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Home My WebLink AboutCS 52-05004 PICKERING REPORT TO AUDIT COMMITTEE Report Number: CS 52-05 Date: June 15, 2005 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2004 Year-End Audit Recommendation: 2a) b) That Report to Council CS 52-05 of the Director, Corporate Services & Treasurer be received and referred to Council for information; and that: the Auditor's Report to the Audit Committee as submitted by Deloitte & Touche be received for information; the Management Letter from the Auditor be referred to the Director, Corporate Services & Treasurer for any further action deemed necessary and report back to the Committee; and, the 2004 draft Audited Financial Statements for the City of Pickering be received and forwarded to Council for information. Executive Summary: Not applicable Background: The Audit for the year 2004 has been completed. Attached are the Auditor's Report to the Audit Committee, which includes the Independence Letter and the Management Letter from the Auditor and the draft Audited Financial Statements. The Auditor's report prepared by Deloitte & Touche summarizes the results of the December 31,2004 audit. Nothing of significance was noted. The draft Financial 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 is responsible to express an opinion on these Financial Statements based on their audit. An unqualified opinion has been provided. I am pleased to advise the Committee there were no problems or questionable items I have to report to you at this time. However I would like to summarize some financial highlights. Report CS 52-05 2004 Year-End Audit Date: June 15, 2005 Page 2 Overall net assets increased by approximately $5.2 million over prior year due to an increase in the cash and investment balances which was offset partly by an increase in the Accounts Payable and Accrued Liabilities, Deferred Revenue and Long -term Liabilities. The increase in the cash balance at the end of the year resulted from timing of investments. Interest rates earned on our money market account were comparable to shod-term interest rates. As a result the funds could be kept quite liquid in the money market account to meet cash requirements in January for the refund to OPG for settlement of some of their earlier outstanding assessment appeals, settlement of the due/to from accounts for the School Board and the Region and for operating cash at the beginning of the year until the first tax due date. The increase in the investment balance results from the timing of receipt of debenture financing for ongoing capital projects, timing of supplementary taxes billed and collected, the overall increase in the Reserve Fund balances, primarily Development Charges Reserve Fund and lastly the City's share of taxes from OPG for properties that are still under assessment appeal. The increase in Accounts Payable corresponds to the increase in the cash balance for the reasons noted above. The increase in deferred revenue is primarily due to the overall increase in the obligatory Reserve Funds which are made up of the following: Development Charges, Parkland, Third Party/Developer's Contribution, Ontario Transit Renewal and Provincial Gas Tax. The increase in the Development Charges Reserve Fund resulted from a large amount of Development Charges collected versus those required in the year to fund capital expenditures. In addition the Third Party/Developer's Contribution Reserve Fund also contributed to the increase. In compliance with financial statement reporting guidelines, these restricted funds are to be reported as deferred revenue. The post-employment benefits obligation balance is higher than reported in prior years with a corresponding restatement to the prior year figure. As explained in the notes to the Financial Statements this is attributed to a requirement under PSAB effective for 2004 to report the sick leave liability. Although sick leave is not vested at the City, PSAB requires the liability to be recognized as earned versus when paid. Current revenues and expenditures are comparable with the budget. Taxation from other governments which are more commonly referred to as payments-in-lieu (PIL) of taxes are higher than budget. This arises due to the returned assessment roll providing higher assessment amounts, which must be billed, for the OPG properties currently under appeal. Again this year, a transfer of the City's share of these revenues ($1.1 M) was made to the Contingencies Reserve until such time as the appeal is settled. As you are aware capital expenditures for projects may be incurred over multiple years and often are not comparable to budget. As you can see capital expenditures incurred were significantly lower than those budgeted. This is a direct result in timing of approval in the budget and completion of the project. For example, a large amount was budgeted in 2004 for external subdivision works of which approximately 9% of budget amount was incurred in 2004. This timing also impacts on the revenue reported for the Report CS 52-05 2004 Year-End Audit Date: June 15, 2005 Page 3 capital projects being much lower than compared to budget. Specifically government grants are lower as a result of the 401 Pedestrian Bridge project not proceeding as planned. This project has been broken into phases and the design phase has been rebudgeted in the 2005 Capital Budget. In conclusion, positive financial results in 2004 are once again assisting in maintaining the City's financial position. However, a steady increase in debt together with increasing demands on the City's limited financial resources may prove challenging in the future. Attachments: 1. Auditor's Report to the Audit Committee 2. 2004 draft Audited Financial Statements Prepared By: I~is[tine Senior Manager, Accounting Services Approved / Endorsed By: Gillis A. Paterson Director, Corporate Services & Treasurer GAP/vw Attachments Copy: Chief Administrative Officer Recommended for the consideration of Pickering C~ouncil ~ Thc('n~.~ J. euin~/Chie~dmin~ / / / ATTACHMENT #:2.L TO REPORT #~f;~;2 ~ c"J.f: Consolidated Financial Statements of THE CORPORATI CITY OF PICKE December 31,2004 MN Document in 2210 CIty of Pickering 81117: 6/15/05: 3:42 PM draft / ;' / FOR DISCUSSION PURPOSES ONL. Y / Auditors' Report Deloitte & Touche LL 5140 Yonge Street Suite 1700 Toronto ON M2 6L7 Canada To the Members of Council, Inhabitants and Ratepayers of the Corporation of the City of Pickering We have audited the consolidated statement of fInancial p Pickering as at December 31, 2004 and the consolidated st e in financial position for,the year then ended. These finane' 1 s management. Our responsibility is to express an opinio on thes We conducted our audit in accordance with Can ilian generally cepted auditing standards. Those standards require that we plan and perform an a t to obtain rea able assurance whether the financial statements are free of material misstatement. f\.n audit includ examining, on a test basis, evidence supporting the amounts and disclosures in th ~te . nts. An audit also includes assessing the accounting principles used and signifIcan es' e y management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated cial statements resent fairly, in all material respects, the financial position of the City as at Decem er 31, 2004 and e results of its operations and the changes in its fmaneial position foc the year t ~d ~ ace cdanee with Canadian generally accepted accounting principles. Chartered Accoun ~~ Tnrnntn Ont$l n (n) M~7.. / / I / I / / / / / / I II I MY Document in 2210 Cltv of Pickering 81117.~ 6/15/05: 3:42 Pl.i / / FOR DISCUSSION PURPOSES ONLY THE CORPORATION OF THE CITY OF PICKERING Table of Contents December 31, 2004 Consolidated Statement of Financial Position Consolidated Statement of Financial Activities Consolidated Statement of Changes in Financial Position Notes to the Consolidated Financial Statements Consolidated Schedule of Reserves and Reserve o /7 / / / II I / / ~"'2Voa",",",,"rl", 8"'" ""5A'< "'''" / / FOR DISCUSSION PURPOSES ONLY 3 4-18 19 20 21 2004 THE CORPORATION OF THE CITY OF PICKERING Consolidated Statement of Financial Position December 31, 2004 ~PROVED BY; / ............. ...,.......................... j ...1............................... Worksh~ in 2211 City of Pickering 81117/6/1512005/3:41 PM / . . / FOR DiSCUSSION PURPOSES ONl. Y FINANCIAL ASSETS Cash $ $ 3,481, 09 Short~enninvesttnen~ 22, 3,572 Taxes receivable , 74,077 Accounts receivable 3,267,074 Other current assets 502,959 Investment in Veridian Corporation (Note 5) 30,875,298 Promissory notes receivable (Note 6) 25,069,000 95,429,289 LIABILITIES Accounts payable and accrued liabilities 6,950,937 Other current liabilities 405,722 Deferred revenue (Note 7) 19,876,543 Long-term liabilities (Note 10) 4,026,000 Post-employment benefit liability (Note 9(a)) 2,219,981 wsm benefit liabilities (Note 9(b)) 634,973 34,114,156 NET FINANCIAL ASSETS 66,431,226 61,315,133 NON-FINANCIAL ASSETS Inventory 448,207 403,810 NET ASSETS $ 66,879,433 $ 61,718,943 88,944 7,043,941 19,224,908 58,443,431 RA RIl1 ??,t '-'""T'_v....,..._.... $ 32,208 612,984 18,267,188 56,581,438 '7c:. L10~ Sll R '-, "_....'~....... (13,774,875) $ 61,718,943 $ (17,921,791) 66,879,433 Page 1 of21 THE CORPORATION OF THE CITY ,OF P1CKERING Consolidated Statement of Financial Activities Year ended December 31, 2004 REVENUES Residential and fann taxation Commercial and industrial taxation Taxation from other governments User charges Government grants and fees Developer contributions and donations Development charges and developer contributions earned Investment income Penalties and interests on taxes Fines Interest on promissory notes Other Total revenues EXPENDITURES (Note 15) Current General government Protection to persons and property Transportation services Environmental services Social and :fumily services Recreational and cultural services Plannin and develo ment 2004 Bud2et Actual (Note 18) $ 24,595,135 5,785,433 7,335,095 9,120,471 1,417,326 419,100 995,135 586,950 6,909,953 22,100 2,784,125 11 298,263 61,646,373 (4,166,360 (89,500) 2,212,000 INCREA IN NON-FINANCIAL ASSETS CHAN0E IN FUND BALANCES , ~2" a~ .f""",",,,, 8m, __ "'''= '.<HM / / $ (3.393,041) FOR DiSCUSSION PURPOSES ONLY 10,250,908 12,486,523 10,490,626 13,745 358,140 14,581,546 1,776,151 49,957 639 516,495 189,459 2,562,144 6,244 21,472 2,545,732 5,841,546 55,799,185 1,861,993 5,116,093 (11,631) (3,187) 5,031,000 267,000 (32,617) (1.103,649 4,146,916 44,397 $ 9,307.406 2003 Actual (Restated - Nate $ 22,324 54 5,5 ,336 9 87,998 ,853,936 1,925,024 672,770 990,515 737,583 1,369,228 493,672 2,138,345 2,375,502 56 545,363 8,869,339 11,873,089 10,015,997 1,644,738 287,836 13,452,146 1 885,203 48,028,348 416,056 3]6,177 5,231,771 223,819 7,215 3,530,447 22,2'14 9,747,699 57,776047 1 350,678 119,994 54,790 526,951 $ Page 2 of21 THE CORPORATION OF THE CITY OF PICKERING Consolidated Statement of Changes in Financial Position Year ended December 31, 2004 NET INFLOW (OUTFLOW) IN CASH RELATED TO THE FOLLOWING ACTIVITIES OPERATING Net expenditure revenue Chan e in e uity in Veridian Co oration Uses Increase in other current assets Increase in taxes receivable Increase in accounts receivable Decrease in accounts payable and accrued liabilities Decrease in, WSIB benefit liabilities Sources Decrease in other current assets Decrease in accounts receivable Increase in accounts payable and ac Increase in other current liabilities Increase in deferred revenue Increase in post-employment nefits obligatio Increase in WSIB benefit Ii ilities c / / I / ; ,/ FOR DISCUSSION PURPOSES ONLY 2004 $ 119,994 (1,350,678) (1,230,684) (249,368) (251,519) (556,879) (1,320,963) (2,378,729) 222,510 11,572 4,073,700 7,682 282,517 4,237,289 1,445,269 77,869 144,290 526,951 8,630,622 2,399,027 11,764,805 (1,210,386) (11 ,865,752) 2,511,115 5,031,000 (266,000) (252,000) 437,880 227,140 r~ -LL:"'I O~1'\ ,.., AOL' rJJ:C \ u,uU""',o I"'" J ...,......ou,......J.J 5,101,933 1,275,869 3,487,309 2,211,440 $ 8,589,242 $ 3,487,309 Page 3 of21 The consolidated financial statements of The Corporation of the City of Picke ng (the "City") e the representations of management prepared in accordance with generall accepted acco ing principles for local governments as established by the Public Sector Acco mg Board ("PS ") of the Canadian Institute of Chartered Accountants. Significant account' policies adopt by the City are as follows: (a) Reporting entity (i) Consolidated statements THE CORPORATION OF THE CITY "OF PICKERING Notes to the Consolidated Financial 'Statements December 31, 2004 1. SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements reflect e assets, liab' Ities, revenues and expenditures of the operating fund, capital nel, reserve fu s and reserves. The reporting entity is comprised of the activitie of all committee of Council and tbe City of Pickering Public Library Board which is ~~d by the ity. All material inter-fund transactions and alan~er . ated on consolidation. (ii) Proportionate consolidation The consolidated financial state ents reflect the liabilities, revenues and expe itures of the Aj (see Note 3). ~ All inter-entity transa 'ons an bal ces consolidated. ty's proportionate share of the assets, Pickering Transit Authority (APTA). I) / / If / / ~rporation is accounted for on a modified equity accepted accounting principles as recommended by in go rnment business partnerships. Under the modified equity basis, Ve dian Corp io s accounting policies are not adjusted to conform with tbose of the ity and inter-or izational transactions and balances are not eliminated. The City ,-cognizes its eq . y interest in the annual income or loss of Veridian Corporation in . s statement of fi ancial activities with a corresponding increase or decrease in its . as t asset ccount. Dividends that the City may receive from Veridian ora' and ther capital transactions are reflected as adjustments in the investment a acco t. Op~ f school boards and the Region of Durham are eliminated when proportionately (ill) The ta tion, other revenues, expenditures, assets and liabilities with respect to the oper ons of the school boards and the Region of Durham are not reflected in these co olidated financial statements. / / / M~"'e:nt in 2210 Ciiyof Pickering 81117: 6/15/05: 3:42 PM / / Trust funds and their related operations administered by the municipality are not consolidated, but are reported separately on the Trust Funds Statement of Financial Activities and Statement of Financial Position. Page 4 of 21 FOR DISCUSSION PURPOSES ONLY THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31. 2004 1. SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Basis of accounting (i) Short-term investments Short-term investments are comprised of highly liquid guar eed investment and are recorded at the lower of cost plus accrued interest m.~ket value. Tangible capital assets ~ Tangible capital asset expenditures incurred du . g the year are expenditures in the consolidated statement offin cial activities. (ii) capital (iii) Ontario Fair Ii) / / / / / / / / / the property taxes were levied. Consolidated Statement of Finan tion of the capping provisions Activities as the full amount of wever, the capp' g adjustments are reported on the al Position as a I: eivable from the Region. (iv) (v) (vi) d at the lower of cost and net realizable value. Cost is determined on a Gove ent transfers are recognized in the financial statements in the period in which vents giving rise to the transfer occur, eligibility criteria are met, and reasonable tes of the amount can be made. (vii', Use of estimates / / II I . rDcumenf in Z210 C;ty of Pickering 81117.. 6/15/05; 3:42 PM // FOR DISCUSSION PURPOSES ONLY The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the fmaneial statements and accompanying notes. Aetual results could differ from these estimates. Page 5 of21 / THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial. Statements December 31 2004 2. CHANGE IN ACCOUNTING POLICY In 2004, the City adopted fully the local government accounting standards . sued by the Pu c Sector Accounting Board of the Canadian Institute of Chartered Acco ants related to ost- Employment Benefits, Compensated Absences and Termination Benefits. reviously, the sts of providing the sick bank program were recorded when paid. These c are now reco . ed as employees earn these entitlements through service. This change' ccounting poli has been applied retroactively and the comparative figures included in these ~~i~l stateme s have been restated to conform with the accounting policies adopted for the c ~ The adoption of these standards has resulted in the follow' g significant c amounts previously reported in the 2003 fmancial statements: "Post-employment benefits obligation" and "amOli s to be recover a from future revenues" reported on the statement of financial position e c~cr ased by 628,837 at December 31, 2002. "Employment benefits expenditures" and "i crease in am n to be recovered" reported on the statement of financial activities and fund alance each mer ased by approximately $60,244 for the year ended December 31, 2003. . . In addition, the adoption of these stan d~esulted the following changes to the amounts reported for the year ended December 1, 20 I\"V'/ · "Post-employment benefits 0 igation" an ounts to be recovered in future years" reported in the statement of ial position ha e each increased by a cumulative amount of approximately $755,000. · "Employment bene..fi ~s" d "increase in amounts to be recovered in future years" reported in the stat e~li1l1/l ctivities have each increased by approximately $66,000. AJAX PICKE ~RANSIT A RORITY 3. Effective Sept ber 4,2001, aj mt Board of Management was established by the City of Pickering and the To ~AjaX by y of a Merger Agreement for operating a transit system across Pickering d~ The erations were combined effective January 1, 2002. These :financial stateme s i ~de ~. k mg's proportionate share (50%) of assets, liabilities, revenues and expen 's ofth~t uthority. o Febrnaty 17, 2 5 it was unanimously agreed by a vote of the Councillors of the area unicipalities an the Region or Durham to transfer the operation of the Transit Authority to the Region ofDurh .. This will be effective as at January 1, 2006. ;1 , ~~ "",a",,"_ BU",M"", ,,,,. / / / FOR DISCUSSION PURPOSES ONLY Page 6 of21 / ./ / /1 Financial position: Financial assets Non-financial assets Liabilities Net liabilities THE CORPORATION OF THE CITY OF PICKERING Notes 10 the Consolidated Financial Statements December 31 2004 3. AJAX PICKERING TRANSIT AUTHORITY (continued) The following table provides condensed supplementary financial in:fi Authority for the year ended December 31: Fund balance Amounts to be recovered Transit Authority Position $ 842,691 357,968 (1,562,670) (362,011) $ (170,849) (191,162) $ (362,011) Financial activities: Revenue Operating expenditures Ca ital ex enditures Net ex enditures 11,574,369 (10,300,066) (1,309,065) (34,762) $ 12,703,908 (9,307,449) (3,626,197) $ (229,738) 4. Fund balance, beginning of year $ (170,849) $ Net expenditures (34,762) Increase in amounts to be covered 15,938 Increase in non-fmancia ass 132,149 Fund balance, end ofye $ (57,524) $ k AND THE REGION OF DURHAM (26,486) (229,738) 17,008 68,367 (170,849) / / / / . 7' Document Ih 2210 City of Pickering 81117; 6/15/05; 3:42 PM / / I Region Schooi Board $ 58,209,242 $ 38,572,609 5,463,002 452,180 $ 63,672,244 $ 39,024,789 Page 70f21 FOR DISCUSSION PURPOSES ONLY (a) Veridian Corporation is owned by the City of Pickering, Town of ax, Municipalit of Clarington and the City of Belleville. Veridian Corporation, as government b mess partnership, is accounted for on the modified equity basis in se financial sta ents. Veridian Corporation serves as the electrical distribution utility fi a number of c unities including the four noted above and conducts non-regulated Utili&S . ce ventur through its subsidiaries. The following table provides condensed supplementary c olidated c. information for the corporation and its subsidiaries for the year ended D ember 31: THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 5. INVESTMENT VERIDIAN CORPORATION 2003 ~O'4 ,242 $ 58,357,713 1 66,690 123,962,633 ,979,006 2,848,774 93,574,938 $ 185,169,120 27,446,398 $ 24,134,450 75,294,000 75,294,000 12,055,488 10,435,064 114,795,886 109,863,514 67,285,173 67,285,173 24,910 24,910 11,468,969 7,995,523 78,779,[)52 75,305,606 $ 193,574,938 $ 185,169,120 ~'-''''T~ J:~i~iU-W -A~ $ 180,210,703 $ 168,329,147 '5,460,962 5,033,314 181,130,219 170,068,125 $ 4,541,446 $ 3,294,336 /mcoi~= / I / / / II rocumem in 2210 City of Pickering BllIT.. 6/15/05: 3:42 PM / / / FOR DISCUSSION PURPOSES ONLY Financial Position: Assets Current Capital and intangibles Other Total assets Liabilities Current Long-term debt Other Total liabilities Page 8 of21 / 5. INVESTMENT VERIDIAN CORPORATION (continued) THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 (b) City of Pickering's equity represented by: Promissory notes receivable (Note 6) $ Investments in Veridian Corporation Initial investment in shares of the Corporation 30,496,196 Accumulated income (loss) (502,579) Accumulated dividends received (227,140) Increase in value of investments 1,108,821 Total investment $ 30 87$.298 (c) Equity in Veridian Corporation 2004 2003 Balance, beginning of year 56,581,438 $ 55,230,760 E uity share of net income for 1,861,993 1,350,678 Balance, end of year $ 58,443,431 $ 56,581,438 (d) Contingencies and gum; statements are as folio (i) Insurance clai ns~. The Co ration, ill ber of the Municipal Electric Association Reciprocal Insuran e Exchange (" ARlli"), which was created on January 1, 1987. A reciprocal insur , ceexchange m be defined as a group of persons formed for the plli-pose of exc anging reciproc contracts of indemnity or inter-insurance with each other. provides eneralliability insurance to member electric utilities. ~ r ~ charged to .each me~ber u~ility. consist .of.a le~ p~~ $.l,O?O. of se~7~~j e e subject to a credit or surCharge. based on each electnc utlllty'S claIms experience, Insurance limits of up to $20,000,000 per occurrence are covered by ME . / / Corporation as disclosed in their financial / / / / / // / I / /7Document in 2210 City of Fickerrng 81117; 6/15/05; 3:42 PM. . I / Page 9 of21 FOR DISCUSSION PURPOSES ONLY A class action claiming $500 million in restitutionary pa on Toronto Hydro on November 18, 1998. The actio Hydro-Electric Commission as the representative of all municipal electric utilities in Ontario which hav charged la overdue utility bills at anytime after April 1 , 1981, THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 5. INVESTMENT VERIDIAN CORPORATION (continued) (d) (continued) (ii) Other claims The claim is that late payment penalties char ed prior to Mar 1 1, 2002 result in the municipal electric utilities receiving interest ~e ective rates' excess of 60% per year, which is illegal under Section 347(1)(b) of e ' 'nal Cod. The Electricity Distributors Associati is un 'ng e defense of this class action. At this time, it is not possible to qua ity the effect, If y, on the fmandal statements of Veridian Corporation, and theref, re on the flnan '8.1 statements of the City for this reason, no recognition of any otential liabilit has been recorded in the financial statement of the City. . (iii) Guarantees - Veridian Co necti~ The Corporation's r lated sU~iai participates in the competitive supply of electricity market t procure a suppl of electricity for its customers. Based upon the market participan s credit rating, e market participants are required to post security prudentials wi e ependent ectricity System Operations (lESO). At Decemb 31~, 'r quirement was satisfied by the posting of letters of credit in the am t of $, 88, (iv) / / // / / V . dian Corporati under the tenus of the shareholder agreement with Enersource ~o~,req es security to meet credit security requirements of First Source E~~~C9.Tf.~ __ .o~ .~~~ _Source) to power suppliers for power purchase agreement for ~l\jI em pUIJ1U:;C:S. As at D ember 31, 2004, Veridian Corporation's proportionate share of guarantees posted behalf of First Source by Enersource Corporation totalled $2,538,000. / / / / racument in 2210 City of Pickering ~1J11: 6/15/05: 3:42 PM / / Page 10 of21 FOR DISCUSSION PURPOSES ONLY THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 5. INVESTMENT VERlDIAN CORPORATION (continued) ( e) Lease commitments Future minimum lease payment obligations under operating leases ar $ PROMISSORY NOTES RECEIVABLE If /} Promissory notes are payable by Veridian Corpor tion a~i Connections Inc. in the amount of $7,095,000 and $17,974,000 respectively, 1th an interest r e of 7.6% and maturity dates of November 1, 2006. These promissory notes e convertible int common shares at the option of the holder at the rate of 1 common share for ev: ry $1,000 of p. ipal then outstanding on or before the maturity date. 2005 2006 2007 2008 Thereafter 6. 7. DEFERRED REVENUE 2004 2003 $ 19,496,777 $ 15,804,668 2,166,696 1,959,087 14,035 14,957 161,515 1,601,076 1 329785 23,440,099 19,108,497 673,733 768,046 $ 24,113,832 $ 19,876,543 / / jt) Document in 2210 City of Pickering 81117: 6/15/05: 3:42 Pi!; . / FOR DISCUSSION PURPOSES ONLY Page 11 of 21 7. DEFERRED REVENUE (continued) Continuity of deferred revenue is as follows: THE CORPORA.TION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 Balance, beginning of year - as previously reported Ad' ustment for externally restricted contributions As restated $ Restricted funds received Interest earned 4,275,077 786,732 5,061,809 Less Revenue recognized in current operations Revenue recognized in capital operations General deferred revenues recognized 38,562 ,419,973 94,313 1,652,848 24,113,832 555,454 990,515 2,070,571 3,616,540 $ 19,876,543 Balance, end of year 8. INTERFUND LO / /1 As a means of Cling various calt' aI acquisitions, funds are borrowed by the Capital Fund from Development C arges and Parkland deferred revenue (obligatory reserve funds), These funds a..re secured by te year promisso notes with interest rates of 5.8% and 5.2% and 5 year promissory notes with '~er: es of 5. Yo. The financing arrangements and ultimate repayment are approved by COUll . ugh c entbudget process. For the purpose of these financial statements, the 11"'uu.u"~"" ...,.,,,, .;..... ,"tiC" fA he:. ..,...oo"',...'(r~or1 ft\.Tnt~ 11'\ 'rh,o f"nllrn1't;nn- ~C' '.) 011T"ntl""n'OT"'(7 ,,-t thp .,.~lQtAA .lvu..a......., ....1..1............ ~ ~~v '"''"'' ""'''' ..._""'-'.,........__ \4..V..... ....LJ. ....~.... .I.............._"l'..u.~E> AU - ...-...~J _... -.._ ............__ loans egotiated, ction: 2004 $ 3,647,747 2,081,757 515,868 134,783 $ 6,380,155 2003 Roads and str tlights Community acilities, libraries and parks Fire servi es Transit ervices Envir nmental Services $ 4,007,974 2,200,477 590,575 36,648 147,747 $ 6,983,421 M Do~um.nt in 2210 City of Picker"'9 81117; 6/15/05; 3:42 PM Page 12 of21 / / I FOR DISCUSSION PURPOSES ONLY (a) Post employment benefit liability The City makes available to qualifying employees who retire b ore the age of 5, the opportunity to continue their coverage for such benefits as e ended health a drugs. Coverage ceases at the age of 65. Dependent on eligibility, h ~eragemay. e a shared financial responsibility between the City and the retired emp IJ . The City so provides full time and permanent part-time employees a sick . e . ent d any unused entitlement is accumulated year to year. This aCClllnU ted entitl t' not vested and therefore does not get paid out at the time of retirement r termination. T e post-employment benefits obligation at December 31, 2004 and the ch es in the accrue enefit obligation for the 2004 fiscal year was determined by actuarial val ation prepared a at January 1,2004. THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 9. POST EMPLOYMENT BENEFITS LIABll.ITY Information about the City's benefits liability is sf, 0 2004 2003 2,219,981 $ 2,075,691 133,500 130,166 72,800 115,500 98,324 (24,300) 2,800 (219,631) (87,000) $ 2,297,850 $ 2,219,981 $ 1,930,700 $ 2,343,931 367,150 (123,950) $ 2,297,850 $ 2,219,981 ns employed in the actuarial valuations are as follows: Th current trend cost at January 1, 2004 was 4.5% per annum. / / / / / / / I."'M'YO,"_~ ~""'h_ Mm, . / FOR DISCUSSION PURPOSES ONLY Health costs were assumed to increase at 10% in 2005 and decrease by 1 % increments per year to an ultimate rate of 5% per year in 2010 and thereafter. Page 13 of21 Accrued WSIB liability, beginning of year Expense for the period Benefits aid durin the eriod Accrued WSIB liability, end of year ~ 2004 2003 THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated FinanCial Statements December 31. 2004 9. POST EMPLOYMENT BENEFITS LIABILITY (continued) (b) Workplace safety and insurance obligations (WSIB) Effective January 1, 2001, the Corporation of the City of Pick ' g became a Sc employer under the Workplace Safety & Insurance Act and follow a policy of self' for all its employees. Information about the City's wsm liability is as follows: $ 108,022 754,959 (228,008) $ 634,973 Management, using best estimates, iden' ed that the amo t provided in the liability account at year-end of $ 631,786 (2003 - $63 ,973) is sufficie to cover the potential liability of all existing claims granted by WSIB an outstanding as a ecember 31, 2004. The outcome of any claims med ith ~ terminable at this time. A WSIB Reserve Fund was stablished ~ool The Reserve Fund balance at December 31, 2004 was $ 378,731 (2003 - $181,023). In dition, the City purchased two insurance policies that protect the City ag' t significant c ms to the Corporation. The occupational accident insurance pays lOSS~ c' up to $300 00 per work related accident. The excess workers compensation ind 't ance h a $300,000 deductible and will pay for claims up to and including $25 0 r related accident or disease claim. . 10. LONG-TERM L ILITIES (al ~e b_~iS;~gZ_,~'ti,~_~ ~de~~~f ilie fullowmg It; lUU~~.)'Y 1 It;liPUlllilUiC iUILllC P<1YIUCIH of principaf ay a interest charges on long-term liabilities i ued by the Region of Durham on the municipa ty's behalf, At the end of the year, the outsta . ng rincipal amount of this liability is / Long-t liabilities, end of year / / / 2004 2003 $ 8,791~OOO $ 8,791,000 $ 4,026,000 $ 4,026,000 M . Do;ument in 2210 City of Pickering 81117: 6/15/05; 3:42 P!.i Page 14 of21 / ./ FOR DISCUSSION PURPOSES ONLY 11. AMOUNTS TO BE RECO THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 10. LONG-TERM LIABILITIES (continued) (b) The above long-term liabilities have maturity dates of November 1,20 , July 15,2014 December 23, 2014 with various interest rates ranging from 3.2500 to 5.6%. repayments are summarized as follows: . 2005 2006 2007 2008 2009 Thereafter C c) Long-term liabilities include a principal sum 0 $1, may be raised by the issuance of debentures ver a Cd) (e) se long-term liabilities is $277,609 (2003 - REVENUES 2004 $ 2,118,850 631,786 6,380,155 8,791,000 $ 17,921,791 2003 $ 2,130,481 634,973 6,983,421 4,026,000 $ 13,774,875 12. ..ti..NCES AT THE END OF THE YEAR / / FoLm] reduction of taxation $ / I rocument in 2210 City of Pickering 81117: 6/15/05; 3:42 PM /1 FOR DISCUSSION PURPOSES ONLY 2004 2003 88,944 $ 32,208 Page 15 of2] (b) Capital Fund Balance Funds availab1eJor acquisition of tangible capital assets $ $ Acquisition of tangible capital assets expected to be Financed by long-tenn liabilities (2,370,701) Financed by taxation or user charges (330,436) Financed by donations (616,793) $ 612,984 (c) Reserves and Reserve Funds 2003 Reserves set aside for special purposes by C uncil Working capital 400,000 $ 400,000 Self insurance 940,514 940,514 Replacement of capital equipment 758,175 730,713 Contingencies 9,053,320 7,813,558 Rate stabilization ~ 2,619,565 2,177,209 City's share for developmen charge 1,921,332 2,685,297 Transit 1,025,740 1,106,634 Continuing Studies 233,160 141,884 Vehicle Replacement 25,000 Total Reserves 16,976,806 15,995,809 THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31, 2004 12. MUNIClPALFUND BALANCES AT THE END OF THE YEAR (continued) 380,604 386,726 1,455,054 1,696,180 33,713 7,450 378,731 181,023 2,248,102 2,271,379 '$ 19,224,908 $ 18,267,188 / / Due to significant surpluses, OMERS had declared a temporary contribution holiday effective Au~ 1, 1998 through to December 31, 2002.-0MERS contributions, at a reduced rate, co enced January 1,2003. Full contribution rates commenced January 1,2004. ~tributions on account of current service fctr 2004 were $ 1,400,257 (2003 - $421,221). MY Dpcumentin 2210 City of Pickering 81117: 6/15/05; 3:42 PM Page 16 of 21 / / I FOR DiSCUSSION PURPOSES ONLY 14. TRUST FUNDS Trust funds administered by the municipality amounting to $ 255,359 (2003 - 249,517) have ot been included in the Consolidated Statement of Financial Position nor hav their operations een included in the Consolidated Statement of Financial Activities 0 THE CORPORATION OF THE CITY OF PICKERING Notes to the Consolidated Financial Statements December 31 2004 15. CLASSIFICATION OF EXPENDITURES BY OBJECT The Consolidated Statement of Financial Activities presents t following classifies those same expenditures by object: Salaries, wages and employee benefits Operating materials and supplies Contracted Services Rents and financial expenses External transfers to others Tan Oble ca ital assets Total expenditures by object 16. RELATEDPARTYTRANSACTI NS ~ Veridian Corporation 2003 $ 31,602,803 11,345,838 . 3,936,292 1,008,549 134,866 9,747,699 $ 57,776,047 ervices from Veridian Corporation, a corporation in Veridian also provides streetlight and power line Bal ces ccounts payabl Promissory no s receivable 2004 2003 $ 1,905,294 $ 2,138,345 $ 31,384 $ 38,393 $ 1 ;690,604 $ 1,613,073 $ 283,550 $ 255,014 $ 25,069,000 $ 25,069,000 / / / / / / 7Documenf in 2210 City of Pickering 811J~: 6/15/05: 3:42 PM / / Page 17 of21 FOR DISCUSSION PURPOSES ONLY (i) The City has provided indemnities under lease agreements for th se of various f; ilities or land. Under the terms of these agreements the City agrees to in~the count arties for various items including, but not limited to, all liabilities, 1 s, 'ts, and da ges arising during, on or after the term of the agreement. The maxim 0 of any, otential future payment cannot be reasonably estimated. THE CORPORATION OF THE CITY OF PICKERING Notes 10 the 'Consolidated Financial Statements December 31 2004 17. GUARANTEES In the normal course of business, the City enters into agreements which co City's primary guarantees are as follows: (ii) The City indemnifies employees and elected officia for various ite s including, but not limited to, all costs to settle suits or actions due to a ociation with th City, subject to certain restrictions. The City has purchased liability ins~e to rnitigat the cost of any potential future suits or actions. The term of the indemni ca' n' not ex citly defmed, but is limited to the period over which the indemnified part se an em oyee or elected official of the City. The maximum amount of any potenti future pa nt annot be reaso~ably estimated. (iii) The City has entered into agreements t t may include' enmities in favour of third parties, such as purchase and sale agreeme , confidentiali~ agreements, engagement letters with advisors and consultants, outsourc' g agreements, 1 sing contracts, information technology agreements and service agreem .~' fication agreements may require the City to compensate counterparties Ii losses ed y the counterparties as a result of breaches in representation and regular ns or as a sul of litigation claims or statutory sanctions that may be suffered by the co terparty as a co equence of the transaction. The terms of these indemnities are not e licitly defmed and the maximum amount of any potential reimbursement cannot e reasonably esti ated. The nature of these in e ~ements prevents the City from making a reasonable estimate of the maxim mere due the difficulties in assessing the amount of liability which stems from tbe predictabi '. o. future events and the unlimited coverage offered to counterparties. H' tori cally, tbe City has not made any significant payments uIlder such or similar indelIlllificatioD greeme~~~' an7refore no amount has been accrued in the balance sheet with 18. ~::~en/ The proved ~ and capital budgets for 2004 are reflected on the Consolidated Schedule of Op ating Fund Fin cial Activities and Fund Balance, Consolidated Schedule of Capital Fund F" cia! Activitie and Fund Balance, and the Consolidated Statement of Financial Activities. The udgets establis d for the capital fund operations are on a project-oriented basis, the costs of which j' may be carried/out over one or more years and, therefore, may not be comparable with the current year ac~tul ounts. As well, the municipality does not have a budget for activity within Reserves / and Rese e Funds, with the exception being those transactions which flow through either the operatin or capital fund budgets. Budget figures bave been reclassified for lhe purposes of lhese / state1.Ilt'nts to comply with PSAB reporting principles, / / MI Document in 2210 City of Pickering 81117: 6/15/05: 3:42 PM Page 18 of 21 / / / FOR DISCUSSION PURPOSES ONLY THE CORPORATION OF THE CITY OF PICKERING Consolidated Schedule of Operating Fund Financial Activities and Fund Balance Year ended December 31, 2004 2004 Budget REVENUES Residential and farm taxation Commercial and industrial taxation Taxation from other governments User charges Government grants. and fees Developer contributions and donations Investment income Penalties and interest on taxes Fines Interest on promissory notes Other Total revenues $ 22 24,454 ,576,336 9,087,998 8,853,936 751,024 409,186 646,104 ] ,369,228 493,672 2,138,345 2,329 639 53,979,922 10,250,908 8,869,339 12,486,523 11,873,089 10,490,626 10,015,997 13,745 1,644,738 358,140 287,836 14,581,546 13,452,146 1,776,151 1,885,203 49,957,639 48,028,348 6,907,368 5,951,574 (5,069,137) (4,604,156) (4,987,257) 2,798,466 (1,163,779) ( 692,320) (1,349,181 ) (1,103,649) (991,724) (8,627) (89,500) (11,631) 54,790 (3,187) 526,951 44,397 67,683 (3,709,352 (6.850,632 (6.021,877 (24,575) 56,736 (70,303) 24,575 32,208 102,511 $ $ 88,944 $ 32,208 EXPENDITURES General government Protection to persons and property Transportation services Environmental services Social and family services Recreational and cultural services Plannin and develo ment Total ex enditures NET REVENUES / / / / GE IN OPERA T G FUND BALANCE ERA TING FUN~ALANCE, BEGINNING F YEAR OPERATING D BALANCE, END OF EAR Page 19 of21 / FOR D!SCUSSION PURPOSES ONLY THE CORPORATION OF THE ,CITY OF PICKERING Consolidated Schedule of Capital Fund Financial Activities and Fund Balance Year ended December 31. 2004 2004 2003 Budget Actual Actual (Restated Note REVENUES Grants $ 1,233,001 $ $ Developer contributions and donations 336,100 Development charges and developer contributions earned 990,515 Other 45,863 Total revenues 2,436,581 EXPENDITURES General government 9 .~ 16,495 416,056 Protection to persons and property 86~9 189,459 316,177 Transportation services ,909,953 2,562,144 5,231,771 Environmental services 6,244 223,819 Social and family services 21,472 7,215 Recreation and cultural services 2,545,732 3,530,447 Planning and develo ment 22,214 Total ex enditures 5,841,546 9,747,699 NET EXPENDITURES (3,798,580) (7,311,118) FINANCING AND TRANSFERS Transfers from Operating Fu ~ 5,069,137 4,604,156 4,987,257 Transfer from Reserves Fu cis 570,000 351~71 (5,540) Proceeds from debentur 2,212,000 5,031,000 Proceeds from intern a oans 267,000 349,071 Repayment of inte Joan (23,990) (298,000) Net financing an ansfers 7,851,137 10,229,537 5,032,788 6,430,957 (2,278,330) 6i2,984 2,891,3 i4 $ $ 7,043,941 $ 612,984 / / / / / II Page 20 of21 FOR DiSCUSSION PURPOSES ONLY / / THE CORPORATION OF THE CITY OF PICKERING Consolidated Schedule of Reserves and Reserve Funds Financial Activities and Fund Balance Year ended December 31,2004 2004 REVENUES Developer contributions and donations Investment income $ NET TRANSFERS FROM (TO) OTHER FUNDS Operating Fund Ca ital Fund Total net transfers 692,320 5,540 697,860 CHANGE IN RESER YES AND RESERVE FUND BALANCE &26,720 RESERVES AND RESERVE FUNDS, BEGINNING OF YEAR - AS PREVIOUSLY REPORTED 18,572,282 17,745,562 Adjustment for externally restricted contributions (Note 7) AS RESTATED RESERVES AND RESERVE F END OF YEAR (305,094) 18,267,188 (305,094) 17,440,468 $ 19,224,908 $ 18,267,188 in 2211 City of Pickering 81117: 611512005: 3;41 PM Page 21 of21 / FOR DISCU5S!OI-J PURPOSES ONt.. y / / Financial Statements of THE CORPORATIO THE CITY OF PIC TRUST FUNDS / / ./ /- I MN Document in 2290 Pickering- Trust-Funds-124 (81122): 6/15/05: 3:32 Mj draft FOR DISCUSSION PURPOSES ONLY Auditors'Report Deleltte & Touche LL 5140 Yonge Street Suite 1700 Toronto ON M Canada To the Members of Council, Inhabitants and Ratepay.ers of The Corporation of the City of Pickering We have audited the statement of fmancial position of the T st unds of the orporation of the City of Pickering as at December 31, 2004 and the statement of fm ci then ended. These financial statements are the responsibi "ty is to express an opinion on these fmandal statements b ed on 0 We conducted our audit in accordance with C Those standards require that we plan and perform an a it to obtain rea nable assurance whether the financial statements are free of material misstatement. ~ udit inclu s examining, on a test basis, evidence supporting the amounts and disclosures in fm' e ents. An audit also includes assessing the accounting principles used and signifi estima mad by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial stat the Trost Funds of the Corporati operations and changes in finan 1al Canadian generally accepted c M -Document in 2290 Pickering- Trust-funds-124 (81122); 6/15/05: 3:32 PM / / / FOR DISCUSSIOr.) PURPOSES ONLY THE CORPORATION OF THE CITY OF PICKERING TRUST FUNDS Statement of Financial Position December 31, 2004 OHRP 2004 Dorothy Card Estate 2003 ASSETS Cash Investment Interest receivable Loans receivable $ $ 24,571 10,485 220,363 231,741 4,310 662 6,115 6,629 $ 6,115 $ $ 249,517 $ 6,115 $ 249,517 TRUST FUI\r:D POSITION / / / / / / / / / / / wor7 in 229/ Pickering- Trust-Funds-/24 (8//22); 6//5/2005; 3:3/ PM / FOR DISCUSSION PURPOSES ONLY Page 1 00 THE CORPORATION OF THE CITY OF PICKERING TRUST FUNDS Statement of Financial Activities Year ended December 31, 2004 OHRP 2004 Dorothy Card Estate REVENUES Interest $ 338 $ 6,356 EXPENDITURES Provincial payments Administration char es 810 42 852 NET (EXPENDITURES) REVENUE FUND BALANCE, BEGINNING OF YEAR FUND BALANCE, END OF YEAR (514) $ / / / / ;/ / in 2291 Pii:kering- Trust-Funds-124 (81122): 6/15/2005: 3:31 PA{ . FOR DISCUSSION PURPOSES ONLY 742 40 782 6,326 249~17 243,191 $ 255,359 $ 249,517 Page 2 of3 Significant accounting policies adopted include: THE CORPORATION OF THE CITY OF PICKERING TRUST FUNDS Notes to the Financial Statements December 31, 2004 1. ACCOUNTING POLICY The Trust Funds financial statements of The Corporation of the Ci of Pickering representation of management prepared in accordance with Canadian ge erally accepted principles. Basis of accounting 2. ONTARIO HOME RENEWAL PROG was ablished by the Ontario Ministry of t make loans to assist owner occupants to loc property standards. Individual loans are Ie ortion is $4,000. . discontinued this program. Unused funds were arch 1, 1994. utstanding balances of loans issued prior to July 16, ed unde the terms of the original program. The City continues o standing loans and remit the proceeds, net of a 5% of M llcipal Affairs and Housing. 3. T City of Picke . g has established a trust fund for the Dorothy Card Estate for the care and pkeep of the stitute elderly. The fund balance is comprised of cash, investments and accumulated in est amounting to $249,244 (2003 - $242,888). STAT~ OF CIlANGES IN FINANCIAL POSITION 'stat ent of changes in financial position has not been presented as the information is readily dete . able from the information provided. 7Document in 2290 Pickering- TrU..t-Fu~S-124 (811EZ): 6/15/05: 3;32 PM Page 3 of 3 / FOR DISCUSSION PURPOSES ONLY / / / Financial Statements of December 31, 2004 / / / / / MN Document in 2206 Library FS.notes : 6/15/05: 3;59 PM FOR DISCUSSION PURPOSES ONLY ~uditors'lleport Oeloltte &. Touche LL 5140 Yonge Street Suite 1700 Toronto ON M2 6L7 Canada We conducted our audit in accordance with anadian gene accepted auditing standards. Those standards require that we plan and perform a~. . sonable assurance whether the financial statements are free of material misstatem 1. 't m udes examining, on a test basis, evidence supporting the amounts and disclosures' the fman 1 s ements. An audit also includes assessing the accounting principles used and signi ant estimates de by management, as well as evaluating the overall financial statement presentati In our opinion, these financial s t the City of Pickering Public L' ra the changes in its financial .ositl accepted accounting pn..Tld es. s present airly, in all material respects, the fmancial position of B a ecember 31, 2004 and the results of its operations and - r the y, ar then ended in accordance with the Canadi3.l1 generally / / I / / / M"/DocumetTt in Z206 Library FS notes: 6/15/05: 3:59 PM / / FOR DISCUSSION PURPOSES ONLY . CITY OF PICKERING PUBLIC LmRARY BOARD Table of Contents December 31, 2004 Statement of Financial Position Statement of Financial Activities and Fund Balance Notes to the Financial Statements / Docl1Jflent in 2206 Library FS note.< : 6/15/05: 3:59 PM / / FOR DISCUSSION PURPOSES ONLY CITY OF PICKERING PUBLIC LIBRARY BOARD Statement of Financial Position December 31, 2004 FINANCIAL ASSETS LIABILITIES CURRENT Accounts payable and accrued liabilities Due to City of Pickering Post-em loyment benefits obligation (Note 4) NET FINANCIAL LIABILITIES NON-FINANCIAL ASSETS Prepaid expense Inventory NET LIABILITIES BOARD POSITION AMOUNTS TO BE RE 2004 $ 2,060 59 7,260 60,953 70,332 $ 72,176 9 1, I 00 163,276 (151,036) (92,944) 21,658 1,178 $ (128,200) 267 1,577 $ (91,100) . $ (128,200) $ (91,100) ~~~~'"~~m.~~:V~~ ~.~ / / / ,I / / / / / / / I I / / / / ,I / Workshettt in 2205lJbrory F5 pre employee benefits #81123,.6/15/2005,.3:59 PM / / ,. / FOR DISCUSSION PURPOSES ONLY Page 1 of6 The fmanciaI statements of the City of Pickering Public Library Board the representat' ns of management prepared in accordance with Canadian generally acc~ accounting . ciples established by the Public Sector Accounting Board (pSAB) of the C adian fustitute 0 Chartered Accountants. / If. Significant accounting policies adopted by the Library Board are s foYb~ CITY OF PICKERL.~G PUBLIC LmRARYBOARD Notes 10 the Financial Statements December 31, 2004 1. SIGNIFICANT ACCOUNTING POLICIES Basis of accounting (b) Capital assets lifetime (c) Cd) The pI: para' on of fin cial statements in conformity with Canadian generally accepted acco f~~'ples quires management to make estimates and assumptions that affect the I rt ~moun; f sets, liabilities and the disclosure of contingent liabilities at the date of Ie finan~~ents and the reported amounts of revenues and expenditures during the period. /0 solIs could differ from those estimates. II / / I /' / II I II II / / MI)i Document in 2206 LIbrary f'S notes: 6//5105: 3:59 PM Page 3 of 6 I / / ./ FOR DISCUSSION PURPOSES OI\!L Y In 2004, the Library Board adopted fully the local government accountin standards issued y the Public Sector Accounting Board of the Canadian Institute of Chartered countants relat to Post- Employment Benefits, Compensated Absences and Termination Bene ts.Previous1y, e costs of providing the sick bank program were recorded when paid. Thes~are now cognized as employees earn these entitlements through service. This chang" unting licy has been applied retroactively and the comparative figures included in t e c tat ents have been restated to conform with the accounting policies adopted for th current year. CITY OF PICKERING PUBLIC LffiRARY BOARD Notes to the Financial Statements December 31, 2004 2. CHANGE IN ACCOUNTING POLICY The adoption of these standards has resulted in the fo owing signific previously reported in the 2003 financial statements: .. "Post-employment benefits obligation" and " m~ be re vered from future revenues" reported on the statement of fmancial pos' ion ea creas a by $45,900 at December 31, 2002. . · "Employment benefits expenditures" and "increase in ounts to be recovered" reported on the statement of fmancial activi "es and fund ba ce each increased by approximately $7,800 for the year ended Dece e~3. In addition, the adoption of these s dards res ed in the following changes to the amounts reported for the year ended Dece er 31, 2004: · "Post-employment b reported in the stat of approximately 63 .. ~. end" ures" and "increase in amounts to be recovered in future t of financial activities have each increased by approximately 3. CAPITAL~~URE Capital p~(tures nere curre~ to acquire.~ture and equipm~t in the am~unt ~f $367,528. Prior ar caPfu\...1We "tures of $57Y,625 included an amoWlt ot $230,325 tor Library .'book coll tion", For 2tlO~, all Library book costs were budgeted under operating expenditures, and ac ordingly the op ating budget for book purchases was increased by an amoUnt similar to that eviously budget a Wlder capital expenditures. / / I / II I / /' / I / I / / I / / 7 Document in 2206 Ubrory FS nutes : 6/15/05; 3:59 PM / FOF( DISCUSSION PURPOSES ONLY Page 4 of6 CITY OF PICKERING PUBLIC LmRARY BOARD Notes to the Financial Statements December 31, 2004 4. POST EMPLOYMENT BENEFITS OBLIGATION The Library makes available to qualifying employees who retire befi e the age of opportunity to continue their coverage for such benefits as extended h th and drugs. ceases at the age of 65. Dependent on eligibility, health coverage y bea shar :financial responsibility between the Library and the retired employees. The also provi es full time and permanent part-time employees a sick time entitlement d unused .tlement is accumulated year to year. This accumulated entitlement is not est ere re does not get paid out at the time of retirement or termination. The poS' employment fits obligatioII at December 31, 2004 and the changes in the accrued benefit ligation for the 04 fiscal year was detennined by an actuarial valuation prepared January 1,20 4. leave entitlements were Information about the Library's benefits liabilities 2004 2003 $ 91,100 $ 78,600 13,300 10,100 36,100 800 100 8,500 2,300 (21,600) $ 128,200 $ 91,100 2004 2003 $ 139,500 $ 94,400 (11,300) (3,300) $ 128,200 $ 91 ,1 00 The main C~Pf ns employed in the actuarial valuations are as follows: 1a) iscount~ The present v ue as at December 31, 2004 of the future benefits was determined using a discount rat of 6%. . / (b) Dental!'t / The cent trend cost at January 1,2004 was 4.5% per annum. (c) / / Health costs were assumed to increase at 10% in 2005 and decrease by 1 % increments per year to an ultimate rate of5% per year in 2010 and thereafter. / / i Document in 2206 Library FS notes: 6/15/05: 3:59 PM / / FOR DISCUSSION PURPOSES ONLY / Page 5 of6 The Library Board makes contributions to the Ontario Municipal Emp yees Retirem (OMERS), which is a multi-employer plan, on behalf of eligible membe of its staff. The Ian is a defined benefit plan that specifies the amount of the retirement befit to be recei ed by the employees based on the length of service and rates of pay. I d.. Due to significant swpluses, OMERS had declared a tempor co~~ ho '(lay, wbich was effective August 1, 1998 through December 31,2002. The Li ary Board res d contributions at a reduced rate, commencing January 1, 2003. As of Janu 1, 2004 the Li rary Board resumed contributions at the full rate and an amount of $122,244 03 - $37,517) as paid to OMERS on behalf of its members during the year. CITY OF PICKERING PUBLIC LmRARY BOARD Notes to the Financial Statements December 31, 2004 5. PENSION AGREEMENTS readily determinable from the financial state ed, as the related information is 6. 7. GUARANTEES In tbe normal course of business, the ibrary~ agreements which contain guarantees. The Library's primary guarantees are as allows: J '\)V~~; (i) The Library indemnifies mployees and b ard members for various items including, but not limited to, all costs to ettle suits or a 'ons due to association with the Library, subject to certain restrictions. ~.~ has p chased liability insurance to mitigate the cost of any potential future sui 0 cf " he erm of the indemnification is not explicitly dermed, but is limited to the erio er will the indemnified party served as an employee or board member of th Library. m 'mum amount of any potential future payment cannot be reasonably e imated. (ii) The Lib bas entered . to agreements that may include indemnities in favour of third Parties~p. urchas and sale agreements, confidentiality agreements, engagement letters with a . ors nd nsultants, outsourcing agreements, leasing contracts, information te 0 agI; ts and service agreements. These indemnification agreements may quire th~ to compensate counterparties for losses incurred by the cotinterparties as ~ result of breac s in representation and regulations or as a result of litigation claims or statutory san ions that may be suffered by the counterparty as a consequence of the transaction. e terms of tbese indemnities are not explicitly defined and the maximum amount 0 any potential reirnbursement cannot be reasonably estimated. / The nature of these indemnification agreements prevents the Library from making a reasonable estimate the maximum exposure due to the difficulties in assessing the amount of liability which stems om the unpredictability of future events and the unlimited coverage offered to coun rparties. Historically, the Library has not made any significant payments under such or si ar indemnification agreements and therefore no amount has been accrued in the Statement of E' ancial Position with respect to these agreements. ~Docum;nt in 2206 Library FS notes; 6/15/05; 3:59 Pill / ./ FOR DISCUSSION PURPOSES ONLY Page6of6