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2017-12-31 Report - 2017 Year End Audited Financial StatementsConsolidated Financial Statements of COUNTY OF NEWELL Year ended December 31, 2017 Management's Responsibility for the Consolidated Financial Statements Management of the County of Newell is responsible for the preparation, accuracy, objectivity, and integrity of the accompanying financial statements and the notes thereto. Management believes that the financial statements present fairly the County's financial position as at December 31, 2017 and the results of its operations for the year then ended. The financial statements have been prepared in accordance with Canadian public sector accounting standards. Financial statements are not precise, since they include certain amounts based on estimates and judgments. Such amounts have been determined on a reasonable basis in order to ensure that the financial statements are presented fairly in all material respects. In fulfilling its responsibilities and recognizing the limits inherent in all systems, management has designed and maintained a system of internal controls to produce reliable information to meet reporting requirements. The system is designed to provide management with reasonable assurance that transactions are properly authorized, reliable financial records are maintained, and assets are properly accounted for and safeguarded. The County Council is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial statements. Council fulfills these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and external auditors. Council is also responsible for recommending the appointment of the County's external auditors. The financial statements have been audited by the independent firm of KPMG LLP, Chartered Professional Accountants. Their report to the Members of Council of the County of Newell, stating the scope of their examination and opinion on the financial statements follows. ve Officer ...._.._S� •,. , tip, ' ... Treasurer �[9111r! mil Twill JIL KPMG LLP 500 Lethbridge Centre Tower 400 - 4th Avenue South Lethbridge AB TU 4E1 Canada Tel 403-380-5700 Fax 403-380-5760 INDEPENDENT AUDITORS' REPORT To the Reeve and Members of Council of the County of Newell. We have audited the accompanying consolidated financial statements of County of Newell (the "County") which comprise the consolidated statement of financial position as at December 31, 2017, and the consolidated statements of financial activities, changes in net financial assets, and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International'), a Swiss entity KPMG Canada provides services to KPMG LLP Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of County of Newell as at December 31, 2017, and its results of consolidated financial activities, its changes in net financial assets and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants April 5, 2018 Lethbridge, Canada COUNTY OF NEWELL Consolidated Statement of Financial Position December 31, 2017, with comparative information for 2016 Financial liabilities: Accounts payable and accrued liabilities 2017 2016 Financial assets: 1,604,991 1,528,839 Cash and cash equivalents (note 2) $ 2,648,535 $ 21,192,048 Taxes and grants in place of taxes receivable (note 3) 1,312,676 1,294,382 Trade and other receivables (note 4) 14,820,227 20,187,853 Land held for resale 31,491 31,491 Investments (note 5) 72,549,878 46,452,097 Notes receivable (note 6) 789,542 1,773,637 Other financial assets 9,819 9,895 Net financial assets 92,162,168 90, 941,403 Financial liabilities: Accounts payable and accrued liabilities 2,407,267 2,201,452 Employee benefit obligations (note 8) 1,604,991 1,528,839 Unearned revenue (note 9) 22,000 196,685 Long-term debt - operating (note 10) 789,542 1,537,923 Long-term debt - capital (note 11) 20,020,644 24,414,424 Provision for landfill closure and post -closure costs (note 12) 662,535 313,533 Provision for gravel pit closure and post -closure costs (note 12) 331,814 335,341 Deposit liabilities (note 2) 212,408 198,874 26,051,201 30,727,071 Net financial assets 66,110,967 60,214,332 Non-financial assets: Prepaid expenses 118,829 114,985 Tangible Capital Assets (note 7) 202,274,435 226,952,338 Inventory for consumption 1,170,123 1,390,753 203,563,387 228,458,076 Contingent liabilities (note 20) Accumulated surplus (note 13) $269,674,354 $288,672,408 The accompanying notes are an integral part of these consolidated financial statements. COUNTY OF NEWELL Consolidated Statement of Financial Activities Year ended December 31, 2017, with comparative information for 2016 Other: Contributed assets -- -- 904,423 Transfer of assets to Newell Regional Services Corporation -- (30,338,627) -- Government transfers (note 15) -- 173,520 3,868,559 Annual surplus (deficit) 8,292,404 (18,998,054) 13,523,021 Accumulated surplus, beginning of year 288,672,408 288,672,408 275,149,387 Accumulated surplus, end of year $296,964,812 $269,674,354 $ 288,672,408 The accompanying notes are an integral part of these consolidated financial statements. 2 Budget 2017 2016 Revenues: Net municipal property taxes (note 14) $ 32,371,964 $ 32,278,376 $ 29,792,314 Special levies 3,112,835 117,189 1,114,708 User fees and sale of goods 1,917,452 2,618,838 2,078,180 Government transfers (note 15) 605,674 638,510 635,998 Penalties and cost of taxes 132,000 210,582 184,855 Investment income 1,270,656 1,234,488 1,642,224 Licenses and permits 152,000 255,278 153,032 Other revenue 143,533 634,705 768,757 Gain (loss) on disposal of tangible capital assets - 143,662 (152,875) 39,706,114 38,131,628 36,217,193 Expenses (note 16): Legislative 572,510 515,343 465,908 Administration 5,057,462 4,381,172 4,303,839 Corporate safety services 340,880 339,779 296,975 Fire and by-law enforcement 1,620,998 1,156,185 1,297,464 Disaster and emergency services 251,406 244,070 212,258 Roads, streets, walks and lighting 12,410,853 10,873,803 10,848,096 Airport 135,400 115,279 120,979 Water and waste water 3,074,693 2,890,116 2,599,895 Waste management 326,824 698,556 313,249 Family and community support 120,466 79,466 64,467 Municipal planning 659,853 571,253 495,112 Community and agricultural services 2,063,117 1,609,879 1,600,315 Subdivision land and development 206,858 190,737 173,915 Recreation and parks 1,898,863 1,873,728 842,609 Culture and library 155,326 155,326 154,470 Other 2,518,201 1,269,883 3,677,603 31,413,710 26,964,575 27,467,154 Annual surplus before the undernoted 8,292,404 11,167,053 8,750,039 Other: Contributed assets -- -- 904,423 Transfer of assets to Newell Regional Services Corporation -- (30,338,627) -- Government transfers (note 15) -- 173,520 3,868,559 Annual surplus (deficit) 8,292,404 (18,998,054) 13,523,021 Accumulated surplus, beginning of year 288,672,408 288,672,408 275,149,387 Accumulated surplus, end of year $296,964,812 $269,674,354 $ 288,672,408 The accompanying notes are an integral part of these consolidated financial statements. 2 COUNTY OF NEWELL Consolidated Statement of Change in Net Financial Assets December 31, 2017, with comparative information for 2016 The accompanying notes are an integral part of these consolidated financial statements. 3 Budget 2017 2016 Annual surplus $ 8,292,404 $(18,998,054) $ 13,523,021 Acquisition of tangible capital assets (11,273,930) (15,587,875) (11,733,660) Contributed tangible capital assets - 33,324,214 (710,756) Proceeds on disposal of tangible capital assets - 556,406 70,432 Amortization of tangible capital assets 6,576,370 6,528,819 6,227,082 (Gain) loss on disposal of tangible capital assets - (143,662) 152,875 3,594,844 5,679,847 7,528,994 Use of inventories for consumption - 220,631 328,706 Acquisition of prepaid expenses - (3,844) (8,874) Change in net financial assets 3,594,844 5,896,635 7,848,826 Net financial assets, beginning of year 60,214,332 60,214,332 52,365,506 Net financial assets, end of year $63,809,176 $ 66,110,967 $ 60,214,332 The accompanying notes are an integral part of these consolidated financial statements. 3 COUNTY OF NEWELL Consolidated Statement of Cash Flows Year ended December 31, 2017, with comparative information for 2016 2017 2016 Cash provided by (used in): Operations: Annual surplus $(18,998,054) $ 13,523,021 Items not involving cash: Amortization 6,528,819 6,227,082 Contributed assets 33,324,214 (710,756) (Gain) loss on disposal of tangible capital assets (143,662) 152,875 Change in non-cash financial assets and liabilities: Taxes and grants in place of taxes receivable (18,294) (235,672) Trade and other receivables 5,367,626 2,939,662 Land held for resale - 390 Other financial assets 76 (5) Prepaid expenses (3,844) (8,874) Inventory for consumption 220,631 328,706 Accounts payable and accrued liabilities 205,813 (1,327,345) Employee benefit obligations 76,153 1,123,213 Unearned revenue (174,685) 13,701 Landfill closure and post -closure costs 349,002 (4,369) Gravel pit closure and post -closure costs (3,527) (15,254) 26,730,268 22,006,375 Capital activities: Proceeds on disposal of tangible capital assets 556,406 70,432 Purchase of tangible capital assets (15,587,875) (11,733,660) (15,031,469) (11,663,228) Investing activities: Decrease (increase) in temporary investments 18,196,412 (15,300,412) Increase in investments (26,097,781) (4,189,961) Payments received,on notes receivable 984,096 1,221,429 (6,917,273) (18,268,944) Financing activities: Repayment of long-term debt: - operating (748,381) (709,366) - capital (5,034,630) (4,942,931) Proceeds from debt acquired 640,850 - Increase (decrease) in deposit liabilities 13,534 (45,117) (5,128,627) (5,697,414) Decrease in cash and cash equivalents (347,101) (13,623,211) Cash and cash equivalents, beginning of year 2,995,636 16,618,847 Cash and cash equivalents, end of year (note 2) $ 2,648,535 $ 2,995,636 Cash and cash equivalents is comprised of: Cash and temporary investments $ 2,648,535 $ 21,192,048 Less investments with original maturities greater than 90 days - (18,196,412) $ 2,648,535 $ 2,995,636 The accompanying notes are an integral part of these consolidated financial statements. 4 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. Significant accounting policies: The consolidated financial statements of the County of Newell (the "County") are the representations of management prepared in accordance with Canadian Public Sector accounting standards. Significant aspects of the accounting policies adopted by the County are as follows: (a) Cash and cash equivalents: Cash and cash equivalents include cash on hand and short-term deposits which are highly liquid with original maturities of less than three months from the date of acquisition. (b) Reporting entity: The consolidated financial statements reflect the assets, liabilities, revenues and expenses, changes in net financial assets and cash flows of the County, which comprises of all the organizations that are owned or controlled by the County and are, therefore accountable to the Council for the administration of their financial affairs and resources. All significant inter -department transactions and balances are eliminated on consolidation. Taxes levied also include requisitions for educational, health care, social and other external organizations that are not part of the County. The statements exclude trust assets that are administered for the benefit of external parties. (c) Basis of accounting: The financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the legal obligation to pay. Funds from external parties and earnings thereon restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified. (d) Investments: Investments are recorded at cost. Where there has been a loss in value of an investment other than a temporary decline, the investment is written down to reflect the loss. (e) Requisition over -levy and under -levy: Over -levies and under -levies arise from the difference between the actual property tax levy made to cover each requisition and the actual amount requisitioned. If the actual levy exceeds the requisition, the over -levy is accrued as a liability and property tax revenue is reduced. Where the actual levy is less than the requisition amount, the under - levy is accrued as a receivable and as property tax revenue. Requisition tax rates in the subsequent year are adjusted for any over -levies for the prior year. 9 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. Significant accounting policies (continued): (f) Inventories: Land held for resale is recorded at the lower of cost and net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping, and leveling charges. Related development costs incurred to provide infrastructure such as water and waste water services, roads, sidewalks and street lighting are recorded as capital assets under their respective function. (g) Landfill and gravel pit closure and post -closure costs: Pursuant to the Alberta Environment Protection and Enhancement Act, the County is required to fund the closure of its landfill site and provide for post -closure care. Landfill closure and post -closure activities include the final clay cover, landscaping, as well as surface and ground water monitoring, leachate control and visual inspection. The requirement is being provided for over the estimated remaining life of the landfill site based on usage. The County is required to fund the closure of its gravel pits. Reclamation of these sites includes providing final cover and landscaping. The requirement is being provided for on an estimate of expected cost on size of sites. (h) Government transfers: Government transfers are recognized in the financial statements as revenues in the period that the events giving rise to the transfer occurred, providing the transfers are authorized, all eligibility criteria have been met by the County, and reasonable estimates of the amounts can be made. (i) Non-financial assets: Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the normal course of operations. (i) Tangible capital assets: Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets is amortized on a straight-line basis over the estimated useful life as follows: Years Land Improvements 15-45 Buildings 25-70 Engineered structures 15-75 Machinery and equipment 5-40 Vehicles 5-14 Assets under construction are not amortized until the asset is available for productive use. COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. Significant accounting policies (continued): (i) Non-financial assets (continued): (ii) Contributions of tangible capital assets: Tangible capital assets received as contributions are recorded at fair value at the date of receipt and recorded as revenue. (iii) Inventories Inventories of materials and supplies held for consumption are recorded at the lower of cost and replacement cost with cost determined by the average cost method. (iv) Cultural and historical tangible capital assets: Works of art for display are not recorded as tangible capital assets but are disclosed. 0) Tax Revenue: Tax revenue results from non-exchange transactions that are paid to governments in accordance with the laws and regulations established to provide revenue to the government for public services. The revenue is recognized when the tax has been authorized and the taxable event has occurred. (k) Pension expenses: The County participates in a multi-employer defined benefit pension plan, wherein contributions for current and past service pension benefits are recorded as expenses in the year in which they become due. (1) Use of estimates: The preparation of the financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the determination of allowance for doubtful accounts, provision for closure and post -closure care, employee benefit obligations and the useful life of tangible capital assets. Contributions of tangible capital assets are recorded at estimated fair value at the date of receipt. Actual results could differ from those estimates. 7 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 1. Significant accounting policies (continued): (m) Contaminated sites: Contaminated sites are a result of contamination being introduced into air, soil, water or sediment of a chemical, organic or radioactive or live organism that exceeds an environmental standard. The liability is recorded net of any expected recoveries. A liability for remediation of a contaminated site is recognized when a site is not in productive use and is management's estimate of the cost of post -remediation including operation, maintenance and monitoring. No contaminated sites have been identified. 2. Cash and cash equivalents: Cash Temporary investments 2017 $ 2,648,535 $ 2,648,535 2016 $ 2,995,636 18,196,412 $ 21,192,048 Included in cash are amounts aggregating $212,408 (2016 - $198,874) not available for current use. Tax sale surplus Public reserve C 2017 $ 20,532 191,876 2016 $ 12,769 186,105 $ 212,408 $ 198,874 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 3. Taxes and grants in place of taxes receivable: 2017 Current $ 703,962 Arrears 708,715 1,412,676 Allowance for uncollectible taxes (100,000) 4. Trade and other receivables: $ 1,312,676 2016 $ 599,967 794,415 1,394,382 (100,000) $ 1,294,382 2017 2016 Grants $ 7,809,602 $ 12,990,945 Local improvement taxes 5,656,126 6,132,749 Other 1,354,499 1,064,159 $ 14,820,227 $ 20,187,853 Local improvement taxes carry annual interest rates ranging from 2.64% - 4.44% and are due between 2018 — 2041. 5. Investments: 2017 2016 Fixed income securities $ 69,479,617 $ 43,367,894 Credit Union Common shares 5 5 Newell Regional Services Corporation: Common shares 20 20 Preferred shares 3,070,236 84,178 3,070,256 84,198 $ 72,549,878 $ 46,452,097 Fixed income securities yield interest from 1.74% to 10.22% and mature in periods 2018 through 2031. The investments have an average expected yield of 3.15% and an aggregate market value of $69,105,496 (2016 - $46,757,445). COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 6. Notes receivable: 2017 2016 Newell Foundation, repayable in annual installments of $832,967 including interest at 5.5%, maturing in 2018 $ 789,542 $ 1,537,922 Newell Regional Services Corporation - 235,715 $ 789,542 $ 1,773,637 7. Tangible capital assets: Cost 2016 Additions Disposals 2017 Land $ 5,353,168 $ -- $ (2,000) $ 5,351,168 Land improvements 2,037,162 -- -- 2,037,162 Buildings 19,160,729 1,808,934 -- 20,969,663 Engineered structures 210,653,643 13,548,656 (35,900) 224,166,399 Machinery and equipment 11,885,537 536,544 (834,608) 11,587,473 Vehicles 5,095,143 1,335,007 (342,872) 6,087,278 Work in progress, net of transfers 36,989,318 (1,615,844) (33,349,638) 2,023,836 Total $291,174,700 $ 15,613,297 $ (34,565,018) $272,222,979 Accumulated Amortization amortization 2016 Disposals expense 2017 Land improvements $ 832,994 $ -- $ 132,968 $ 965,962 Buildings 1,389,690 -- 326,286 1,715,976 Engineered structures 54,467,144 (35,900) 4,737,061 59,168,305 Machinery and equipment 5,165,433 (476,865) 925,572 5,614,140 Vehicles 2,367,101 (289,872) 406,932 2,484,161 Total $ 64,222,362 $ (802,637) $ 6,528,819 $ 69,948,544 10 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 7. Tangible capital assets (continued): Net book value 2017 2016 Land $ 5,351,168 $ 5,353,168 Land improvements 1,071,200 1,204,168 Buildings 19,253,687 17,771,039 Engineered structures 164,998,094 156,186,499 Machinery and equipment 5,973,333 6,720,104 Vehicles 3,603,117 2,728,042 Work in progress 2,023,836 36,989,318 Total $ 202,274,435 $ 226,952,338 Contributed tangible capital assets are recognized at fair value at the date of contribution. The County donated assets with a carrying value of $33,324,414 to Newell Regional Services Corporation during the year. These assets were held in trust as part of the regional water project. The assets were transferred in exchange for $2,986,058 Class H preferred shares with the difference being recorded as a transfer to Newell Regional Services Commission on the statement of financial activities. 8. Employee benefit obligations: Vacation The vacation liability is comprised of the vacation that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to these benefits within the next budgetary year. Sick The sick liability is comprised of the sick pay that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to them within the next budgetary year. 9. Unearned Revenue: Recognized as Description 2016 Received revenue Street Improvement Grant $ 173,520 -- Other 23,165 22,000 Total $ 196,685 $ 22,000 11 (173,520) (23,165) $ (196,685) 2017 22,000 $ 22,000 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 10. Long-term debt — operating: Debenture supported with notes receivable Principal and interest repayments are due as follows: 2018 Principal $ 789,542 $ 789,542 2017 2016 $ 789,542 $ 1,537,923 Interest Total $ 43,425 $ 832,967 $ 43,425 $ 832,967 Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at 5.5% per annum, before Provincial subsidy, and matures in 2018. Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $74,295 (2016 — $113,847). The County's total interest paid in 2017 was $84,585 (2016 - $123,601). 11. Long-term debt — capital: Tax supported debentures Principal and interest repayments are due as follows: Principal 2018 $ 5,138,389 2019 5,233,923 2020 3,651,630 2021 2,482,572 2022 1,845,476 Thereafter 1,668,654 $ 20,020,644 12 2017 2016 $ 20,020,644 $ 24,414,424 Interest Total $ 395,760 $ 5,534,149 300,227 5,534,150 209,611 3,861,241 141,266 2,623,838 81,869 1,927,345 333,370 2,002,024 $ 1,462,103 $ 21,482,747 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 11. Long-term debt —capital (continued): Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates ranging from 1.124% to 3.406% per annum, before Provincial subsidy, and matures in periods 2018 through 2042. The average annual interest rate is 2.095% for 2017 (2016 — 2.014%). For qualifying debentures, the Province of Alberta rebates 60% of interest in excess of 8%, 9% and 11% to a maximum annual rate of 12.5%, depending on the date borrowed. Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $476,748 (2016 - $556,235). The County's total interest paid in 2017 was $468,725 (2016 - $560,422). 12. Provision for landfill and gravel pit closure and post -closure costs: Alberta environmental law requires closure and post -closure care of landfill sites, which includes final covering and landscaping, pumping of ground water and leachates from the site, and on- going environmental monitoring, site inspections and maintenance. The accrued liability for the remaining post -closure costs of the County's landfill and closure and post -closure costs for the County's gravel pits are based on an estimate of future discounted costs. All landfill sites are closed. One site is expected to be reclaimed in 2018, while post -closure costs associated on another are expected until 2028. The estimated closure and post -closure costs for the landfill are $662,535 and $331,814 for the gravel pits, all of which have been accrued in the financial statements. The County has not designated assets for settling closure and post -closure liabilities. 13 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 13. Accumulated surplus: Equity in tangible Unrestricted capital Restricted Total Total net assets assets (1) Surplus (2) 2017 2016 Beginning balance $ 1,505,734 $202,537,914 $84,628,760 $288,672,408 $275,149,387 Annual surplus (deficit) (18,998,054) -- -- (18,998,054) 13,523,021 Transfers to restricted surplus (20,721,496) -- 20,721,496 -- -- Transfers from restricted surplus 19,218,644 -- (19,218,644) -- -- Amortization of tangible capital assets 6,528,819 (6,528,819) -- -- Net book value of assets disposed 412,745 (412,745) -- -- -- Capital assets internally funded (14,947,025) 14,947,025 -- -- -- Capital assets debt funded (640,850) 640,850 -- -- -- Transferred assets 33,324,214 (33,324,214) -- -- -- Debt issued 640,850 (640,850) -- -- -- Debt paid - capital (5,034,630) 5,034,630 -- -- -- Total $ 1,288,951 $182,253,791 $86,131,612 $269,674,354 $288,672,408 (1) Equity in tangible capital assets: Tangible capital assets (note 7) Accumulated amortization (note 7) Long-term debt — capital (note 11) 14 2017 $ 272,222,979 (69,948,544) (20,020,644) $ 182,253,791 2016 $ 291,174,700 (64,222,362) (24,414,424) $ 202,537,914 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 13. Accumulated surplus (continued): (2) Restricted surplus is comprised of funds internally restricted as follows: Paving Infrastructure Future Projects Vehicles, Machinery & Equipment Regional Enhancement Stabilization Facilities Fire Apparatus Recreation Tilley Unexpended Budget Appropriation 14. Net municipal property taxes: Taxation: Real property taxes Linear property taxes Government grants in place of property taxes Requisitions: Alberta School Foundation Fund Newell Foundation Net municipal property taxes 2017 2016 $ 127,805 $ 6,501,897 38,522,787 28,282,967 19,513,713 26,086,018 9,478,581 8,359,816 4,428,874 3,390,161 5,400,277 5,762,969 2,893,968 2,688,639 3,156,346 3,224,453 1,417,008 - 50,662 50,662 1,141,591 281,178 $ 86,131,612 $ 84,628,760 Budget 2017 2016 $ 17,375,227 $ 17,285,035 $ 15,611,840 27,734,366 27,732,086 27,489,906 367,943 366,827 355,528 45,477,536 45,383,948 43,457,274 12,207,543 12,207, 543 12,754,794 898,029 898,029 910,166 13,105,572 13,105,572 13,664,960 $ 32,371,964 $ 32,278,376 $ 29,792,314 15 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 15. Government transfers: Budget 2017 2016 Transfers for operating: Provincial government $ 388,676 $ 405,145 $ 406,850 Local government 216,998 233,365 229,148 605,674 638,510 635,998 Transfers for capital: Provincial government - 173,520 3,757,309 Local government - - 111,250 173,520 3,868,559 $ 31,413, 710 $ 26, 964, 575 $ 27,467,154 16 $ 605,674 $ 812,030 $ 4,504,557 16. Expenses by object: Budget 2017 2016 Salaries, wages and benefits $ 8,410,144 $ 7,895,217 $ 7,430,179 Contracted and general. services 4,900,998 3,455,799 3,725,751 Materials, goods, supplies and utilities 5,799,044 4,796,641 3,985,928 Transfers to organizations 5,146,293 2,920,646 4,264,050 Bank charges and short-term interest 8,000 6,014 5,370 Interest on long-term debt 552,861 551,044 670,082 Other expenditures 20,000 810,395 1,158,712 Amortization 6,576,370 6,528,819 6,227,082 $ 31,413, 710 $ 26, 964, 575 $ 27,467,154 16 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 17. Salary and benefits disclosure: Disclosure of salaries and benefits for elected municipal officials and the chief administrative officer as required by provincial regulation is as follows: 1) Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria and any other direct cash remuneration. 2) Benefits and allowances include the employer's share of all employee benefits and contributions or payments made on behalf of employees including pension, health care, dental coverage, vision coverage, group life insurance, accidental disability and dismemberment insurance, long and short-term disability plans, professional memberships and tuition. Benefits and allowances figures also include the employer's share of the costs of additional taxable benefits including special leave with pay, financial planning services, retirement planning services, concessionary loans, travel allowances, car allowances, and club memberships, if applicable. 17 2017 2016 Benefits & Salary (1) Allowances (2) Total Total Council: Division 1 -Amulung $ 31,724 $ 5,380 $ 37,104 $ 35,147 Division 2 - Kallen 6,749 947 7,696 - Division 2 - Simpson 20,577 4,224 24,801 34,877 Division 3 - Philipsen 28,421 5,224 33,655 35,470 Division 4 - Hammergren 25,981 2,671 28,652 27,497 Division 5 - Fyfe 27,512 5,193 32,705 33,114 Division 6 - Christman 28,551 5,346 33,897 32,087 Division 7 - Unruh 27,883 5,210 33,093 33,522 Division 8 - De Jong 25,824 1,308 27,132 28,100 Division 9 - Douglass 50,081 2,441 52,522 51,427 Division 10 - Juss 24,877 5,077 29,954 32,019 $ 298,181 $ 43,031 $ 341,212 $ 343,260 Chief Administrative Officer $ 220,720 $ 49,115 $ 269,835 $ 265,601 1) Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria and any other direct cash remuneration. 2) Benefits and allowances include the employer's share of all employee benefits and contributions or payments made on behalf of employees including pension, health care, dental coverage, vision coverage, group life insurance, accidental disability and dismemberment insurance, long and short-term disability plans, professional memberships and tuition. Benefits and allowances figures also include the employer's share of the costs of additional taxable benefits including special leave with pay, financial planning services, retirement planning services, concessionary loans, travel allowances, car allowances, and club memberships, if applicable. 17 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 18. Debt limits: Section 276(2) of the Municipal Government Act requires that debt and debt limits as defined by Alberta Regulation 255/00 for the County be disclosed as follows: 2017 2016 Total debt limit $ 57,197,442 $ 54,325,790 Total debt (20,810,186) (25,952,347) $ 36,387,256 $ 28,373,443 2017 2016 Debt servicing limit $ 9,532,907 $ 9,054,298 Debt servicing (6,367,116) (6,336,321) $ 3,165,791 $ 2,717,977 The debt limit is calculated at 1.5 times revenue of the County (as defined in Alberta Regulation 255/00) and the debt service limit is calculated at 0.25 times such revenue. Incurring debt beyond these limitations requires approval by the Minister of Municipal Affairs. These thresholds are guidelines used by Alberta Municipal Affairs to identify municipalities which could be at financial risk if further debt is acquired. The calculation taken alone does not represent the financial stability of the County. Rather, the financial statements must be interpreted as a whole. 19. Local authorities pension plan: The County participates in a multi-employer defined benefit pension plan. This plan is accounted for as a defined contribution plan. Employees of the County participate in the Local Authorities Pension Plan (LAPP), which is one of the plans covered by the Public Sector Pension Plans Act. The LAPP serves about 253,862 people and about 417 employers. The LAPP is financed by employer and employee contributions and investment earnings of the LAPP fund. Contributions for current service are recorded as expenditures in the year in which they become due. The County is required to make current service contributions to the Plan of 10.39% of pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension Plan and 14.84% on pensionable earnings above this amount. Employees of the County are required to make current service contributions of 9.39% of pensionable salary up to the year's maximum pensionable salary and 13.84% on pensionable salary above this amount. Total current service contributions by the County to the LAPP in 2017 were $619,332 (2016 - $613,239). Total current service contributions by the employees of the County to the LAPP in 2017 were $571,265 (2016 - $565,546). At December 31, 2016, the LAPP disclosed an actuarial deficiency of $637 million. 18 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 20. Contingent liabilities: The County of Newell is a member of the Alberta Municipal Insurance Exchange (MUNIX). Under the terms of membership, the County of Newell could become liable for its proportionate share of any claim losses in excess of the funds held by the exchange. Any liability incurred would be accounted for as a current transaction in the year the losses are determined. 21. Recent accounting pronouncements: The Public Sector Accounting Board recently announced the following accounting pronouncements: (a) Financial instruments: This section establishes recognition, measurement, and disclosure requirements for derivative and non -derivative instruments. The standard requires fair value measurements of derivative instruments and equity instruments; all other financial instruments can be measured at either cost or fair value depending upon elections made by the government. Unrealized gains and losses will be presented on the new statement of remeasurement gains and losses arising from the adoption of PS 1201. There will also be a requirement to disclose the nature and extent of risks arising from financial instruments and clarification is given for the de- recognition of financial liabilities. As the Municipality does not invest in derivatives or equity instruments based on its investment policy, it is anticipated that the adoption of this standard will have a minimal impact on the Municipality. This standard is effective for fiscal years beginning on or after April 1, 2019. (b) Foreign currency translation: This section establishes guidance on the recognition, measurement, presentation and disclosure of assets and liabilities denominated in foreign currencies. The Section requires monetary assets and liabilities, denominated in a foreign currency and non -monetary items valued at fair value denominated in a foreign currency to be adjusted to reflect the exchange rates in effect at the financial statement date. The resulting unrealized gains and losses are to be presented in the new statement of remeasurement gains and losses. This standard is effective for fiscal years beginning on or after April 1, 2019. (c) Related party transactions: This section provides guidance on the definition of a related party and establishes the disclosure requirements for transactions between related parties. This standard is effective for fiscal years beginning on or after April 1, 2017. 19 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 21. Recent accounting pronouncements: (d) Financial statement presentation: The implementation of this standard requires a new statement of re -measurement gains and losses separate from the statement of operations. This new statement will include the unrealized gains and losses arising from the remeasurement of financial instruments and items denominated in a foreign currency. This standard is effective for fiscal years beginning on or after April 1, 2019. Management is assessing the impact of the adoption of these standards which is not known or reasonably estimable at this time. 22. Segmented Disclosures: Segmented disclosures (Schedule 1) are intended to enable users to better understand the government reporting entity and the major expense and revenue activities of the County. The segments have been selected based upon functional activities provided by the County. For each reported segment, revenues and expenses represent both amounts directly attributable to the segment and amounts that are allocated on a reasonable basis. The functional areas that have been separately disclosed, along with the services they provide are as follows: (a) General government is comprised of Council, Legislative, Corporate Administration, Finance, Information and Computer Services, Planning, Economic Development, Corporate Safety, Agricultural Services, Fire and Disaster Services, Bylaw Enforcement, Community Services, Recreation, Parks and Programs and Library. (b) Public Works and Transportation is comprised of Roads and Engineering Services. (c) Public Utilities is comprised of Water, Wastewater and Solid Waste. 20 COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2017 23. Budget information: The budget information presented in these consolidated financial statements is based upon the 2017 budget approved by Council on April 6, 2017. 24. Approval of financial statements: These financial statements were approved by Council and Management. 21 COUNTY OF NEWELL Schedule of Segmented Disclosures Year ended December 31, 2017, with comparative information for 2016 Public Works General and Government Transportation Public Utilities Revenue Net taxes for municipal purposes Special levies User fees and sale of goods Government transfers - operating Penalties and costs of taxes Investment income License and permits Other Gain (loss) on disposal of capital assets Expenses Salaries, wages and benefits Contracted and general services Materials, goods, supplies and utilities Transfer to organization Bank charges and short term interest Interest on long-term debt Other expenditures Amortization Annual surplus (deficit) before the undernoted Other Insurance proceeds Transfer of assets to NRSC Government transfers - capital Other Annual surplus (deficit) Schedule 1 Public Works Total General and Total 2017 Government Transportation Public Utilities 2016 $ 32,278,376 $ $ - $ 32,278,376 $ 29,792,314 $ - $ - $ 29,792,314 - 117,189 117,189 311,243 - 803,465 1,114,708 868,422 256,573 1,493,843 2,618,838 530,515 257,732 1,289,933 2,078,180 533,510 - 105,000 638,510 530,998 - 105,000 635,998 210,582 - 210,582 184,855 - - 184,855 1,234,488 - 1,234,488 1,642,224 - - 1,642,224 255,278 - - 255,278 153,032 - - 153,032 414,858 46,167 173,680 634,705 496,641 97,925 174,195 768,761 12,217 131,445 - 143,662 10,301 (163,180) - (152,879) 35,807,731 434,185 1,889,712 38,131,628 33,652,123 192,477 2,372,593 36,217,193 5,061,846 2,833,371 - 7,895,217 4,890,664 2,539,515 - 7,430,179 1,656,052 1,118,991 680,756 3,455,799 1,481,460 1,560,180 684,111 3,725,751 1,392,641 2,087,032 1,316,968 4,796,641 1,243,977 1,991,618 750,333 3,985,928 2,898,032 - 22,614 2,920,646 4,241,371 - 22,679 4,264,050 6,014 - 6,014 5,370 - 5,370 74,296 476,748 551,044 113,847 - 556,235 670,082 810,394 - - 810,394 1,158,712 - - 1,158,712 1,073,278 4,363,956 1,091,586 6,528,820 990,695 4,336,601 899,786 6,227,082 12,972,553 10,403,350 3,588,672 26,964,575 14,126,096 10,427,914 2,913,144 27,467,154 22,835,178 (9,969,165) (1,698,960) 11,167,053 19,526,027 (10,235,437) (540,551) 8,750,039 - (30,338,627) (30,338,627) 173,520 - 173,520 $ 22,835,178 $ (9,795,645) $ (32,037,587) $ (18,998,054) 904,423 - - 904,423 - - 3,868,559 3,868,559 $ 20,430,450 $ (10,235,437) $ 3,328,008 $ 13,523,021