / (To) Other FundsTransfers from operations

Transfers to capital acquisitions 1,544,202

(5,281,399)2,125,800

(4,161,504)2,006,424

(1,182,823)

Total Net Transfers (3,737,197) (2,035,704) 823,601

Reserves and Reserve Fund Balances,Change in Year (3,737,197) (2,035,456) 824,304

Reserves and Reserve Fund Balances,Beginning of Year 10,093,682 10,093,682 9,269,378

Reserves and Reserve Fund Balances, End of Year 6,356,485 8,058,226 10,093,682

Composition of Reserves and Reserve Funds


$ $

Reserves set aside for specific purposes by Council:For Operating Purposes

< for working capital< for contingencies< for election< for business improvement area

629,397 1,790,551

19,728 51,523

629,397 886,310

14,118 44,240

2,491,199 1,574,065

For Capital Expenditures < for future capital expenditure< for waste disposal site< for waterworks and sewer capital

< for library purposes

292,850 13,253

5,123,639 118,745

295,360 13,253

8,038,493 154,219

5,548,487 8,501,325

Total Reserves 8,039,686 10,075,390

Reserve Funds< museum 18,540 18,292

Total Reserves and Reserve Funds 8,058,226 10,093,682

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

24

Town of PerthBusiness Improvement Area Committee

Statement of Financial Position

December 31 2017 2016

$ $

ASSETS

Financial Assets

Due from Town 51,523 44,240

NET FINANCIAL ASSETS 51,523 44,240

ACCUMULATED SURPLUS (note 3) 51,523 44,240

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

27


Statement of Operations

For the year ended December 31(Note 4)Budget 2017 2016

$ $ $

REVENUES

TaxationMunicipal contribution

Government grants Fees and service charges

Donations

90,290 9,000

56,500 73,500

59,920

85,412 9,000

46,350 47,820 84,956

88,556 14,000

27,500 56,815

66,935

TOTAL REVENUES 289,210 273,538 253,806

EXPENDITURES

Salaries and wagesAdvertising and promotion

Stewart Park Festival Office expenses and travel

Repairs, maintenance and beautification

59,028 4,496

157,000 44,050

28,636

62,694 4,006

144,256 26,869 28,430

50,633 9,333

158,786 12,877

37,103

TOTAL EXPENDITURES 293,210 266,255 268,732

ANNUAL SURPLUS (DEFICIT)

ACCUMULATED SURPLUS, BEGINNING OF YEAR

(4,000)

44,240

7,283

44,240

(14,926)

59,166

ACCUMULATED SURPLUS, END OF YEAR 40,240 51,523 44,240


28


Statement of Changes in Net Financial Assets


$ $

ANNUAL SURPLUS (DEFICIT) 7,283 (14,926)

INCREASE (DECREASE) IN NET FINANCIAL ASSETS 7,283 (14,926)

NET FINANCIAL ASSETS, BEGINNING OF YEAR 44,240 59,166

NET FINANCIAL ASSETS, END OF YEAR 51,523 44,240

Statement of Cash Flows


$ $


Annual surplus (deficit) 7,283 (14,926)

Net Change in Non-Cash Working Capital ItemsDue from Town 7,283 14,926

Working Capital from Operations --- ---

NET INCREASE IN CASH


---

---

---

---

CASH, END OF YEAR --- ---


29


Notes to the Financial Statements

December 31, 2017

1. Status of the Committee

Pursuant to the Municipal Act, the Perth Business Improvement Area Committee (the ‘Committee’) wasestablished by By-law No. 2259 on December 12, 1978.


The financial statements of the Perth Business Improvement Area Committee are the representationsof management and have been prepared in all material respects in accordance with Canadian PublicSector Accounting Standards. Significant aspects of the accounting policies adopted by the Committeeare as follows:

Reporting Entity

The financial statements reflect financial assets, liabilities, operating revenues and expenditures,reserves, reserve funds and changes in investment in tangible capital assets of the Committee.

Basis of Accounting

The financial statements are prepared using the accrual basis of accounting. The accrual basis ofaccounting records revenue as it is earned and measurable. Expenditures are recognized as they areincurred and measurable based on receipt of goods and services and/or the creation of a legalobligation to pay.

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 not intendedfor 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 forthe year.



Assets Estimated Useful Life

Equipment 3 to 30 years

Amortization is charged from the month following acquisition. Assets under construction are notamortized until the asset is available for productive use, at which time they are capitalized.

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 assets as of the date of transfer.

30



December 31, 2017



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 Committee’s abilityto provide services or the value of the future economic benefits associated with the tangible capitalasset are 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.


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


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 Committee defers recognition of user charges and fees which have been collected but for whichthe related services have yet to be performed. These amounts will be recognized as revenues in thefiscal year the services are performed.

The Committee receives restricted contributions under the authority of Federal and Provinciallegislation and Committee by-laws. These funds by their nature are restricted in their use and untilapplied to applicable costs are recorded as deferred revenue. Amounts applied to qualifying expensesare recorded 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 theCommittee 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.


All financial instruments are initially recognized at fair value on the statement of financial position. TheCommittee has 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.

31



December 31, 2017


Financial Instruments / continued



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


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.

3. Accumulated Surplus

Accumulated surplus consists of individual fund surplus (deficit) and reserves as follows:

2017 2016

$ $

SurplusBusiness Improvement Area Committee --- ---

Reserves Stewart Park Festival

Contingency 29,253 22,270

25,541

18,699

Accumulated Surplus 51,523 44,240

4. Budget Figures

Town of Perth Business Improvement Area Committee reviews its operating and capital budgets eachyear. The approved operating budget for 2017 is included in the budget figures presented in theStatement of Operations.

32


Schedule of Continuity of Reserves and Reserve Funds


$ $ $

Net Transfers From / (To) Other FundsTransfer from (to) current fund (4,000) 7,283 (14,926)

Total Net Transfers (4,000) 7,283 (14,926)

Reserves and Reserve Fund Balance, Change in Year (4,000) 7,283 (14,926)

Reserves and Reserve Fund Balance, Beginning of Year 44,240 44,240 59,166

Reserves and Reserve Fund Balance, End of Year 40,240 51,523 44,240

Composition of Reserves


$ $

Reserves Stewart Park Festival

Contingency 29,253 22,270

25,541 18,699

51,523 44,240


33

Perth & District Union Public Library BoardStatement of Financial Position

December 31 2017 2016

$ $

ASSETS

Financial AssetsCash

Accounts receivable 439,903

15,776

445,795

23,693

455,679 469,488

LIABILITIES

Financial LiabilitiesAccounts payable and accrued liabiltiies 151,726 75,521

NET FINANCIAL ASSETS 303,953 393,967

NON-FINANCIAL ASSETSTangible capital assets (note 4) (Schedule 2) 555,202 486,573

ACCUMULATED SURPLUS (note 3) 859,155 880,540


37

Perth & District Union Public Library BoardStatement of Operations


$ $ $

REVENUES

Government GrantsMunicipal Grants < Perth

< Tay Valley < Drummond/North Elmsley

Provincial Grants < Operating Other Grants

User Charges < fees and service charges Other Income

Fines, other Interest

Rentals Book sales

Donations

202,804

158,047 157,166

42,800 16,459

6,300

10,000 3,725

500 2,250

42,000

202,372 158,054 157,592

42,817 26,656

6,497

10,830 5,933

890 3,704

60,913

198,759

154,918 154,071

42,817 13,211

6,809

10,322 5,519

360 2,636

75,349

TOTAL REVENUES 642,051 676,258 664,771

EXPENDITURES

Amortization < books

< building < equipment and shelving

< leasehold improvements Salaries, wages and employee benefits

Periodicals, newspapers and Ebooks Utilities, telephone

Special programs, activities Insurance, professional fees

Internet, videos, miscellaneous Library, photocopy supplies

Technology Maintenance and repairs Fire hall lease and operations

Donation to Perth and District Community Foundation

--- ---

--- ---

424,047 10,200

24,000 42,000

16,400 3,100

12,000 9,812

20,000 6,000

---

53,006 38,616

8,503 2,639

427,522 8,463

20,934 46,417 19,573

3,756 12,193 10,543 27,286

2,667 15,525

53,760 21,912

8,151 2,639

419,735 9,123

22,849 41,643

19,135 12,065

10,618 9,108

13,927 3,296

18,000

TOTAL EXPENDITURES 567,559 697,643 665,961

ANNUAL (DEFICIT) SURPLUS

ACCUMULATED SURPLUS, BEGINNING OF YEAR

74,492

880,540

(21,385)

880,540

(1,190)

881,730

ACCUMULATED SURPLUS, END OF YEAR 955,032 859,155 880,540


38

Perth & District Union Public Library BoardStatement of Changes in Net Financial Assets


$ $

ANNUAL DEFICIT (21,385) (1,190)

Amortization of tangible capital assetsAcquisition of tangible capital assets

102,764 (171,393)

86,462 (86,897)

(68,629) (435)

DECREASE IN NET FINANCIAL ASSETS (90,014) (1,625)

NET FINANCIAL ASSETS, BEGINNING OF YEAR 393,967 395,592

NET FINANCIAL ASSETS, END OF YEAR 303,953 393,967

Statement of Cash Flows


$ $


Annual deficit for the year Amortization

(21,385)102,764

(1,190)86,462

81,379 85,272

Net Change in Non-Cash Working Capital ItemsAccounts receivableAccounts payable and accrued liabilities

7,917 76,205

(5,205)(29,172)

84,122 (34,377)

Working Capital from Operations 165,501 50,895

CAPITAL ACTIVITIES

Acquisition of tangible capital assets (171,393) (86,897)

NET DECREASE IN CASH


(5,892)

445,795

(36,002)

481,797

CASH, END OF YEAR 439,903 445,795


39

Perth & District Union Public Library BoardNotes to the Financial Statements

December 31, 2017

1. Status of the Board

The Perth & District Union Public Library Board (the ‘Board’) was formed November 14, 1983 pursuantto the Public Libraries Act and an agreement between the Town of Perth and the Township of Bathurst,Drummond, North Burgess, North Elmsley and South Sherbrooke. Subsequently, the Township ofDrummond and North Elmsley amalgamated as the Township of Drummond/North Elmsley and theremaining three townships amalgamated as Tay Valley Township.


The financial statements of the Perth & District Union Public Library Board are the representations ofmanagement and have been prepared in all material respects in accordance with Canadian PublicSector Accounting Standards for local governments as recommended by the Public Sector AccountingBoard (‘PSAB’) of the Chartered Professional Accountants of Canada. Significant aspects of theaccounting policies by the Board are as follows:

Reporting Entity

The financial statements reflect financial assets, liabilities, operating revenues and expenditures,reserves, reserve funds and changes in investment in tangible capital assets of the Board.

Basis of Accounting

The financial statements are prepared using the accrual basis of accounting. The accrual basis ofaccounting records revenue as it is earned and measurable. Expenditures are recognized as they areincurred and measurable based on receipt of goods and services and/or the creation of a legalobligation to pay.

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 not intendedfor 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 forthe year.



Assets Estimated Useful Life

LandBuilding 40 yearsLeasehold Improvements 10 yearsBooks 7 yearsShelving 10 yearsMachinery and Equipment 5 years

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

40


December 31, 2017



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 assets 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 Board’s 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 and accumulatedamortization of the asset are reduced to reflect the revised estimate of the value of the asset’sremaining service potential. The resulting net adjustment is reported as an expense on the statementof operations.


The Board considers cash and cash equivalents to be highly liquid investments with original maturitiesof three months or less.


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 Board defers recognition of user charges and fees which have been collected but for which therelated services have yet to be performed. These amounts will be recognized as revenues in the fiscalyear the services are performed.

The Board receives restricted contributions under the authority of Federal and Provincial legislation andBoard by-laws. These funds by their nature are restricted in their use and until applied to applicablecosts are recorded as deferred revenue. Amounts applied to qualifying expenses are recorded asrevenue 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 theBoard has received pursuant to legislation, regulation or agreement that may only be used for certainprograms or in the completion of specific work. These amounts are recognized as revenue in the fiscalyear the services are performed or related expenses incurred.


All financial instruments are initially recognized at fair value on the statement of financial position. TheBoard has 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.

41


December 31, 2017


Financial Instruments / continued



The Board classifies cash and cash equivalents as held-for-trading financial assets, accounts receivableas loans and receivables, and accounts payable and accrued liabilities as other financial liabilities.


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.

3. Accumulated Surplus

Accumulated surplus consists of individual fund surplus (deficit) and reserves as follows:

2017 2016

$ $

SurplusInvested in tangible capital assets 555,202 486,573

Reserves InsuranceCapital

Contingency Building

Literacy Books

Donations and bequest

10,000 18,957 19,695

192,355 8,440

43,025 11,481

3,000 99,387

19,694 189,355

20,525 50,525

11,481

Total Reserves 303,953 393,967

Accumulated Surplus 859,155 880,540

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December 31, 2017

4. Tangible Capital Assets

Net Book Value of Assets 2017 2016

$ $

LandBuildings

Leasehold improvements Books

Machinery and equipment

125,000 243,916

18,476 158,252

9,558

125,000 165,603

21,115 158,552

16,303

555,202 486,573

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

5. Risk Management

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

The Board’s financial instruments consist of cash, investments, accounts receivable, accounts payableand accrued liabilities. The fair values of cash, investments, accounts payable and accrued liabilitiesapproximate their carrying values because of their expected short term maturity and treatment onnormal trade terms.

The Board’s 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 Board provides services to may experience difficulty and be unable to fulfill their obligations. The Board is exposed to financial riskthat arises from the credit quality of the entities to which it provides services. The Board does not havea significant exposure to any individual customer or counter party. As a result, the requirement forcredit risk related reserves for accounts receivable is minimal.

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 Board is exposed tofinancial risk that arises from the interest rate differentials between the market interest rate and therates on its cash and cash equivalents. Changes in variable interest rates could cause unanticipatedfluctuations in the Board’s operating results.

Liquidity Risk

Liquidity risk is the risk that the Board will not be able to meet its obligations as they fall due. TheBoard requires working capital to meet day-to-day operating activities. Management expects that theBoard’s cash flows from operating activities will be sufficient to meet these requirements.

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December 31, 2017

6. Budget Figures

Perth & District Union Public Library Board reviews its operating and capital budgets each year. Theapproved operating budget for 2017 is included in the budget figures presented in the Statement ofOperations.

44

Perth & District Union Public Library BoardSchedule 1 < Continuity of Reserves


$ $ $

Net Transfers From / (To) Other FundsTransfers from operations

Transfers to capital acquisitions 27,992

(87,148)32,376

(122,390)

36,082

(37,707)

Total Net Transfers Approved By Board (59,156) (90,014) (1,625)

Reserves, Change in Year (59,156) (90,014) (1,625)

Reserves, Beginning of Year 393,967 393,967 395,592

Reserves, End of Year 334,811 303,953 393,967

Composition of Reserves


$ $

Reserves InsuranceContingencyLiteracy

Donations and bequest

10,000 19,695

8,440 11,481

3,000

19,694 20,525

11,481

49,616 54,700

For Capital Purposes CapitalBuilding

Books

18,957 192,355

43,025

99,387 189,355

50,525

254,337 339,267

Total Reserves 303,953 393,967


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Perth & District Union Public Library BoardSchedule 2 < Tangible Capital Assets

December 31, 2017

Assets Cost


31/12/17


01/01/17 Additions (Disposals)


31/12/17

Net Book Value

31/12/17

$ $ $ $ $ $ $

LandBuildingLeaseholdImprovementsBooksShelvingMachinery & Equipment

125,000 754,500

25,592 556,537 84,627

54,554

--- 116,929

--- 52,706

---

1,758

--- ---

--- (57,986)

---

---

125,000 871,429

25,592 551,257 84,627

56,312

--- 588,897

4,477 397,985 84,627

38,251

--- 38,616

2,639 53,006

---

8,503

--- ---

--- (57,986)

---

---

--- 627,513

7,116 393,005 84,627

46,754

125,000 243,916

18,476 158,252

---

9,558

1,600,810 171,393 (57,986) 1,714,217 1,114,237 102,764 (57,986) 1,159,015 555,202

December 31, 2016

AssetsCost


31/12/16


01/01/16 Additions (Disposals

)


31/12/16

Net Book Value

31/12/16

$ $ $ $ $ $ $

LandBuildingLeaseholdImprovementsBooksShelvingMachinery & Equipment

125,000 724,006

18,379 567,275 84,627

54,554

--- 30,494

7,213 49,190

---

---

--- ---

--- 59,928

---

---

125,000 754,500

25,592 556,537 84,627

54,554

--- 566,985

1,838 404,153 84,627

30,100

--- 21,912

2,639 53,760

---

8,151

--- ---

--- 59,928

---

---

--- 588,897

4,477 397,985 84,627

38,251

125,000 165,603

21,115 158,552

---

16,303

1,573,841 86,897 59,928 1,600,810 1,087,703 86,462 59,928 1,114,237 486,573


46

Town of Perth Consolidated Financial Statements December ...

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