HomeMy WebLinkAboutCS 27-08
REPORT TO
EXECUTIVE COMMITTEE
Report Number: CS 27-08
Date: June 9, 2008
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From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
2007 Year End Audit
Recommendations:
1. That Report CS 27-08 of the Director, Corporate Services & Treasurer be
received;
2. That the Audit Results Report as submitted by Deloitte & Touche LLP be received
for information; and,
3. That the 2007 draft Audited Consolidated Financial Statements for the City of
Pickering be forwarded to Council for approval.
Executive Summary: This report provides the auditor's Audit Results report,
independence letter and the draft Audited Consolidated Financial Statements for the
year ended December 31, 2007.
I am pleased to advise that the auditor did not find it necessary to issue a Management
Letter for 2007. However, staff in a separate confidential report will be providing an
update on those ongoing matters identified in 2006.
Financial Implications: The 2007 year financial results were once again very
favourable and contributed significantly to the City's much lower 2008 property tax
increase. A combination of under expenditures due to expenditure control and staffing
vacancies and increased revenues mainly in the areas of investment income and
penalties and interest on taxes contributed significantly to the City's positive financial
position. Additional contributing factors included increased building permits, lower than
expected benefits renewal costs and higher supplementary taxes.
Sustainability Implications:
implications.
This report does not contain any sustainability
Report CS 27-08
Date: June 9, 2008
2007 Year-End Audit
Page 2
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Background: The audit of the consolidated financial statements for the year ended
December 31, 2007 has been completed. The auditor's Report to the Executive
Committee - Audit Results is included as Attachment 1 and also includes the auditor's
independencelette~
This report, prepared by De/oitte & Touche LLP, summarizes the results of the
December 31, 2007 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 in addition to confirming their
independence with respect to the City. The Independence Letter in Appendix 1 of the
attachment confirms that Deloitte & Touche LLP is independent with respect to the City.
The draft Audited Consolidated Financial Statements are included as Attachment 2.
They 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 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.
The Consolidated Financial Statements also 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.
Overall net assets increased over prior year by approximately $4.7 million as a result of
a decrease in liabilities of approximately $4.6 million.
Financial Assets
The change in financial assets from prior year was very minimal. Although the
investment balance significantly declined by approximately $4.2 million, this decrease
was offset by increases in taxes receivable, accounts receivable and the investment in
Veridian Corporation.
The investment portfolio balance under management declined over prior year primarily
as a result of the refund to OPG for the settlement of the outstanding assessment
appeals for the years 2003 to 2006. The City's share of this refund amounted to
approximately $4.2 million.
Report CS 27-08
Date: June 9, 2008
2007 Year-End Audit
Page 3
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The taxes receivable increase of approximately $800,000 over the prior year is
reasonable since total taxes billed increased over the prior year. The outstanding
receivable balance at DI3cember 31, 2007 represents 8,3% (2006 - 8.2%) of total tax
revenue which is comparable to the prior year.
The increase in the investment in Veridian Corporation arises due to the City's share of
Veridian's net income offset by the dividends received from Veridian during the course
of the year.
Liabilities
The decrease in liabilities of approximately $4.6 million is primarily due to the decrease
in the accounts payable and accrued liabilities balance of approximately $6.5 million in
addition to a decrease in long-term liabilities offset by an increase in deferred revenue.
The prior year accounts payable and accrued liabilities balance included an accrual for
the settlement of the OPG assessment appeal in the amount of approximately $6.6
million which included both the City and Region shares. This amount was paid to OPG
in December 2007. The Region has paid the City its share which represents
approximately $2.4 million.
Deferred revenue increased by approximately $3.0 million which arises from the
increase in the obligatory Reserve Funds and two Provincial grants received in 2007 but
earmarked to be used in the 2008 Capital Budget. The Obligatory Reserve funds are
made up of the following: Development Charges, Parkland, Third Party/Developer's
Contribution and Federal Gas Tax. In compliance with generally accepted accounting
principles, these restricted funds are to be reported as deferred revenue. The
Development Charges Fieserve Fund and Federal Gas Tax fund balances increased
because of the timing of receipt of funds and occurrence of related capital expenditures.
The decrease in long-term liabilities of approximately $1.1 million represents the annual
principal repayment of the outstanding debentures. The City's requirement for debt did
not coincide with the Re!Jion's timing therefore there was no debt issued on the City's
behalf during 2007.
Revenues & Expenditures
Consolidated revenues and expenditures are comparable with the budget with the
exception of government grants and fees, investment Income, general government
expenditures and planning and development which are discussed below.
The budget for government grants and fees includes provincial and federal grant
monies, such as COMRI F and federal gas tax, identified in the 2007 capital budget to
fund various capital projects. Because of the timing of capital expenditures, revenue is
recognized once the expenditures are incurred. Particularly COMRIF funding is not
received by the municipality until an expenditure claim is submitted. Therefore
Report CS 27-08
Date: June 9, 2008
2007 Year-End Audit
Page 4
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approximately $1.0 million of the revenue reported in 2007 relates to expenditures for
projects approved in previous budgets and thus the grant revenue is not included in the
budget figure.
The budget for investmE!nt income is usually a conservative estimate as it is difficult to
predict interest rates and timing of cash on hand. The variance from budget of
approximately $750,000 arose due to the unexpected interest rate increase over the
course of the year and excess cash on hand from timing of receipts (i.e. Provincial
Grants) and payments (i.e. OPG tax refund from appeal). For these reasons and a
declining interest rate environment, the budget estimate for 2008 was only increased by
$50,000 to $1,050,000. It is expected that the investment income will be more in line
with the budget estimate for 2008 due to changes in the market conditions and that
interest rates began to drop in December 2007.
General government expenditures, which includes purchased services, insurance, tax
write-ofts, contingency and Administration and Corporate Services departments was
underbudget by approximately $950,000. There is not one specific factor driving this
under expenditure but multiple underages in the cost centres within the Departments
and the contingency account.
Planning and developmemt expenditures are underbudget by approximately $970,000.
This is primarily a result of an under expenditure in the Planning consulting account of
$750,000 which arose from some studies not proceeding/commencing during 2007. For
example Duffin Heights and Seaton Neighbourhood Servicing Plans, to be funded 100%
from landowners, had no expenditures as funds were not received from the external
parties.
As you are aware capital expenditures for projects may be incurred over multiple years
therefore comparisons of actual to budget are not meaningful. Capital expenditures
incurred are slightly higher than the budget amount reported but only approximately
$3.7 million of the total capital expenditures of $10.7 million were for 2007 approved
projects. The balance of the expenditures was for projects budgeted and approved in
earlier years.
Attachments:
1. Auditor's Report to the Executive Committee - Audit Results
2. 2007 Draft Audited Consolidated Financial Statements
Report CS 27-08
Date: June 9, 2008
2007 Year-End Audit
Page 5
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Prepared By:
/
Approved I Endorsed By:
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Gillis A. Paterson
Director, Corporate Services & Treasurer
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A/;lCt.J ~ ."\./{ {,H
ristine Senior
Manager, Accounting Services
GAP/vw
Copy: Chief Administrative Officer
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Recommended for the l::onsideration of
Pickering City COU.r\ \'
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ATTACHM[! __ L_
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Deloitt_!
The C~orporation of
the City of Pickering
Report to the Executive Committee - Audit Results
Year ended December 31, 2007
Audit. Tax .Consulting. Financial Advisory.
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Deloitte
Deloitte & Touche LLP
5140 Y onge Street
Suite 1700
Toronto, ON M2N 6L7
Canada
Tel: (416) 601 6150
Fax: (416) 601 6151
www.deloitte.ca
May 20, 2008
The Members of the Executive Committee
The Corporation of the City of Pickering
I The Esplanade
Pickering ON L I V 6K7
Dear Executive Committee 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, 2007.
Our audit was completed in accordance with the audit plan presented to you on November 12,2007. 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 2007 audit of the
consolidated financial statements, comment on significant matters regarding the audit and other matters
which we believe will be of interest to the Executive Committee (the "Committee").
This report has been provided to the Committee on a confidential basis. It is intended solely for the use of
the Committee 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 the Committee 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,
;j)J.cdiL ~ f~t, LLI'
Chartered Accountants
Licensed Public Accountants
Member of
Oeloitte Touche Tohmatsu
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Table of contents
Status of the audit, audit scope and related representations
Matters to report to the Executive Committee
Audit findings
- Management judgments and accounting estimates
- Adjusted differences
- Unadjusted differences
Areas of audit focus
Internal controls
Significant upcoming changes in accounting standards
Appendices
Appendix:
Independence letter
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
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5
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Status of the audit, audit scope and
related representations
· The audit of the December 31, 2007 consolidated financial statements is
substantially complete.
· Our auditors' report on the 2007 consolidated financial statements will:
- be signed following approval by Council;
- be dated April 4, 2008; and
- state that the consolidated financial statements present fairly, in all material
respects, the financial position of the City as at December 31, 2007 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 provided to you on
November 12, 2007.
· 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 employee future
benefits.
· 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 independence letter to the Committee is included in
Appendix 1 of this report.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
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Matters to report to the Executive
Committee
Reportable matter
1. Significant weaknesses in internal No significant weaknesses in internal
controls relating to the financial controls relating to the financial reporting
reporti ng process. process were identified.
2. Illegal acts. None noted.
3. Significant transactions inconsistent None noted.
with the ordinary course of business,
including fraud or possible fraud.
4. Unusual related party transactions. None noted.
5. New significant accounting principles None in the current year. See page 11
or policies. for significant upcoming changes in
accounting standards.
6. Disagreements with management. None.
7. Management consultation with other None noted.
accountants about any significant
auditing or accounting matters.
8. Unusual transactions that None noted.
significantly increase risk of loss.
9. Actions that, if they became public, None noted.
might cause embarrassment.
10. Non-compliance with regulatory None noted.
requirements.
11. Major issues discussed with None noted.
management that influence audit
appointment.
12. Management's judgments and Reasonable (see Pages 5 and 6).
accounting estimates.
13. Misstatements, including unadjusted See audit findings (Page 7).
audit differences.
14. Difficulties encountered during the None.
audit.
15. Limitations placed on the scope of None.
our audit.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
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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; and
· Contingent liabilities.
Post employment benefit liability and WSIB benefit liabilities
Management uses the assistance of an actuary in determining the post-employment
benefits liability. The extrapolation to December 31, 2007 was based on the January 1,
2004 valuation. As reported by the actuary, this is not in accordance with accepted
actuarial practice as extrapolations should not be performed for a period longer than
three years. We understand that a new valuation will be performed next year once the
results of collective bargaining is known. The results of any collective bargaining
undertaken by the City during 2008 have not been reflected in the post-employment
benefits liability at December 31, 2007.
The WSIB benefit liabilities are calculated by WSIB using management's best
estimates and assumptions. This approach is consistent with other municipalities and
these estimates appear to be reasonable.
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.
The liability for the significant property tax appeal outstanding at December 31, 2006
was settled during fiscal 2007 and any amounts remaining in the Contingency Reserve
relating to this matter were transferred to the Rate Stabilization Reserve in accordance
with Council approval.
Accrued liabilities
Management is required to make estimates, mainly for capital work performed to
December 31, where invoices for such work have not been received prior to when the
books are closed. Also included in accruals at December 31, 2007 are amounts relating
to salaries under negotiation and a compensation review.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
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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.
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.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
6
Audit findings (continued)
13
Adjusted differences
The following differences were discussed with City management and were adjusted:
· An adjustment of $249,725 to the general ledger clearing account for the Class
System, which is grouped with cash, to correct the accounting of prior years' (pre
2003) recreation revenues as the systems moved from a manual accounting
system to the automated Class system.
· Recording of $31,150 of investment income earned on an interest bearing
investment.
· Reversal of operating fund revenues and recording of deferred revenue in the
amount of $59,340 relating to 2008 bingo licenses.
Unadjusted difference
The following difference was discussed with City management but not adjusted:
· The understatement of 2007 capital fund revenues and accounts receivable in the
amount of $25,729 relating to a capital project to be funded by a third party for
work completed to December 31, 2007 but not yet billed.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
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Areas of audit focus
On November 12, 2007 we reported to you our planned key areas of audit focus. The
following summarizes our findings in respect of these areas:
Area I Issue I Response I Conclusion
Year end · Determine if cut-off · Focused substantive testing on · Satisfactory
cut-off of revenues and accounts payable, accrued (see audit
expenditures is liabilities, deferred revenue and findings).
appropriate. 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 · Review actuarial report including . Satisfactory
determined completeness of related assumptions. (see audit
liabilities certain liabilities findings).
such as Workplace · Determine that appropriate
Safety and accounting treatment has been
Insurance ("WSIB") applied.
and Post . Review related financial
employment statement note disclosure.
benefits.
· Communicate with actuary on our
reliance on their report for audit
purposes.
Reserves, . Approval of · Focused testing on the continuity . Satisfactory.
reserve transfers to and and material transactions to
funds and from reserve and determine if transfers are in
capital fund reserve funds. accordance with council
approvals and/or legislative
requirements.
Investment . Compliance with PS . Review accounting for Investment . Satisfactory
in Veridian 3070 "Government in Veridian Corporation and (see Note 4 in
Corporation Business related disclosures. consolidated
Enterprises". · Review financial statements of financial
Veridian Corporation. statements).
. Communication with Veridian
Corporation's auditor on our
reliance on their auditor's report
for purposes of the City's audit.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
8
Areas of audit focus (continued)
(-
,)
Area I Issue I Response I Conclusion
Management · Requires · Focused review of calculations · Satisfactory (see
estimates management and support. audit findings).
judgment
(i.e. allowance for · Discussion with management.
assessment
appeals, · Analytic review of related
contingent accounts.
liabilities, etc.).
Capital Fund . Revenue · Focused testing to determine · Satisfactory (see
Recognition whether restricted contributions audit findings).
(i .e. development charges, gas
tax, conditional grants) have
been recognized as revenue in
the appropriate period.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
9
6
Internal controls
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 did not identify any significant internal control weaknesses during the audit. We
understand that management will provide the committee with an update on the status
of any outstanding comments from our prior year's management letter.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
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Significant upcoming changes in
accounting standards
Most municipal governments in Canada prepare their financial statements in accordance
with generally accepted accounting principles (GAAP) as established by the Canadian
Institute of Chartered Accountants (CICA) Public Sector Accounting Board (PSAB).
Effective with the fiscal year commencing January 1, 2009, there will no longer be a
separate reporting model specific to local governments. All governments in Canada,
including municipalities, will follow a single reporting model.
This reporting model, which among other things will require municipalities to capitalize
and amortize tangible capital assets, will have a significant impact on the financial
reporting, budgeting, systems and processes that are currently in place at the City.
Municipalities currently manage a variety of significant tangible capital assets and have
various sub-systems and processes to manage different asset classes. We encourage
Council and management to use this accounting change to engage the entire municipality
into providing more integrated information about tangible capital assets for decision
making purposes. This can include decisions related to resource allocations,
affordability, sustainability, setting rates and fees, full cost accounting, life cycle costing
etc.
There will be a significant one-time effort required to gather and compile the necessary
information needed to record tangible capital assets on the statement of financial
position for the year ending December 31, 2009 (with comparative restated figures for
2008). There will also be a need to ensure that the CAD, finance staff, department
managers, Council and others understand the changes and their impact on the financial
statements and the budgets.
We have noted that municipalities are at various stages in the process of preparing for
this significant change, including a few throughout the country that have already
implemented the new reporting model. Most municipalities have limited in-house
resources to undertake the incremental preparation work required to ensure that the
necessary changes have been implemented on time.
As the conversion period is fast approaching, this process will require a focused effort in
order to ensure that the impact on future budgets is assessed and that there is no delay
in issuing financial statements for the 2009 fiscal year. It is important that this not be
viewed simply as an accounting exercise for purposes of financial reporting. In order to
be able to sustain the ongoing requirements of reporting under this new reporting model
it is necessary for all departments to understand the requirements for maintaining
information related to tangible capital assets such as additions, disposals, useful lives
and residual values.
We encourage the Executive Committee, as part of your responsibility for the oversight
of the financial reporting process, to monitor the progress of the implementation plan
relating to the new reporting requirements.
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
7
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Appendix
Appendix - Independence letter
9
Deloitte
Deloitte & Touche LLP
5140 Y onge Street
Suite 1700
Toronto, ON M2N 6L7
Canada
Tel: (416) 601 6150
Fax: (416) 601 6151
www.deloitte.ca
May15,2008
The Members of the Executive Committee
The Corporation of the City of Pickering
I The Esplanade
Pickering ON L I V 6K7
Dear Executive Committee 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 31,2007, which includes:
· The Corporation of the City of Pickering; and
· Pickering Public Library Board.
In addition, we have been engaged to audit 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:
(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.
Member of
Oeloitte Touche Tohmatsu
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
13
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Appendix 1 - Independence letter
( continued)
The Corporation of the City of Pickering
May15,2008
Page 2
We have prepared the following comments to facilitate our discussion with you regarding independence
matters arising since July 6,2007, 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 July 6,2007 to May IS, 2008.
The fees (exclusive of GST) billed from July 6,2007 (the date of our last independence letter) to May 15,2008
are as follows:
City of Pickering
· Balance of audit related fees for the year ended December 31, 2006
· Audit for the year ended December 31, 2007- interim billings
$10,250
$55,000
· Auditors' report dated June 15, 2007 for the Transfer of Federal
Gas Tax Revenues for the year ended December 31, 2006
$ 3,500
City of Pickering Public Library Board
· Audit for the year ended December 31,2007- interim billing
$ 3,500
GAAS requires that we confirm our independence to the Executive Committee 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 May 15, 2008.
This report is intended solely for the use of the Executive Committee and others within the City and should not
be used for any other purposes.
Yours truly,
'dJ~ 0/- tiw.de.. ILfJ
Chartered Accountants
Licensed Public Accountants
@ Deloitte & Touche LLP and affiliated entities.
The Corporation of the City of Pickering -
2007 Report to the Executive Committee
14
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Deloille
@ Deloitte & Touche LLP and affiliated entities.
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory
services through more than 7,600 people in 56 offices. Deloitte operates in Quebec as Samson Belair/Deloitte & Touche
s.e.n.c.r.1. The firm is dedicated to helping its clients and its people excel. Deloitte is the Canadian member firm of
Deloitte Touche Tohmatsu.
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective
subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms
have any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity
operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu," or other related names. Services
are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.
JOEST
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ATTACHMENT #....1- TOREPORT#~ ~ 7-0'1
December 31, 2007
VM T Document in City of Pickering Notes (.' 5/21/08: 10:40 AM
FOR DISCUSSION PURPOSES ONLY
The Corporation of the City of Pickering
December 31, 2007
{')"Z
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Table of contents
Auditors' Report ............................................................. ............................. ....................... ....1
Consolidated schedule of capital fund financial ac vities and fund
Consolidated statement of financial position............................................. ....................... ...........2
Consolidated statement of ft nancial activities no................................ ... ~...... ................... 3
Consolidated statement of changes in financial position .............. ....................... ..........................4
~~
V. Document in City of Pickering Notes (; 5/21/08; 10:40 AM
FOR DISCUSSION PURPOSES ONLY
24
Deloltte & To he LLP
5140 Yonge treet
Suite 170
Toronto N M2N 6L7
Canad
Auditors' Report
To the Members of Council, Inhabitants and
Ratepayers of the Corporation of the City of Pickering
We have audited the consolidated statement of fmancial position f the Corporatio of the City of
Pickering as at December 31, 2007 and the consolidated state nts of financial tivities and of changes
in financial position for the year then ended. These financial ta ents are th responsibility of the City's
management. Our responsibility is to express an opinion 0 th cia! atements based on our audit.
Chartered Accountant
Licensed Public Acc untants
April 4, 2008
Document in City of Pickering Notes (." 5/21/08: 10:40 AM
FOR DISCUSSION PURPOSES ONLY
The Corporation of the City of Pickering
Consolidated statement of financial position
December 31, 2007
Financial assets
Cash
Investments (Note 4)
Taxes receivable
Accounts receivable
Other current assets
Investment in Veridian Corporation (Note 5(b))
Promisso notes receivable Note 6
Liabilities
Accounts payable and accrued liabilities
Other current liabilities
Deferred revenue (Note 7)
Long-term liabilities (Note 10)
Post-employment benefit liability (Note 9(a))
WSIB benefit liabilities Note 9 b
Net financial assets
Non-financial assets
Invento
Net assets
Municipal position
Operating fund (Note 12(a))
Capital fund (Note 12(b))
Reserves and reserve fund (Not
E ui in Veridian Cor or tion Note
t in City of Pickering FS (#3921): 5/21/2008: 10:41 AM
FOR DISCUSSION PURPOSES ONLY
:2 ~:)
2007
$
3,445/5 2,969, 1
46/714/ 60 50,867,,722
12,13 ,647 11,3 7,986
5,1 4,265 4, 92,024
~ 530,363
6, 634 34,768,015
25 69 25 069 000
130 488 293 130 464 291
11/16 ,320 17,625,266
1,469 61,168
32 24,941 29,434,292 '
/796,011 9,929,000
2,343,250 2,316,950
643 045 690,331
55 457 036 60 057 007
75,031,257 70,407,284
246 361 209 760
75,277,618 70,617,044
(51,077) (50,232)
2,294,298 5,209,345
23/927,149 20,148,226
64 894 654 62 880 035
91/065,024 88,187,374
Page 2
26
The Corporation of the City of Pickering
Consolidated statement of financial activities
year ended December 31, 2007
Revenues
Residential and farm taxation
Commercial and Industrial taxation
Taxation from other governments
User charges
Government grants and fees
Other 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 family services
Recreational and cultural services
Plannln and develo ment
Capital
General government
Protection to persons and prope
Transportation services
Environmental services
Social and Family Service
Recreation and cultural ervices
Pianning and develo ent
Budget
(Unaudited)
$
(Note 19)
28,816,719
7,168,712
6,813,101
7,983,905
1,350,627
213,500
1,180,360
623,436
4,756,100
510,000
33,000
2,602,410
9 705,306
63,763,276
( 4,534,307)
(1,132,989)
(1,101,847)
2,696,700
803,000
1,264,864
(3,269,443)
FOR DISCUSSION PURPOSES ONLY
26 74,748
,683,041
6,937,311
7,194,785
2,806,426
549,778
1,552,588
1,498,759
1,698,253
590,341
1,905,244
602,157
58,493,431
11,813,917 15,302,981
14,330,659 13,513,808
6,109,154 5,308,877
119,365 46,718
385,401 333,056
16,529,901 16,047,858
1,774,748 1,928,424
51063,145 52,481 722
1,014,811 1,280,176
1,342,124 1,739,315
5,978,241 3,570,541
132,408 91,493
25,029 14,945
2,186,944 1,993,404
782
10 679 557 8,690,656
61 742 702 61,172,378
3,654,619 3,669,588
4,623,973 990,641
(1,132,989) (847,000)
(1,225,949) (1,095,381)
2,792,000
352,000
10,700
262,567
949,752
229,227)
1,711,166
Page 3
The Corporation of the City of Pickering
Consolidated statement of changes in financial position
year ended December 31, 2007
2007
$
Operating activities
Net revenue
E uit share of net income of Veridian Cor oration
Uses
Increase in taxes receivable
Increase in accounts receivable
Increase in other current assets
Decrease in accounts payable and accrued liabilities
Decrease in other current liabilities
Decrease in WSIB benefit liabilities
(1,042,887)
(359,252)
(108,288)
Sources
Increase in accounts payable and accrued Iiabili
Increase in other current liabilities
Increase in deferred revenue
Increase in ost-em 10 ment benefit Iiab" t
~
6,290,978
1,775,987
10 700
8 077 665
3 432 860
Investing activities
Increase (decrease) in investme
Dividends received from Veridi
4,152,862
1 640 000
5 792 862
476,418
2 969 181
3,445,599
258,025
2 711 156
2,969,181
t in City of Pickering FS (#3921): 5/21/2008: 10:41 AM
Page 4
FOR DISCUSSION PURPOSES ONLY
')8
The Corporation of the City of Pickering
Notes to the consolidated fmancial statements
December 31, 2007
1. Significant accounting policies
The consolidated financial statements of The Corporation of the City of Pickeri g (the "City") ar
the representations of management prepared in accordance with generally cepted accounti g
principles for local governments as established by the Public Sector Accou ing Board ("PSA ")
of the Canadian Institute of Chartered Accountants. Significant accounti g policies adopt by
the City are as follows:
(a) Reporting entity
Consolidated statements I d
The consolidated financial statements reflect the set0~s, r, venues and
expenditures of the operating fund, capital fund, eserve funds a reserves.
The reporting entity is comprised of the activit' s of all committ es of Council and
the City of Pickering Public Library Board whi is controlled b the City.
All material inter-fund transactions and b nces are elimin ed on consolidation.
Investment in Veridian Corporation ~
The City's investment in Veridian Co ora" "acco ted for on a modified equity
basis, consistent with generally ac pted acc in principles as recommended by
PSAB for investments in govern nt business ent rprises. Under the modified
equity basis, Veridian Corporat' n's accounting Iicies are not adjusted to conform
to those of the City and inter- rganizational tr sactions and balances are not
eliminated. The City recog "zes its equity in rest in the annual net income or loss
of Veridian Corporation in " 5 lidated atement of financial activities with a
corresponding increase r de s "nvestment asset account. Dividends that
the City may receive f m Veri Cor ration and other capital transactions are
reflected as adjustm nts in the i est ent asset account.
Operations of Sch 01 Boards and t Region of Durham
The taxation, 0 er revenues, e enditures, assets and liabilities with respect to
the operation of school b rds and the Region of Durham are not reflected in
these cons Id ~ ancial atements.
Trust fu s V;
(i)
(ii)
(iii)
(iv)
Docvment in City of Pickering Notes (.' 5/21/08: 10'40 AM
FOR DISCUSSION PURPOSES ONLY
Page 5
The Corporation of the City of Pickering
Notes to the consolidated [mancial statements
December 31, 2007
1. Significant accounting policies (continued)
(b) Basis of accounting
(i) Investments
Investments are recorded at the lower of cost plus accrued' terest and mar t
value. Any premium or discount at purchase of an invest ent is amortized over
the life of the investment.
(ii) Tangible capital assets
The net impact in property taxes as a res t of the applicat" n of the capping
provisions does not affect the Consolida ~atement of inancial Activities as the
full amounts of the property taxes wer. Ie . d owe v , the capping adjustments
are reported on the consolidated St eme Financ' I Position as a receivable
from the Region.
Deferred revenue
Deferred revenues represent ser charges and ees which have been collected but
for which the related servic s have yet to be erformed. These amounts will be
recognized as revenues i h,~r t services are performed. In addition,
any contributions receiv d Wit:\wmal r, strictions are deferred until the related
expenditures are mad .
Post employment b nefits
The present valu of the cost of p viding employees with future benefits programs
is recognized a employees ear hese entitlements through service. Actuarial
gains and 105 es amortize over the average remaining service period
("ARSP"). e t ter. ined ARSP to be 16 years.
(iii)
(iv)
(v)
(vi)
t e lower of cost and net realizable value. Cost is
ted-average basis.
(vii)
ment tra sfers are recognized in the financial statements in the period in
eve ts giving rise to the transfer occur, eligibility criteria are met, and
Ie timates of the amount can be made.
The pr paration of financial statements in conformity with Canadian generally
acce ed accounting principles requires management to make estimates and
ass mptions that affect the reported amounts in the financial statements and
a companying notes. Actual results could differ from these estimates.
Document in City of Pickering Notes (: 5/21/08: 10:40 AM
FOR DISCUSSION PURPOSES ONLY
Page 6
~ i)
,'H
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
2.
Ajax Pickering Transit Authority
Effective September 4, 2001, a joint Board of Management was established b
Pickering and the Town of Ajax by way of a Merger Agreement for operating transit system
across Pickering and Ajax. Operations, under the control of the joint boar , commenced
effective January 1, 2002.
In January 2005, the Councils of the City of Pickering and the Town of jax passed a r olution
agreeing to the transfer of the responsibilities for transit services to e Regional Mu . ipality of
Durham (the "Region"). On January 1, 2006 the Ajax Pickering Tr nsyuthority (\\ TA")
transferred its operations to the Region as part of the Durham R i9?'Z~sit Co ission in
accordance with Regional By-law #85-2004. v "'0
Negotiations between the City of Pickering, Town of Ajax an the Region are ngoing as to the
ultimate realization of assets and assumption of liabilities the Durham R ion Transit
Commission and are expected to be finalized during 200 . Any remainin und balance will be
settled once negotiations with the Region are complet .
Operalions of school boards and lhe Region f D If /}
Further to Note 1 (a) (Hi) requisitions are mad by the~~ 0 Durham and School Boards
requiring the City to collect property taxes a payments in Ii of property taxes on their
behalf. The amounts collected and remitte are summarize as follows:
3.
41,472,114
495 004
41,967,118
School board
$ $
Taxation
Pa ments in lieu of taxes
73,818,524
4 888 255
78,706,779
4.
Investments ~
The investments ha e a mar alu of $47,043,975 (2006 - $51,091,578) at the end of the
year. Investments re comprise 0 ankers acceptances, medium term notes, discount notes
and bonds.
Document in City of Pickering Notes t. 5/21/08: 10:40 AM
Page 7
FOR DISCUSSION PURPOSES ONLY
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
;( "1
\..) !
5. Investment in Veridian Corporation
(a) Veridian Corporation is owned by the City of Pickering, Town of Ajax, M icipalityof
Clarington and the City of Belleville. The City has a 41 per cent inter t in Veridian
Corporation. Veridian Corporation, as a government business enter ise, is accounte for
on the modified equity basis in these financial statements. Veridi Corporation set; es as
the electrical distribution utility for a number of communities incl ding the four no ed
above and conducts non-regulated utility service ventures thro gh its subsidiari .
The following table provides condensed supplementary cons id formation
for the corporation and its subsidiaries for the year ended ec
Financial position:
Assets
Current
Capital and intangibles
other
Total assets
Liabilities
Current
Long-term debt
other
Tota/liabilities
V. Document in City of Pickering Notes (: 5/21/08: 10:40 AM
FOR DISCUSSION PURPOSES ONLY
53,948,442
60,794,000
18 293 223
133 035 665
67,285,173
24,910
22 403 660
89 713 743
222,749,408
235,271,455
6,878,200
233 235 950
8,913,705
2006
$
69,512,995
138,225,079
946 571
208,684,645
42,961,459
60,794,000
20 129 148
123 884 607
67,285,173
24,910
17489 955
84 800 038
208,684,645
223,302,423
6,823,343
221 175 551
8,950,215
Page 8
i ')
,-J_."
The Corporation of the City of Pickering
Notes to the consolidated [mandaI statements
December 31, 2007
5. Investment in Veridian Corporation (continued)
(b) City of Pickering's equity represented by:
Promisso
Investments in Veridian Corporation
Initial investment in shares of the Corporation
Accumulated income
Accumulated dividends received
Increase in value of investments
Total investment
30,496,196
8,256,018
(5,093,020)
1 108 821
34,768,015
(c) Equity in Veridian Corporation
2007
$
2006
$
Balance, beginning of year
Equity share of net income for t year
Dividend received from Veridi Co
Balance, end of year
(d)
(i)
membe of the Municipal Electric Association Reciprocal
" IE") which was created on January 1, 1987. A
exch nge may be defined as a group of persons formed for the
purpo of exchan . g eciprocal contracts of indemnity or inter-insurance with
eac other. MEARIE ovides general liability insurance to member electric utilities.
charged to each member utility consist of a levy per $1,000 of
ervice revenue bject to a credit or surcharge based on each electric utility's
e. Insurance limits of up to $30 million per occurrence are covered
An ac io has been brought under the Class Proceedings Act: 1992. The plaintiff
class eks $500 million in restitution for amounts paid to Toronto Hydro and to
othe Ontario municipal electric utilities ("LDCs") who received late payment
pe alties which constitute interest at an effective rate in excess of 60% per year,
ntrary to Section 347 of the Criminal Code. Pleadings have closed in this action.
he action has not yet been certified as a class action and no discoveries have been
held, as the parties were awaiting the outcome of a similar proceeding brought
against Enbridge Gas Distribution Inc. (formerly Consumers Gas).
V, Document in City of Pickering Notes (.' 5/21/08; 10:40 AM
Page 9
FOR DISCUSSION PURPOSES ONLY
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
5. Investment in Veridian Corporation (continued)
(d)
(ii)
(iii)
of corporate taxes
Mar 2, 2007, the Province of Ontario released the 2007 Ontario Budget. The
b ,a ounced that new rules would be put in place to limit tax deductibility for
inter st aid by municipal electric utilities ("MEUs") to municipalities. Interest
eligibl for deductibility for the Corporation and other Ontario MEUs would be
cons' tent with OEB cost-of-capital rules. Regulations for these new rules have not
ye een released by the Minister of Finance. In the absence of the new regulation,
t e amount of additional tax liability related to excess interest cannot be
etermined. The Corporation and subsidiary, VCI, paid interest to municipalities of
$4,620,344 during 2007 that may be subject to the new tax regulations.
V. Document in City of Pickering Notes C' 5/21/08: 10:40 AM
Page 10
FOR DISCUSSION PURPOSES ONLY
2008
2009
2010
2011
2012
Thereafter
31,212
697,325
688,836
616,914
149,580
76 000
2,959,867
7 ~
f, if
,,) .
The Corporation of the City of Pickering
Notes to the consolidated [mancial statements
December 31, 2007
5. Investment in Veridian Corporation (continued)
(e) Lease commitments
Future minimum lease payment obligations under operating leases aJ;
6.
Promissory notes receivable If /)
Promissory notes are payable by Veridian Cor ration ~ri an Connections Inc. in the
amount of $7,095,000 and $17,974,000 res ectively, with an nterest rate of 7.6% and
maturity dates of November 1, 2009. The promissory no s are convertible into common
shares at the option of the holder at the te of 1 comma share for every $1,000 of principal
:::e:::t:::~:u~ or before the mat it~
7.
2007 2006
$ $
23,528,009 22,341,331
1,557,607 1,993,928
19,166
523,014 771,076
2,144,075 1,455,769
2 129 222 1 868 148
29,881,927 28,449,418
2 543 014 984 874
32,424,941 29,434,292
V. Document ill City of Pickerillg Notes C- 5/21/08; 10:40 AM
Page 11
FOR DISCUSSION PURPOSES ONLY
7 C-
,) ,)
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
7. Deferred revenue (continued)
Continuity of deferred revenue is as follows:
Restricted funds received
General funds received
Interest earned
8. Interfund loans
V. Document in City of Pickering Notes (; 5/21/08; 10:40 AM
FOR DISCUSSION PURPOSES ONLY
1 108 004
4 196 153
2007 2006
$ $
1,903,668 2,470,785
1,732,892 1,867,264
442,584 392,319
66,956 82,681
38 000
4,184,100 4 813,049
Page 12
1 /
:) b
9. Post-employment benefit liability
(a) Post-employment benefit liability
The City makes available to qualifying employees who retire before t e age of 65, the
opportunity to continue their coverage for such benefits as extende health and dru .
Coverage ceases at the age of 65. Dependent on eligibility, healt coverage may a
shared financial responsibility between the City and the retired mployees, The Ity also
provides full time and permanent part-time employees a sick 'me entitlement nd any
unused entitlement is accumulated year to year. This accu I (j entitleme t is not
vested and therefore does not get paid out at the time of r: tir nt or ter /nation. The
most recent actuarial valuation of the post-employment en erf rmed at
January 1, 2004.
Information about the City's benefits liability is as fo ows:
The Corporation of the City of Pickering
Notes to the consolidated [mandaI statements
December 31, 2007
2006
$
2,050,400
292 850
2 343,250
1,999,100
317850
2,316,950
yed in the actuarial valuations are as follows:
(i)
(Ii)
were assumed to increase at 10% in 2005 and decrease by 1%
per year to an ultimate rate of 5% per year in 2010 and thereafter.
V, Document in City of Pickering Notes (: 5/21/08: 10:40 AM
Page 13
FOR DISCUSSION PURPOSES ONLY
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
7- 'j
,,/ '
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 u der the Workpla e
Safety & Insurance Act and follows a policy of self insurance for all . s employees.
Information about the City's WSIB liability is as follows:
10. Long-term liabilities
(a) The balance of I ng
is made up of the following:
8,796,011
Document in City of Pickering Notes (.. 5/21/08; 10:40 AM
FOR DISCUSSION PURPOSES ONLY
2006
$
2007
$
2006
$
9,929,000
page 14
1 (~
,J C
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
10. Long-term liabilities (continued)
(b) The above long-term liabilities have maturity dates of July 15, 2009, D ember 23, 2009
July 12, 2011, 2016 and 2021, November 1, 2012, July 15, 2014 and ecember 23, 20
with various interest rates ranging from 3.6% to 5.6%. Principal re yments are
summarized as follows:
2008
2009
2010
2011
2012
Thereafter
1,190,648
1,248,393
1,026,228
1,077,159
2,094,189
2 159 394
8796,011
(c)
Long-term liabilities include a principal su
which may be raised by the issuance of d
10 years.
The above long-term liabilities have een approved b't; Council by-law. The annual
principal and interest payments re ired to service ese liabilities are within the annual
debt repayment limit prescribed the Ministry of unicipal Affairs and Housing.
Interest expense recorded in t e ye~ t these long-term liabilities is $474,451
(2006 - $440,813). \S /
(d)
(e)
11. Amounts to be recovered
2007 2006
$ $
2,164,250 2,137,950
4,184,100 4,813,049
8,796,011 9,929,000
643 045 690 331
15,787,406 17 570 330
12.
The City's fund alances are comprised of the following:
(a) Opera ng Fund balance
2007
$
2006
$
For general reduction of taxation
(51,077)
(50,232)
V, Document in City of Pickering Notes (: 5/21/08: 10:40 AM
FOR DISCUSSION PURPOSES ONLY
$
page 15
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
12. Municipal fund balances at the end of the year (continued)
(b) Capital Fund balance
Funds available for acquisition of
tangible capital assets
Acquisition of tangible capital assets
expected to be
Financed by long-term liabilities
Financed by taxation or user charges
Financed by grants
Financed b donations and contributions
(c) Reserves and Reserve Funds
V, Document in City of Pickering Notes C' 5/21/08: 10:59 AM
FOR DISCUSSION PURPOSES ONLY
5&,356
(~2~7.
(50,8 0)
2007
$
400,000
951,391
683,214
1,328,080
15,491,176
745,244
120,999
713,821
122,547
55,000
308 243
20 919 715
180,880
1,458,193
119,057
1,103,109
146 195
3007434
23,927,149
2006
$
400,000
951,391
685,715
6,356,615
6,910,981
809,654
120,999
474,484
72,547
30,000
833 243
17645629
194,175
1,394,511
78,989
834,922
2 502 597
20,148,226
Page 16
",
4 f I
. ,.J
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
13. Pension agreements
The municipality makes contributions to the Ontario Municipal Employees Reti ment Fund
(OMERS), which is a multi-employer plan, on behalf of the members of its s ff. The plan is
defined benefit plan which specifies the amount of the retirement benefit t be received by
employees based on the length of service and rates of pay.
Contributions on account of current service for 2007 were $1,828,005 2006 - $1,705,
14. Trust Funds I d
Trust funds administered by the municipality amounting to $ 7,27f(~ $ 68,567) have
not been included in the Consolidated Statement of Financi Position nor hall their operations
been included in the Consolidated Statement of Financial ctivities.
Classification of expenditures by object ~
The Consolidated Statement of Financial Activitie pre . he ex nditures by function; the
following classifies those same expenditures by bject:
15.
16.
1: ansactions
Revenues
Interest 0 promissory notes
Propert taxes levied
Expens
Ele rical energy and services
Balan es
A ounts payable
romissory notes receivable
Document in City of Pickering Notes (.' 5/21/08; 10:40 AM
FOR DISCUSSION PURPOSES ONLY
2007
$
35,963,876
11,881,810
2,054,598
961,143
201,718
10 679 557
61 742 702
2007
$
1,905,244
42,093
1,919,134
393,505
25,069,000
2006
$
32,114,799
17,386,515
1,721,394
1,097,144
161,870
8 690 656
61172 378
2006
$
1,905,244
40,366
1,931,707
175,508
25,069,000
Page 17
17. Guarantees
In the normal course of business, the City enters into agreements which cant
The City's primary guarantees are as follows:
(i) The City has provided indemnities under lease agreements for the e of various fac' Ities
or land. Under the terms of these agreements the City agrees to 'ndemnify the
counterparties for various items including, but not limited to, al iabilities, loss, s its, and
damages arising during, on or after the term of the agreemen . The maximum mount of
any potential future payment cannot be reasonably estimat ~
(Ii) The City indemnifies employees and elected officials for v rio s incl ing, but not
limited to, all costs to settle suits or actions due to asso iation with . y, subject to
certain restrictions, The City has purchased liability i urance to mitig e the cost of any
potential future suits or actions. The term of the in mnification is n explicitly defined,
but is limited to the period over which the indemn' led party served s an employee or
elected official of the City. The maximum amou of any potentia future payment cannot
be reasonably estimated. ~
(Iii) The City has entered into agreements that ay' I inde ities in favour of third
parties, such as purchase and sale agree nts, c entia' y agreements, engagement
letters with advisors and consultants, ou ourcing ag nts, leasing contracts,
information technology agreements an service agreem nts. These indemnification
agreements may require the City to mpensate coun rparties for losses incurred by the
counterparties as a result of breac s in representa ' n and regulations or as a result of
litigation claims or statutory sanc ons that may b suffered by the counterparty as a
conseq. uence of the transaction Th!:2f th se indemnities are not explicitly defined
and the maximum amount of ny po i ursement cannot be reasonably
estimated. .
The nature of these inde nification agr e ents prevents the City from making a
reasonable estimate of e maximum ex osure due to the difficulties in assessing the
amount of liability wh' h stems from t unpredictability of future events and the
unlimited coverage er to counte arties. Historically, the City has not made any
. significant payme s such or imilar indemnification agreements and therefore no
amount has bee a lance sheet with respect to these agreements.
41
The Corporation of the City of Pickering
Notes to the consolidated financial statements
December 31, 2007
18.
named as defendant in certain legal actions In which damages have been
of th se actions is not determinable as at the date of reporting and
o prov ion as been made in these financial statements for any liabilities which
19. udget figures
The approved erating and capital budgets for 2007 are reflected on the Consolidated
Schedule of erating Fund Financial Activities and Fund Balance, Consolidated Schedule of
Capital Fun Financial Activities and Fund Balance, and the Consolidated Statement of Financial
Activities. The budgets established for the capital fund operations are on a project-oriented
basis, t costs of which may be carried out over one or more years and, therefore, may not be
comp able with the current year actual amounts. As well, the municipality does not have a
bud t for activity within Reserves and Reserve Funds, with the exception being those
tr sactions which flow through either the operating or capital fund budgets. Budget figures
ve been reclassified for the purposes of these statements to comply with PSAB reporting
principles.
Document in City of Pickering Notes (; 5/21/08; 10:40 AM
Page 18
FOR DISCUSSION PURPOSES ONLY
20. Tangible capital assets
For fiscal years commencing after January 1, 2009, the City will be required t report tangible
capital assets in its consolidated financial statements in accordance with Th ublic Sector
Accounting Handbook of the Canadian Institute of Chartered Accountants ction PS3150 -
Tangible Capital Assets. The City is currently working toward obtaining e necessary
information in order to comply with PS 3150. For 2007, Public Sector ideline 7 requir s the
disclosure of tangible capital asset information in the notes to the fin cial statements 0 the
extent that reliable information is available. The City is currently w rki on a plan
implement PS3150 but as at December 31, 2007 the City does no h detailed t gible capital
asset information to disclose. For the year ended December 31 0 ible c ital
expenditures incurred during the year are recorded as capital xpenaitur . t e consolidated
statement of financial activities.
42
The Corporation of the City of Pickering
Notes to the consolidated fmancial statements
December 31, 2007
21. Comparative figures
Certain comparative figures have been reclassified
statement presentation.
current year financial
Document in City of Pickering Notes (.' 5/21/08: 10:40 AM
page 19
FOR DISCUSSION PURPOSES ONLY
.",.~.~"",,,---~-~
,1 7
'-& .")
, ~,
The Corporation of the City of Pickering
Consolidated schedule of operating fund financial activities and fund b ance
year ended December 31, 2007 Sc edule I
Revenues
Residential and farm taxation
Commercial and industrial taxation
Taxation from other governments
User charges
Government grants and fees
Other contributions and donations
Investment income
Penalties and interest on taxes
Fines
Interest on promissory notes
Other
Total revenues
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
Budget
(UnaUdited)
$
(Note 19)
11,813,917
14,330,659
6,109,154
119,365
385,401
16,529,901
1 774 748
51 063 145
7,401,024
,474,748
6,683,041
6,937,311
7,194J85
352,672
98A43
lA04,505
1,698,253
590,341
1,905,244
591,612
53,930 955
15,302,981
13,513,808
5,308,877
46,718
333,056
16,047,858
1 928 424
52481,722
1 449,233
1,000,000 1,640,000 2A60,000
(2,343,239) (2,242,532) (2,668,858)
1,053,001 (4,456,014) 1,131,597
(1,132,989) (1,132,989)
(1,101,847) (1,225,949)
(47,286)
26,300
36,601
(2,525,074) (7,401,869
(110,000) (845) (51,503)
110,000 1,271
(51,077) (50,232)
FOR DISCUSSION PURPOSES ONLY
Page 20
'14
it
The Corporation of the City of Pickering
Consolidated schedule of capital fund financial activities and fund bal ce
year ended December 31, 2007 Scl dule II
Revenues
Grants
Other contributions and donations
Development charges and developer
contributions earned
Other
Total revenues
Expenditures
General government
Protection to persons and property
Transportation services
Environmental services
Social and family services
Recreation and cultural services
Plannin and develo ment
Total ex enditures
Net ex enditures
Budget
Unaudited
$
(Note 19)
969,750
192,500
,014,811
1,342,124
5,978,241
132,408
25,029
2,186,944
10 679 557
1,552,588
10 545
4441 727
1,280,176
1,739,315
3,570,541
91,493
14,945
1,993,404
782
8 690 656
2,283,556 2,242,532 2,668,858
1,166,125 978,374 (433,637)
2,696,700 2,792,000
803 000 597000 352000
6 949 381 3 817 906 5,379 221
(2,915,047) 1,130,292
5 209 345 4 079 053
2,294,298 5,209,345
FOR DISCUSSION PURPOSES ONLY
Page 21
~
The Corporation of the City of Pickering
Consolidated schedule of reserves and
reserve funds financial activities and fund balance
year ended December 31, 2007
Revenues
Other contributions and donations
Investment income
Net transfers from (to)
other funds
Operating Fund
Ca ital Fund
Total net transfers
Change in reserves and
reserve fund balance
Reserves and reserve funds,
be innin of ear
Reserves and reserve funds,
end of year
(577,211)
20 148 226
20 725 437
23,927,149
20,148,226
Page 22
FOR DISCUSSION PURPOSES ONLY
LJ
Financial Statements of
CITY OF PICKERI G ill
PUBLIC LIBRAR BOA~
December 31,2007
DS Document in 2211 Pickering-City-Public-Library-Board-127 (; 5/27/08: 8:13 AM
FOR DISCUSSION PURPOSES ONLY
Auditors' Report
/~1 '7
Deloitte & To he LLP
5140 Yonge treet
Suite 170
Toronto N M2N 6L7
Canad
We conducted our audit in accordance th Canadian nerally accepted auditing standards.
Those standards require that we plan and p Ol~'t t obtain reasonable assurance whether the
financial statements are free of material I Isstate . A audit includes examining, on a test basis,
evidence supporting the amounts and d' closures the mancial statements. An audit also includes
assessing the accounting principles u d and signi ca t estimates made by management, as well as
evaluating the overall financial state nt presentation.
In our opinion, these financial s tel
the City of Pickering Public L' r
the changes in its financial ositt
accepted accounting princi es.
s present airly, in all material respects, the financial position of
B a ecember 31, 2007 and the results of its operations and
r the y, ar then ended in accordance with the Canadian generally
FOR DISCUSSION PURPOSES ONLY
/1 e
CITY OF PICKERING
PUBLIC LIBRARY BOARD
Table of Contents
December 31, 2007
Statement of Financial Position
Statement of Financial Activities and Change in Fund Balance
2
Notes to the Financial Statements
3-6
D Document in 2211 Picke,.ing-City-Public-Librory-Board-127 C 5/27/08: 8:13 AM
FOR DISCUSSION PURPOSES ONLY
Cash
Accounts receivable
Due from City of Pickerin
o
CITY OF PICKERING
PUBLIC LIBRARY BOARD
Statement of Financial Position
December 31, 2007
2007
FINANCIAL ASSETS
$
LIAB~ITIES
CURRENT
Accounts payable and accrued liabilities $ 155,502
Deferred Revenue
Due to the Government of Canada 409
Post-employment benefits obli ation (Note 3) 123,000
278,911
NET FINANCIAL LIABILITIES (169,482) (196,364)
NON-FINANCIAL ASSETS
Prepaid ex ense $ 52,182 $ 73,364
NET LIABILITIES $ (117,300) $ (123,000)
BOARD POSITION
AMOUNTS TO BE RE
$ (117,300)
$ (123,000)
tin 2210 Pickering-City-Public-Library-Boord-127(#7044)' 5/27/2008; 8:13 AM
Page 1 of6
FOR DISCUSSION PURPOSES ONLY
\)
CITY OF PICKERING
PUBLIC LIBRARY BOARD
Statement of Financial Activities and Change in Fund Balanc
Year ended December 31, 2007
2007
Budget
(unaudited)
(Note 7)
Actual
REVENUES
City of Pickering grants - operating
City of Pickering grants - capital
Federal grants
Province of Ontario grants
Fines and other recei ts
$
4,052,450
186,750
$
$ 3,9 4,325
40,930
19,114
109,725
196,910
4,421,004
EXPENDITURES
Operating
Salaries
Salaries and wages
Fringe benefits
Material, supplies and utilities
Books
Utilities
Other supplies
2,582,430
531,921
3,114,351
502,541 526,327
192,249 205,422
53,315 49,125
748,105 780,874
223,235 227,773 189,704
43,898 42,013 40,131
13,600 10,397 11,817
12,600 17,880 10,103
12,750 10,562 11,885
8,295 7,457 4,183
4,706 6,248 5,509
38,759 52,501 58,509
8,000 6,873 14,806
1,763
15,763 16,679 15,228
381,606 400,146 361,875
4,374,057 4,324,986 4,257,100
186,750 197,880 140,930
4,560,807 4,522,866 4,398,030
26,882 22,974
(5,700) (5,800)
(21,182) (17,174)
$
$
$
in 2210 P;ckering-City-Public-Library-Board-127(#7044): 5/27/2008: 8:13 AM
Page 2 of6
FOR DISCUSSION PURPOSES ONLY
-'..f ,.-....i.~_~__;;.~.~__"-__.~....""',.."'"e<'''';-;
The financial statements of the City of Pickering Public Library Board (the' ibrary Board") re the
representations of management prepared in accordance with Can ian generally ccepted
accounting principles for local government established by the Publ" Sector Accoun ng Board
(PSAB) of the Canadian Institute ofChm1ered Accountants. . I d
Significant accounting policies adopted by the Library Board are s fo1l6~
'1
I
CITY OF PICKERING
PUBLIC LIBRARY BOARD
Notes to the Financial Statements
December 31, 2007
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
(b) Tangible capital assets
n r tangible capital assets are not recorded
, al as ets acquired during the year are rep0l1ed on
ng in fund balance as capital expenditures in the
(c)
(d)
of fi ancial statements in confonnity with Canadian generally accepted
pIe requires management to make estimates and assumptions that affect the
assets, liabilities and the disclosure of contingent assets and liabilities at
the date of t le nancial statements and the rep0l1ed amounts of revenues and expenditures
during the per' d. Actual results could differ from those estimates.
Capital ex nditures were incurred to acquire furniture and equipment in the amount of $197,880
(2006 - $ ilO,930).
D Document in 2211 Pickering-City-Public-Library-Boord-127 (.- 5/27/08: 8:13 AM
Page30f6
FOR DISCUSSION PURPOSES ONLY
r~,
.</
The Library Board makes available to qualifying employees who retire b ore the age of
opportunity to continue their coverage for such benefits as extended he th and drugs. overage
ceases at the age of 65. Dependent on eligibility, health coverage ay be a share financial
responsibility between the Library Board and the retired employ s. >rhe LibratJ5 Board also
provides full time and permanent patt-time employees a sick th e 'tlement aJ any unused
entitlement is accumulated year to year. This accumulated entit m i ves d and therefore
does not get paid out at the time of retirement or termination. T e most recen c arial valuation of
the post-employment benefits was performed at Januaty 1,20 21-.
CITY OF PICKERING
PUBLIC LIBRARY BOARD
Notes to the Financial Statements
December 31, 2007
3. POST EMPLOYMENT BENEFITS OBLIGATION
Information about the Library Board's post employment b nefits liabilities' as follows:
Post-employment benefits liability, beginning of~ ar
Current service costs
AmOltization of actuarial losses
Interest expense
Benefits aid during the year
Post-employment benefits liability, en
2006
123,000 $ 128,800
15,800 14,900
800 800
8,000 8,400
(30,300) (29,900)
$ 117,300 $ 123,000
2007
2006
$ 126,200
(8,900)
$ 117,300
$ 132,700
(9,700)
$ 123,000
loyed in the actuarial valuations are as follows:
(a)
The current ental cost trend cost at January 1, 2004, the date of the most recent actuarial
valuation, as 4.5% per annum.
H Ith costs were assumed to increase at 10% in 2005 and decrease by 1 % increments per year
an ultimate rate of 5% per year in 2010 and thereafter.
D Document in 2211 Pickering-City-Public-Library-Boord-127 (: 5/27/08: 8:13 AM
Page 4 of6
FOR DISCUSSION PURPOSES ONLY
The Library Board makes contributions to the Ontario Municipal Emp yees Retiremen Fund
(OMERS), which is a multi-employer plan, on behalf of eligible member of its staff. The Ian is a
defined benefit plan that specifies the amount of the retirement be efit to be recei ed by the
employees based on the length of service and rates of pay. I ;(
Contributions in the amount of $149,696 (2006 - $143,143) wer paM/t~R on behalf of its
members during the year.
/~J
CITY OF PICKERING
PUBLIC LIBRARY BOARD
Notes to the Financial Statements
December 31, 2007
4. PENSION AGREEMENTS
5. STATEMENT OF CHANGES IN FINANCIAL POSI
the related information is
A statement of changes in financial position has not ~h>sented,
readily determinable from the financial statements P' sel~
GUARANTEES
6.
In the normal course of business, the brary Board el ers into agreements, which contain
guarantees. The Library Board's primary, ouarantees are as ollows:
(i) The Library Board indemnifies mplo~o I'd members for various items including, but
not limited to, all costs to s Ie sui~~~~ti~s due to association with the Library Board,
subject to certain restrictiOl . The Library Bard has purchased liability insurance to mitigate
the cost of any potentia future suits or ctions. The term of the indemnification is not
explicitly defined, but' limited to the riod over which the indemnified party served as an
employee or board 1 e of the Li rary Board. The maximum amount of any potential
future payment ca ot IX stimated.
(ii) i 0 agreements that may include indemnities in favour of third
pm1ies, such s purchase and Ie agreements, confidentiality agreements, engagement letters
rs and consul nts, outsourcing agreements, leasing contracts, information
agreements a a service agreements. These indemnification agreements may
ibrm}' Bard to compensate counterparties for losses incurred by the
a r ult of breaches in representation and regulations or as a result of
o statutory sanctions that may be suffered by the counterpmiy as a
t transaction. The tenns of these indemnities are not explicitly defined and
aunt of any potential reimbursement cannot be reasonably estimated.
he nature of t se indemnification agreements prevents the Librm}' Board from making a
reasonable esti ate of the maximum exposure due to the difficulties in assessing the amount of
liability, whi stems from the unpredictability of future events and the unlimited coverage offered
to counterp ties. Historically, the Library Board has not made any significant payments under such
or simila mdemnification agreements and therefore no amount has been accrued in the Statement of
Financ' 1 Position with respect to these agreements.
D Document in 2211 Pickering-City-Public-Library-Boord-127 {.. 5/27/08; 8:13 AM
Page50f6
FOR DISCUSSION PURPOSES ONLY
/t
CITY OF PICKERING
PUBLIC LIBRARY BOARD
Notes to the Financial Statements
December 31, 2007
7. BUDGET FIGURES
Budgets established for capital expenditures are set on a project-oriented sis, the costs of hich
may be carried out over one or more fiscal years and may not be compa ble with the cur ent year
actual amounts.
8. TANGIBLE CAPITAL ASSETS
For fiscal years commencing after January 1, 2009, the Libr ry Board will b required to repOlt
tangible capital assets in its financial statements in accorda ce with The Pub c Sector Accounting
Handbook of the Canadian Institute of Chartered AccoUl nts section PS 50 - Tangible Capital
Assets. The Library Board is currently working toward t' ing the nec sary information in order
to comply with PS 3150. For 2007, Public Sector id 'ne requir the disclosure of tangible
capital asset infonnation in the notes to the fi nc' tement to the extent that reliable
infonnation is available. The Library Board is c rrently 'ng n a plan to implement PS3150
but as at December 3 1, 2007 the Library B rd does not e detailed tangible capital asset
infonnation to disclose. For the year end December 3 I, 007 tangible capital expenditures
incurred during the year are recorded as cag' al expenditures 1 the statement of financial activities.
COMPARATIVE FIGURES ~
Certain of the prior year's comp ative figu~ha~ been reclassified to confonn to the current
year's financial statement presen tion.
9.
~
D Document in 2211 Pickering-City-Public-Librory-Boord-127 (.' 5/27/08: 8:13 AM
FOR DISCUSSION PURPOSES ONLY
Page 6 of6
Financial Statements of
THE CORPORATIO
THE CITY OF PIC
TRUST FUNDS
DS Doa.unent in 2210 2007 Trust Notes (: 5/27/08: 8:00 AM
FOR DISCUSSION PURPOSES ONLY
'-) b
Deloitte & T che LLP
5140 Yong Street
Suite 17
Torant
Cana
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 T st unds of the orporation of the City of
Pickering as at December 31, 2007 and the statement of fin ci ac' vities a fund balances of the Trust
Funds for the year then ended. These financial st em re th responsibility of the City's
management. Our responsibility is to express an opinio on these statements based on our audit.
We conducted our audit in accordance with
Those standards require that we plan and perfo
financial statements are free of material mis ate ent. An a it includes examining, on a test basis,
evidence suppOlting the amounts and disci sure i 111 cial statements. An audit also includes
assessing the accounting principles used and sig cant stimates made by management, as well as
evaluating the overall financial statemen presentatio'
FOR DISCUSSION PURPOSES ONLY
THE CORPORATION OF THE CITY OF PICKERING
TRUST FUNDS
Statement of Financial Position
December 31, 2007
FINANCIAL ASSETS
Investments
Interest receivable
Loans receivable
TRUST FUND POSITION
OHRP
2007
Dorothy Card
Estate
2006
$ $ 256,674 256,674
18,360 8,222
2,240 3,671
$ 2,240 $ 268,567
$ 2,240 $ 268,567
tin 22112007 Trust FS (#7043); 5/27/2008: 7:59 AM
Page 1 of3
FOR DISCUSSION PURPOSES ONLY
) >{
" \.'
THE CORPORATION OF THE CITY OF PICKERING
TRUST FUNDS
Statement of Financial Activities and Fund Balances
Year ended December 31, 2007
REVENUES
Interest
2007
Dorothy Card
OHRP Estate
$ 314 $
1,658
87
1,745
(1,431)
EXPENDITURES
Provincial payments
Administration charges
NET REVENUES (EXPENDITURES)
FUND BALANCE, BEGINNING
OF YEAR
FUND BALANCE, END OF YEAR
FOR DISCUSSION PURPOSES ONLY
9,641
1,766
93
1,859
7,782
268,567
$ 277,274
260,785
$ 268,567
Page 2 of3
THE CORPORATION OF THE CITY OF PICKERING
TRUST FUNDS
Notes to the Financial Statements
December 31, 2007
1. ACCOUNTING POLICY
The financial statements of the Trust Funds of the Corporation of the ty of Pickering re the
representations of management prepared in accordance with Ca aian generally
accounting principles.
Significant accounting policies adopted include:
Basis of accounting
Investments
Investments are recorded at cost.
roximates their fair value.
2. ONTARIO HOME RENEWAL P
'vable at ecember 31, 2007 are comprised entirely of repayable loans of
). the event of the sale or lease of the home or in the event of the
o upy the home, the balances of the repayable loan immediately become
e omeowner.
3.
The City of p' ering has established a trust fund for the Dorothy Card Estate for the care and
upkeep of t destitute elderly. The fund balance is comprised of investments and accumulated
interest am unting to $275,034 (2006 - $264,896).
A atement of cash flows has not been presented as the information is readily determinable from
e financial statements presented.
D Document in 22102007 Trust Notes t. 5127/08; 8;00 AM
Page 3 of3
FOR DISCUSSION PURPOSES ONLY