Financial Report and Consolidated Financial Statements

Transcription

1 Brantford, Ontario Financial Report and Consolidated Financial Statements For the year ended December 31, 2014 Prepared by Corporate Services Department, City of Brantford

2 Financial Report and Consolidated Financial Statements For the Year Ended December 31, 2014 The Corporation of the City of Brantford Brantford, Ontario, Canada Prepared by Corporate Services Department, City of Brantford

3 Table of Contents INTRODUCTION... Welcome to Brantford... 5 Members of Council... 6 Corporate Organizational Chart... 7 Message from the City Treasurer, Director of Finance... 8 FINANCIAL SECTION CITY OF BRANTFORD CONSOLIDATED FINANCIAL STATEMENTS Management Report Independent Auditors Report Consolidated Statement of Financial Position Consolidated Statement of Operations Consolidated Statement of Changes in Net Financial Assets Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Schedule of Tangible Capital Assets Schedule of Segmented Information CITY OF BRANTFORD TRUST FUNDS FINANCIAL STATEMENTS...56 BRANTFORD PUBLIC LIBRARY FINANCIAL STATEMENTS...62 BRANTFORD MUNICIPAL NON-PROFIT HOUSING CORPORATION FINANCIAL STATEMENTS...76 JOHN NOBLE HOME FINANCIAL STATEMENTS...89 BRANT COUNTY HEALTH UNIT FINANCIAL STATEMENTS BRANTFORD DOWNTOWN BUSINESS IMPROVEMENT AREA FINANCIAL STATEMENTS STATISTICAL INFORMATION... Five-Year Financial Review

4 INTRODUCTION

5 Welcome to Brantford Situated on the picturesque Grand River, the City of Brantford is located in the heart of Southern Ontario. Brantford is known as The Telephone City, as it was here in 1874 where Alexander Graham Bell first conceived the idea for the telephone. Brantford is also hometown to hockey's greatest legend, Wayne Gretzky. Walter Gretzky, Canada s most famous hockey Dad, still calls our City home. Today, Brantford is a vibrant community with its central location making it an ideal place to live, work, play and visit. Location Strategically centred in the largest industrial corridor of the free world, and ideally situated 55 miles southwest of Toronto and less than 90 minutes from Buffalo, N.Y., Brantford offers manufacturers, distributors and service companies the best of both worlds. Brantford is directly connected to Trans-Canada Highway #401 immediately to the west, and the Queen Elizabeth Way to the East by Highway 403. Essential Services Police Fire & Rescue Affordable Housing Ontario Works Child Care Higher Education The City of Brantford is proud to be home to three post-secondary institutions. Laurier Brantford Conestoga College Nipissing University Water & Waste Water Waste Management Transportation Services Public Transit Population Population: 97,499 Growth rate : 3.8% Employment Brantford has a local workforce of over 74,000 and over 800,000 within a 30-minute commuter shed. Brantford s top business employers include: Ferrero Canada Ltd. OLG Brantford Casino S.C Johnson and Son Ltd. NCO Financial Services Western Waffles Page 5

6 Members Of Council Brantford s City Council is comprised of the Mayor and ten City Councillors (two from each of the City s five Wards.) Mayor Chris Friel Ward 1 Larry Kings Ward 1 Rick Weaver Ward 2 John Utley Ward 2 John Sless Ward 3 Dan McCreary Ward 3 Greg Martin Ward 4 Richard Carpenter Ward 4 Cheryl Antoski Ward 5 David Neumann Ward 5 Brian Van Tilborg Page 6

7 Corporate Organizational Chart Chief Administrative Officer Geoff Rae Corporate Policy & Management Practices Corporate Communications Corporate Customer Service Corporate Services Darryl Lee Public Works Russ Loukes Public Health, Safety & Social Services Josephine Atanas Community Services Greg Dworak Accounting Budgets & Financial Analysis City Clerk's Office Customer Service - Water Human Resources IT Services Legal and Real Estate Provincial Offenses Office Purchasing Tax Office Brantford Farmers Market Brantford Municipal Airport Design and Construction Engineering Environmental Services Fleet Parking Facilities and Asset Management Operational Services Transit Transportation Services Ontario Works Housing Services Child Care Services Brantford Fire Department Brantford Police Services Brantford Public Library John Noble Home Brantford Cultural Network Brownfields Building Business Resource Centre Current Planning Services Development Approvals Downtown Revitalization Economic Development and Tourism Golf Operations Growth Management Heritage Parks Services Recreation Services Policy Planning, Heritage & Special Projects Property Standards By-law Enforcement Sanderson Centre Page 7

8 Message from the City Treasurer, Director of Finance It is with great pleasure that I present the 2014 Annual Financial Report for the Corporation of the City of Brantford. This report provides stakeholders with highlights of the City s 2014 financial results, including the strategic financial plan, financial management processes, significant achievements for the year, and our priorities for the future. Limited financial resources have been and will continue to be a major issue for the City of Brantford. At the same time, we are facing the need to deal with aging infrastructure, downloaded services from senior levels of government, and competing interests for improved and new services. The City had developed a strategic plan to determine where to focus our limited resources and provide a balance between service delivery and financial stability. The City of Brantford s strategic goals are guided by three fundamental elements our community vision, our corporate mission, and our long-term desired goals. Community Vision Brantford- proud, vibrant, progressive... a GRAND" community for living, learning, working and playing. Corporate Mission The City of Brantford, in partnership with our community, is committed to responsible leadership through sound fiscal management and the delivery of quality programs and services for the citizens of Brantford Long-Term Desired Goals Economic Vitality & Innovation High Quality of Life & Caring for All Citizens Managed Growth & Environmental Leadership Excellence in Governance & Municipal Management Today, these goals continue to reflect the needs and vision of our community and will be used to assist Council in setting priorities and utilizing resources during the remainder of their term through to Strategic actions have been proposed that would continue to work towards our community s long term desired outcomes. Page 8

9 Accomplishments & Initiatives Office of the Mayor & Chief Administrative Officer COMMUNITY ENGAGEMENT INITIATIVE Involving the Community in discussions on matters that affect them is a fundamental element of representative democracy. As part of the City of Brantford Community Strategic Plan, the City of Brantford is committed to Excellence in Governance and Municipal Management. Specifically, the City is committed to engaging and informing the citizens of Brantford about their community and their City government; the City of Brantford will be known for its open and accessible government. In order to ensure community involvement, the City of Brantford has developed a Community Involvement Policy, Framework and a Community Involvement Toolkit. The goal of this initiative is to provide decision makers, staff of the City of Brantford, and most importantly, our citizens and stakeholders with a consistent genuine approach that will set a standard of excellence for community involvement plans in the City. Other accomplishments & initiatives Launched Customer One Strategy including investment of approximately $3.8 million in technology to support the initiative (new Unified Communications telephone system and Customer Relationship Management tools) supported by corporate-wide customer service training Commission Priorities for 2015 Develop 4 key strategic initiatives that focus on engaging residents, service organizations, business community, educators and other stakeholders to create a community where people want to live, work, learn, play and grow Complete Strategic Growth Negotiations with neighbouring municipalities Develop Corporate Communication Strategy Review City services and programs to adapt to changing demographics and ensure integration with City initiatives Explore opportunities for lean practices as part of ongoing operational efficiency review Page 9

10 Corporate Services ONLINE PORTAL The mybrantford.ca is a user-friendly web portal that was established to allow the residents of Brantford to create an online connection to the City of Brantford. In 2014, the portal was expanded to allow for online bill payment services, making it easier and more convenient for residents to pay and register for services online. This tool is also utilized as a mechanism for community engagement when seeking feedback from the community as well as for information sharing. Other accomplishments & initiatives 2014 Municipal Election-Introduction of online voting Developed 10 year Capital Plan Upgrade of the City s data network infrastructure both downtown and at remote offices Unified Communications-Finalization of project funding, implementation plan and project kickoff Approval of the City of Brantford Accessibility Plan Completed an in-depth Human Resources Master Plan City s Asbestos Management Plan was updated and implemented across the Corporation Completion of Development Charges Background Study Commission Priorities for 2015 Review the City s Strategic Financial Plan Expand Asset Management Strategy to include all divisions across the Corporation Completion of a required pay equity and compensation review for all of the City s exempt positions Negotiation of a new 5 year Enforcement Services Agreement with the Brant County SPCA for the provision of Animal Control Services for the City Implementation of updated software within the City s Finance Department for the budgeting and accounts payable processes Refresh Landfill Masterplan Page 10

11 Public Works WATER TREATMENT PLAN OPTIMIZATION Through a comprehensive Water Treatment Plant Optimization Study supported by Council, the City of Brantford was able to defer $27.75 million in capital expenditures by enhancing performance through improved process control. Other accomplishments & initiatives Established Asset Management Department and completed comprehensive Asset Management Plan Full-Corridor reconstruction of 15 sites and road resurfacing of 17 sites Repaired 2,536 potholes Pilot project for reloading Brantford Transit cards at Kiosk Commission Priorities for 2015 Completed detail design and construction of Shellard Lane Improvements Replaced 3,396 panels of sidewalk Installed cameras and new digital radio equipment on Brantford Lift equipment Implemented Enhanced Multi-residential Recycling Program Implemented an Enhanced Sewer use program to address overload/treatment issues Activity Tracking Tool and continuing condition assessments to support the Asset Management Strategy Continue developing Accommodation Strategy for all City staff and services Veterans Memorial Parkway improvements and extension Wastewater Treatment Optimization Study Purchase 3 new conventional transit and 5 new specialized transit buses Develop and Review Green Infrastructure Strategy Site security and accessibility improvements at City facilities Ashgrove Street lighting upgrades and replacements Page 11

12 Public Health, Safety & Social Services NEIGHBORHOOD HUB PARTNERSHIP A neighbourhood hub is a neutral space where residents can come together that engage in enjoyable, enriching experiences. Hubs are located in logical community locations and are in walking distance for many residents. Through participating in Hub activities that interest them, residents build natural networks of social connectedness and support, develop local leadership capacity, learn about services, and create healthier lifestyles. Over the long term, Hubs can become a place where people who are interested in making positive changes for themselves, their families and their community, gather. With engaged residents, neighbourhood renewal becomes possible. Other accomplishments & initiatives SAMS (Social Assistance Management System) Brantford-Brant Housing Stability Plan Completion of comprehensive Master Aging Plan Library received Award of Distinction 2014 Downtown Champion by Downtown BIA Commission Priorities for 2015 The Neighborhood Hub working project, a 3 year pilot program is a local initiative of our Social Services Department to work in partnership with three area schools to bring literacy programming to elementary students. Assisted individuals find appropriate shelter as part of the Homelessness Program Maintained occupancy rate at John Noble Home of 97% or better Establishment of Safe Brantford Office to support and coordinate long-term crime prevention initiatives Development of a Capacity Building Model to strengthen the non-profit social service sector in Brantford Develop community-wide Mental Health and Youth Services strategies Carbon Monoxide Alarm Education and Health & Wellness Program Implementation of Healthy Kids Community Challenge Strategic planning and environmental scan to support the development of the Healthy Brantford initiative Provide planning and administrative leadership for the Smart Brantford (Digital Inclusion) Initiative Fire Station relocation and Training Facility Studies Page 12

13 Community Services WAYNE GRETZKY SPORT CENTRE PROJECT City of Brantford has invested in creating a one-of a-kind world-class state of the art recreation facility that includes a new 4-pad arena, new 25 metre pool and hydro therapy pool to complement the existing 65 metre pool. The facility also features a fitness studio, fully-equipped weight room, dry land training room, indoor track, gymnasium, football field and more. The facility was completed in 2014 and is also home to our Sports Hall of Fame. Total commitment to the expansion and redevelopment of the facility was $64.3 million which included a $32.4 million commitment from the City as well as $31.9 million in funding contributions from the Federal and Provincial Build Canada Funding program. Other accomplishments & initiatives The City assisted 114 organizations granting $539,000 to support valued programs and services 8 new industries and 10 business expansions Downtown improvement grants of $884,250 were provided resulting in over $17 million in investment in the downtown area Discover Brantford blog and e-newsletter launch Established Rapid Response Team to reduce red tape for developers Revitalization of Victoria Park Northridge Renovation and Course Improvement Project completed Joint Use Agreement at Sanderson Centre Gretzky Gardenscape Project Commission Priorities for 2015 Civic Centre Front Entrance and Seat Replacement North of Shellard Recreation Centre and Sports Complex Northridge Pro Shop/Maintenance Shop project Kiwanis Field Artificial Surface Project Greenwich Mohawk and Sydenham/Pearl brownfield remediation Equipping main lobby at Sanderson Centre as a secondary performance space Page 13

14 Strategic Financial Plan The purpose of the City s Strategic Financial Plan is a framework to guide City Council and the City s departments, boards and committees in their financial planning and decision-making processes. Through this, the outcome is to improve and strengthen the long-term financial health of the City. Objectives To focus on cost efficient and effective service and program delivery. To maximize revenues through a variety of sources. To use debt in a fiscally responsible manner. To properly maintain and fund the City s physical assets. To account for and fund liabilities. To ensure that user fees remain regionally competitive. To ensure that growth will pay its fair share of growth related infrastructure costs. To establish a stable and equitable tax burden policy for the community. Financial Policies Below are some of the financial policies adopted to assist in achieving the financial objectives listed above. Financial Management Policy - Proposals for new services or service level adjustments (mandatory or discretionary) will be presented to Finance Committee for consideration. These proposals shall include impacts on the operating and capital budgets, funding sources, human resource requirements, performance measures, and long-term financial impact. Development Charges - The City will be guided by the principle that growth shall pay for itself. User Fees - The City will strive to increase user fees as a percentage of overall funding by identifying new areas where user fees can be implemented and by ensuring that existing fees are updated based on increases in the associated costs to provide the service. Asset Management and Liability Policies - The City will include increased funding within its annual Capital funding to include lifecycle costing for all of the City s tangible capital assets to be fully implemented by Capital Budget Management Process The City has moved to a Ten-Year Capital Budget process with one year of detailed project information and ten years of financial information identified. The Ten-Year Capital Budget will be reevaluated and updated on an annual basis by staff for consideration by Council. Debt Management Policies For Tax-Supported debt, debt carrying costs must be paid through the City s Operating Budget, while for Rate-Supported debt, debt carrying costs must be paid through user fees. Page 14

15 Financial Management Processes Annual Budget Process Operating Budget The City of Brantford uses the budget as a means of allocating resources to provide services, and maintain the infrastructure that residents and businesses in the City of Brantford depend on. Our operating budget process begins in June of each year with guidelines sent out to departments, and runs through until the budget is passed, which for the 2014 budget year was January 27, The operating budget provides for the everyday operation of our services. It includes salaries and benefits, the purchase of services from other groups, companies or agencies, along with costs for repairs and maintenance, materials and supplies. The budget process requires each department and commission to review their existing budgets in comparison to historical spending based on their current level of service. In addition to a review of prior spending patterns, adjustments are made for known process improvements and efficiencies, the economic indicators of the community, and business plans of the corporation as set out by Council. Department budgets are completed in early September and presented and reviewed by the Senior Management Team followed by the Estimates Committee, concluding with an approved budget. Capital Budget Our capital budget has the same timeframe as that of our operating budget, with a common goal of balancing our immediate and future needs with affordability. Capital projects and assets include such things as vehicles, roads, bridges, water lines, buildings, software systems, and equipment. At the City we use various forms of financing to support our capital plan, and this includes debt financing, funding from other levels of government, reserved (accumulated from previous planning), the levy (current year taxes), etc. The development of a long term capital forecast and the related financing strategy is needed to ensure our municipal infrastructure is maintained. The bulk of our capital spent occurs in our Public Works area (road network, water and sewer systems, facilities & equipment, transit system and bridges), and to a smaller extend in Corporate Services (information technology systems), Community Services (parks, playgrounds and recreational facilities), and Public Health (housing and emergency services). Page 15

16 The Annual Audit Process The City of Brantford annually prepares audited consolidated financial statements which comprise the consolidated statement of financial position as at December 31 st, and the consolidated statements of operations, cash flows and changes in net financial assets for the year then ended. Auditor s Responsibility The external auditor is responsible for expressing an opinion on our consolidated financial statements based on their audit. The audit is conducted in accordance with Canadian generally accepted auditing standards which require that they comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement. Councillor s Responsibility The mandate of Council is to provide oversight to staff and the External auditors and is responsible to review internal and external reports, work plans, including the External Auditor s Annual Audit Plan, as well as the consolidated financial statements and audit report findings. The audit is performed using procedures that assess the risk of material misstatement whether due to fraud or error. In their review, the auditor considers internal control relevant to the entity s preparation and fair representation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. Management s Responsibility Management s responsibility for the financial statements is for the preparation and fair presentation of our consolidated statements in accordance with Canadian generally accepted accounting principles and for internal controls that management has deemed to be necessary for the financial statements to be free from material misstatement. Page 16

17 2014 Financial Year in Review The consolidated financial statements of the Corporation of the City of Brantford are prepared by management in accordance with Canadian public sector accounting standards as recommended by the Public Sector Accounting Board of CPA Canada. The consolidated financial statements include the assets, liabilities, revenue and expenses of the City. The reporting entity is composed of all organizations, committees and local boards accountable for the administration of their financial affairs and resources to the City and which are owned or controlled by the City. These consolidated financial statements include: Brant and Brantford Local Housing Corporation Brantford Downtown Business Improvement Area Brantford Municipal Non-Profit Housing Corporation Brantford Police Services Board Brantford Public Library John Noble Home Government Business Enterprises include Brantford Energy Corporation. In accordance with Public Sector Accounting Standards this is accounted for on a modified equity basis in which the business enterprise s accounting principles are not adjusted to conform with those of the City, and interorganizational transactions and balances are not eliminated. The City s Trust Fund and their related operations administered by the municipality are not consolidated but are reported separately. Non-consolidated entities include the Brant County Health Unit. The following information summarizes the financial results from the 2014 consolidated financial statements. FINANCIAL ASSETS: Total Financial Assets at 2014 year end were $269.6 million (2013 $251.5 million). This represents an increase of $18.1 million over the prior year. During 2014, cash and cash equivalents decreased by $39.1 million to $52.0 million (2013 $91.1 million). Additional cash from maturing investments in 2013 caused the cash balance to be unusually high. These additional funds were subsequently reinvested at the beginning of Taxes receivable decreased by $4.1 million in 2014 due to an increase in doubtful accounts combined with a decrease in tax receivable. The balance at 2014 year end was $4.9 million (2013 $9.0 million). Accounts and grants receivable were $16.8 million (2013 $14.1 million), an increase of $2.7 million over The increase was attributable to a billing cycle change on our water and wastewater billings for Page 17

18 Investments increased by $56.3 million in 2014 due to the reinvestment of cash received in the prior year from maturing investments. The balance of investments at December 31, 2014 was $139.3 million (2013 $83.0 million). Investment in Brantford Energy Corporation in 2014 increased by $2.4 million over the prior year. The balance at December 31, 2014 was $30.0 million (2013 $27.6 million). FINANCIAL LIABILITIES: Total Financial Liabilities at 2014 year end were $164.0 million (2013 $159.0 million), representing an increase of $5.0 million over the prior year. revenue earned as there was increase capital spending in Post employment/retirement benefits were $17.6 million in 2014 (2013 $17.1 million), representing an increase of $0.5 million. Landfill closure and post closure liability increased from $13.9 million in 2013 to $24.7 million in The $10.8 million increase was due to an adjustment in the future liability estimate. Net long term liabilities were $37.8 million (2013 $41.1 million) resulting in a decrease of $3.3 million. NON-FINANCIAL ASSETS: Total Non-Financial Assets at year end were $720.1 million (2013 $728.3 million). This represents a decrease of $8.2 million resulting from the sale of land that was held as inventory. Non-Financial Assets consist of tangible capital assets, inventories and prepaid expenses with tangible capital assets representing over 97.8% of the total balance. Accounts payable and accrued liabilities decreased from $37.0 million in 2013 to $36.9 million in 2014 due to the timing of payments at year end. Deferred revenues obligatory reserve funds were $43.3 million in 2014 (2013 $46.4 million), representing a decrease of $3.1 million from the prior year due to greater Page 18

19 REVENUES AND OTHER INCOME: In 2014, Total Revenues and Other Income amounted to $302.5 million (2013 $272.0 million) representing an increase of $30.5 million. The sources and breakdown of revenue are provided in the chart below: * Breakdown of Other revenue: % Other 3.3% Rents and concessions 2.8% Deferred revenue earned 2.4% Casino revenue 1.7% Recoveries from other municipalities 1.3% Contributed tangible capital assets 1.2% Income from Brantford Energy Corporation 0.9% Change in equity in Brantford Energy Company 0.8% Interest earned on reserves and reserve funds 0.8% Provincial Offences Act and other fines 0.7% Licenses and permits 0.7% Penalties and interest on taxes 0.6% Investment income 0.4% Total 17.56% Taxation revenues in 2014 totalled $131.3 million (2013 $128.5 million) which represents an increase of $2.76 million or 2.2% over the prior year. User charges for 2014 were $56.8 million (2013 $55.0 million), an increase of $1.74 million or 3.2% over the prior year resulting primarily from a billing cycle change for water and wastewater. Government transfers for 2014 totalled $61.3 million (2013 $54.7 million). This represents an annual increase of $6.5 million that resulted largely from an increase in federal grant spending in In 2014, deferred revenue earned was $7.3 million (2013 $2.0 million), an increase of $5.3 million over the prior year resulting from significant increases in development charge spending in Page 19

20 EXPENSES: In 2014, Total Expenses including those classified as Other on the Consolidated Statement of Operations totalled $297.5 million (2013 $272.1 million) representing an increase of $25.4 million. The increase consists primarily of the following: $11.6 million increase in environmental services expense from an adjustment made to the landfill closure and post closure liability estimate. Annual projected expenditures required to treat leachate from the Site had not been previously identified in the liability calculation. $4.0 million increase in costs for transportation services resulting from expenditures for the repairs and maintenance of neighbouring roads and other assets, as well as higher costs relating to the maintenance of fleet vehicles and equipment $2.5 million increase in costs relating to protection to persons and property resulting primarily from a combination of retroactive earnings and benefit adjustments 2014 Expenses by Service and Other Expenses (In $ millions) General government - $12.3 million Protection to persons and property - $54.6 million Transportation services - $32.1 million Environmental services - $41.4 million Health services - $6.6 million Social and family services - $74.0 million Recreational and cultural services - $26.1 million Planning and development - $9.6 million Loss on disposal of assets - $7.5 million Amortization - $33.5 million Page 20

21 2014 Expenses by Type and Other Expenses (In $ millions) Salaries, wages and benefits - $121.5 million Materials - $57.6 million Contracted services - $28.9 million External transfers - $41.1 million Amortization - $33.5 million Debt servicing - $1.7 million Other expenditures - $5.8 million Loss on disposal of assets - $7.5 million The following chart shows the percentage breakdown of expenses by type: Page 21

22 RESERVE FUNDS: The City of Brantford manages several reserves and reserve funds for the main purposes of funding capital expenditure projects, mitigating the impact of future obligations, stabilizing operating costs and balancing specific budget items. In 2014, the balance of reserve and reserve funds was $108.2 million (2013 $96.4 million). This represents an increase of $11.8 million over the prior year. The City s most significant reserve fund balances include; water and wastewater; social housing; transportation; sick leave; and insurance. Reserves and reserve funds are included in the accumulated surplus balance. Deferred revenues from obligatory reserve funds are reported on the Consolidated Statement of Financial Position and are comprised of contributions received from federal and provincial gas tax, development charges and other payments from developers for future projects. In 2014, the balance of deferred revenues - obligatory reserve funds was $43.3 million (2013 $46.4 million). This represents a decrease of $3.1 million from the prior year. The reserve balances are monitored on an ongoing basis to ensure they remain sufficient to meet long-term financial commitments and to allow the City to take advantage of financial opportunities as they become known. The following chart shows the historical trend of reserve and reserve fund balances since 2010: Page 22

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24 FINANCIAL SECTION

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26 Millards Chartered Accountants P.O. Box 367, 96 Nelson Street Brantford, Ontario N3T 5N3 Telephone: (519) Facsimile: (519) INDEPENDENT AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of The Corporation of the City of Brantford We have audited the accompanying consolidated financial statements of the Corporation of the City of Brantford, which comprise the consolidated statement of financial position as at December 31, 2014, and the consolidated statements of operations, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation of the City of Brantford as at December 31, 2014, and the results of its operations, its changes in net assets and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. June 11, 2015 Brantford, Ontario CHARTERED PROFESSIONAL ACCOUNTANTS Licensed Public Accountants Millard, Rouse & Rosebrugh LLP Brantford Hagersville Simcoe Delhi Norwich Tillsonburg Page 6 Page 26

27 CORPORATION OF THE CITY OF BRANTFORD CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December (Restated Note 2) FINANCIAL ASSETS Cash and cash equivalents (Note 6) 52,030,701 91,159,464 Taxes receivable (Note 7) 4,865,004 8,994,408 Accounts and grants receivable (Note 8) 16,840,750 14,111,491 Inventories held for resale 44,481 42,275 Land held for resale 1,114,983 1,114,983 Investments (Note 9) 139,259,375 82,954,790 Investment in Brantford Energy Corporation (Note 10) 29,947,148 27,582,655 Note receivable - Brantford Power Inc. (Note 10) 24,189,168 24,189,168 Note receivable - Brantford Hydro Inc. (Note 10) 1,303,335 1,303,335 TOTAL FINANCIAL ASSETS 269,594, ,452,569 LIABILITIES Accounts payable and accrued liabilities (Note 11) 36,889,613 37,023,753 Deferred revenues - obligatory reserve funds (Note 12) 43,334,339 46,413,329 Vested sick leave (Note 13) 3,183,725 3,028,812 Post employment/retirement benefits (Note 13) 17,630,658 17,149,935 Accrued interest on long term liabilities 442, ,283 Landfill closure and post closure liability (Note 14) 24,694,625 13,863,159 Net long term liabilities (Note 16) 37,795,207 41,062,145 TOTAL LIABILITIES 163,970, ,005,416 NET FINANCIAL ASSETS 105,624,281 92,447,153 NON-FINANCIAL ASSETS Tangible capital assets (net) (Schedule 1) 704,329, ,288,204 Inventories (Note 3) 9,541,743 18,074,097 Prepaid expenses 6,183,941 2,957, ,055, ,319,704 NET ASSETS 825,679, ,766,857 ACCUMULATED SURPLUS (Note 18) 825,679, ,766,857 The accompanying notes are an integral part of theses financial statements Page 7 Page 27

28 CORPORATION OF THE CITY OF BRANTFORD CONSOLIDATED STATEMENT OF OPERATIONS As at December 31 Budget (Note 26) (Restated Note 2) REVENUES Taxation 130,978, ,289, ,532,084 User charges (Note 19) 57,576,022 56,778,237 55,040,377 Government transfers 59,875,954 61,269,988 54,734,289 Rents and concessions 8,488,239 8,628,530 8,605,740 Investment income 1,215,000 1,169,406 1,134,686 Interest earned on reserves and reserve funds 2,254,209 2,298,999 1,951,241 Recoveries from other municipalities 3,189,871 3,979,285 4,379,539 Casino revenue 5,100,000 5,064,697 4,681,243 Deferred revenue earned 8,182,767 7,338,007 2,003,412 Provincial Offenses Act and other fines 2,115,050 2,177,994 2,242,634 Licenses and permits 2,380,352 2,044,832 1,925,610 Penalties and interest on taxes 2,100,000 1,706,372 1,898,764 Income from Brantford Energy Corporation (Note 20) 2,601,362 2,651,362 2,651,362 Other (Note 21) 6,423,025 10,106,915 8,485,645 TOTAL REVENUES 292,480, ,504, ,266,626 EXPENSES General government 11,066,512 12,255,702 12,388,354 Protection to persons and property 55,288,384 54,551,981 52,101,813 Transportation services 30,878,981 32,060,643 28,079,927 Environmental services 41,379,657 41,381,988 29,758,481 Health services 6,603,786 6,635,106 6,845,744 Social and family services 75,833,330 73,978,827 74,422,371 Recreational and cultural services 25,800,987 26,061,518 25,075,298 Planning and development 9,821,058 9,563,581 11,107,124 TOTAL EXPENSES 256,672, ,489, ,779,112 INCOME BEFORE UNDER-NOTED ITEMS 35,807,828 40,014,777 38,487,514 OTHER INCOME/(EXPENSE) Contributed tangible capital assets 3,594,089 3,594,089 3,701,835 Loss on disposal of tangible capital assets and land inventory (7,534,463) (7,534,463) (392,401) Amortization of tangible capital assets (33,257,468) (33,525,944) (31,944,084) Change in equity in Brantford Energy Corporation - 2,364,493 (9,927,977) (37,197,842) (35,101,825) (38,562,627) ANNUAL SURPLUS (DEFICIT) FROM OPERATIONS (1,390,014) 4,912,952 (75,113) ACCUMULATED SURPLUS, BEGINNING OF YEAR 820,766, ,766, ,841,970 ACCUMULATED SURPLUS, END OF YEAR 819,376, ,679, ,766,857 The accompanying notes are an integral part of theses financial statements Page 8 Page 28

29 CORPORATION OF THE CITY OF BRANTFORD CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS For the year ended December 31 Budget (Restated Note 2) Annual Surplus (1,390,014) 4,912,952 (75,113) Amortization of tangible capital assets 33,525,944 33,525,944 31,944,084 Contributed (Donated) tangible capital assets (3,594,089) (3,594,089) (3,701,835) Acquisition of tangible capital assets (31,545,600) (31,545,600) (26,018,876) Loss/(Gain) on disposal of tangible capital assets and land inventory 7,534,463 7,534, ,401 Proceeds on disposal of tangible capital assets 52,021 52,021 21,818 Acquisition of inventory and prepaid expense - 2,291,437 (6,660,366) Increase (Decrease) in Net Financial Assets 4,582,725 13,177,128 (4,097,887) Net Financial Assets, Beginning of Year 92,447,153 92,447,153 96,545,040 Net Financial Assets, End of Year 97,029, ,624,281 92,447,153 The accompanying notes are an integral part of theses financial statements Page 9 Page 29

30 CORPORATION OF THE CITY OF BRANTFORD CONSOLIDATED STATEMENT OF CASH FLOWS As at December (Restated Note 2) OPERATING Annual Surplus (Deficit) 4,912,952 (75,113) Sources (Uses) of Cash: Taxes receivable 4,129,404 (66,598) Accounts receivable (2,729,259) 3,782,550 Accounts payable and accruals (134,140) (6,739,730) Contributed (Donated) tangible capital assets (3,594,089) (3,701,835) Deferred revenues - obligatory reserve funds (3,078,990) 5,120,200 Employee benefits and interest 613, ,882 Landfill closure and post closure liability 10,831, ,006 Other financial assets (2,206) (1,041) Inventories and prepaid expenses 2,291,437 (6,660,366) 13,240,425 (7,828,045) Non cash charges to operations: Amortization 33,525,944 31,944,084 Loss on disposal of tangible capital assets and land inventory 7,534, ,401 41,060,407 32,336,485 Cash provided by operating transactions 54,300,832 24,508,440 CAPITAL Acquisition of tangible capital assets (31,545,600) (26,018,876) Proceeds on disposal of tangible capital assets 52,021 21,818 Cash applied to capital transactions (31,493,579) (25,997,058) INVESTING (Increase)/Decrease of investments (56,304,585) 22,999,705 (Increase)/Decrease of investment in Brantford Energy Corporation (2,364,493) 9,927,977 Cash provided by (applied to) investing transactions (58,669,078) 32,927,682 FINANCING Long term debt issued - 1,350,000 Long term debt repaid (3,266,938) (3,041,613) Cash applied to financing transactions (3,266,938) (1,691,613) Net Change in Cash and Cash Equivalents (39,128,763) 29,747,451 Opening Net Cash and Cash Equivalents 91,159,464 61,412,013 Closing Net Cash and Cash Equivalents 52,030,701 91,159,464 The accompanying notes are an integral part of theses financial statements Page 10 Page 30

31 CORPORATION OF THE CITY OF BRANTFORD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2014 The Corporation of the City of Brantford is a Municipality in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act and related legislation. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of the Corporation of the City of Brantford (the City ) are prepared by management in accordance with Canadian public sector accounting standards as recommended by the Public Sector Accounting Board of CPA Canada. The preparation of financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the period. Since precise determination of many assets and liabilities is dependent upon future events, the preparation of periodic financial statements necessarily involves the use of estimates and approximations. These have been made using careful judgment. Actual results could differ from these estimates. Significant aspects of the accounting policies adopted by the City are as follows: (a) Reporting Entities (i) The consolidated financial statements include the assets, liabilities, revenues and expenses, of the City. The reporting entity is composed of all organizations, committees and local boards accountable for the administration of their financial affairs and resources to the City and which are owned or controlled by the City. These consolidated financial statements include: Brant and Brantford Local Housing Corporation Brantford Downtown Business Improvement Area Brantford Municipal Non-Profit Housing Corporation Brantford Police Services Board Brantford Public Library John Noble Home Inter-departmental and inter-organizational transactions and balances between these organizations have been eliminated. (ii) Effective January 1, 2002, the City entered into a service agreement with the Brant and Brantford Local Housing Corporation whereby the Housing Corporation transferred all operations to the City. The Housing Corporation has retained title to its physical assets in the capacity of bare trustee for the benefit of the City. (iii) Non-Consolidated Entities The following local boards, joint local boards, municipal enterprises and utilities are not consolidated: Brant County Health Unit Page 11 Page 31

32 CORPORATION OF THE CITY OF BRANTFORD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Reporting Entities (continued) (iv) Accounting for School Board Transactions The taxation, other revenues, expenditures, assets and liabilities with respect to the operations of the school boards are not reflected in the accumulated surplus of these financial statements. (v) Trust Funds Trust funds and their related operations administered by the municipality are not consolidated, but are reported separately on the Trust Funds statement of continuity and statement of financial position. (vi) Brantford Energy Corporation Brantford Energy Corporation is accounted for on a modified equity basis, consistent with the Canadian public sector accounting standards for government business enterprises. Under the modified equity basis, the business enterprise s accounting principles are not adjusted to conform with those of the City, and inter-organizational transactions and balances are not eliminated. (b) Basis of Accounting (i) Accrual Basis of Accounting The consolidated financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the creation of a legal obligation to pay. (ii) Non-financial Assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the change in net financial assets for the year. (ii) a) Tangible Capital Assets Under Canadian public sector accounting standards guidelines, tangible capital assets are recorded at their historical cost and amortized over their estimated useful life. Tangible capital assets are defined as non-financial assets with an estimated useful life greater than 1 year, held for use in the production or supply of goods and services, not held for resale, in continuous use, and valued in excess of an established financial threshold. The capitalization threshold for general assets is $5,000 and $25,000 for infrastructure assets. Individual tangible capital assets with lesser value are expensed and groups of similar assets, such as library books, fire hoses, or street signs, are recorded as pooled assets based on their year of acquisition. Page 12 Page 32

33 CORPORATION OF THE CITY OF BRANTFORD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Basis of Accounting (continued) (ii) a) Tangible Capital Assets (continued) Tangible capital assets are recorded at cost which includes amounts directly attributable to the acquisition, construction, development or betterment of the assets. The cost is amortized on a straight-line basis over their estimated useful lives as follows: Buildings Vehicles: Transit buses Vehicles Computer hardware and software Other: Machinery and equipment Land improvements Waste, wastewater plants and networks: Underground networks Water and wastewater plants and facilities Transportation: Roads Bridges, culverts, etc years 12 years 5-15 years 4-15 years years years years years years years Expected useful lives are determined based on experience with the asset. Revisions to the estimates may be caused by upgrades or renewal expenditures that result in a change in the service level of the asset or may revise the life expectancy. These estimates and potential impairment of the tangible capital assets are reviewed annually. Amortization is calculated beginning in the month the asset is put into service. Assets under construction are not amortized until the asset is available for productive use. b) Contribution of Tangible Capital Assets Tangible capital assets received as contributions are recorded at their fair market value at the date of receipt. c) Leases Leases are classified as capital leases if they transfer substantially all of the benefits and risks incidental to ownership of property. Leased capital assets are recorded as tangible capital assets. d) Inventories Inventories held for consumption are not considered tangible capital assets. (iii) Cash and Cash Equivalents Cash and cash equivalents are comprised of cash on hand, cash held in financial institutions and short term investments with maturities of 365 days or less. Page 13 Page 33

34 CORPORATION OF THE CITY OF BRANTFORD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Basis of Accounting (continued) (iv) Government Transfers Government transfers are recognized in the financial statements as revenues in the period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met and reasonable estimates of the amounts can be made. (v) Taxation Revenue Taxation revenue is recorded when property tax bills are levied. Taxation revenue recognized each year is adjusted for estimates for expected supplementary taxes, appeals and non-collectible taxes. (vi) Deferred Revenues - Obligatory Reserve Funds Deferred revenues represent developer and user charges, Federal and Provincial gas tax revenue, Federal and Provincial transit capital funding, Move Ontario roads and bridges capital funding, and B-Home housing program which have been collected, but for which the related services have yet to be performed. These amounts will be recognized as revenues in the fiscal year the services are performed. (vii) Land Held for Resale Land held for resale is recorded at the lower of cost and net realizable value. Cost includes amounts for improvements to prepare the land for sale or servicing. 2. RESTATEMENT OF 2013 COMPARATIVE FIGURES During the 2014 year, it was determined that deferred revenue was incorrectly calculated in previous years. This error resulted in changes to the opening accumulated surplus, deferred revenue earned, deferred revenue obligatory reserve fund, and closing accumulated surplus for During 2014 it was also determined that two parcels of land for resale were not included in the financial statements in previous years. This error resulted in changes to the opening accumulated surplus, land for resale and closing accumulated surplus for The total impact of correcting these items in the 2013 comparative figures is as follows: As Previously 2013 Reported Adjustment As Restated Opening Accumulated Surplus 825,847,649 (5,005,678) 820,841,971 Deferred revenue earned 680,879 1,322,533 2,003,412 Deferred Revenue - Obligatory Fund 41,615,201 4,798,128 46,413,329 Land for resale - 1,114,983 1,114,983 Closing Accumulated Surplus 824,450,003 (3,683,146) 820,766,857 Page 14 Page 34