HomeMy WebLinkAboutCS 32-10
Report To Council
8 9
PICKERING Report Number: Cs 32-10
Date: September 13, 2010
From: Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject: 2009 Year End Audit
Recommendations:
1. That Report CS 32-10 of the Director, Corporate Services & Treasurer be
received;
2. That the Audit Results Report, including the auditor's independence letter and
management letter, as submitted by Deloitte & Touche LLP be received for
information; and
3. That the 2009 draft Audited Consolidated Financial Statements for the City of
Pickering be approved.
Executive Summary: This report provides the auditor's Audit Results report,
independence letter, management letter and the draft Audited Consolidated Financial
Statements for the year ended December 31, 2009. Again this year, the auditor has
provided an unqualified opinion on the financial statements.
The 2009 statements are significantly different from prior years due to the
implementation of new presentation standards and the introduction of mandatory
reporting of tangible capital assets as discussed in the background of this report.
Financial Implications: The financial results for 2009 were once again favourable.
However these results, as in prior years, are primarily a result of one-time occurrences
and cannot be relied upon to continue year after year to produce these favourable
results.
Sustai.nability Implications: This report does not contain any sustainability
implications.
Background: The audit of the consolidated financial statements for the year ended
December 31, 2009 has been completed. The auditor's Report to Council - Audit
Report CS 32-10 Date: September 13, 2010
2009 Year-End Audit Page 2
90
Results is included as Attachment 1 and also includes the auditor's independence letter
and management letter. This report, prepared by Deloitte & Touche LLP, summarizes
the results of the December 31, 2009 audit and comments on significant matters
regarding the audit or other matters they may believe to be of interest to you. Nothing of
significance was noted.
On an annual basis, the auditor is required to communicate all relationships between
the City and the firm that may impact on their independence to the City. The
independence letter in Appendix 1 of the attachment confirms that Deloitte & Touche
LLP is independent with respect to the City.
As you are aware, the scope of the audit does not include an in-depth evaluation of all
systems or internal controls; however, the auditors may report on matters that come to
their attention during the course of their review. These observations and
recommendations are provided in the management letter in Appendix 2 of Attachment
1. As in previous years, the auditor has addressed the management letter as
confidential; however,,after reviewing the content, management did not deem it
necessary to report it to Council on a confidential basis. As we have done in the past,
management's responses have been included to provide our planned course of action
or to explain our position in addressing these recommendations.
The draft Audited Consolidated Financial Statements are included as Attachment 2.
These statements are the responsibility of management and have been prepared by
City accounting staff under the direction of the Director, Corporate Services &
Treasurer. Deloitte & Touche LLP are responsible to express an opinion on these
Consolidated Financial Statements based on its audit. An unqualified opinion has been
provided. The Consolidated Financial Statements includes the activities of the City of
Pickering Public Library Board. The City's investment in Veridian Corporation is
accounted for on a modified equity basis which means the City includes its share of
Veridian's income or loss in the Consolidated Financial Statements.
For the 2009 fiscal reporting period, the City implemented the Public Sector Accounting
Board (PSAB) financial statement presentation standards as prescribed in PS 1200,
Financial Statement Presentation. Furthermore, the City changed its accounting policy
related to the treatment of tangible capital assets to comply with PS 3150, Tangible
Capital Assets. Tangible capital assets, such as land, building, infrastructure and
equipment are now capitalized (recorded) at cost on the Statement of. Financial Position
(Balance Sheet) and amortized (depreciated) over their estimated useful lives in current
operating expenses.
Both these changes have significantly altered the format of the financial statements.
The Statement of Financial Position now includes tangible capital assets under the non-
financial asset section and shows Accumulated Surplus instead of Fund Balances and
Amounts to be Recovered which were previously reported. The Statement of
Operations no longer shows capital expenditures which is further explained below.
Report CS 32-10 Date: September 13, 2010
2009 Year-End Audit Page 3
91
Statement of Financial Position
Financial assets are those assets which could provide resources to discharge existing
liabilities or finance future operations.
Net financial assets increased slightly over the prior year which was due to an increase
in financial assets of approximately $2.1 million offset by an increase in liabilities of
approximately $1.3 million. These year over year fluctuations are part of day to day
business and there is not one significant contributing factor to these increases. The
2009 consolidated financial statements include a new statement called the "Statement
of Changes in Net Financial Assets" which explains the increase in net financial assets
year over year.
Non-financial assets now includes a line for tangible capital assets which is the net book
value (cost less accumulated amortization) of the City owned assets including land,
buildings, roads, bridges & sidewalks infrastructure, storm sewer infrastructure, furniture
and fixtures, vehicles and equipment. Non-financial assets are not available to
discharge existing liabilities and are held for use in the provision of services. They have
useful lives extending beyond the current year and are not intended for sale in the
ordinary course of operations
Statement of Operations
The most significant change on this statement is the reporting for capital budget
expenditures which are no longer shown on the Statement of Operations as capital
expenditures. For those expenditures that meet the definition of a tangible capital asset
(TCA), the cost is now reported on the Statement of Financial Position (Balance Sheet).
Only a portion of the asset's cost is included as an amortization expense each year over
the life of the asset in the operating expenses reported on the Statement of Operations.
The amortization expense is included in operating expenses for the asset's respective
functional category. For example, amortization on a fire truck is included under the
Protection to Persons and Property category. Capital budget expenditures that do not
meet the TCA definition are included as operating expenses under the appropriate
functional category.
The budget figures reported also needed to be adjusted to reflect the change in
reporting for capital budget expenditures. Note 18 of the City's consolidated financial
statements reflects the changes made to the 2009 Council approved budget to put it on
a basis consistent with the full accrual basis of accounting which incorporates tangible
capital asset reporting.
As always, the revenue reported includes both operating and capital. Therefore,
variances between budget to actual may arise due to timing of approval in the capital
budget and actual receipt of funds/recognition of revenue. This is clearly illustrated with
Report CS 32-10 Date: September 13, 2010
2009 Year-End Audit Page 4
92
the Government grants and fees revenue item. This amount includes provincial and
federal grant monies for both current and capital budget expenditures. The higher
budget figure compared to actual is primarily due to the $10 million budget for the 401
Pedestrian Bridge project approved in the 2009 Capital Budget. As you are aware, this
project is now being constructed by the Province and is no longer a City project.
Therefore, the actual revenue is much lower than the budget.
Overall, the actual expenses are comparable with the budget.
Accumulated Surplus
As noted above, the accumulated surplus replaces the Fund balances and Amounts to
be Recovered that were reported on the face of the Statement of Financial Position
under the old Financial Statement format. The components that make up this balance
are disclosed in Note 12 of the City's consolidated financial statements and are
summarized below. It must be emphasized that these amounts are not surplus funds in
the traditional sense. The accumulated surplus balance essentially represents the
difference between assets and liabilities of the City. What primarily contributes to this
balance are the tangible capital assets of approximately $186.2 million and the City's
equity in Veridian Corporation of approximately $67.9 million.
The table below breaks down the new definition of accumulated surplus into the
components used in prior years.
Operating fund $ 125,089 Fund Balance - old format
Capital fund 8,935,216 Fund Balance - old format
Reserves and reserve funds 28,417,249 Fund Balance - old format
Equity in Veridian Corporation 67,894,665 Fund Balance - old format
Tangible capital assets .186,242,634 New
Post employment benefits liability (2,536,100) Amts to be Recovered- old format
WSIB benefit liabilities (1,368,198) Amts to be Recovered- old format
Internal loans (2,299,828) Amts to be Recovered- old format
Net long-term liabilities (14,219,970) Amts to be Recovered- old format
$271,190,757
Attachments:
1. Auditor's Report to Council - Audit Results
2. 2009 Draft Audited Consolidated Financial Statements
I
Report CS 32-10 Date: September 13, 2010
2009 Year-End Audit Page 5
93
Prepared By: Approved / Endorsed By:
Kristine Senior Gillis A. Paterson
Manager, Accounting Services Director, Corporate Services & Treasurer
KAS:vw/ks
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickering Ci ~unci
Tony Preve el, .Eng. 7~ 2olD
Chief Administrative Officer
ATTACHMENT#=TO REPORT#6
94
Delolotte
The Corporation of the
City ofPickering
Report to Council- Audit Results
Year ended December 31, 2009
Delomitte 95
Deloitte & Touche LLP
5140 Yonge Street
Suite 1700
Toronto ON M2N 61_7
Canada
Tel: 416-601-6150
Fax: 416-601-6151
www.deloitte.ca
September 3, 2010
Private and confidential
The Members of Council
The Corporation of the City of Pickering .
1 The Esplanade
Pickering ON L IV 6K7
Dear Council Members:
We are pleased to submit this report on the results of our audit of the consolidated financial statements of The
Corporation of the City of Pickering (the "City") for the year ended December 31, 2009.
Our audit was completed in accordance with the audit plan presented to you on October 13, 2009. -Our
professional standards require that we communicate with you certain matters that may be of interest to you in
fulfilling your obligation to oversee the financial reporting and disclosure process. for which management of
the City is responsible. This report is designed to summarize certain aspects of the 2009 audit of the
consolidated financial statements, comment on significant matters regarding the audit and other matters
which we believe will be of interest to Council.
This report is intended solely for the use of Council and we disclaim any responsibility or obligation to any
third party who may rely on this report. The matters addressed in this report are a by-product of the financial
statement audit and may not necessarily identify all matters that may be of interest to Council in fulfilling its
responsibilities.
We wish to express our appreciation for the co-operation we received from senior management, finance staff
and the many employees of the City with whom we work in the discharge of our various responsibilities.
Yours sincerely,
Chartered Accountants
Licensed Public Accountants
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Table of contents
Page
Status of the audit, audit scope and related representations 3
Matters to report to Council 4
Audit findings
• Management judgments and accounting estimates 5,
• Adjusted differences 7
• Unadjusted differences 7
• Omitted disclosures 7
Areas of audit focus 8
Appendices
Appendix I: Independence letter
Appendix ll: Management letter
The Corporation of the City of Pickering - 2
2009 Report to Council
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Status of the audit, audit scope and related
representations
• The audit of the December 31, 2009 consolidated financial statements is substantially complete,
with the exception of the following matters:
• Receipt of the management representations letter; and
• Approval of the financial statements.
• Our auditors' report on the 2009 consolidated financial statements will:
• be signed following approval by Council;
• be dated September 2, 2010; and
• state that the consolidated financial statements present fairly, in all material respects, the
financial position of the City as at December 31, 2009 and the results of its operations and the
changes in its financial position for the year then ended in accordance with Canadian generally
accepted accounting principles.
• The audit approach was consistent with the audit plan we presented to you on October 13, 2009.
• Our audit was conducted in accordance with Canadian Generally Accepted Auditing Standards
("GAAS") and our firm standards.
• We examined, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements, therefore, we would not necessarily detect all weaknesses,
errors or other irregularities that might have occurred.
• We assessed the accounting principles used and significant estimates made by management.
• We evaluated the overall financial statement presentation.
• Tests and procedures that we considered necessary were used to form an opinion on the
consolidated financial statements.
• We relied on the work of the City's actuaries in the calculation of the post-employment benefit
liability'and WSIB benefit liabilities.
• We did not rely on the work of the City's internal auditor in determining the nature, extent and
timing of our work.
• We are independent of the City as is required to provide an independent audit opinion. A copy of
our annual independence letter is included in Appendix I to this report.
The Corporation of the City of Pickering - 3
2009 Report to Council
98
Matters to report to Council
As discussed in our audit plan, the following reportable matters are required to be reported to
Council. Where points of interest are connected with a reportable matter, we have made reference
to the relevant area of this report or the consolidated financial statements
Comments
1. Significant weaknesses in internal control relating to No significant weaknesses in internal controls
the financial reporting process relating to the.financial reporting process were
identified.
2. Illegal acts None noted.
3. Significant transactions inconsistent with the None noted.
ordinary course of business, including fraud or
possible fraud.
4. Unusual related party transactions. None noted.
5. New significant accounting principles or policies The City implemented PS 3150 Tangible Capital
Assets and PSI 200 - Financial Statement
Presentation. See additional note disclosure
(Note 2) and updated financial statement
presentation in the City's consolidated financial
statements.
6. Disagreements with management None.
7. Management consultation with other accountants None noted.
about any significant auditing or accounting matters
8. Unusual transactions that significantly increase the None noted.
risk of loss
9. Actions that, if they became public, might cause None noted.
embarrassment
10. Non-compliance with regulatory requirements None noted.
11. Major issues discussed with management that None noted.
influence audit appointment
12. Management's judgments and accounting estimates Reasonable (see page 5).
13. Misstatements, including unadjusted audit See page 7.
differences
14. Difficulties encountered during the audit None.
15. Limitations placed on the scope of our audit None.
The Corporation of the City of Pickering - 4
2009 Report to Council
99
Audit findings
Management judgments and accounting estimates
The preparation of the consolidated financial statements requires management to exercise judgment
and utilize assumptions to make estimates.
The key.areas where management estimates are required are as follows:
• Post employment benefit liability and WSIB benefit liabilities;
• Allowance for significant property tax appeals;
• Allowance for doubtful accounts receivable;
• Accrued liabilities;
• Self-Insurance claims accruals;
Contingent liabilities - litigation; and
• Tangible Capital Assets
Post employment benefit liability and WSIB benefit liabilities
Management uses the assistance of an actuary in determining the post-employment benefits liability
and the WSIB benefit liabilities. The amounts recorded in the financial statements were based on the
January 1, 2008 and December 31, 2008 valuations, respectively, which were extrapolated to
estimate the December 31, 2009 recorded amounts.
Property tax appeals and doubtful accounts receivable
Management makes estimates for significant property tax appeals and the provision for doubtful
accounts receivable. Management makes these estimates based on the information available, at a
point in time, when preparing the financial statements.
Accrued liabilities
Management is required to make estimates, mainly for services received to December 31, where
invoices for such work have not been received prior to when the accounting records are finalized. In
addition, estimates made and recorded in the prior year are trued up to actual in the current year. The
true up amount, if any, is recorded when it is known.
Self-Insurance Claims Accrual
An accrual is made for legal expenses incurred by Cowan for insurance claims/cases which have not
yet been settled. This estimate is made based on an open claims schedule sent to the City by
Cowan.
The Corporation of the City of Pickering - 5
2009 Report to Council
100
Audit findings. (continued)
Management judgments and accounting estimates (continued)
Contingent liabilities - litigation
When preparing the consolidated financial statements, management makes estimates relating to
litigation based on the information available, at a point in time. As disclosed in Note 17 to the financial
statements, the City recognizes liabilities in the financial statements related to litigation when
management and legal counsel have assessed the outcome of the legal claim as likely and the
amount can be reasonably estimated. Management has determined that the outcome of any legal .
actions outstanding as at the reporting date is not determinable and accordingly, no provision has
been made in the consolidated financial statements.
Tangible capital assets
In the 2009 financial statements it was necessary for management to make estimates in the
implementation of "PS3150 - Tangible Capital Assets" in order to determine certain inventories,
valuations and remaining useful lives of classes of municipal assets.
Overall, we believe the accounting policies selected and the application thereof to be appropriate for
the City. Estimates and assumptions used have been assessed against standard practice and appear
to be reasonable.
The Corporation of the City of Pickering - 6
2009 Report to Council
101
Audit findings (continued)
Adjusted differences
An adjustment was made by management as a result of our audit work with respect to the recording
of subdivision assets which were assumed by the City pursuant to subdivision agreements. The
implementation of the new accounting standards on Tangible Capital Assets requires that
contributed/assumed assets be recorded as revenue with a corresponding capital asset addition
recorded at the fair value on the date of contribution. Although certain of these assets had been
considered in the January 1, 2008 opening balance of tangible capital assets (and for the fiscal years
2008 and 2009), there was an adjustment required to correct the cut off between the years and to
recognize revenue in 2009 for contributions in that year. There were no assets assumed in 2008.
Unadjusted difference
No unadjusted differences were noted during our audit.
The Corporation of the City of Pickering - 7
2009 Report to Council
102
Areas of audit focus
On October 13, 2009 we reported to you our planned key areas of audit focus. The following
summarizes our findings in respect of these areas:
Conclusion
Area Issue
Year end cut-off Determine if cut-off of Substantive testing on • Satisfactory.
revenues and expenditures accounts payable, accrued
is appropriate. liabilities, deferred revenue
and accounts receivable.
• Test disbursements and cash
receipts subsequent to year-
end.
Test supporting assumptions
for accrued liabilities, deferred
revenue and accounts
receivable.
Actuarial Accuracy and completeness • Review actuarial report, Satisfactory.
determined of certain liabilities such as including related assumptions.
liabilities Workplace Safety and
Insurance ("WSIB") and • Ensure appropriate accounting
post- employment benefits. treatment has been applied.
• Review related financial
statement note disclosure for
accuracy and completeness.
• Communicate with actuary on
our reliance on their reports for
audit purposes.
Reserves and Approval of transfers to and- • Substantive testing on the - Satisfactory.
reserve funds from reserves and reserve continuity of material
funds. transactions to determine if
transfers are in accordance
with Council approvals and/or
legislative requirements.
The Corporation of the City of Pickering - 8
2009 Report to Council
103
Areas of audit focus (continued)
Conclusion
Investment in Compliance with PS 3070 • Review accounting for Satisfactory.
Veridian "Investment in Government Investment in Veridian
Corporation Business Enterprise". Corporation and related
disclosures.
• Review consolidated financial
statements of Veridian
Corporation.
• Communication with. Veridian
Corporation's auditor on our
reliance on their auditors" report
for purposes of the City's audit.
Management Requires management • Focused review of calculations Satisfactory.
estimates judgment and support.
(i.e. allowance for
significant property tax • Discussion with management.
appeals, contingent . Analytic review of related
liabilities, etc.).
accounts.
Capital • Revenue Recognition Substantive testing to Satisfactory.
expenditures determine whether restricted
• Capital expenditures-year contributions (i.e. development
end cut-off charges, gas tax, conditional
grants) have been recognized
as revenue in the appropriate
period.
• Substantive testing on accruals
relating to capital expenditures
incurred before year end.
The Corporation of the City of Pickering - 9
2009 Report to Council
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Areas of audit focus (continued)
Conclusion
Area Issue
Public sector accounting Impact of the new Review of significant Satisfactory.
standards local government accounting policies,
reporting model implementation of new
including the standards and any
implementation of unusual transactions.
tangible capital assets Work with City staff to
accounting. determine if appropriate
plans are in place to
enable compliance with
the new standards.
Tangible capital assets • Appropriate accounting Review of assumptions Satisfactory.
and disclosure. used in determining
opening balances.
• Reasonable
procedures for legacy Substantive testing of
data collection. tangible capital asset
balances.
• Review of calculations of
accumulated
amortization.
The Corporation of the City of Pickering - 10
2009 Report to Council
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Appendices
t
The Corporation of the City of Pickering -
2009 Report to Council
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Appendix I - Independence letter
107
Deloittel,Deloitte & Touche LLP
5140 Yonge Street
Suite 1700
Toronto ON M2N 61_7
Canada
Tel: 416-601-6150
Fax: 416-601-6151
www.deloitte.ca
September 2, 2010
The Members of Council
The Corporation of the City of Pickering
1 The Esplanade
Pickering ON L1 V 6K7
Dear Council Members:
We have been engaged to audit the consolidated financial statements of the Corporation of the City of
Pickering (the "City") for the year ended December 31, 2009, which includes:
• The Corporation of the City of Pickering; and
• The Corporation of the City of Pickering Public Library Board.
In addition, we have been engaged to audit the Corporation of the City of Pickering Trust Funds.
Canadian generally accepted auditing standards ("GAAS") require that we communicate at least annually with
you regarding all relationships between the City and our Firm that, in our professional judgment, may
reasonably be thought to bear on our independence.
In determining which relationships to report, these standards require us to consider relevant rules and related
interpretations prescribed by the appropriate provincial institute / ordre and applicable-legislation, covering
such matters as:
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(a) holding a financial interest, either directly or indirectly, in a client;
(b) holding a position, either directly or indirectly, that gives the right or responsibility to exert significant
influence over the financial or accounting policies of a client;
(c) personal or business relationships of immediate family, close relatives, partners or retired partners, either
directly or indirectly, with a client;
(d) economic dependence on a client; and
(e) provision of services in addition to the audit engagement.
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The Corporation of the City of Pickering
September 2, 2010
Page 2
We have prepared the following comments to facilitate our discussion with you regarding independence
matters arising since June 22, 2009, the date of our last independence letter.
We are not aware of any relationships between the City and our Firm that, in our professional judgment, may
reasonably be thought to bear on independence that have occurred from June 22, 2009 to September 2, 2010.
The fees (exclusive of GST) billed from June 22, 2009 (the date of our last independence letter) to September
2, 2010 are as follows:
City of Pickering
• Balance of audit fees for the year ended December 31, 2008 $ 6,500
• Audit for the year ended December 31, 2009- interim billings $55,000
• Auditors' report dated March 6, 2010 for the Transfer of Federal
Gas Tax Revenues for the year ended December 31, 2009 $ 4,900
• Audit procedures on tangible capital assets $19,000
City of Pickering Public Library Board
• Balance of audit fees for the year ended December 31, 2008 $ 900
• Audit for the year ended December 31, 2009 - interim billing $ 5,000
GAAS requires that we confirm our independence in the context of the Rules of Professional Conduct of the
Institute of Chartered Accountants of Ontario. Accordingly, we hereby confirm that we are independent with
respect to the City within the meaning of the Rules of Professional Conduct of the Institute of Chartered
Accountants of Ontario as of September 2, 2010.
This report is intended solely for the use of Council and others within the City and should not be used for any
other purposes.
Yours truly,
Chartered Accountants
Licensed Public Accountants
109
Appendix 11 Management. letter
110
Deloitte 5140 to 8 T Yonge S Str e LLP
5140 treet
Suite 1700
Toronto ON M2N 61_7
Canada
Tel: 416-601-6150
Fax: 416-601-6151
September 2, 2010 www.deioate.ca
The Members of Council
The Corporation of the City of Pickering
1 The Esplanade
Pickering ON L IV 6K7
Dear Council Members:
We have recently completed our examination of the consolidated financial statements of the Corporation of the
City of Pickering (the "City") for the year ended December 31, 2009. Our audit was designed to provide a basis
for formulating an opinion as to whether the consolidated financial statements present fairly in all material
respects, in accordance with generally accepted accounting principles, the financial position, results of
operations and changes in financial position of the City. As part of our examination we reviewed and evaluated
the design and implementation of certain entity level controls and business cycle controls in order to assess
audit risk in accordance with Canadian generally accepted auditing standards.
The main purpose of our review of controls was to assist in determining the nature, extent and timing of our
audit tests and to establish the degree of reliance, which we could place on selected controls; it was not to
determine whether internal controls were adequate for the City's purposes. The scope of such a review of
internal controls is not sufficient to express an opinion as to the effectiveness or efficiency of the City's internal
controls.
While the audit did not include an in-depth evaluation of all systems of internal controls or all aspects of any
individual system and should not therefore be relied upon to identify all significant internal control weaknesses,
or all errors, irregularities or inefficiencies that might occur, we undertake to report such matters to you when
they come to our attention.
We have included as an attachment our observations and recommendations as well as management responses.
We would like to thank management and staff of the City for their assistance and co-operation during the audit.
Yours truly,
LID"
lbvu
Chartered Accountants
Licensed Public Accountants
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The Corporation of the City of Pickering
Management letter comments
December 31, 2009 Page 1 of 2
1. Variance analysis
Observation
During our audit of expenses, it was noted that a budget to actual comparison was not being performed for one
particular cost centre. We understand that staff turnover in the department was a contributing factor. This
control weakness was detected by Finance staff after a significant variance from budget had built up in the cost
centre.
Recommendation
We recommend that appropriate departmental staff regularly perform budget-to-actual variance analyses for
their respective cost centres on a timely basis.
Management's response
It is the responsibility of the appropriate staff in each department to monitor the budget to actual expenditures
throughout the year. They should then be advising their respective Supervisors of any variances, their
Department Head and if significant, the Treasurer. Staff have access to review their accounts and run reports
from the General Ledger system at any time during the course of the year. Accounting staff also distribute a
month end budget to actual report to departments for review. In addition, Finance staff complete a high level
review of budget to actual variances 3 times a year and follow up with appropriate staff when significant
variances are found.
Finance staff will remind departments the importance of monitoring the budget to actual variances on a timely
basis.
112
The Corporation of the City of Pickering
Management letter comments
December 31, 2009 Page 2 of 2
2. Tangible capital assets
Observation
In 2009, the City adopted the requirements of PS3150 "Tangible Capital Assets"(TCA). This accounting
standard represents a significant change in the way municipalities are required to account for their TCA. The
staff of the City worked diligently in order to prepare and value an opening TCA inventory as at January 1,
2008, and developed a workable process for properly recording 2008 and 2009 TCA activity in the financial
statements.
Going forward, the City must adopt accounting procedures which account for TCA additions within its
accounting systems in a more "routine" manner so as to remove the significant amount of manual analysis that
was required in order to comply with the standard in 2009 and prepare the financial statements. Without
adopting accounting procedures which systematically record TCA activity, the processes required to comply
with the accounting standard at year end will continue to be time consuming and increase the risk of error.
Recommendation
We recommend the City develop and implement procedures which are followed throughout the year to ensure
TCA activity is recorded as it occurs.
Management's response
With the introduction of tangible capital assets there are a number of projects or changes to be undertaken to
streamline the accounting for tangible capital assets. These changes range from development of accounting
procedures; implementation of software for recording asset additions, disposals and calculating amortization;
and changes to capital budgeting to assist in identifying and recording tangible capital assets.
A Senior Financial Analyst was hired as of August 2009 with primary responsibility for overseeing the
accounting for tangible capital assets. The initial priority of the position was completing the compilation and
valuation of the opening inventory balances at January 1, 2008 and compiling the addition and disposal
information for 2008 and 2009 to meet the financial statement reporting requirements for 2009 year end.
Going forward, the responsibilities of this position are: to develop the processes and procedures surrounding
the accounting for TCA additions, disposals and amortization; to assist in selection and implementation of
appropriate asset management software so accounting for assets may be automated where possible; and to work
with Finance staff in streamlining the capital budget format in order that data can be recorded more efficiently.
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ATTACHMENT # Z TO REPO #CS 32-
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Consolidated financial statements of
The Corporatio ®f the
City of Picker' I g
December 31,2009
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FOR DISCUSSION PURPOSES ONLY
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The Corporation of the City of Pickering
December 31, 2009
Table of contents
Auditors' Report ...................................................................................................................................................1
Consolidated statement of financial position .......................................................................................................2
Consolidated statement of operations ................................................3
Consolidated statement of change in net financial assets ...................................................................................4
Consolidated statement of cash flows .................................................................................................................5
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Notes to the consolidated financial statements 6-25
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Deloitte & Tou a LLP
5140 Yonge reet
Suite 1700
Toronto M2N 61-7
Canad
Tel: 16-601-6150
F 416-601-6151
.deloitte.ca
I
Auditors' Report
To the Members of Council, Inhabitants
and Ratepayers of the Corporation of
the City of Pickering
i
We have audited the consolidated statement of financial posi 'o the Corpo tion of the City of
Pickering as at December 31,2009 and the consolidated st a is opera ions, changes in net financial
assets and of cash flows for the year then ended. These ancia emen are the responsibility of the
City's management. Our responsibility is to express opinion on a mancial statements based on our
audit.
I
We conducted our audit in accordance with C dian generally a epted auditing standards. Those
` standards require that we plan and perform an u ' tain re onable assurance whether the financial
statements are free of material misstatemer Ana t d examining, on a test basis, evidence
supporting the amounts and disclosures ' he financ' stat ents. An audit also includes assessing the
accounting principles used and signific t estimates d y management, as well as evaluating the
overall financial statement presentati
In our opinion, these financial s m present f ' ly, in all material respects; the financial position of
the Corporation of the City of 'ck 'n e mber 31, 2009 and results of its operations and its cash
flows for the year then ende a ce wi Canadian generally accepted accounting principles.
Chartered Acco to
Licensed Publ' A un
September. , 2010
0 Document in 2210A City of Pickering Notes 913110,-10.-46 AM
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The Corporation of the City of Pickering
Consolidated statement of financial position
as at December 31, 2009
2008
(Restated -
2009 Note 2
$ $
Financial assets
Cash 8,079 07 4,4 058
Investments (Note 4) 59,5 ,301 63, 2,451
Taxes receivable 16 65 85 1 ,678,581.
Accounts receivable ,9 ,321 4,891,541
Investment in Veridian Corporation (Note 5(b)) 9 5 38,635,318
Promissory notes receivable Note 6 25,069,0 25,069,000
152 418,359 150,362,949
Liabilities
Accounts payable and accrued liabilities /4/- 10,864,497
Other current liabilities 107,016
Deferred revenue (Note 7) 36,125,738
Long-term liabilities (Note 10) 16,111,363
Post-employment benefit liability (Note 9(a)) 2,563,500
WSIB benefit liabilities Note 9(b 1,085,198
68,134,766 66,857,312
Net financial assets 84,283,593 83,505,637
Non-financial assets
Tangible capital assets (Note 11) 186,242,634 180,420,178
Inventory 266,506 192,417
Pre aid expenses 398,024 532,338
186,907,164 181,144,933
Accumulated surplus Note 12 271,190,757 264,650,570
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The Corporation of the City of Pickering
Consolidated statement of operations
year ended December 31, 2009
j 2009 2008
Budget Actual
(Unaudited) (Restated -
Note 18 Act /al Note 2
Revenues
Residential and farm taxation 31,946,856 ,031,448 30 45,111
Commercial and industrial taxation 8,110,611 302,954 1717,742
Taxation from other governments 6,824,903 ,215,337 7,162,628
User charges 7,510,5 6,507 7,543,566
j Government grants and fees 18,637, 27 5, 6 7,598,366
i Other contributions and donations 1,17 ,250 1,640, 6 678,599
Development charges and
developer contributions earned ,343,800 6,962 637,284
Contributed tangible capital assets - 74,280 -
Investment income 7 ,000 309,690 1,234,452
Penalties and interests on taxes ,000 2,320,563 2,074,549
Fines 3,041 811,938 836,602
Interest on promissory notes 1,9 ,2 1,905,244 1,905,244
Equity share of Veridian Corporation
earnings for the year (Note 5 (c)) - 4,509,327 3,574,684
Other 5,500 764,876 506,958
Gain on disposal of tangible capital assets - 46,758 -
Total revenues 1,077,857 76,147 494 72,415,785
Expenses (Note 19)
General government 12,957,317 12,815,997 11,075,785
Protection to persons and property 19,783,319 18,768,392 18,143,056
Transportation services 11,351,983 11,190,538 10,355,376
Environmental services 2,112,451 2,055,947 2,066,553
Social and family services O 551,334 402,489 373,515
Recreational and cultural s ice 23,048,758 22,155,313 21,002,326
Planning and develo me 2,719,446 2,218,631 1,895,566
72,524,608 69,607,307 64,912,177
Annual surplus 8,553,249 6,540 187 7,503,608
Accumulated su I , beginning of ye 264,660,570 264 650,570 257,146,962
Accumulated s u.61 f ea 273,203,819 271,190,767 264,650,570
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The Corporation of the City of Pickering 1 9
Consolidated statement of change in net financial assets
year ended December 31, 2009
Budget
(Unaudited) 2008
Note 18 2009 7 Note 2
$ $ $
i
Annual surplus 8,553,249 6,540,187 7,503,608
Acquisition of tangible capital assets (27,770,215) (15,414,607) (7,935,306)
Amortization of tangible capital assets 9,374,524 9,416,629 9,276,925
(Gain) Loss on disposal of tangible capital assets - (46,758) 58,566
Proceeds on disposal of tangible capital assets - 222,280 48,981
(9,842,442) 717,731 8,952,774
Acquisition of inventories of supplies - (860,335) (1,103,298)
Use of inventories of supplies - 786,246 1,157,242
Acquistion of prepaid expenses - (394,788) (557,890)
Use of prepaid expenses - 529,102 587,941
60,226 83,995
Change in net financial assets (9,842,442) 777,956 9,036,769
Net financial assets, beginning of year 83,505,637 83,505,637 74,468,868
Net financial assets, end of year 73,663,195 84,283,593 83,505,637
O ,
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The Corporation of the City of Pickering
Consolidated statement of cash flows
year ended December 31, 2009
2008
/(Restated -
2009 Note 2
Operating activities
Annual surplus 6,5 ,187 7,5 3,608
Non cash items
Amortization of tangible capital assets ,4 6,629 1276,925
(Gain) Loss on disposal of tangible capital assets 46,758) 58,566
Equity share of Veridian Corporation 327) (3,574,684)
Contributed tangible capital assets recorded in revenue (2,77 , 0) -
Change in non-cash operating items:
Increase in taxes receivable (2,387, 4) (1,540,934)
Decrease in accounts receivable 98 , 20 884,623
Increase (decrease) in accounts payable and accrued liabilif s 9 0,256 (303,823)
Increase in other current liabilities 15,150 25,547
1 Increase in deferred revenue 1,788,841 3,700,797
1 Increase in post-employment benefit liability 151,600 220,250
Increase in WSIB benefit liabilities 283,000 442,153
(Increase) decrease in inventory (74,089) 53,944
Decrease in prepaid expenses 134,314 30,051
10,454,339 16,777, 023
Capital
Acquisition of tangible capital assets (12,640,327) (7,935,306)
Proceeds on disposal of tangible ca aa222,280 48,981
(12,418,047 7,886,325)
Investing activities
Decrease (increase) in inve/ia7aor 4,106,150 (16,907,591)
Dividends received from Ve 3,362 000 1,722,000
7,468,150 15,185, 591
Financing activities
Proceeds from de/tures issued - 8,506,000
Princi al re a me debentures 1,891 393 1,190,648
1891393 7,315,352
Net increase i cogf 3,613,049 1,020,459
Cash, be in in e 4,466,058 3,445 599
Cash en of year 8,0791107 4,466,058
i
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
1. Significant accounting policies
The consolidated financial statements of The Corporation of the City of Pickering ( e "City") are the
representations of management prepared in accordance with accounting standar s established by e
Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartere Accountants.
Significant accounting policies adopted by the City are as follows:
(a) Reporting entity
(i) Consolidated statements
The consolidated financial statements reflect the assets iab ' ies, nu and expenses
of the reporting entity. The reporting entity is compris of the activities all committees of
Council and the City of Pickering Public Library Boa which is controll d by the City.
All material inter-fund transactions and balances re eliminated on nsolidation.
(ii) Investment in Veridian Corporation
The City's investment in Veridian Corporat' n i nted fo on a modified equity basis,
consistent with generally accepted accou ting es as commended by PSAB for
investments in government business a erprises. r t modified equity basis, Veridian
Corporation's accounting policies are of adjusted to co orm to those of the City and inter-
organizational transactions and bal ces are not elimi ated. The City recognizes its equity
interest in the annual net income r loss of Veridian orporation in its consolidated
statement of operations with a rresponding incr se or decrease in its investment asset
account. Dividends that the C' y eive fro Veridian Corporation and other capital
transactions are reflected a adju a th investment asset account.
(iii) Operations of School Bo rds and th egi of Durham
The taxation, other re enues, expenditu s, assets and liabilities with respect to the
operations the sc ool boards and t Region of Durham are not reflected in these
consolidatedoffna ial statements.
(iv) Trust funds
Trust funds nd r o erations administered by the municipality are not
cons olida d, but a ort e separately on the Trust Funds Statement of Financial
Activitie and Stateme o inancial Position.
I (b) Basis of a counting
(1) A rual basis of acc nting
e nd exp nses are reported on the accrual basis of accounting. The accrual basis
o ccou I g r ognizes revenues as they are earned and measurable; expenses are
r niz a hey are incurred and measurable as a result of the receipt of goods and
serve n the creation of a legal obligation to pay.
(ii) Investm is
Temp ary investments are recorded at the lower of cost plus accrued interest and market
valu . Long-term investments are recorded at cost and any loss in value which is considered
of er than temporary is recorded as appropriate. Any premium or discount at purchase of an
vestment is amortized over the life of the investment.
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
1. Significant accounting policies (continued)
(b) Basis of accounting (continued)
(iii) Tangible capital assets ("TCA")
Tangible capital assets are recorded at cost less accumulated a ortization. Cost in udes
all costs directly related to acquisition or construction of the tan able capital asset' cluding
transportation costs, installation costs, design and engineerin fe , legal fees d site
preparation costs. Amortization is recorded on a straight-fin b over the es mated life of
the tangible capital asset commencing once the asset is ail ruse as ollows:
i
Buildings 15 to 45 year
Machinery & equipment 2 to 25 year
Vehicles 5 to 15 ye rs
Infrastructure -Roads 10 to 50 ears
Infrastructure - Storm sewers 25 to 0 years
Infrastructure - Sidewalks 20 t 40 ars
Information technology hardware 4 8 r
Infrastructure - Parks to rs
Library collection materials 4 to 7 ye
Furniture & fixtures 10 to 50 ye
One-half of the annual amortizatio s charged in the ar of acquisition and in the year of
disposal. Assets under constructi n are not amortiz until the asset is available for
productive use. Land is not am ized.
Tangible capital assets rece' ed do are recorded at their fair value at the date
contributed, and that amo t fs al r or e s revenue.
(iv) Accounting for Property ax Cappin rov' ions resulting from the Ontario Fair Assessment
System
The net impact in operty taxes as a esult of the application of the capping provisions
does not affect t Consolidated St ement of Operations as the full amounts of the
property taxes er ed. Howe r, the capping adjustments are reported on the
consolidated tat er of Fina ial Position as a payable to the Region.
(v) Deferred r enu
Deferre revenues re s t user charges and fees which have been collected but for
which a related service have yet to be performed. These amounts will be recognized as
reve ues in the fiscal y ar the services are performed. In addition, any contributions
re ived with extern restrictions are deferred until the related expenditures are made.
(VI) o loyment enefits
pres t va a of the cost of providing employees with future benefits programs is
r iz a employees earn these entitlements through service. Actuarial gains and
loss ortized over the average remaining service period ("ARSP"). The actuary
determine ARSP to be 15 years.
(vii) Invent
Inve tory is valued at the lower of cost and replacement cost. Cost is determined on a
w ' hted-average basis.
(viii) ovemment transfers
Government transfers are recognized in the financial statements in the period in which the
events giving rise to the transfer occur, eligibility criteria are met, and reasonable estimates
of the amount can be made.
(ix) Intangible assets
Intangible assets are not recognized as assets in the financial statements.
D Document in 2210A City of Pickering Notes 9/3/10,10:46 AM Page 7
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of the City of Pickerin 1 2 3
The Corporation g
Notes to the consolidated financial statements
December 31, 2009
1. Significant accounting policies (continued)
(x) Use of estimates
The preparation of financial statements in conformity with Canadian enerally accepte
accounting principles requires management to make estimates an assumptions tha affect
the reported amounts in the financial statements and accompan ng notes. Accou
involving significant estimates include allowance for doubtful a counts, accrued Ii ilities,
employee future benefits liabilities and estimates in thou
he curre t y r relating to ngible
capital assets. Actual results could differ from these estim s.
2. Change in accounting policies
On January 1, 2009, the Corporation of the City of Pickering ad ted the following ublic Sector
Accounting Standards: Section 1000 - Financial Statement C ncepts, Section 1 00 - Financial
Statement Objectives and Section 1200 - Financial Statem t Presentation. A a result, the
presentation of the financial statements changed from the rio ear. In additi n, the City changed its
accounting policy related to the treatment of tangible cap' al e s to com with Section 3150 -
Tangible Capital Assets. Capital assets are capitalized t c amorti d over their estimated useful
lives. Previously the costs to acquire tangible capital ssets r recor d as a.capital expenditure
when incurred.
Method used for determining the opening cost o each major categ ry of tangible capital assets
The financial information recorded includes t actual historical ost of the tangible capital assets. When
historical cost records were not available, o er methods were sed to estimate the costs and
accumulated amortization of the assets. T e lied a nsistent method of estimating the
replacement or reproduction cost of the ngib c s is to each category for which it did not have
historical cost records. After determini g replac nt or production cost, deflation factors were used
to deflate the replacement or reprod ction cost t n e imated historical cost for the year of acquisition.
Where required, a third party was red to provide h City with values for tangible capital assets. The
third party used the deflated reps cement or reprod ction cost or deflated fair market value
methodologies in.determining lues for tangible pital assets.
This change in accounting lic been ap led retroactively with the restatement of the prior period.
This change has changed m nt e' o ed ' prior period as follows:
2008
Accumulated su lus
Operating 125,000
Capital 13,405,505
Rese s rve F ds 26,555,196
Equi in idian orp ration 66,747,338
A ounts to v ed (22,602,647)
ccumulated s pl , as previously reported 84,230,392
Net book value o tan ible capital assets 180,420,178
ccumulated su s as restated 264,650,570
An/scapitalized as previously reported 8,952,774
gnized on contributed tangible capital assets 135,183
but previously expensed 7,800,123
xpense not previously reported (9,276,925)
e of assets sold (107,547)
nual surplus, as restated 7,503,608
D Document in 2ZIOA City of Pickering /Votes 913110,• 2.27PA4 Page S
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
3. Operations of school boards and the Region of Durham
Further to Note 1 (a) (iii) requisitions are made by the Region of Durham an/half. requirin
the City to collect property taxes and payments in lieu of property taxes on tamount
collected and remitted are summarizes as follows:
ho board
Taxation /4, 060 /41,959,128
Payments in lieu of taxes 16 488,772
86,817,9t4/ 42,447,900
4. Investments
0 2008
Cost Mark v e cost Market value
Temporary investments 27,643,803 /32,064,236 ,626,605 34,093,374 34,138,266
Long-term investments 31,872,498 29,529,077 30 042 240.
59,516,301/ 59,690,841/ 63,622,451 64,180,506
I Temporary investments are composed ban to ces, deposit notes and discount notes. They
are recorded at cost which is not signi antly d nt fro market value. Long-term investments are
comprised of deposit notes and bon
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D Document in V10A City of Pickering /Dotes 913110,• 10.49 AM Page g
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
5. Investment in Veridian Corporation
(a) Veridian Corporation is owned by the City of Pickering, Town of Ajax, Munic' ality of Claringto
and the City of Belleville. The City has a 41 per cent interest in Veridian C oration. Veridia
Corporation, as a government business enterprise, is accounted for on t modified equity asis
in these financial statements. Veridian Corporation serves as the elect 'cal distribution uti . for a
number of communities including the four noted above and conducts on-regulated utili service
ventures through its subsidiaries.
The following table provides condensed supplementary consoli to ancial info ation for the
corporation and its subsidiaries for the year ended December
200 2008
Financial position:.
Assets
Current 78,9 1,113 69,599,771
Capital and intangibles 160 03,199 144,357,602
Other 350 539 13,028,112
Total assets /258,604,861 226,985,485
Liabilities
Current 73,264,994 108, 931,221
Long-term debt 60,794,000 -
Other 27,515,014 23,821 779
Total liabilities 161,674,008 132,753 000
Shareholders' equity
Share capital 67,285,173 67,285,173
Contributed capital 24,910 24,910
Retained earnin s 29,720,760 26,922,402
Total equity 97,030,843 94,232,485
Total liabilities a e 258,604,861 226,985,485
Financial a ' ities:
Revenu 246,318,763 228,759,331
Other' come 6,553,673 9,002,241
Exp nses 243,691,109 229,103,101.
E i m disco 7inuedations 1,817,031 60,271
N e, m s the ar 10,998,358 8,718,742
D Document in2210ACltyofftkeringAktes 913/10,-10:50AM Page 10
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
5. Investment in Veridian Corporation (continued)
I (b) City of Pickering's equity represented by:
200 /08
$ $
Promissory notes receivable Note 6 25 0 9 00 069 000
Investments in Veridian Corporation
Initial investment in shares of the Corporation 30,496,19 30,496,196
Accumulated earnings 19,994,648 15,485,321
Accumulated dividends received (11,817,020 (8,455,020)
Increase in value of investments 1 108 8 1,108,821
Total investment 39.782.0/46 38,635,318
i (c) Equity in Veridian Corporation
/2009 2008
Balance, beginning of year /13,362,000) 6,747,338 64,894,654
Equity share of net earnings fo/Ccfibbafien, 4,509,327 3,574,684
Dividend received from Veridia (1,722,000)
Balance end of year 67,894,665 66,747,338
(d) Contingencies and guarant es of Veridian o oration (the "Corporation') as disclosed in their
financial statements are follows:
(i) Insurance c/a*
The Corpora . on ' a ember o he Municipal Electric Association Reciprocal Insurance
Exchange M I h as created on January 1, 1987. A reciprocal insurance
exchang may b fined a group of persons formed for the purpose of exchanging
recipro al contracts in mnity or inter-insurance with each other. MEARIE provides
gene I liability insuran to member electric utilities.
In rance premiums harged to each member utility consist of a levy per $1,000 of service
venue subject to credit or surcharge based on each electric utility's claims experience.
In ce limits up to $30,000,000 per occurrence are covered by MEARIE.
i D Document in 2210A City of Pickering Notes 913110.-10.-46 AM Page 11
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Notes to the consolidated financial statements
December 31, 2009
I
5. Investment in Veridian Corporation (continued)
(d) (continued)
(ii) Other claims
An action has been brought under the Class Proceedings Act: 92. The plaintiff ass
seeks $500,000,000 in restitution for amounts paid to Toront ydro and to oth Ontario
municipal electric utilities ("LDCs") who received late paym t nalties whic onstitute
interest at an effective rate in excess of 60% per year, co ra o Section 3 of the
Criminal Code. Pleadings have closed in this action. a not y been certified
as a class action and no discoveries have been held, s the partie er awaiting the
outcome of a similar proceeding brought against E ridge Gas Distrib ion Inc. (formerly
Consumers Gas).
i On April 22, 2004, the Supreme Court of Can a released a deci ion in the Consumers
Gas case rejecting all of the defences which a eZatem raised b Enbridge Gas Distribution
Inc., although the Supreme Court of Cana d' o ermit th plaintiff class to recover
damages for any period prior to the issu ce t t of claim in 1994 challenging
the validity of late payment penalties. T e Sup Cou f Canada remitted the matter
back to the Ontario Superior Court of Justice for d ation of the damages. At the end
of 2006, a mediation process resul d in the settleme of the damages payable by
Enbridge Gas Distribution Inc..
After the release by the Supre a Court of Cana of its 2004 decision in, the Consumers
Gas case, the plaintiffs in th L to payme penalties class action indicated their
intention to proceed with t lit1 o s he LDCs. To date, no formal steps have
been taken to move the ction fo d. Th electric utilities intend to respond to the action
i if and when it proceed on the basi at a LDCs' situation may be distinguishable from
I that of Consumers s.
i The parties are i ettlement discus ons but no settlement has been reached. At this time,
it is not possibl o quantify the eff ct, if any, on the financial statements.
(iii) Contractual li io H dro ne Networks Inc. (HONP)
The Corp ratio sidia , Veridian Connections Inc. ("VCI"), is party to a connection
and co recovery em nt with HONI related to the construction by HONI of a
transf rmer station desi ated to meet VCI's anticipated electricity load growth.
Co truction of the pr 'ect was completed during 2007 and VCI connected to the
tr sformer station ring 2008.
o t e extent tha a cost of the project is not recoverable from future transformation
n rev ues, VCI is obliged to pay a capital contribution equal to the difference
etwee hes revenues and the construction costs allocated to VCI. The construction
c d to VCI for the project are estimated at $9,974,670.
(iv) En vi n ntal liability
Envir ment Canada has issued new regulations governing the management of
poly hlorinated biphenyls (PCBs). The Corporation is in the process of determining the
e ent and impact that the new regulations will have on the Corporation. As at December
2009, the cost of testing performed to date has been included within regulatory assets;
however, costs related to additional testing or remediation have not been accrued as the
amount is not determinable.
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
5. Investment in Veridian Corporation (continued)
(e) Lease commitments
Future minimum lease payment obligations under operating leases re as follows:
2010 622,000
2011 588,000
2012 153,000
2013 2,000
2014 2,000
Thereafter 72,000
1 439 000
1
6. Promissory notes receivable
2009 2008
Promissory note receivable from Veridian o oration
maturing November 12, 2012 and be ng i
7.62% until April 30, 2010, then the reater o
or the Ontario Energy Board dee ed long to ebt
rate on an annual basis to mat ty (6% effective
May 1, 2010) 7,095,000 7,095,000
Promissory note receivable ro ndian Co ections Inc.
maturing November 1, 3 n g i erest at
7.62% until April 30, 10, .5 o f m
May 1, 2010 to De tuber 31, 4 a 'then the Ontario
Energy Board d med long-term d t rate for each successive
five year erio thereafter 17,974,000 17,974,000
i 25,069,000 25,069,000
Interest re n d from ese notes receivable totaled $1,905,244(2008 -1,905,244). The
promiss n s'fro eri an Corporation are convertible into common shares at the rate of one
Comm shar a 000 of principal amount, at the option of the City.
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
7. Deferred revenue
2009 20
Obligatory Reserve Funds
Development charges /27,4,3932 2 ,413,355
Parkland 1,984,486
Federal gas tax 3,084,862
Third party/Developer's Contributions Reserve Fund 2 043 667
34,872,751 33,526,370
Other unearned revenues 3 041 8 2,599,368
37,914.09 36,125,738
Continuity of deferred revenue is as follows:
/2009 2008
Balance beginning of year /36,125,7 8 32,424,941
► Restricted funds received 4,246,730 4,314,126
General funds received
442,460 56,354
Interest earned 1 283 835 1 294 510
/1
5,973,025 5,664,990
i
Earned revenue transferred o operations 4,184,184 1,964,193
Balance end of ear 37,914,579 36,125,738
8. Interfu/ayema As a mvarious cap I quisitions, funds are borrowed by th e Capital Fund from
Develoand Parkland eferred revenue (obligatory reserve funds). These funds are
securenotes with i rest rates ranging from 3.1 % to 4.7% and various payment terms
ranging o 10 years he financing arrangements and ultimate repayment are approved by
Councirrent bu et process. Although these notes have payment terms as noted above,
they arema . The following is a summary, of the related loans:
2009 2008
$ $
ads and streetli is 711,509 1,307,327
ommunity facil' es, libraries and parks 829,558 1,308,514
Protection se ces 694,491 321,252
Environmen I services 34,554 50,544
Municipal uildin 29 716 33 949
2 299 828 3 021 586
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
9. Post-employment benefit liability
(a) Post-employment benefit liability
The City makes available to qualifying employees who retire before the a of 65, the.oppo unity
to continue their coverage for benefits such as post-retirement extend healthcare bens s.
Coverage ceases at the age of 65. The City also provides full time a permanent part-'me
employees a sick time entitlement and any unused entitlement is a cumulated year t ear. This
accumulated entitlement is not vested and is forfeited at the time f r ' ement or to ination. The
most recent actuarial valuation of the post-employment benefit w ormed a January 1,
2008.
Information about the City's benefits liability is as follows:
20 9 2008
Accrued benefits liability, beginning of year 2 63,500 2,343,250
Prior period service cost - 150,700
Current service costs 214,200 191,800
Interest on accrued benefits 186,900 187,200
Amortization of actuarial losses 49,000 39,200
Benefits aid during the year (298,500) 348,650)
Accrued benefits liability, end of ear 2,715,100 2,563,500
Accrued benefit obligation 3,435,300 3,332,700
Unamortized actuarial los s (720,200) (769,200)
Accrued benefits liabili nd of year 2,715,100 2,563,500
The main actuarial ass ptions employe in the actuarial valuations areas follows:
(i) Discount rate
The prese v c ber 31, 2009 of the future benefits was determined using a
discoun ate of (200 - 6.0%).
(ii) Dent costs
T dental cost tren ates was 4.0% increase per annum.
j (iii) ealth costs
sts w e assumed to increase at 9% in 2009 and decrease by 0.5% increments
r year a ultimate rate of 5% per year in 2017 and thereafter.
i
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0 Document in 2210A City of Pickering Notes 913110.-10.-96 AM Page 15
FOR DISCUSSION PURPOSES ONLY
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
9. Post-employment benefit liability (continued)
(b) Workplace Safety and Insurance Board (WSIB) benefit liabilities
Effective January 1, 2001, the City became a Schedule II employer unde the Workplace S ety &
Insurance Act and follows a policy of self insurance for the risk associ d with paying be fits for
workplace injuries for all its employees. The WSIB administers the cl ms related to wor place
injuries and is reimbursed by the Corporation. The most recent act ri I valuation of t e WSIB
benefits was performed at December 31, 2008.
Information about the City's WSIB liability is as follows:
2 0 2008
Accrued WSIB liability, beginning of year 1, 5,198 643,045
Current service cost 293,000 284,432
Interest on accrued benefits 80,000 51,200
Amortization of estimation adjustment loss - 253,075
Benefits aid during the year 90 000 (146,554)
j Accrued WSIB liability, end of ear 1,368,198 1,085,198
The main actuarial assumptions a loyed in the act arial valuations are as follows:
(i) Discount rate
The present value as at cemb 2 0 of the future benefits was determined using a
discount rate of 6.0% ( 08 - 6.00
(ii) Inflation rate
E The rate of inflati was assumed t e 3% per annum.
(iii) WSIB Admini ati ate
Liabilities f W h e been increased 30% to reflect the administration rate
charged W
A WSIB Res a Fund was st lished in 2001. The Reserve Fund balance at December 31,
2009 was 658,462 (2008 - 1,339,907). In addition, the City purchased two insurance policies
that prot t the City against ignifcant claims to the Corporation. The occupational accident
insura a pays loss claim up to $400,000 per work related accident. The excess workers
com ns tion indemni insurance has a $400,000 deductible and will pay for claims up to and
Intl d1 0,000 er work related accident.
i 10. Long- rm lia "e
(a) The balance of ong-term liabilities is made up of the following.
2009 2008
The unicipality is responsible for the payment of
incipal and interest charges on long-term liabilities .
issued by the Regional Municipality of Durham on the
City's behalf. At the end of the year, the
outstanding principal amount of this liability is 14,219,970 16,111,363
D Document in 2210A City of Pickering Notes 913110,10:46 AM Page 16
FOR DISCUSSION PURPOSES ONLY
132
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
10. Long-term liabilities (continued)
(b) The above long-term liabilities have maturity dates of July 12, 2011, 2016 a d 2021, Novembe 1,
2012, November 21, 2012 and 2018, July 15, 2014 and December 23, 20 4 with various int est
rates ranging from 2.65% to 5.6%. Principal repayments are summarize as follows:
2010 1,683,228
2011 1,753,158
2012 2,792,188
2013 1,390,325
2014 1,258,572
Thereafter 5,342,499
14,219,970
i
(c) Long-term liabilities include a principal sum of 0 as 'Ref dable Debentures' which may
be raised by the issuance of debentures over further od n to exceed 10 years.
(d) The above long-term liabilities have been proved by Coun ' by-law. The annual principal and
interest payments required to service th a liabilities are wi in the annual debt repayment limit
! prescribed by the Ministry of Municipal ffairs and Housi
! (e) Interest expense recorded in the ye r r lating to these ong-term liabilities is $742,139 (2008 -
$466,281).
11. Tangible capital assets
Information relating to tangible c ital assets is as f ows:
i) Contributed tangible capit assets
The City records tangib c assets tributed by an external party at fair value on the date
contributed. Typical a es d, ads, storm sewers and sidewalks installed by a developer
as part of a subdivi on opme agreement. Contributions of tangible capital assets in 2009
amounted.to $2,7 4,280( 2 - $ '
ii) Tangible capit assets recogniz at nominal value
Land under oads are assigne a nominal value of one Canadian dollar because this land only
supports is intended to s port road infrastructure and the majority of land acquired supporting
road all a was acq . ed at no cost.
iii) Wor o and i tori al treasures
T e City ha s m which holds various historical treasures and historical buildings pertaining
the heritage n istory of the City of Pickering. These items are not recognized as tangible
capital assets in a financial statements because a reasonable estimate of the future benefits
associated wit such property cannot be made. Any acquisition or betterment of these assets is
recognized an expense in the financial statements.
iv) Other
The n book value of tangible capital assets not being amortized because they are under
cons uction is $1,841,341 (2008 - $2,267,916).
D ring the year, there were no write-downs of assets (2008 - nil) and no interest was capitalized
uring the year (2008 - nil).
D Document in 2210A City of Pickering Notes 913110,• 10:46 AM Page 17
FOR DISCUSSION PURPOSES ONLY
133
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
12. Accumulated surplus
The City's accumulated surplus is comprised of the following:
/09 08
Capital fund 99 ,216 405,505
Operating fund 5,089 125,000
Equity in Veridian Corporation , 66 66,747,338
Tangible capital assets 186,242, 4 180,420,178
Post employment benefits liability (2,536,10 (2,384,500)
j Internal loans (2,299, 8) (3,021,586)
Net long-term liabilities (14,21 ,970) (16;111,363)
WSIB benefit liabilities (1,3 8,198) (1,085,198)
Reserves set aside for special purposes by Council
Working capital 400,000 400,000
i Self insurance 962,707 951,391
Replacement of capital equipment 854,338 618,419
Contingencies 1,471,140 1,401, 340
Rate stabilization 16,565,777 17,374,935
City's share for development charge 1,946,216 1,168,494
Continuing studies 390,315 750,534
Vehicle replacement 237,547 172,547
Easement settlement 131,279 131,279
Eastern branch 105,000 80,000
Move Ontario 267,033 8,243
Capital asset management 90,000 75,000
` Economic stabilization 1,236,000 -
1 Reserve Funds set aside f
special purposes by C n
Recreation progra s an ities 215,350 192,845
Acquisition of to gible capita se 1,585,630 1,516,365
Squash court 1,316 92,530
WSI B 1,658,462 1,339,907
Animal sh ter 162,553 152,896
Men's s w pitch 137,587 128,471
271,190,757 264,650 570
13. Pen - n agreem
I T City makes cont ' utions to the Ontario Municipal Employees Retirement Fund (OMERS), which is
multi-employer p n, on behalf of the members'of its staff. The plan is a defined benefit plan which
specifies the am nt of the retirement benefit to be received by the employees based on the length of
service and rat s of pay.
Contributio on account of current service for 2009 were $2,117,873 (2008 - $2,034,410).
14. Trust F ds.
Trus unds administered by the municipality amounting to $297,350 (2008 - $288,070) have not been
inc ded in the Consolidated Statement of Financial Position nor have their operations been included in
t Consolidated Statement of Operations.
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D Document in 2210A City of Pickering Notes 9/3/10.• 10:46 AM Page 20
FOR DISCUSSION PURPOSES ONLY
1
136
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
15. Related party transactions
Veridian Corporation
The City of Pickering receives electricity and services from Veridian Corpo/Note corpor tion
in which the City is a principal shareholder.
2008
$ $
_ I
Transactions
Revenues
Interest on promissory notes 1,905,2 1,905,244
Property taxes levied 41 75 42,558
Expenses
Electrical energy and services 1 65,955 1,941,923
Balances
Accounts payable and accrued liabilities 316,068 406,725
Promissory notes receivable 25,069,000 25,069,000
16. Guarantees
In the normal course of business, the City ters into agreem is which contain guarantees. The City's
primary guarantees are as follows,
(i.) The City has provided indemni' s unde a ag ements for the use of various facilities or land.
Under the terms of these agr ments the ty a ees to indemnify the counterparties for various
items including, but not limi d to, all liabilitl s, oss, suits, and damages arising during, on or after
the term of the agreemen . The maximum a ount of any potential future payment cannot be
! reasonably, estimated.
(ii) The City indemnifies II yees and lected officials including Library employees and board
members for vario it s i g, ut not limited to, all costs to settle suits or actions due to
association with a sec o ertain restrictions. The City has purchased liability insurance
to mitigate the ost of an tenti future suits or actions. The term of the indemnification is not
explicitly defi ed,. but is limi the period over which the indemnified party served as an
employee elected official o e City. The maximum amount of any potential future payment
.cannot b reasonably estim ed.
(iii) The C' has entered int agreements that may include indemnities in favour of third parties, such
as rc d sale reements, confidentiality agreements, engagement letters with advisors
an c ultan , out urcing agreements, leasing contracts, information technology agreements
d s ' e a e nts. These indemnification agreements may require the City to compensate
counterpa o osses incurred by the counterparties as a result of breaches in representation
and regulations r as a result of litigation claims or statutory sanctions that may be suffered by
the counterp as a consequence of the transaction. The terms of these indemnities are not
explicitly d ned and the maximum amount of any potential reimbursement cannot be reasonably
estimate
The nature of ese indemnification agreements prevents the City from making a reasonable estimate of
the maximu exposure due to the difficulties in assessing the amount of liability which stems from the
unpredict ility of future events and the unlimited coverage offered to counterparties. Historically, the
City has of made any significant payments under such or similar indemnification agreements and
theref a no amount has been accrued in the balance sheet with respect to these agreements.
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I
FOR DISCUSSION PURPOSES ONLY
137
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
17. Contingent liabilities
Litigation
The City has been named as a defendant in certain legal actions in which dam es have been so ht.
The outcome of these actions is not determinable as at the date of reporting d accordingly, no
provision has been made in these financial statements for any liabilities whi may result.
18. Budget figures
The 2009 Budget adopted by Council on May 19, 2009 was not prep re is co istent with that
used to report actual results. The budget was prepared on a modifI d accrual ba ' w He Public Sector
Accounting Standards now require a full accrual basis. The budg figures treated tangible capital
expenditures as expenses and did not include amortization ex nse on tangible c pital assets. As a
result, the budget figures presented in the Statements of Op ations and Chan in Net Financial
Assets represent the budget adopted by Council on May 1 , 2009 with adjust ents as follows:
2009 2009
Council CA Budget
approve expen es presented in
from capit Amortization statements
bud le
! $ $ $ $
Revenue
Taxation 70 - - 46,882,370
Capital 20,6 - - 20,619,250
Other 13,57 7 - - 13,576,237
81,077,W - - 81,077,857
Expenditures
General gove/ices 11,949 26 412,702 595,189 12,957,317
Protection to 18,2 ,804 908,600 609,915 19,783,319
Transportatio7 86,475 529,000 3,436,508 11,351,983
Environmenta221,505 - 1,890,946 2,112,451
Social and fa456,334 95,000 - 551,334
Recreational ces 18,479,292 1,727,500 2,841,966 23,048,758
Plannin and 2,719,446 - - 2,719,446
59,477,282 3,672,802 9,374,524 72,524,608
Annual sur lu 21,600,575 (3,672,802) (9,374,524) 8,553,249
Capital pe tures (31,443,017) 3,672,802 - (27,770,215)
Trans rs from a 2,386,934
r erve funds
D' idend from Vendi Corporation 3,334,000
rincipal repayme of debt (3,122,942)
Debt proceeds 7,134,450
Prior year su s 110,000
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0 bocoment in 22104 City of Pickering Notes 913110,• 2.26 PM Page 22
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FOR DISCUSSION PURPOSES ONLY
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The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2009
19. Segmented information
The City of Pickering is a diversified municipal government that provides a wide ra a of services to i
residents. Distinguishable functional segments have been separately disclosed i the segmented
information. The nature of the segments and the activities they encompass are s follows:
I
General Government
This item relates to revenues and expenses of the municipality itself and n t be directly ributed to
a specific segment.
Protection to Persons and Property
Protection includes fire services, animal control, bylaw services d building inspe ' n/enforcement of
the building code to ensure the safety and protection of citizen and their property
Public Works Services
Public works includes construction and maintenance of t C s roadways ncluding snow removal and
sidewalk repairs, street lighting, maintenance of the sto er stem a d environmental services.
Social and Family Services
Social services for assistance or services for sen' rs.
Recreation and Culture Services
Recreation and cultural services include re eation programs, aintenance and rental of facilities and
parks, operation of the City's museum an lib ces.
Planning and Development
Planning and development provide a number of rv' es including municipal planning and review of all
property development plans.
Segmented information has b n provided in the ollowing pages.
I
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D Document in ZZIOA City of PickeHnq Notes 9/3/10,• 10:46 AM Page 23
i
FOR DISCUSSION PURPOSES ONLY
i
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41
Financial statements of
The Corporatio of the
City of Picked g Trust ands
December 31, 2009
}
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095 Document in 2215 2009 Trust Funds Notes 9/3/1Q 1:55PM
FOR DISCUSSION PURPOSES ONLY
~e2Corporation of the
City of Pickering Trust Funds
December 31, 2009
Table of contents
Auditors' Report .............................................:.....................................................................................................1
Statement of financial position ..........................................................................................................................2
Statement of financial activities and fund balances ...............................3
Notes to the financial statements 4
O
D Document in 2215 2009 Trust Funds Notes 913110,• 1.55PM
FOR DISCUSSION PURPOSES ONLY
43
Deloitte & Tou a LLP
5140 Yonge et
Sulle 1700
Toronto M2N 6L7
Canad
Tel- 16-601-6150
F . 416-601-6151
.deloittexa
Auditors' Report
To the Members of Council, Inhabitants and Ratepayers
of The Corporation of the City of Pickering
We have audited the statement of financial position of The Co o ation of the C' of Pickering Trust
Funds as at December 31, 2009 and the statement of fmanci a i 'es and d balances of the Trust
Funds for the year then ended. These financial statements e r onsib' ty of the City's
management. Our responsibility is to express an opinio on these ci statements based on our audit.
We conducted our audit in accordance with Canadi generally acce ed auditing standards.
Those standards require that we plan and peifo an audit to ob ' reasonable assurance whether the
financial statements are free of material missta went. An audit i cludes examining, on a test basis,
evidence supporting the amounts and disclos -es c' statements. An audit also includes
assessing the accounting principles used a sign' es ' ates made by management, as well as
evaluating the overall financial statemen presentatio .
In our opinion, these financial state nts present fairl , in all material respects, the financial position of
The Corporation of the City of Pi ering Trust Fun as at December 31, 2009 and the results of
operations and cash flows of th ds for a year then ended in accordance with Canadian
generally accepted accountin ri 1p
Chartered Acco t
Licensed Publ' A ountan
April 1, 201
D Document in 22152009 Trust Funds Rtes 913110,• 1c55PA4
FOR DISCUSSION'PURPOSES ONLY
144
The Corporation of the
City of Pickering Trust Funds
Statement of financial position
as at December 31, 2009 11 /
20 2008
Dorothy Card
OHRP Estate otal To I
Financial assets
Investments - 277,351 277,351 277,351
Interest receivable - 19,9 19,999 8,905
Loans receivable - 1,814
29 35 7,00 288,070
Trust Fund position 297,350 2 350 288,070
W ksheet in 2215 2009 trust funds financial statements (#12399 91312010,• 1:55PM Page 2
FOR DISCUSSION PURPOSES ONLY
45
The Corporation of the
City of Pickering Trust Funds
Statement of financial activities and fund balances
year ended December 31, 2009
20 2008
Dorothy Card
OHRP Estate /Otal To
Revenues
Interest 109 11,094 11 203 11,383
Expenditures
Provincial payments 1,827 - 118 558
Administration charges 96 - 96 29
1,923 - ,923 587
Net revenues (expenditures) (1,814) 11,094 9,280 10,796
Fund balance, beginning of year 1 814 1112 286,266 /288,070 277,274
Fund balance end of year /2V.360/ 297,350 288,070
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W ksheet in ZZ152009 trust Amds financial statements (WZ399, 9131Z010, 1:56 PM Page 3
FOR DISCUSSION PURPOSES ONLY
146
The Corporation of the
City of Pickering Trust Funds
Notes to the financial statements
December 31, 2009
1. Accounting policy
The financial statements of The Corporation of the City of Pickering Trust Fun s are the represe ations
of management prepared in accordance with Canadian generally accepted counting principl s.
Significant accounting policies adopted include:
Basis of accounting
Revenues are recorded in the period in which the transactions or a ents occurre a gave rise to the
revenue.
Expenditures are reported on the accrual basis of accounting hich recognizes penditures as they are
incurred and measurable as a result of the receipt of goods services and th creation of a legal
obligation to pay.
Investments
Investments are recorded at cost. The cost of invest ents ap mat their fair value.
2. Ontario Home Renewal Program
The Ontario Home Renewal Program ("OHR ) was establishe y the Ontario Ministry of Housing in
1973 to provide grants for municipalities to ake loans to ass' t owner occupants to repair, rehabilitate
and improve their homes to local prope sta divi al loans are limited to $7,500 of which the
maximum forgivable portion is $4,000.
Effective July 16, 1993, the Provinc of Ontario ' on ' ued this program. Unused funds were remitted
to the Province on March 1, 1994. utstanding ba n es of loans issued prior to July 16, 1993 continued
to be administered under the to s of the original p gram. The City continued to administer the
collection of any outstanding I ns and remit the roceeds, net of a 5% administration fee to the Ministry
of Municipal Affairs and Hou ng.
All "OHRP" loans have n e at ecember 31, 2009 and the OHRP Trust Account was
closed as of December 1,
3. Dorothy Card Es
The City of Pick Ing has establish .a trust fund for the Dorothy Card Estate for the care and upkeep of
the destitute el erly. The fund bal nce is comprised of investments and accumulated interest amounting
to $297,350 008 - $286,256).
4. Stateme t o ash fl s
A sta ment of c has not been presented as the information is readily determinable from the
fina cial statement pr sented.
D Document in 22152009 Trust Funds Notes 913110,,1:55M Page 4
FOR DISCUSSION PURPOSES ONLY
47
Financial statements of
City of Pickerin
Public Library oard
December 31, 2009
O
SW Document in 22109 Notes to the Financial Statements (Library - December 31, 2009) (32398),• 9/27110,
5:OOYM
FOR DISCUSSION PURPOSES ONLY
148
City of Pickering Public Library Board
December 31, 2009
Table of contents
Auditors' Report ...................................................................................................................................................1
Statement of financial position ........................................................................................•...................................2
Statement of operations .....................................................................................................................................3
Statement of change in net financial assets ........................................................................................................4
Statement of cash flows ........................................5
Notes to the financial statements 6-10
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D Document in 22109 Notes to the Fl mnciol 5tatements (Library -December 31, 2009) (32398).• 9/3/10,• 12:40 PM
FOR DISCUSSION PURPOSES ONLY
I 1 9
Delohte & Touc a LLP
5140 Yonge reet
Suite 1700
Toronto O M2N 61.7
Canad
Tel: 16-601-6150
F 416-601-6151
deloitte.ca
Auditors' Report
To the Members of
The City of Pickering Public Library Board,
Members of Council, Inhabitants and Ratepayers
of the City of Pickering
We have audited the statement of financial position of the i ering ublic Library Board as at
December 31, 2009 and the statements of operations, ch ges in ebt d cash flows for the year then
ended. These fmancial statements are the responsibili of the Board agement. Our responsibility is
to express an opinion on these financial statements ed on our audi
We conducted our audit in accordance with C than generally a cepted auditing standards. Those
standards require that we plan and perform a au onable assurance whether the financial
statements are free of material misstateme . An au ' c ud examining, on a test basis, evidence
supporting the amounts and disclosures i the financ sta ments. An audit also includes assessing the
accounting principles used and signific t estimates m by management, as well as evaluating the
overall financial statement presentati n.
In our opinion, these financial a present irly, in all material respects, the financial position of
the City of Pickering Public L' r at ecember 31, 2009 and the results of its operations and
its cash flows for the year th en accor ce with the Canadian generally accepted accounting
principles.
Chartered Ac un
Licensed P lic Acco is
April 1, 10
5 Document in 2210B Notes to the Financial Statements (Library -December 31, 2009) (32398Z• 8127110,- 5:00 PM
FOR DISCUSSION PURPOSES ONLY
I
150
City of Pickering Public Library Board
Statement of financial position
as at December 31, 2009
f zoos
(Restated
i 2009 -Note 2)
Financial assets
Accounts receivable 449
Cash /,147,564 310
Due from City of Pickering ' 93,841
150,133 96,600
Liabilities
Accounts payable and accrued liabilities 1X4,81 117,100
Deferred revenue 8,388
Due to the Government of Canada 349
Post-employment benefits obligation Note 3 19,200 120,100
/308,315 245,937
Net debt (158,182) 149,337
j Non-financial assets
Tangible capital assets (Note 5) 1,993,685 2,520,072
Prepaid expense 38,982 29,237
2,032,667 2,549,309
Accumulated surplus 1,874,486 2,399,972
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Worksh in 2210A City of ftkering - Library Finonaa/ Statements (December 31, 2009) (32398E' 9/3/2010,12.32 PM Page 2
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i
151
City of Pickering Public Library Board
Statement of operations
year ended December 31, 2009
2009. 2008
Budget Actual
(Unaduited - (Restated
Note 7 Actu I - Note 2
Revenue
City of Pickering grants 4,688,119 57,315 4,4 029
Federal grants - 18,246 20,720
Province of Ontario grants 188,177 74,231 156,337
j Fines and other receipts 205 965 89 619 - 195 507
Total revenue 5,082,264 5, 411 4,792,593
i Expenses
Operating
Salaries
Salaries and wages X6,4 ,377 2 69,487 2,778,661
Fringe benefits 51 630,094 585,644
6 828 /3,699,681 3,364,305
Material, supplies and utilities
Books 92,0 104,841 92,991
Utilities 191 50 179,631 175,873
Other supplies ,500 60,586 51,405
48,950 345,058 320,269
Services
Insurance 44,807 38,845 37,616
Travel 4,528 5,480 4,008
Repairs and mai/aintenance 386,283 374,551 398,015
Consulting and p78,850 77,510 37,489
Advertising 23,622 20,035 34,555
Conferences 8,295 8,485 4,133
Postage 6,000 5,587 5,442
Telephone 48,185 49,698 48,580
Seminars and ed25,500 18,748 8,855
Vehicle repairs a5,000 3,248 2,682
Miscellaneous 62,063 49,390 43,579
683,133 661,677 624,954
Capital related
Amortizatio ex se 968,000 968,682 1,038,184
Total o er tin ex e 5,609,911 5,564,898 5,347,712
Annual ficit 527,650 525,487 555,119
Accu ulated surplus, b innin of year 2,399,972 2,399,972 2,955 091
Ac mulated su lu end of year 1,872,322 1,874,485 2,399,972
7
W11-210A Cty of Pickering -Library Finandal statements (December 31,200Y) (3Z398k 9/3/2010,12:08 PM Page 3
FOR DISCUSSION PURPOSES ONLY
152
City of Pickering Public Library Board
Statement of change in net debt
year ended December 31, 2009
Budget
(Unaudited - 2008
Note 7) 200 (Note 2)
Annual surplus 527,660) 5 487 555 19
Acquisition of tangible capital assets (440,350) (442,295) 85,865)
Amortization of tangible capital assets 968 000 968,682 038,184
627,650/ 626,387 552,319
Change in prepaid expense - 74 22,945
Change in net debt - (845) 20,145
- 9Net debt, beginning of year 337 169,482
Net deb end of year 2168,182) (149,337)
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W kshact in 2210A City of Pickering -Library Financial 5tatements (December 31,200P) (32398),-.91312010- 2:24 PM Page 4
FOR DISCUSSION PURPOSES ONLY
53
City of Pickering Public Library Board
' Statement of cash flows
year ended December 31, 2009
20os
/(Restated
2009 - Note 2
Operating activities
Annual deficit /26,487) (5 119)
Non cash items
Amortization of tan ible ca ital assets 038,184
443,195 483,065
Change in non cash operating items
I Decrease in accounts receivable 1 114
j Increase in due from City of Pickering (53 23) (53,069)
Increase in accounts payable and accrued liabilities ,751 35,082
Increase (decrease) in deferred revenue 5,525 (4,962)
Increase (decrease) in due to Government of Canada 2 (110)
(Decrease) increase in post-employment benefit liability (900) 2,800
Increase decrease in prepaid expense 9 745 22,945
900 2,800
442,295 485,865
Capital
Acquisition of tangible capital assets (442,296) 485,865
Net increase in cash - -
Cash beginning of year 2,310 2,310
Cash end of year 2,310 2,310
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Worksh in 22108 City of Pickering - Library Fnondai Statements (December 31, 2009) (32398),• 9/3/Z010,-12:09 PM Page 5
FOR DISCUSSION PURPOSES ONLY
154
City of Pickering Public Library Board
Notes to the financial statements
December 31, 2009
1. Significant accounting policies
The financial statements of the City of Pickering Public Library Board (the "Library bard") are the
representations of management prepared in accordance with Canadian generall ccepted accoun ' g
principles established by the Public Sector Accounting Board (PSAB) of the Ca adian Institute of
Chartered Accountants.
Significant accounting policies adopted by the Library Board are as follow
Basis of accounting
(a) Accrual basis of accounting
Revenues and expenses are reported on the accrual basis o accounting. The crual basis of
accounting recognizes revenues as they are earned and m asurable; expens s are recognized, as
they are incurred and measurable as a result of the recei of goods and se ices and the creation
of a legal obligation to pay.
(b) Non-financial assets
(i) Tangible capital assets
Tangible capital assets are recorded at co less acc ate depreciation. Cost includes all
amounts that are directly attributable to quisition, deve o ent or betterment of the asset.
The cost of the tangible capital asset i amortized on a st ight-fine basis over the estimated
useful life as follows:
Machinery & equipment 2 to 25 y ars
Information technology hardwar 4 to 8 ars
Library collection material years
Furniture and fixtures 10 50 years
One-half of the annual a rtization is ch rg in the year of acquisition and in the year of
disposal.
Other major assets i luding the Libra uilding are owned by the. City and are not reflected in
these financial stat e
(ii) Contribution/do do f c ital assets
Tangible cap' I ass ceive s contributions or donations are recorded at their fair value at
the date of ceipt, and fa' value is also recorded as revenue.
(iii) Intangibl assets
Intan ' le assets are no ecognized as assets in the financial statements.
(c) Deferr re e
Def re venu epr ents amounts which have been received for expenditures not yet incurred.
T se a nts I b recognized as revenue in the fiscal year the related items are purchased.
ll (d) ost employ t enefits
The present va a of the cost of providing employees with future benefits programs is recognized
as employee earn these entitlements through service. Any actuarial gains or losses are amortized
on a straig -line basis over the average remaining service period (ARSP) of employees. The
actuarya imated the ARSP to be 15 years.
(e) Use of stimates
The reparation of financial statements in conformity with Canadian generally accepted accounting
p ' ciples requires management to make estimates and assumptions that affect the reported
ount of assets, liabilities and the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenditures during the period.
Actual results could differ from those estimates.
D Document in 22108 Notes to the Financial Statements (Library - December 31, 2009) (32398Z• 913110•• 12:34 PM Page 6
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City of Pickering Public Library Board 155
Notes to the financial statements
December 31, 2009
2. Change in accounting policies
Effective January 1, 2009, the Library Board has implemented Sections 1200 "Fin cial Statement
Presentation" and 3150 "Tangible Capital Assets" of the Public Sector Accountin Handbook. Secti
1200 establishes general reporting principles and standards for the disclosure information in Li ary
Board financial statements. Section 3150 requires the Library Board to recor and amortize the
tangible capital assets in their financial statements. Tangible capital assets ere previously r orded as
expenditures when acquired.
Method used for determining the opening cost of each major category f t e capital ssets
The financial information recorded includes the actual historical co of the tang) c ital assets. When
historical cost records were not available, other methods were us d to estimate the osts and
accumulated amortization of the assets. The Library Board appied a consistent m thod of estimating
the replacement or reproduction cost of the tangible capital a ets to each cate ryfor which it did not
have historical cost records. After determining replacement r reproduction co , deflation factors were
used to deflate the replacement or reproduction cost to a es ' ated histori I cost for the year of
acquisition.
The change has been applied retroactively and prio/the ods bee estated. This change in
accounting policy has changed amounts reported i prior pe ' follows:
2008
Accumulated surplus -Amounts to be re ve reviou y reported (120,100)
Net book value of tangible capital asse 2,520,072
Accumulated surplus, as restated 2,399,972
i
Annual surplus
Net revenue, as previous/rorted (2,800)
Assets capitalized but precorded as xpenditures 485,865
Amortization ex ense o l record (1,038,184)
Annual surplus, as restat (555,119)
5 Document in 22109 Hates to the Financial Statements (Library - December 31, Z009) (31398,x• 8/27110,• 5:19 PM Page 7
FOR DISCUSSION PURPOSES ONLY
156
i City of Pickering Public Library Board
Notes to the financial statements
December 31, 2009
3. Post employment benefits liability
The Library Board makes available to qualifying employees who retire before the a of 65, the
opportunity to continue their coverage for benefits such as post-retirement exten d healthcare be fits.
Coverage ceases at the age of 65. The Library Board also provides full time a permanent part-' e
employees a sick time entitlement and any unused entitlement is accumulate year to year. Thi
accumulated entitlement is not vested and therefore is forfeited at the time f retirement or ter ination.
The post-employment benefits obligation at December 31, 2009 and the a es in the acc ed benefit
obligation for the 2009 fiscal year was determined by actuarial valuatio pr red as at J uary 1, 2008.
Information about the Library Board's post employment benefits liab' tie ' as ws:
2 9 2008
Post-employment benefits liability, beginning of year /(30, 100 117,300
Current service costs 600 14,900
Amortization of actuarial losses 900 3,300
Interest expense 500 9,900
Benefits aid durirt the year
900 25,300
Post-em to meet benefits liability, end of year 119,200 120,100
2009 2008
Accrued post-employment benefits o ination 166,500 171,300
Unamortized actuarial losses 47 300 (51,200)
Post-employment benefits liabili 119,200 120,100
The main actuarial assumpti s employed in th actuarial valuations areas follows:
(a) Discount rate
The present value s at mber 3 , 2009 of the future benefits was determined using a discount
rate of 5.5% (20 - 6%).
(b) Dental cost
The curre dental cost trend ost at January 1, 2008 was 4.0% per annum.
(c) Health ost
Hea c s we ass ed to increase at 9% in 2009 and decrease by 0.5% increments per year
to n ul a ra of % per year in 2017 and thereafter.
4. Pe ion agreements
e LibraryBoard akes contributions to the Ontario Municipal Employees Retirement Fund (OMERS),
which is a multi- ployer plan, on behalf of eligible members of its staff. The Plan is a defined benefit
plan that specif s the amount of the retirement benefit to be received by the employees based on the
length of serv' e and rates of pay.
Contributi s in the amount of $163,185 (2008 - $161,830) were paid to OMERS on behalf of its
membe during the year.
5 Document in 22108 Notes to the Financial Statements (Library- December 34 2009) (32398).• 8/27/10.• 5.00 PM Page 8
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i
57
City of Pickering Public Library Board
Notes to the financial statements
December 31, 2009
5. Tangible capital assets
Machinery Information Library Fur ' ure
and technology. collection and
equipment hardware materials fixtures 009
Cost
Balance, beginning of year - 405,830 6,115, 7 292,082 6,813,299
Add:
Additions during the year 9,992 - 2,303 - 442,295
Less:
Disposals during the year - - 1,171,073 1,171,073
Balance end of year 9,992 405,830 6,376,617 Z92,082 6,084,521
Accumulated amortization
Balance, beginning of year - 26 , 9 /,171,073 78,977 4,293,227
Add:
Amortization 500 51,117 5,842 968,682
Less:
Accumulated amortization
on disposals - 1,171,073
Balance end of year 50 313,611 /3,692,006 84,819 4,090,836
Net book value 9.402 319 1,684,611 207,263 1,993,685
I
M chinery or tion Library Furniture
and to ology collection and
equipment ardware materials fixtures 2008
Cost
Balance, beginning of y ar 420,420 5,659,332 292,082 6,371,834
Add:
Additions during t e year - 29,810 456,055 - 485,865
Less:
Disposals dur' the year - 44,400 - - 44,400
Balance end year 405,830 6,115,387 292,082 -6,813,299
Accumula d o ' ion
Balanc be i ning o ear - 250,258 2,976,050 73,135 3,299,443
Add:
A ortization - 56,536 975,806 5,842 1,038,184
L s:
Accumulated a rtization
on disposals - 44,400 - 44,400
Balance end 4 ear - 262,394 3,951,856 78,977 4,293,227
Net book vale - 143,436 2,163,531 213,105 2,520,072
D Document in 2210B Notes to the Finandol5tatements (Uhmry - December 31,2009)(32398)' 913110.• 1Z25PM Page 9
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158
City of Pickering Public Library Board
Notes to the fmancial statements
December 31, 2009
6. Accumulated surplus
Accumulated surplus consists of the following:
/2009 08
1 Invested in capital assets /1,19,200) 93,685 /j512 ,072
Post em to ment benefits liabilit 100
74 485 2,399,972
I
j 7. Budget figures
The 2009 budget was not prepared on a basis consistent wit at used to repo actual results. The
budget was prepared on a modified accrual basis while Pub c Sector Account' g Standards now require
a full accrual basis of accounting in the financial stateme a isclosed in ote 2. The following
provides a reconciliation from the approved budget to th b e umbers resented in the financial
statements.
2009 TCA adjus ent T A 2009 budget
council approved r City expendi res presented in
budget own d assets from a ital Amortization statements
Revenue
City of Pickering 4,/,,177 - - 4,688,119
Federal and
provincial grants (2 0, 0) 188,177
Other - - - 205,965
082,261 0,000 - - 5,082,261
Expenditures
Salaries - - - 3,609,828
Material, supplies
and utilities +340, - 8,500 - 348,950
.Services 583, 3 - 99,500 - 683,133
Amortization - - - 968,000 968,000
4 3 911 - 108,000 968,000 5,609 911
Annual rp 748,350 (200,000) (108,000) (968,000) (527,650)
Capit expen e
a itions (748,350) 200,000 108,000 - (440,350)
0 Document in 22108 Notes to the Financial Statements (Library -December 31.2009)(3239B)- 913110,• 2:25 PM Page 10
FOR DISCUSSION PURPOSES ONLY