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Executive Summary
The Municipal District of Bonnyville’s 2020 Annual Report is information for residents, stakeholders, and other users about the financial performance of the municipality from January 1 to December 31, 2020. It lends assistance to understanding the complete set of audited financial statements. It also provides an opportunity to highlight the efforts of all departments for the year, comparing the financial results achieved to the approved budget passed by Council. Management is responsible for the information contained in the annual financial report. The Province of Alberta’s Municipal Government Act (MGA) provides the M.D. with the legislative authority as a local government within the Province of Alberta. The consolidated financial statements are prepared in accordance with Section 276 of the MGA and public sector accounting standards established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. The 2020 consolidated financial statements have been prepared and audited by Metrix Group LLP and their Independent Auditors’ Report is included in this Annual Report.
Respectfully submitted,
Tolulope Maraiyesa
Tolulope Maraiyesa, CPA, CGA General Manager, Corporate Services
FINANCIAL SUMMARY
The comparative Financial Statements presented reveal financial information for two consecutive years. Comparative Financial Statements are quite useful in communicating financial information for the following reasons: • Provides a comparison of the M.D. of Bonnyville’s performance over two years to determine trends, • Provides a comparison of expenses to revenues and the proportions of various items on the balance sheet over the two-year period, lending useful information for cost management purposes, • Provides a comparison of expenses and revenues to the approved budget to determine if the municipality has met its financial forecasting projections and to consider whether there are areas that need more funding, • May be useful for predicting future performance, though more reliance should be placed on operational indicators and leading indicators than on historical performance for this type of analysis.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The consolidated statement of financial position, as found on page 31, presents the financial status of the M.D. of Bonnyville as of December 31, 2020, allowing the reader to measure the financial performance in comparison to the prior fiscal year. Financial assets increased by $4.8 million, and liabilities increased by $4.4 million. The increase in liabilities is due to amounts payable to neighbouring municipalities while the Intermunicipal Collaboration Framework negotiations were ongoing. The M.D. had net financial assets of $80.6 million (2019: $80.2 million), which is an indication of a strong financial position where financial assets exceed financial liabilities. Non-financial assets, which consist primarily of tangible capital assets, inventory and prepaid expenses, increased by $12.2 million. The net changes in net financial assets and nonfinancial assets result in a net increase in accumulated surplus of $12.5 million.
CONSOLIDATED STATEMENT OF OPERATIONS & ACCUMULATED SURPLUS
The Statement of Operations on page 32 summarizes the municipality’s revenues and expenses over the entire year. It outlines revenues earned by the municipality and expenses incurred to provide services. Total revenues consisted of municipal revenue at $71.1 million, government transfers of $10 million, and other income of $1.5 million while total expenses were $70.1 million. The net result was an annual surplus of $12.5 million. The accumulated surplus balance at the end of the year was $398,145,379 (2019: $385,567,066).
Net financial assets is a measure of the M.D.’s ability to finance its activities and to meet liabilities and contractual obligations. The change in net financial assets reflect the spending to acquire new capital assets, expenditures prepaid for future years, and additional inventories purchased such as gravel or supplies; and is reduced by the sale of any capital assets, use of prepaid expenditures, and inventory. In December 2020 the M.D.’s Net Financial Assets were $80.6 million (2019: $80.2 million), showing a net increase of $400,000. This statement can be found on page 33.
CONSOLIDATED STATEMENT OF CASH FLOWS
The statement of cash flows on page 34 provides information regarding the change in cash and short-term investments during the year. It shows details of how cash was received or spent under the following activities: operational, capital, investing, and financing. Cash and temporary investments increased by $11.5 million in 2020. Operations provided cash of $40.4 million. Of this, $773,000 was used to repay debt, $30.4 million was used to purchase tangible capital assets, and $2.3 million was used for investments.
RESTRICTED SURPLUS (RESERVES)
The M.D. of Bonnyville has an accumulated surplus which includes restricted surplus (reserves), unrestricted surplus, and equity in tangible capital assets. All changes in restricted surplus (reserves) are approved by Council. During the year, transfers into and from reserves led to a net increase of $11,062,249 to a year-end figure of $110,336,893.
$120,000,000
$90,000,000
$60,000,000
$30,000,000
$0
RESERVES SUMMARY
2020 2019 2018 2017 2016
FINANCIAL MANAGEMENT & CONTROL
The finance team is responsible for the preparation of the financial statements, procedures, and internal control mechanisms. The M.D. maintains systems of internal accounting and administrative controls that are designed to provide reasonable assurance that the financial information is relevant, reliable, accurate, and that the assets of the M.D. are properly accounted for and adequately safeguarded. The major components of the M.D.’s financial management and control programs include the budget process, accounting procedures, external audit, and several long-term financial polices to effect good governance, transparency, and fiscal responsibility.
BUDGET PROCESS
Section 242 of the MGA provides for the adoption of a budget by Council. The budget process involves Council, the Chief Administrative Officer, General Managers, staff, and the public. In the month of October, the first draft of the budget is presented to Council for deliberation, and public consultation is held in November. Once deliberations and revisions are complete, Council adopts the subsequent year’s budget. The budget is approved before the start of the new fiscal year (January 1). After the budget is adopted by Council, expenditures are controlled against budget by formal policies and financial systems designed specifically to prevent exceeding the budget. Any unbudgeted expenditures for the year are approved by Council resolution as per policy 2A.002 Expenditures not Included in Budget Policy.
FINANCIAL POLICIES
Expenditures not Included in Budget: this policy ensures that certain procedures are consistently followed regarding the authorization and verification of expenditures that are not included in an operating or capital budget. Grant Revenue Recognition Policy: the purpose of this policy is to outline how grants received are recognized as revenue. Investment Policy: this policy provides guidelines to invest municipal funds in a matter that will provide a reasonable rate of return with maximum security while meeting the daily cash flow needs of the municipality and conforming to the MGA. Procurement Policy: This policy ensures that consistent procedures are followed for the acquisition of goods and services and construction projects at the best value while treating all vendors equitably through procurement processes that ensure integrity, transparency, accountability, efficiency, consistency, and complies with applicable trade agreements.
TANGIBLE CAPITAL ASSETS
In accordance with Section 3150 of the Public Sector Accounting Board Handbook of the Canadian Institute of Chartered Accountants, the M.D. of Bonnyville must comply with the recommendations for the disclosure of tangible capital assets. The policy provides financial definition of tangible capital assets and sets internal guidelines on the capitalization thresholds and amortization methods.
EXTERNAL AUDIT
Section 280 of the MGA states that “Each council must appoint one or more auditors for the municipality”. Further, the Act requires the auditor to report to Council on the annual financial statements. The M.D. has appointed Metrix Group LLP, Chartered Professional Accountants as the independent auditor for the municipality. The auditor’s responsibility is to express an opinion as to whether the municipality’s financial statements present fairly, in all material respects, the municipality’s operating results and financial position. The independent auditor’s report is presented as the first component of the financial section of this report.
ACCOUNTING
All financial and accounting services fall under the Corporate Services Department. In 2020, Council was provided monthly expenditure reports and quarterly financial reports. The significant accounting policies used in preparing the financial statements are summarized in Note 1 of the Audited Financial Statements.
