Report to: General Committee Report
Date:
SUBJECT: Draft 2006 Consolidated Financial Statements
PREPARED BY: Raj Raman, Ext.2013
RECOMMENDATION:
That the report “Draft 2006
Consolidated Financial Statements be received;
And That Council approve the
Corporation of the Town of Markham’s Draft Consolidated Financial Statements for
the fiscal year ended December 31, 2006;
And That Council authorize Staff to
issue the Consolidated Financial Statements for the fiscal year ended December
31, 2006 upon
finalization of all consolidated amounts;
And that Staff be authorized and directed to do all things necessary to give effect to this resolution.
EXECUTIVE SUMMARY:
The Town of
The statements were prepared in accordance with
“Generally Accepted Accounting Principles”, the audit was performed in
accordance with “Generally Accepted Auditing Standards”, and KPMG has expressed
an unqualified or “clean” opinion that these statements present fairly the
financial position of the Town. These
statements indicate how the Town financed its activities and met its cash
requirements. Additionally, the statements
confirm that the resources were obtained and used in accordance with the operating
and capital budgets as approved by Council.
At the time of this report, audited consolidated financial statements
for Markham Enterprises Corporation (MEC), are not complete. MEC’s
shareholdings in Powerstream Inc. and Markham District Energy Inc. will be
consolidated into the MEC statements. MEC financial information at the end of
2005 is temporarily reflected in the draft 2006 Financial Statements. Upon
receipt of MEC’s audited financial statements, Staff will consolidate the
results with the Town’s and publish the consolidated statements along with the
2006 Annual Report. Copies of the Report
will be distributed to Council when available.
As in previous years, the 2006 statements were prepared in accordance with Public Sector Accounting Board (PSAB) guidelines. PSAB issues recommendations and reporting requirements that serve in the public’s interest by strengthening accountability in the public sector by developing, recommending and gaining acceptance of accounting and financial reporting standards.
Under PSAB, municipal reporting
requirements should include as a minimum:
Consolidated
Statement of Financial Position
Consolidated
Statement of Financial Activities
Consolidated
Statement of Changes in Financial Position
Additionally, the Town’s financial
package includes the following:
Schedule
of Operating Fund Activities
Schedule
of Capital Fund Activities
Schedule
of Reserves and Reserve Funds
Comments and a brief explanation for each of
the main financial statements are outlined under the Options/Discussion section
of this report.
FINANCIAL CONSIDERATIONS:
The Town’s different financial activities are classified into three funds, Operating, Capital and Reserve/ Reserve Funds plus the Town’s equity in Markham Enterprises Corporation. Each year, the net result of each of these funds appears under the Municipal Position section of the Consolidated Statement of Financial Position. The comparative balances for 2006 and 2005 are as follows:
The Operating Fund Balance, which is tax and water rate funding, reflects the net result of operating revenues and expenditures.
The Capital and Reserve Funds reflect the net effect of financial activities during 2006.
The Equity in Markham
Enterprises Corporation has not been finalized for 2006, and is therefore
reflected at 2005 values.
1. Purpose 2. Background 3. Discussion 4. Financial
5. Others
(Environmental, Accessibility, Engage 21st, Affected Units) 6.
Attachment(s)
PURPOSE:
To obtain Council’s approval of the Town of
BACKGROUND:
The Town of
OPTIONS/ DISCUSSION:
Consolidated
Statement of Financial Position
This statement describes the financial position of the Corporation in terms of assets and liabilities. This allows the reader to determine whether the financial position has improved or deteriorated.
PSAB requires that assets be
classified as either “financial” or “non-financial”. As at
Liabilities are financial
obligations to outside organizations or individuals that are the result of
transactions or events that occurred on or before the end of the accounting
period. The Corporation’s liabilities
are estimated as accurately as possible in order that the readers of the
statements are provided with a complete picture of the organization’s financial
position.
Another PSAB presentation requirement
is the handling of the Development Charge Reserve Fund which is now reflected
as “Deferred Revenue”. Accordingly,
Development Charge funds that were transferred to fund capital projects and
were not expended have been reclassified as Deferred Revenue for statement
purposes.
The municipal position represents
funding that is available to assist in offsetting future revenue requirements
and amounts that have been set aside to finance future expenditures. Municipalities account for and report on a
“fund” basis. Traditionally these funds
are comprised of operating, capital, reserves, and reserve funds. The Town’s net equity in Markham Enterprises
Corporation will also be included within this section of the statement.
Consolidated Statement of Financial Activities
This statement should account for the difference between a local government’s revenue and expenditures, adjusted for any changes in valuation allowances, in the accounting period. This statement also accounts for the combined change in the balances of a local government’s funds. Reporting information about the changes in its fund balance helps users to assess the local government’s short-term revenue requirements, and its ability to finance its operations and meet its current obligations.
Consolidated Statement of Changes in Financial Position
This statement presents changes in cash and cash equivalents by highlighting the sources and uses of cash. The statement indicates how the Town’s activities were financed and how cash requirements were met.
The Consolidated Schedule of Operating
Fund Activities (Schedule 1) identifies the 2006 year end surplus to be transferred
in accordance with the Town’s Reserve Policy.
Additionally, this statement enables the Town’s citizens to access the
actual operating results against the budgets that Council approved. The surplus
of $ 3.8 million is comprised as follows:
The Consolidated
Schedule of Capital Fund Activities (Schedule 2) informs the reader
whether permanent financing has been secured for the organization’s capital
expenditures or whether the financing has been secured but not spent. The Town’s balance of $25.9 million
represents a net position indicating capital financing has been secured, but
not spent (capital projects have been funded but have not been completed).
The Consolidated Schedule of Reserves and
Reserve Funds Activities (Schedule 3) represent funds that have been set
aside by Council to offset future expenditures in either the operating or
capital funds. At
Communication
The Municipal Act 2001, Section 295 (1) requires municipalities to annually communicate to its ratepayers, the results of the municipality’s year end. Section 295 (1) reads as follows:
Within 60 days after receiving the audited financial statements of the municipality for the previous year, the treasurer of the municipality,
a) shall publish in a newspaper having general circulation in the municipality,
a copy of the audited financial statements, the notes to the financial statements, the auditor’s report and the tax rate information for the current year as contained in the financial review or
a notice that the information contained in (i) above will be made available at no cost to any tax payer or resident of the municipality upon request; and
b) may provide the information described in sub clause (a) (i) or (ii) to such persons and in such other manner as the treasurer considers appropriate.
Publication of the Town’s statements will occur after consolidation of MEC’s 2006 results and receipt of the Town’s audited financial statements.
FINANCIAL TEMPLATE: (external link)
[Forward Excel document to Clerks for attachment]
ENVIRONMENTAL CONSIDERATIONS:
[Insert text here or delete section]
ACCESSIBILITY CONSIDERATIONS:
ENGAGE 21ST CONSIDERATIONS:
[Insert text here or delete section]
BUSINESS UNITS CONSULTED AND AFFECTED:
[Insert text here or delete section]
RECOMMENDED
BY: ________________________ ________________________
Barb Cribbett, Treasurer Andy Taylor, Commissioner,
Corporate Services
ATTACHMENTS:
Appendix “A” Corporation
of the Town of