By Kenyon Stronski
Sunny South News
Mark DeBlois of KPMG arrived at council during their ninth regular meeting of council on Apr. 19 to present council with their audit and financial statements.
“We’re prepared to issue a clear opinion on your financial statements. Our opinion will read ‘in our opinion the company’s financial statements present fairly, in all material respects, the financial position of the town as of December 31, 2021, and its results of operations, changes in net financial assets and its cash-flows for the year then ended in accordance with Canadian public sector accounting standards.’ I’d like to just walk through the statements and make a few high-level comments.”
The first document presented was the statement of financial position. “This is a snapshot of the financial assets, liabilities and non-financial assets of the town as of Dec. 31. Financial assets are assets that are converted into cash during normal operation. The year’s total financial assets were $12.9 million, very consistent with where we were at this time last year. The components, cash and cash equivalents make up $11.7 million of this. Taxes receivable, $137,000 and trade and other receivables were $1 million.”
Next came financial liabilities, where Coalhurst accrued liabilities of $357,000. After was deferred revenue which is revenue that has been received, but has not met the stipulations of that revenue in order to have it recognized. Coalhurst’s deferred revenue is $1.55 million and their debenture debt is $3.6 million.
“The financial assets less the liabilities bring you to net financial assets. Net financial assets basically means the town has resources in order to continue to provide its services and continue other programs and projects as the case may be. As of December 31, your net financial assets were $7 million compared to $6.2 (million) in the prior year. Non-financial assets are the assets that are consumed in the delivery of your services. Primarily your equipment, buildings, roads, those types of things. Your tangible capital assets net of depreciation on Dec. 31 were $29.1 million compared to $28 million in the prior year which brings us to an accumulated surplus of $36.1 million. This is made up of the investment intangible capital assets, the restricted reserves that you’ve set aside as well as the unrestricted surplus.”
The next statement is the statement of operation where the town’s operations for the year are looked at and are compared to both the prior year and the budget.
The town’s revenue, which was $4.6 million in 2021, compared to $5 million the previous year and $6.5 (million) for the budget.
“When we look at the difference between the budget actual, primarily, the difference is made up of the difference in government transfers for operating activities, the budgeted $2.3 million and actually recognized $334 thousand. So that’s the grants you’ve received for specific purposes and if the purpose is not received the amount stays in deferred revenue.” The audit report also confirmed the Town’s total expenses are, “fairly consistent,” year to year. “That leaves you with an operating surplus of $422,000 you then had your government transfers for capital so those are your capital grants. You budgeted $2.2 million and you actually recognized $1.4 million of capital grants. That is the grants that you’ve met the terms for and are now recognized as revenue. That leaves you with a surplus for the year of $1,891,000 bringing your cumulative surplus at the end of the year to $36.1 million.”
The audit report detailed the Town’s statement of operations does not include capital expenditures, and thus shows a surplus of that surplus. “There are funds that were spent on capital projects and capital assets. So this statement starts with your excess of revenue over expenses of $1,891,000. And then you’ll see the acquisition of tangible capital assets, which is the money spent on those assets of $2.1 million. We add back amortization expenses which is a non-cash expense, the gain on disposable tangible capital assets and the proceeds on tangible capital assets to bring you to $828,000 being your change in net financial assets for the year. That’s really the key figure for you when you’re looking at how the town is doing and where you’re using your resources so even though you have a surplus of almost $1.9 million,” it doesn’t include the capital expenditures. “If you look at your change in your net financial assets that’s really a more critical amount that will tell you how the town did in terms of using its resources for the purposes intended.”
The statement of cash flows which takes the town’s surplus for the year and breaks it down in terms of the inflows and outflows of cash.
“From operation activities, you had a cash inflow of $1,943,000, capital activities you had a cash outflow of $2,072,000 and in financing activities, you spent around $150,000 servicing debt. That leaves you with a decrease in cash for the year of $279,000 bringing your cash balance at the end of the year to $11.7 million. In the notes to the financial statements, the first is the significant accounting policies. There’s been no change in your accounting policies this year, the statements are prepared on a consistent basis with the policies that were in place in the prior year.”
DeBlois also noted the town’s primary expenses are salaries and benefits. However, there is also an expense for amortization which was said to be not budgeted. More expenses come in contracted general services and materials, goods and supplies.
The audit report and financial statements were accepted as presented.
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