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AGENDA - Audit Committee - 20170627 Audit Committee Meeting Agenda Tuesday, June 27, 2017 6:30 p.m. Council Chambers Aurora Town Hall Public Release June 22, 2017 Town of Aurora Audit Committee Meeting Agenda Tuesday, June 27, 2017 6:30 p.m., Council Chambers 1. Approval of the Agenda Recommended: That the agenda as circulated by Legislative Services be approved. 2. Declarations of Pecuniary Interest and General Nature Thereof 3. Delegations (a) Giselle Bodkin, Partner, and Andrea Nauss, Manager, BDO Canada LLP Re: Item R1 – FS17-029 – 2016 Year-End Audited Financial Statements 4. Consideration of Items Requiring Discussion (Regular Agenda) R1. FS17-029 – 2016 Year End Audited Financial Statements Recommended: 1. That Report No. FS17-029 be received; and 2. That the 2016 Audit Reports and Financial Statements for the year- ended December 31, 2016 be approved and published in accordance with the Municipal Act, 2001, S.O. 2001, c25, Section 295 on the Town’s website. 5. Adjournment Town of Aurora Audit Committee Report No. FS17-029 Subject: 2016 Year End Audited Financial Statements Prepared by: Jason Gaertner, Manager of Financial Planning Department: Financial Services Date: June 27, 2017 Recommendation 1. That Report No. FS17-029 be received; and 2. That the 2016 Audit Reports and Financial Statements for the year-ended December 31, 2016 be approved and published in accordance with the Municipal Act, 2001, S.O.2001, c25, Section 295 on the Town’s website. Executive Summary To present for approval, the Town of Aurora’s audited financial statements for the year ended December 31, 2016, and the auditor’s report thereon. Background Attached hereto is the entire audit package as presented by our auditors BDO Canada LLP, which include the 2016 Year End Audit Report, Letter to the Audit Committee and the audited financial statements which can all be found under Attachment 1. The actual financial statements have been prepared by staff and audited by BDO Canada LLP. The results shown in these consolidated statements differ from the traditionally prepared year-end report card due to the inclusion of tangible capital assets and other Public Sector Accounting Standards (PSAS) reporting differences. They have been marked DRAFT by the auditors, as the audit cannot be technically completed until after the approval of the statements by Council. Council is required to approve these statements as part of the finalization of the audit. Once the auditors sign their final report in the coming days, the financial statements will be made publicly available by being placed on the Town website, a requirement under Section 295 of the Municipal Act, 2001, S.O. 2001, c. 25 as amended. BDO also provides a letter to management on internal controls and other matters that they feel should be brought to their attention. Representatives from BDO Canada LLP will be in attendance to present their report and findings. Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 1 of 68 June 27, 2017 Page 2 of 3 Report No. FS17-029 Analysis The Audited Financial Statements present a consolidation of the Town’s finances and include the combined results of the General Operations of The Town, the Library Board, and the Water/Wastewater Sewer Operations. Staff continue to monitor the Town’s financial processes in an attempt to identify further opportunities for efficiency. Any time that a change in process is considered, staff give full consideration to any impact that these proposed changes may have on the existing internal controls, and the adequacy thereof. Any deliberated changes made are approved by the Director of Financial Services - Treasurer, and drawn to the auditors’ attention during the next audit. During the course of this audit, BDO Canada LLP reviewed their previous management letter items. Advisory Committee Review Not applicable. Financial Implications There are no financial implications in regards to the 2016 year-end audit report, the purpose of which is for its receipt by the Audit Committee as well as to obtain approval of the Consolidated 2016 Financial Statements of the Town so that the Statements may be published as required by legislation. Communications Considerations In accordance with the Municipal Act, 2001, S.O.2001, c25, Section 295, the Town’s 2016 audited financial statements will be published on the Town’s website. Link to Strategic Plan None; the annual audit is a statutory requirement, and is guided by professional standards applicable to all Canadian licensed audit practitioners. Preparation and publication of the annual audited financial statements supports the Strategic Plan principles of integrity, and progressive corporate excellence and continuous improvement. Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 2 of 68 Audit Committee Meeting Agenda Tuesday, June 27, 2017Item R1 Page 3 of 68 –“ Year End Report for The Corporation of the Town of Aurora Presented by Giselle Bodkin, CPA, CA Andrea Nauss, CPA, CA Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 4 of 68 TABLE OF CONTENTS Where are you today? Key Performance Results ....................................................................... 2-7 Industry Comparison .......................................................................... 9-13 Audit Committee Best Practice Recommendations ................................................... 14 Summary of Audit Process ............................................................................ 15-16 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 5 of 68 2 TOTAL REVENUE, EXPENSES AND ANNUAL SURPLUS (IN THOUSANDS ‘000) 2012 2013 2014 2015 2016 Revenue 71,871 70,409 96,654 119,372 122,593 Expenses 65,071 67,315 71,543 75,537 80,987 Annual Surplus 6,800 3,094 25,111 43,835 41,606 - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 6 of 68 3 ANNUAL SURPLUS PLUS AMORTIZATION AND TCA ADDITIONS 2012 2013 2014 2015 2016 Annual Surplus + Amortization 16,804 13,618 36,018 55,494 55,440 TCA Additions 13,207 7,894 19,752 51,182 31,972 - 10,000 20,000 30,000 40,000 50,000 60,000 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 7 of 68 4 TOTAL NET FINANCIAL ASSETS (IN THOUSANDS ‘000) 2012 2013 2014 2015 2016 Net Financial Assets 54,983 59,474 45,843 53,348 76,988 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 8 of 68 5 TOTAL ACCUMULATED SURPLUS AND TANGIBLE CAPITAL ASSETS (IN THOUSANDS ‘000) 2012 2013 2014 2015 2016 Accumulated Surplus 428,195 419,245 444,356 488,191 529,797 Accumulated TCA 379,720 378,381 395,727 434,742 452,604 - 100,000 200,000 300,000 400,000 500,000 600,000 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 9 of 68 6 2016 REVENUE 2012 REVENUE 32.69% 43.04% 2.28% 4.48% 8.67% 8.84% Revenue Taxation User fees Grants Net Gain on disposal of TCA and land Assumed infrastructure assets Other 44.83% 34.83% 2.67% 4.64% 2.75%10.28% Revenue Taxation User fees Grants Gain on disposal of TCA Assumed infrastructure assets Other Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 10 of 68 7 FIVE YEAR EXPENSE COMPARISON (IN THOUSANDS ‘000) 2016 2015 2014 2013 2012 General government 13,329 12,006 12,078 11,677 9,076 Protection to person and property 12,749 12,654 12,254 10,875 10,386 Transportation services 9,107 8,399 8,236 7,652 7,996 Environmental services 24,638 21,478 20,176 18,714 18,539 Leisure and cultural services 19,058 19,056 16,883 16,485 17,656 Planning and development 2,106 1,944 1,916 1,912 1,418 80,987 75,537 71,543 67,315 65,071 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 11 of 68 8 2016 EXPENSES 2012 EXPENSES 32.90% 17.08% 6.40% 42.70% 0.33%0.59% Expenses Salaries, wages and benefits Amortization Materials and supplies Contracted services Interest on long-term liabilities Others 35.12% 15.37% 5.79% 41.43% 0.54%1.74% Expenses Salaries, wages and benefits Amortization Materials and supplies Contracted services Interest on long-term liabilities Others Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 12 of 68 9 INDUSTRY COMPARISON NET FINANCIAL ASSETS (DEBT) TCA ADDITIONS 2011 2012 2013 2014 2015 Town of Aurora 50,942 54,983 59,474 48,543 53,348 Town #2 (20,479) (17,981) (14,620) (7,124) (4,376) Town #3 (18,168) (12,355) (15,755) (14,833) (7,555) Town #4 (1,529) 2,641 5,964 8,718 9,325 Town #5 40,092 50,863 60,667 56,662 61,442 (30,000) (20,000) (10,000) - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2011 2012 2013 2014 2015 Town of Aurora 25,306 15,183 7,894 19,752 51,182 Town #2 24,794 45,531 14,867 22,822 21,513 Town #3 9,994 9,396 13,125 33,639 11,647 Town #4 16,549 5,382 6,853 9,016 4,734 Town #5 21,455 20,782 27,714 42,018 24,214 - 10,000 20,000 30,000 40,000 50,000 60,000 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 13 of 68 10 REVENUE EXPENSES 2011 2012 2013 2014 2015 Town of Aurora 79,442 71,871 70,409 96,654 119,372 Town #2 53,320 68,232 54,398 62,527 65,600 Town #3 41,159 43,825 39,682 44,652 51,398 Town #4 54,749 44,491 46,003 51,601 52,589 Town #5 97,511 102,893 114,929 122,901 117,935 - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2011 2012 2013 2014 2015 Town of Aurora 62,547 65,071 67,315 71,543 75,537 Town #2 40,128 43,987 46,352 50,092 51,022 Town #3 32,199 33,514 34,393 36,676 38,479 Town #4 44,486 45,410 47,006 50,387 53,716 Town #5 89,907 93,817 98,182 103,685 107,200 - 20,000 40,000 60,000 80,000 100,000 120,000 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 14 of 68 11 ANNUAL SURPLUS (DEFICIT) ACCUMULATED SURPLUS 2011 2012 2013 2014 2015 Town of Aurora 16,895 6,800 3,094 25,111 43,835 Town #2 13,193 24,245 8,046 12,435 14,578 Town #3 8,960 10,311 5,341 7,975 12,919 Town #4 10,239 (1,774) (1,175) 1,204 (1,278) Town #5 8,514 10,446 16,747 20,894 12,406 (10,000) - 10,000 20,000 30,000 40,000 50,000 2011 2012 2013 2014 2015 Town of Aurora 421,395 428,195 419,245 444,356 488,191 Town #2 205,462 229,707 237,753 250,189 267,595 Town #3 129,898 140,209 145,550 153,500 166,419 Town #4 358,867 357,093 357,775 358,979 357,701 Town #5 472,638 483,084 495,979 516,873 529,279 - 100,000 200,000 300,000 400,000 500,000 600,000 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 15 of 68 12 2015 TOWN OF AURORA REVENUE 2015 INDUSTRY AVERAGE REVENUE 31.93% 39.04% 2.25% 2.45% 13.23% 11.10%Revenue Taxation User fees Grants Net gain on disposal of TCA and land Assumed infrastructure assets Other 43.79% 31.26% 2.48% 0.71% 13.51% 8.24%Revenue Taxation User fees Grants Gain on disposal of tangible capital assets Assumed infrastructure assets Other Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 16 of 68 13 2015 TOWN OF AURORA EXPENSE 2015 INDUSTRY AVERAGE EXPENSE 34.07% 15.43%6.55% 43.24% 0.22% 0.50%Expense Salaries, wages and benefits Amortization Materials and supplies Contracted services Interest on long-term liabilities Other 42.99% 16.97% 10.58% 24.67% 1.68% 3.10%Expense Salaries, wages and benefits Amortization Materials and supplies Contracted services Interest on long-term liabilities Other Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 17 of 68 14 Audit Committee Best Practice Recommendations • Financial Reporting o The Committee should receive monthly internal financial statements and ensure that the financial statements clearly reflect the true performance of the Organization. o The Committee should review audit adjustments made and those waived because of immateriality. o The Committee should review and approve the draft audited financial statements. o Is there a financial expert on the Committee? The financial expert would have the following 5 attributes:  Understanding of the financial statements and accounting principles used to prepare the issuer's financial statements;  Ability to assess the application of such accounting policies;  Experience preparing, auditing, analyzing or evaluating financial statements, or experience supervising individuals engaged in preparing, auditing, analyzing or evaluating financial statements;  An understanding of internal controls and procedures for financial reporting;  An understanding of audit committee functions • Risks and Controls o The Committee should create the right tone at the top to foster growth of suitable controls. o The Committee should have a sufficient understanding of the risks at the Organization. o The Committee should analyze the internal control system to ensure that the risks are adequately mitigated. • Audit Function o The Committee should ensure that the external auditor selected has sufficient knowledge of and experience in the Organization’s industry. o The Committee should review the audit fee and ensure that it is in line with the scope of the audit. o The Committee should confirm and discuss the auditor’s independence. o The Committee should keep an open line of communication with the external auditors, including such items as:  The auditor's responsibility under Canadian Auditing Standards.  The quality of the accounting principles followed by the Organization.  Disagreements with management.  Difficulties in performing the audit.  Major issues management discussed with the auditors before their retention. • Other Issues to Consider: o Is the Committee independent from the Organization? o Is the Committee sufficiently financially literate? o Are there clear position descriptions for directors? o Is there orientation and continuing education for all directors in place? o Is there a written code of business conduct and ethics? o Is there a nominating committee? Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 18 of 68 15 Summary of Audit Process • Overall Approach o Attain an understanding of processes and controls within the departments by performing system descriptions and walkthroughs. o Attain an understanding of internal IT and software, through discussions with the IT department and our systems descriptions. o Identify specific areas of the financial information which contain risk, and significant judgment. o From these initial stages, we determine what procedures to be performed on the specific areas of the financial statements. • Income Statement Approach o Revenue  Taxation – we obtain the annual by-law and compare to the revenue recorded following-up on significant differences.  Grants and government transfers – we obtain a sample of revenue received and agree to the funding documents, following up on differences.  Interest income – Interest reasonability tests are performed on tax interest, reserve interest, bank and investments.  Assumed infrastructure assets – we obtain the asset registers and recalculate. We take a sample of additions and trace to the supporting documentation to ensure the amounts agree. We then compare the overall asset registers to that recorded and follow-up on any significant differences.  Gain on disposal of tangible capital assets – we review the disposals and compare to the asset registers to ensure the cost was removed appropriately. Also, if the assets were sold we obtain documentation on the proceeds to ensure the calculation of the gain/loss is appropriate.  User fees, fines, licenses, permits and other revenue – we performed a detailed comparison of current year to the prior five years and budget on an account by account basis, using a threshold to determine the significant changes. We then review the significant changes with management and obtain supporting documentation. o Expenses  Salaries, wages and employee benefits – we perform test of controls on a cyclical basis. This tests various input and output controls for salaries. With regards to benefits we perform a reasonability test based on yearly percentages of CPP, EI, and benefits as a percentage of salaries. These are compared to the stated rates and differences are followed up.  Materials and supplies, contracted services and other – we perform substantive tests on these expenses and vouch to supporting documentation on a sample basis, following up on any differences.  Interest on long-term liabilities - we review the various debenture contracts and agree the interest expensed to the interest indicated in those.  Amortization – we recalculate the amortization on a test basis and compare to the actual amounts recorded, following up on any significant differences. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 19 of 68 16 • Balance Sheet Approach o Assets  Cash – test of controls are performed on bank reconciliations, and a bank confirmation is sent to the bank and agreed to the general ledger.  Taxes receivable – we perform a detailed five year comparison by aging following-up on significant differences. We also perform a large arrears check and follow-up to determine what the approach is to collect from that resident.  User fees and accounts receivable – we obtain the various accounts receivable account details and for significant balances agree to the supporting documentation or calculations. We also perform reasonability tests on various specific balances. We perform cut-off tests to ensure that amounts have been recorded in the proper period. We also check for deferred revenue or amounts that have been outstanding for significant periods of time and ensure they should not be written off.  Portfolio investments – Confirmations are sent to the investment advisors and review of investment certificates and continuity schedules is performed.  Land listed for sale – we obtain the current year listing and for any purchases or sales obtain the agreement and agree the amounts and recalculate any gains/losses.  Tangible capital assets and tangible capital assets under construction – we obtain the asset registers and recalculate. We take a sample of additions and trace to the supporting documentation to ensure the amounts agree. We then compare the overall asset registers to that recorded and follow-up on any significant differences.  Prepaid expenses – we obtain supporting documentation for any material items included in prepaid. o Liabilities  Accounts payable and accrued liabilities – we obtain supporting documentation for significant liabilities outstanding. We perform cut-off testing to ensure they have been recorded in the proper period. We test to ensure that accruals are reasonable.  Deposits – we review the deposits and ensure that amounts received should not be recognized through a sample of items, following up with the specific departments.  Deferred revenue – we obtain the continuity schedule. For additions we test the supporting grant funding letters, test the calculation of developer charges and the reasonability of interest. For decreases we ensure they are approved in the budget.  Employee benefits liabilities – we obtain the actuarial report, and review the assumptions made and ensure they are reasonable. We then ensure that the appropriate accounting method has been applied. We follow-up with both the actuary and the Town’s Finance department on any unusual items, differences.  Net long-term liabilities – we obtain third party confirmation on the balance, terms and interest rate, following up on any significant differences. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 20 of 68 The Corporation of the Town of Aurora Final Report to the Audit Committee June 27, 2017 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 21 of 68 Attachment #1Audit Committee Meeting Agenda Tuesday, June 27, 2017Item R1 Page 22 of 68 THE CORPORATION OF THE TOWN OF AURORA 3 TABLE OF CONTENTS Status of the Audit 4 Independence 5 Materiality 5 Audit Findings 6 Fraud Discussion 8 Internal Control Matters 9 Other Required Communications 10 BDO Resources 12 Appendix A – Draft Audit Report Appendix B – Independence Update Appendix C – Unadjusted Differences Appendix D – Representation Letter Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 23 of 68 THE CORPORATION OF THE TOWN OF AURORA 4 STATUS OF THE AUDIT As of the date of this final report, we have substantially completed our audit of the 2016 financial statements pending the completion of the items highlighted below. These items will need to be completed prior to issuance of our audit report on the financial statements. COMPLETION OF AUDIT • Receipt of signed Management representation letter • Receipt of outstanding legal confirmations • Subsequent events review through to financial statement approval date FINANCIAL STATEMENTS • Approval of financial statements by Council We conducted our audit in accordance with Canadian generally accepted auditing standards. The objective of our audit was to obtain reasonable, not absolute, assurance about whether the financial statements are free from material misstatement. The scope of the work performed was substantially the same as that described in our Planning Report to the Audit Committee dated June 28, 2016. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 24 of 68 THE CORPORATION OF THE TOWN OF AURORA 5 INDEPENDENCE At the core of the provision of external audit services is the concept of independence. Canadian generally accepted auditing standards require us to communicate to the Audit Committee at least annually, all relationships between BDO Canada LLP and its related entities and The Corporation of the Town of Aurora and its related entities, that, in our professional judgment, may reasonably be thought to bear on our independence with respect to the audit of the Municipality. Our annual letter confirming our independence was previously provided to you. Except as noted in Appendix B, we know of no circumstances that would cause us to amend the previously provided letter. MATERIALITY Misstatements, including omitted financial statement disclosures, are considered to be material if they, individually or in aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As communicated to you in our Planning Report to the Audit Committee, preliminary materiality was $1,450,000. Final materiality was increased to $2,150,000 to reflect actual results. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 25 of 68 THE CORPORATION OF THE TOWN OF AURORA 6 AUDIT FINDINGS As part of our ongoing communications with you, we are required to have a discussion on our views about significant qualitative aspects of the Municipality's accounting practices, including accounting policies, accounting estimates and financial statement disclosures. In order to have a frank and open discussion, these matters will be discussed verbally with you. A summary of the key discussion points are as follows: ACCOUNTING AND AUDIT MATTERS Management Override of Controls Risk Procedures Results Management is in a unique position to perpetrate fraud because of management’s ability to directly or indirectly manipulate accounting records or prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. Our audit procedures tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of financial statements. We also obtained an understanding of the business rationale for significant transactions that we became aware of that were outside the normal course of operations for the Municipality, or that otherwise appeared to be unusual given our understanding of the Municipality and its environment. We reviewed accounting estimates for biases and evaluated whether the circumstances producing the bias, if any, represented a risk of material misstatement due to fraud. No exceptions noted. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 26 of 68 THE CORPORATION OF THE TOWN OF AURORA 7 ADJUSTED AND UNADJUSTED DIFFERENCES We have disclosed all significant adjusted and unadjusted differences and disclosure omissions identified through the course of our audit engagement. Each of these items has been discussed with Management. Management has determined that the unadjusted differences are immaterial both individually and in aggregate to the financial statements taken as a whole. Should the Audit Committee agree with this assessment, we do not propose further adjustments. For purposes of our discussion, a summary of unadjusted differences and disclosure omissions has been presented in Appendix C. MANAGEMENT REPRESENTATIONS During the course of our audit, management made certain representations to us. These representations were verbal or written and therefore explicit, or they were implied through the financial statements. Management provided representations in response to specific queries from us, as well as unsolicited representations. Such representations were part of the evidence gathered by us to be able to draw reasonable conclusions on which to base our audit opinion. These representations were documented by including in the audit working papers memoranda of discussions with management and written representations received from management. A summary of the representation we have requested from management is set out in the management representation letter included in Appendix D to the report. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 27 of 68 THE CORPORATION OF THE TOWN OF AURORA 8 FRAUD DISCUSSION Canadian generally accepted auditing standards require us to discuss fraud risk with the Audit Committee on an annual basis. As an update to the discussion held with the Audit Committee during the planning of our audit, we have prepared the following comments: Required Discussion BDO Response Question to Audit Committee Details of existing oversight processes with regards to fraud. Based on our discussions during the planning of our audit, the Audit Committee’s oversight processes include: • Audit Committee charters; • Discussions at audit committee meetings and our attendance at those meetings; • Review of related party transactions; and • Consideration of tone at the top. Are there any new processes or changes in existing processes relating to fraud since the date of our previous discussions, that we should be aware of? Knowledge of actual, suspected or alleged fraud. Currently, we are not aware of any actual, suspected or alleged fraud. Are you aware of any instances of actual, suspected or alleged fraud affecting the Municipality? AUDITORS’ RESPONSIBILITIES FOR DETECTING FRAUD We are responsible for planning and performing the audit to obtain reasonable assurance that the financial statements are free of material misstatements, whether caused by error or fraud. The likelihood of not detecting a material misstatement resulting from fraud is higher than the likelihood of not detecting a material misstatement resulting from error, because fraud may involve collusion as well as sophisticated and carefully organized schedules designed to conceal it. The scope of the work performed was substantially the same as that described in our Planning Report to the Audit Committee dated June 28, 2016. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 28 of 68 THE CORPORATION OF THE TOWN OF AURORA 9 INTERNAL CONTROL MATTERS During the course of our audit, we performed the following procedures with respect to the Municipality’s internal control environment: • Documented operating systems to assess the design and implementation of control activities that were relevant to the audit. • Discussed and considered potential audit risks with management. The results of these procedures were considered in determining, the extent and nature of substantive audit testing required. We are required to report to you in writing, significant deficiencies in internal control that we have identified during the audit. A significant deficiency is defined as a deficiency or combination of deficiencies in internal control that, in the auditor's professional judgment, is of sufficient importance to merit the attention of those charged with governance. As the purpose of the audit is for us to express an opinion on the Municipality’s financial statements, our audit cannot be expected to disclose all matters that may be of interest to you. As part of our work, we considered internal control relevant to the preparation of the financial statements such that we were able to design appropriate audit procedures. This work was not for the purpose of expressing an opinion on the effectiveness of internal control. SIGNIFICANT DEFICIENCIES IN INTERNAL CONTROL We did not note any significant deficiencies in internal control during the course of our audit. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 29 of 68 THE CORPORATION OF THE TOWN OF AURORA 10 OTHER REQUIRED COMMUNICATIONS Professional standards require independent auditors to communicate with those charged with governance certain matters in relation to an audit. In addition to the points communicated within this letter, the table below summarizes these additional required communications. Communication Required Auditors’ Response Potential effect on the financial statements of any material risks and exposures, such as pending litigation, that are required to be disclosed in the financial statements. We have obtained a summary of outstanding litigation and claims from the Municipality’s legal department and communicated with the Municipality’s external legal counsel and insurer. Where applicable, litigation and claims have been accounted for and disclosed in the financial statements. The final draft of the representation letter. Refer to Appendix D. Material uncertainties related to events and conditions that may cast significant doubt on the Municipality’s ability to continue as a going concern. None noted. Disagreements with management about matters that, individually or in aggregate, could be significant to the Municipality’s financial statements or our audit report. None. Matters involving non compliance with laws and regulations. None noted. Significant related party transactions that are not in the normal course of operations and which involve significant judgments made by management concerning measurement or disclosure. None noted. Subsequent events that have caused changes to the audit report. None. Modifications in opinion None. Emphasis of matters paragraphs or other matters paragraphs. None. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 30 of 68 THE CORPORATION OF THE TOWN OF AURORA 11 Significant matters arising from the audit that were discussed or subject to correspondence with management. None. Significant accounting policies, estimates and judgments. None. Unreasonable management’s refusal to allow the auditor to send a confirmation request, or the inability to obtain relevant and reliable audit evidence from alternative audit procedures. None. Limitation of the scope of the audit imposed by management. None. Findings from the group audit. No significant findings. Other matters None. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 31 of 68 THE CORPORATION OF THE TOWN OF AURORA 12 BDO RESOURCES BDO is one of Canada’s largest accounting services firms providing assurance and accounting, taxation, financial advisory, risk advisory, financial recovery and consulting services to a variety of publicly traded and privately held companies. BDO serves its clients through 105 offices across Canada. As a member firm of BDO International Limited, BDO serves its multinational clients through a global network of over 1,100 offices in more than 100 countries. Commitment to knowledge and best practice sharing ensures that expertise is easily shared across our global network and common methodologies and information technology ensures efficient and effective service delivery to our clients. Outlined below is a summary of certain BDO resources which may be of interest to the Audit Committee. PUBLICATIONS BDO’s national and international accounting and assurance department issues publications on the transition and application of Public Sector Accounting Standards (PSAB). In addition, we offer a wide array of publications on Accounting Standards for Private Enterprises (ASPE), International Financial Reporting Standards (IFRS), and Accounting Standards for Not-for-Profit Organizations (ASPNO). For additional information on PSAB, including links to archived publications and model financial statements, refer to the link below: http://www.bdo.ca/en/library/services/assurance-and-accounting/pages/default.aspx. MYPDR Class is in session! Meeting Your Professional Development Requirements (MYPDR) is an educational program designed to support our clients, contacts and alumni in achieving their ongoing professional development requirements. Through the MYPDR program, we are committed to providing timely, relevant topics that can support you in meeting your ongoing professional development needs. For more information on the MYPDR program or to register, please visit http://www.cvent.com/d/34qqxp. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 32 of 68 APPENDIX A Draft Auditor’s Report Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 33 of 68 Independent Auditor's Report To the Mayor and Councillors of The Corporation of the Town of Aurora We have audited the accompanying consolidated financial statements of The Corporation of the Town of Aurora, which comprise the consolidated statement of financial position as at December 31, 2016, the statements of operations and accumulated surplus, 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 financial statements that are free from material misstatement, whether due to fraud or error. Auditor's 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 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 auditor's 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 controls 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, these financial statements present fairly, in all material respects, the financial position of The Corporation of the Town of Aurora as at December 31, 2016 and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants, Licensed Public Accountants Barrie, Ontario June 27, 2017 1 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 34 of 68 APPENDIX B Independence Update Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 35 of 68 Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 36 of 68 APPENDIX C Unadjusted Differences Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 37 of 68 ` SUMMARY OF UNADJUSTED DIFFERENCES The following is a summary of uncorrected misstatements noted during the course of our audit engagement: Increase (Decrease) Assets Liabilities Equity Net Income Negative balances in accounts receivable $148,533 $(148,533) $- $- 2016 progress billing recorded in 2017 26,679 (268,214) - 241,535 Total 175,212 (416,747) - 241,535 Effect of Prior Year’s Reversing Errors - - - - Total Unadjusted Differences $175,212$(416,747)$-$241,535 SUMMARY OF DISCLOSURE OMISSIONS There were no disclosure omissions noted during the course of our audit. Attachment #1Audit Committee Meeting Agenda Tuesday, June 27, 2017Item R1 Page 38 of 68 APPENDIX D Representation Letter Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 39 of 68 June 27, 2017 BDO Canada LLP Chartered Professional Accountants 300 Lakeshore Drive, Suite 300 Barrie, Ontario L4N 0B4 This representation letter is provided in connection with your audit of the financial statements of Town of Aurora for the year ended December 31, 2016, for the purpose of expressing an opinion as to whether the financial statements are presented fairly, in all material respects, in accordance with Canadian public sector accounting standards. We confirm that to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves: Financial Statements • We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated December 5, 2016, for the preparation of the financial statements in accordance with Canadian public sector accounting standards; in particular, the financial statements are fairly presented in accordance therewith. • Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable. • Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of Canadian public sector accounting standards. • All events subsequent to the date of the financial statements and for which Canadian public sector accounting standards require adjustment or disclosure have been adjusted or disclosed. • The financial statements of the entity use appropriate accounting policies that have been properly disclosed and consistently applied. • The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to the financial statements as a whole. A list of the uncorrected misstatements is attached to the representation letter. • We have reviewed and approved all journal entries recommended by the auditors during the audit. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 40 of 68 Information Provided • We have provided you with: o access to all information of which we are aware that is relevant to the preparation of the financial statements, such as records, documentation and other matters; o additional information that you have requested from us for the purpose of the audit; and o unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. • We are responsible for the design, implementation and maintenance of internal controls to prevent, detect and correct fraud and error, and have communicated to you all deficiencies in internal control of which we are aware. • All transactions have been recorded in the accounting records and are reflected in the financial statements. • We have disclosed to you all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing the financial statements. • We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware. Fraud and Error • We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. • We have disclosed to you all information in relation to fraud or suspected fraud that we are aware of and that affects the entity and involves: o management; o employees who have significant roles in internal control; or o others where the fraud could have a material effect on the financial statements. • We have disclosed to you all information in relation to allegations of fraud, or suspected fraud, affecting the entity’s financial statements communicated by employees, former employees, analysts, regulators, or others. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 41 of 68 Existence, Completeness and Valuation of Specific Financial Statement Balances • The inventories as set out in the financial statements represent all of the inventories to which the entity held title as at the balance sheet date. Inventories do not include any goods consigned to the entity, merchandise billed to customers or any items for which the liability has not been provided in the books. • For contributed property, plant and equipment, the nature and amount of contributed property, plant and equipment received and recognized have been disclosed. • Where the fair value of contributed property, plant and equipment was not determinable, information about contributed property, plant and equipment recognized at a nominal value has been disclosed. • Property, plant and equipment has been appropriately recognized and measured in accordance with Canadian public sector accounting standards. • There are no pledges or assignments of assets as security for liabilities except as disclosed in the financial statements. • The entity has complied with all provisions in its agreements related to debt and there were no defaults in principal or interest, or in the covenants and conditions contained in such agreement. • The employee future benefit costs, assets and obligation have been determined, accounted for and disclosed in accordance with Canadian public sector accounting standards. The source data and plan provisions provided are complete and accurate. The plans included in the valuation are complete. The determination of the discount rate and the use of specific actuarial assumptions are our best estimate assumptions. We feel that the extrapolations are accurate and have properly reflected the effects of changes and events occurring subsequent to the most recent valuation that had a material effect on the extrapolation. • There were no direct contingencies or provisions (including those associated with guarantees or indemnification provisions), unusual contractual obligations nor any substantial commitments, whether oral or written, other than in the ordinary course of business, which would materially affect the financial statements or financial position of the entity, except as disclosed in the financial statements. General Representations • We are aware of the environmental laws and regulations that impact our organization and we are in compliance. There are no known environmental liabilities or contingencies that have not been accrued for or disclosed in the financial statements. • We confirm that operating segments are appropriately identified and disclosed in accordance with Canadian public sector accounting standards. • There have been no plans or intentions that may materially affect the carrying value or classification of assets and liabilities. • No significant matters, other than those disclosed in the financial statements, have arisen that would require a restatement of the comparative financial statements. Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 42 of 68 • We have made the following additional significant representations to you during the course of your audit which we understand that you have relied upon: The municipality is a schedule 2 employer for WSIB but does not currently employ firefighters and is not aware of any additional liabilities that may be incurred in relation to the new WSIB legislation for firefighters. Other Representations Where the Situation Exists • We have informed you of all known actual or possible litigation and claims, whether or not they have been discussed with legal counsel. When applicable, these litigation and claims have been accounted for and disclosed in the financial statements. Yours truly, _______________________________________ _______________________________________ Signature Position _______________________________________ _______________________________________ Signature Position l Attachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 43 of 68 The Corporation of the Town of AuroraSummary of Unadjusted MisstatementsDecember 31, 2016Pre-Tax Proposed AdjustmentsDescription of theMisstatementIdentifiedMisstatementProjectedMisstatementEstimatesAssetsDr(Cr)LiabilitiesDr(Cr)Opening R/EDr(Cr)IncomeDr(Cr)Details of why no adjustment hasbeen made to financial statementsNegative balancesin A/R148,533--148,533(148,533)--Adjustment does not impact thestatement of operations.Management does not believe theimpact of the classification erroron the balance sheet is significantenough to adjust.2016 Progressbilling recorded in2017268,214--26,679(268,214)-241,535This cut-off error will reverse inthe following fiscal year and is notsignificant enough to adjust.Likely AggregateMisstatements BeforeEffect of PreviousYear's Errors andEstimates416,747--175,212(416,747)-241,535Effect of PreviousYear's Errors, Net ofTax Effects----Tax Effect----Likely AggregateMisstatements175,212(416,747)-241,535Attachment #1Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 44 of 68 The Corporation of the Town of Aurora Consolidated Financial Statements For the year ended December 31, 2016 DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 45 of 68 The Corporation of the Town of Aurora Consolidated Financial Statements For the year ended December 31, 2016 Contents Independent Auditor's Report 1 Consolidated Financial Statements Consolidated Statement of Financial Position 2 Consolidated Statement of Operations and Accumulated Surplus 3 Consolidated Statement of Change in Net Financial Assets 4 Consolidated Statement of Cash Flows 5 Notes to the Consolidated Financial Statements 6 - 20 Schedule 1 - Consolidated Schedule of Segmented Disclosure 21 - 22 DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 46 of 68 Independent Auditor's Report To the Mayor and Councillors of The Corporation of the Town of Aurora We have audited the accompanying consolidated financial statements of The Corporation of the Town of Aurora, which comprise the consolidated statement of financial position as at December 31, 2016, the statements of operations and accumulated surplus, 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 financial statements that are free from material misstatement, whether due to fraud or error. Auditor's 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 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 auditor's 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 controls 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, these financial statements present fairly, in all material respects, the financial position of The Corporation of the Town of Aurora as at December 31, 2016 and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants, Licensed Public Accountants Barrie, Ontario June 27, 2017 1DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 47 of 68 The Corporation of the Town of Aurora Consolidated Statement of Financial Position December 31 2016 2015 (Dollar amounts presented in '000's) Financial assets Cash (note 2) $ 4,278 $ 16,702 Taxes receivable 5,455 6,677 User fees receivable 5,348 3,666 Accounts receivable 7,421 6,638 Portfolio investments (note 4) 112,460 83,951 Land listed for sale (note 5) 2,952 3,654 137,914 121,288 Liabilities Notes payable and bank indebtedness (note 6) 7,219 9,370 Accounts payable and accrued liabilities 10,395 14,350 Deposits (note 7) 3,207 4,478 Deferred revenue (note 8) 33,610 36,181 Employee benefits liabilities (note 9) 1,010 984 Net long-term liabilities (note 10) 5,485 2,577 60,926 67,940 Net financial assets 76,988 53,348 Non-financial assets Tangible capital assets (note 23) 452,604 434,742 Prepaid expenses 205 101 452,809 434,843 Accumulated surplus (note 11) $ 529,797 $ 488,191 Contingencies and contractual obligations (notes 17 and 18) Approved by Council Mayor Chief Administrative Officer The accompanying notes are an integral part of these consolidated financial statements 2DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 48 of 68 The Corporation of the Town of Aurora Consolidated Statement of Operations and Accumulated Surplus Budget For the year ended December 31 2016 2016 2015 (Dollar amounts presented in '000's) (note 3) Revenue Taxation (note 12) $ 39,565 $ 40,071 $ 38,115 User fees 45,736 52,766 46,607 Grants (note 13) 1,883 2,796 2,680 Gain on disposal of land available for sale -5,726 3,385 Loss on disposal of tangible capital assets -(239)(461) Assumed infrastructure assets -10,632 15,796 Other (note 14) 7,383 10,841 13,250 94,567 122,593 119,372 Expenses General government 13,403 13,329 12,006 Protection to person and property 13,322 12,749 12,654 Transportation services 9,439 9,107 8,399 Environmental services 23,774 24,638 21,478 Leisure and cultural services 19,495 19,058 19,056 Planning and development 3,003 2,106 1,944 82,436 80,987 75,537 Annual surplus 12,131 41,606 43,835 Accumulated surplus, beginning of year 488,191 488,191 444,356 Accumulated surplus, end of year $ 500,322 $ 529,797 $ 488,191 The accompanying notes are an integral part of these consolidated financial statements 3DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 49 of 68 The Corporation of the Town of Aurora Consolidated Statement of Change in Net Financial Assets Budget For the year ended December 31 2016 2016 2015 (Dollar amounts presented in '000's) (note 3) Annual surplus $ 12,131 $ 41,606 $ 43,835 Amortization of tangible capital assets 13,834 13,834 11,659 Net proceeds on disposal of tangible capital assets -37 47 Loss on disposal of tangible capital assets -239 461 Acquisition of tangible capital assets (21,340)(21,340)(35,386) Assumed infrastructure assets -(10,632)(15,796) Change in prepaid expenses -(104)(15) Change in net financial assets 4,625 23,640 4,805 Net financial assets, beginning of year 53,348 53,348 48,543 Net financial assets, end of year $ 57,973 $ 76,988 $ 53,348 The accompanying notes are an integral part of these consolidated financial statements 4DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 50 of 68 The Corporation of the Town of Aurora Consolidated Statement of Cash Flows For the year ended December 31 2016 2015 (dollar amounts presented in '000's) Operating transactions Annual surplus $ 41,606 $ 43,835 Non-cash charges to operations: Amortization of tangible capital assets 13,834 11,659 Gain on disposal of land listed for sale (5,726)(3,385) Loss on disposal of tangible capital assets 239 461 Assumed infrastructure assets (10,632)(15,796) Changes in non-cash operating working capital: Taxes receivable 1,222 (514) User fees receivable (1,682)(322) Accounts receivable (783)(357) Land listed for sale (530)5,295 Accounts payable and accrued liabilities (3,955)60 Deposits (1,271)454 Deferred revenue (2,571)6,449 Employee benefits liabilities 26 21 Prepaid expenses (104)(15) Total Operating Transactions 29,673 47,845 Capital transactions Acquisition of tangible capital assets (21,340)(35,386) Net proceeds on disposal of land listed for sale 6,958 3,936 Net proceeds on disposal of tangible capital assets 37 47 Total Capital Transactions (14,345)(31,403) Investing transactions Increase in portfolio investments (28,509)(15,507) Financing transactions Advances / (principal repayments) on long-term liabilities 2,908 (1,709) Advances / (principal repayments) of notes payable and bank indebtedness (2,151)9,370 Total Financing Transactions 757 7,661 Increase / (Decrease) in cash (12,424)8,596 Cash, beginning of year 16,702 8,106 Cash, end of year $ 4,278 $ 16,702 The accompanying notes are an integral part of these consolidated financial statements 5DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 51 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 1. Summary of Significant Accounting Policies The Corporation of the Town of Aurora (the "Town") is a municipality in the Province of Ontario. The Town conducts its operations guided by the provisions of provincial statutes such as the Municipal Act, Municipal Affairs Act and related legislation. Management's Responsibility The consolidated financial statements of the Town are the responsibility of management. They have been prepared in accordance with Canadian public sector accounting standards established by the Public Sector Accounting Board ("PSAB") of The Chartered Professional Accountants of Canada. Basis of Consolidation The consolidated financial statements reflect the assets, liabilities, revenue, expenditures and fund balances of the Town and comprise all of the organizations that are accountable for the administration of their financial affairs and resources to the Town and are owned or controlled by the Town. These boards include: The Aurora Public Library Board All inter-organizational and inter-fund transactions and balances are eliminated. Basis of Accounting Revenue and expenses are reported on the accrual basis of accounting whereby revenue is recognized as it is earned and measurable; and expenses are recognized in the period that goods and services are acquired, a liability is incurred, or transfers are due. Cash Cash and cash equivalents are comprised of cash on hand, cash held in financial institutions and temporary investments with maturities of 90 days or less. Government Transfers Government transfers, which include legislative grants, are recognized in the consolidated financial statements in the period in which the events giving rise to the transfers occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates of the amounts can be made, except to the extent possible that the transfer stipulations give rise to an obligation that meets the definition of a liability. Transfers are recognized as deferred revenue when transfer stipulations give rise to a liability. Transfer revenue is recognized in the consolidated statement of operations as the stipulated liabilities are settled. Tangible Capital Assets Tangible capital assets are recorded at cost, less accumulated amortization. Cost includes all costs directly attributable to acquisition or construction of the tangible capital asset including transportation costs, installation costs, design and engineering fees, legal fees and site preparation costs. Contributed tangible capital assets are recorded at fair value at the time of the donation, with a corresponding amount recorded as revenue. Amortization is recorded on a straight-line basis over the estimated life of the tangible capital asset using the following rates. 6DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 52 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 1. Summary of Significant Accounting Policies (continued) Tangible Capital Assets (continued) Buildings 10 - 50 years Vehicles 7 - 15 years Other Machinery and Equipment 7 - 15 years Library Collection 7 years Computer Equipment 4 - 10 years Facilities (excluding Buildings) 5 - 80 years Transportation Infrastructure Roads 20 - 36 years Bridges and Other Structures 15 - 40 years Environmental Infrastructure Underground and Other Networks 15 - 100 years One half of the annual amortization is charged in the year of acquisition and in the year of disposal. Non-pension Post-employment Benefits, Compensated Absences & Termination Benefits The Town accrues its obligations under employee benefit plans as the employees render the services necessary to earn employee future benefits. The Town has adopted the following valuation methods and assumptions: a) Actuarial cost method: Accrued benefit obligations are computed using the projected benefit method prorated on service, as defined in PSAB 3250 and PSAB 3255. The objective under this method is to expense each member's benefit under the plan taking into consideration projections of benefit costs to and during retirement. Under this method an equal portion of total estimated future benefit is attributed to each year of service. b) Accounting policies: Actuarial gains and losses are amortized on a linear basis over the expected average remaining service life ("EARSL") (expected remaining payment period in respect of the retiring allowance) of members expected to receive benefits under the plan, with amortization commencing in the period following the determination of the gain or loss. Obligations are attributed to the period beginning on the member's date of hire and ending on the expected date of termination, death or retirement, depending on the benefit value. c) Workplace Safety and Insurance Board (WSIB): The costs of WSIB obligations are actuarially determined and are expensed in the period they occur. Any actuarial gains and losses that are related to WSIB benefits are recognized immediately in the period they arise. 7DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 53 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 1. Summary of Significant Accounting Policies (continued) Pension agreements The Town makes contributions to the Ontario Municipal Employees' Retirement System ("OMERS"), a multi-employer public sector pension fund, based on the principles of a defined benefit plan, which specifies the amount of the retirement benefit to be received by the employees on the basis of predefined retirement age, length of eligible service and rates of remuneration over a fixed period of time. Because OMERS is a multi-employer pension plan, any pension plan surpluses or deficits are a joint responsibility of all participating Ontario municipalities and their employees. As a result, the Town does not recognize any share of the OMERS pension surplus or deficit. Accordingly, contributions made during the year are expensed. Deposits The Town receives deposits on building permits and site plan applications that ensure restitution of any potential damage caused by the developer. These deposits are held in trust until the work has been completed, at which point in time, the deposit is returned. Deferred Revenue Deferred revenue represents user charges and fees which have been collected, but for which the related services have yet to be performed. These amounts will be recognized as revenue in the fiscal year the services are performed. The Town receives development charges under the authority of provincial legislation and Town by-laws. These funds, by their nature, are restricted in their use and, until applied to specific capital works, are recorded as deferred revenue (formerly obligatory reserve funds). Use of Estimates The preparation of financial statements in accordance with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The principal estimates used in the preparation of these financial statements are the post-employment benefits liabilities, the estimated useful lives of tangible capital assets and valuation of tangible capital assets. Actual results could differ from management's best estimates as additional information becomes available in the future. Assumed Infrastructure Assets Subdivision streets, lighting, sidewalks, drainage, and other infrastructure and in some instances park fixtures and trail networks are required to be provided by subdivision developers. Upon completion they are assumed by the Town and recorded at fair value at the date of assumption. The Town is not involved in the construction and does not budget for either the contributions from the developer or the capital expenditure. 8DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 54 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 1. Summary of Significant Accounting Policies (continued) Revenue Recognition Revenues are recognized as follows: a) Taxation revenue is recognized as revenue when it is authorized and the taxable event occurs. Related penalties and interest are recognized as revenue in the year that they are earned. b) User fees are reported on an accrual basis. c) Grants - Conditional grant revenue is recognized to the extent the conditions imposed on it have been fulfilled. - Unconditional grant revenue is recognized when monies are receivable. d) Investment income earned on surplus funds is reported as revenue in the period earned. Investment income earned on deferred revenue amounts such as development charges and parkland allowances, is added to the associated funds and forms part of the respective deferred revenue balance. Investment income earned on the Town's reserve fund balances is added to the associated funds and forms part of the respective period ending reserve fund balance. Reserve fund balances in a credit position are similarly charged interest. e) Development related fees and charges are recognized over the period of services or when required expenses occur if applicable. 2. Cash The Town's bank accounts are held at one chartered bank. The bank accounts earn interest at composite prime rate minus 1.75%. As at December 31, 2016, the rate is 1.00% (2015 - 0.95%). The Town has an overdraft credit facility agreement with TD Bank, to be used for day to day operations. The maximum credit limit is $1,000 with interest calculated using the composite prime rate minus 0.25%. As at December 31, 2016, the rate is 2.45% (2015 - 2.45%) and the outstanding balance is $Nil (2015 - $Nil). 3. Budget Reconciliation The Budget for 2016 adopted by Council on December 8, 2015 was prepared on a basis not consistent with that used to report actual results (Canadian public sector accounting standards). The budget was prepared on a modified accrual basis, while Canadian public sector accounting standards now require financial statements to be prepared on a full accrual basis. Accordingly, the budget expensed all tangible capital expenditures rather than including amortization expense. As a result, the budget figures presented in the statements of operations and change in net financial assets represent the 2016 budget adopted by Council with adjustments as follows: 9DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 55 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 3. Budget Reconciliation (continued) Revenue Expense Net Council approved budget: Operating - Town & Library $ 58,170 $ 58,170 $ - Operating - water/sewer 20,070 20,070 - Capital (for multiple years) 12,375 12,375 - Total Council approved budget 90,615 90,615 - Less: Multiple years capital (12,375) (12,375)- debt principal payments1 -(357)357 Plus: 2016 Non-TCA capital - 1,532 (1,532) budget change 715 715 - transfers to/from other funds2 (2,098) (11,528) 9,430 transfers from deferred revenue 17,710 - 17,710 amortization expense3 - 13,834 (13,834) Adjusted budget per the consolidated statement of operations $ 94,567 $ 82,436 $ 12,131 1 "Debt principal payments" are considered a repayment of a long-term liability and are not considered an expense under accrual accounting - only the related interest portion remains a valid expense under accrual accounting. 2 "Transfers to/from other funds" represents transfer to/from reserves for expenditures and is not considered a revenue source under accrual accounting. 3 Under accrual accounting, costs related to the acquisition of "Tangible Capital Assets" are recorded on the balance sheet - only the amortization of existing Tangible Capital Assets is included as an expense. 4. Portfolio Investments Portfolio investments are comprised of fixed income securities that are primarily federal, provincial and municipal government bonds, debentures and promissory notes and bearer deposits that mature after more than 90 days. Portfolio investments are valued at the lower of cost or market value. Portfolio investments of $112,460 (2015 - $83,951) have a market value of $118,154 (2015 - $85,093). 10DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 56 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 5. Land Listed for Sale As of December 31, 2016 the Town has listed a total of five properties that it owns which have been deemed surplus to the Town's needs. Of these five properties, two relate to the Town's Leslie Lands parcel. Subsequent to the year end, the Town sold three of these noted properties. The details of these transactions can be found in note 19. 6. Notes Payable and Bank Indebtedness For the purposes of constructing a new Joint Operations Centre, the Town arranged for a construction line of credit through Infrastructure Ontario. The line of credit is fully open, bears a monthly variable interest rate, interest is paid monthly, and the line of credit is to be refinanced within 120 days of completion of the project. It is the Town’s intent to pay down the line of credit to the extent possible as planned project funding sources materialize prior to refinancing. During 2016, subsequent to the completion of the facility, the 120 day refinancing period was extended by Infrastructure Ontario to allow more time for the Town to receive anticipated revenues in the short term. Refinancing of any balance then remaining is now to occur prior to January 31, 2018. As of December 31, 2016 the Town has received a total of $11,678 of advances from Infrastructure Ontario and subsequently paid back a total of $4,459 resulting in an outstanding balance of $7,219 related to this line of credit. 7. Deposits Beginning Ending Balance 2016 2016 Balance 2016 Inflows Outflows 2016 Refundable Damage Deposits $ 4,478 848 (2,119)$ 3,207 11DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 57 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 8. Deferred Revenue Beginning Balance 2016 2016 Inflows 2016 Outflows Ending Balance 2016 Development charges $ 15,595 21,656 (18,331)$ 18,920 Parkland purposes 8,596 927 (5,078)4,445 Federal Gas Tax 2,541 1,630 (1,925)2,246 Revenue Deferral - General 4,487 3,421 (4,295)3,613 31,219 27,634 (29,629)29,224 Deferred Revenue transferred to capital but unexpensed at the end of the year 4,962 15,168 (15,744)4,386 $ 36,181 42,802 (45,373)$ 33,610 9. Employee Benefits Liabilities 2016 2015 Post-employment benefits $ 694 $ 663 Accrued sick leave 148 166 842 829 WSIB benefits 168 155 $ 1,010 $ 984 12DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 58 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 9. Employee Benefits Liabilities (Continued) Post-employment benefits Post-employment benefits are health and dental benefits that are provided to early retirees and employees currently on a long term disability. The Town recognizes these post- employment costs as they are earned during the employee's tenure of service. The accrued benefit obligations for the Town's post-employment benefits and accrued sick leave liabilities as at December 31, 2016 are as follows: 2016 2015 Accrued benefit obligation, beginning of year $ 1,257 $ 1,285 Add: Benefit expense 71 67 Interest cost 58 57 Less: Benefits paid for the period (152)(152) Accrued benefit obligation, end of year 1,234 1,257 Unamortized actuarial losses (392)(428) Accrued benefit liability $ 842 $ 829 The accrued benefit obligations for the Town's post-employment benefits liability and accrued sick leave as at December 31, 2016 are based on actuarial valuations for accounting purposes as at December 31, 2013 with projections to December 31, 2016. These actuarial valuations were based on assumptions about future events. The economic assumptions used in these valuations are management's best estimates of expected rates of: 2016 2015 Expected future inflation rates 2.0%2.0% Discount on accrued benefit obligations 4.75%4.75% Health care costs escalation 5.00%5.33% Dental costs escalation 4.0%4.0% The amount of benefits paid by the Town during the year was $13 (2015 - $25). Workplace Safety and Insurance Board (WSIB) benefits The Town is a Schedule 2 employer under the Workplace Safety and Insurance Act and, as such, assumes responsibility for financing its workplace safety and insurance costs. The accrued WSIB benefit obligations for the Town's WSIB benefits liability as at December 31, 2016 are based on actuarial valuations for accounting purposes as at December 31, 2013 with projections to December 31, 2016. These actuarial valuations were based on assumptions about future events. 13DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 59 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 10. Net Long-term Liabilities 2016 2015 Debenture, bearing interest at 2.29%, maturing in March 2026. Principal and interest is repayable in semi-annual installments of $184.$ 3,121 $- Debenture, bearing interest at 4.37%, maturing in September 2025. Principal and interest is repayable in semi-annual installments of $160.2,364 2,574 Capital leases, bearing interest at 3.80%, maturing in July 2016. Principal and interest is repayable in quarterly installments.-3 $ 5,485 $ 2,577 Principal repayments for each of the next five years and thereafter are as follows: 2017 $ 517 2018 534 2019 551 2020 569 2021 587 Thereafter 2,727 $ 5,485 The interest expense related to the above long-term debt was $145 (2015 - $163). One debenture was issued by The Regional Municipality of York in the name of the Town to fund the construction of a recreation complex. A second debenture was issued by Infrastructure Ontario in the name of the Town of Aurora to fund the Town's conversion of all streetlights to LED. These long-term liabilities have been approved by municipal and regional by-law. The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs and Housing. 14DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 60 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 11. Accumulated Surplus Accumulated surplus is comprised of the following: 2016 2015 Non Financial Surpluses General revenue $ 8,489 $ (13,346) Land listed for sale 2,952 3,654 Invested in tangible capital assets 452,604 434,742 Less: financed by long-term liabilities (5,485)(2,577) Total non-financial surpluses 458,560 422,473 Reserves set aside by Council for Infrastructure Infrastructure Sustainability - Water Rate Funded 8,888 4,958 Infrastructure Sustainability - Tax Rate Funded 9,237 9,341 18,125 14,299 Reserve funds, set aside for specific purposes by Council 15,756 14,790 Proceeds of sale of Aurora Hydro 37,356 36,629 Total reserves and reserve funds 71,237 65,718 Accumulated surplus $ 529,797 $ 488,191 12. Net Taxation 2016 2015 Total taxes levied by the Town $ 120,696 $ 115,465 Less: Taxes levied on behalf of the Boards of Education 33,299 32,331 Taxes levied on behalf of the Region of York 47,326 45,019 $ 40,071 $ 38,115 13. Grants Revenue 2016 2015 Federal $ 1,985 $ 1,498 Provincial 496 836 Other 315 346 $ 2,796 $ 2,680 15DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 61 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 14. Other Revenue 2016 2015 Penalties and interest on taxes $ 878 $ 891 Fines 183 220 Licenses, permits and fees 6,272 6,268 Interest income 2,888 3,855 Other 620 2,016 $ 10,841 $ 13,250 15. Pension Agreements OMERS provides pension services to more than 470,000 active and retired members and their approximately 1,000 employers. Each year an independent actuary determines the funding status of OMERS Primary Pension Plan (the Plan) by comparing the actuarial value of invested assets to the estimated present value of all pension benefits that members have earned to date. The most recent actuarial valuation of the Plan was conducted at December 31, 2016. The results of this valuation disclosed total actuarial liabilities of $87,554 million in respect of benefits accrued for service with actuarial assets at that date of $81,834 million indicating an actuarial deficit of $5,720 million. Because OMERS is a multi-employer plan, any pension plan surpluses or deficits are a joint responsibility of Ontario municipal organizations and their employees. As a result, the town does not recognize any share of the OMERS pension surplus or deficit. Contributions in 2016 ranged from 9.0% to 14.6% depending on the level of earnings. As a result, $1,949 (2015 - $1,889) was contributed to OMERS for current year services. 16. Insurance Coverage The Town is self-insured for insurance claims up to $10 for any individual claim and for any number of claims arising out of a single occurrence. Claim costs during the year amounted to $60 (2015 - $46). The Town has made provisions for reserves for self-insurance claims under $10 to be used for those claims that exceed the sum provided for in the annual budget. These reserves are reported on the Consolidated Statement of Financial Activities under reserves set aside by Council. In 2013, the Insurance stand alone reserve was collapsed into the Town's general Tax Rate Stabilization Reserve; this reserve will be similarly accessible for this purpose. The balance of the Tax Rate Stabilization Reserve as of December 31, 2016 was $4,324. 16DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 62 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 17. Contingencies The Town is subject to various legal claims arising in the normal course of its operations. The ultimate outcome of these claims cannot be determined at this time; therefore, no amounts have been recorded in these financial statements. The Town's management believe that the ultimate disposition of these matters will not have a material adverse effect on its financial position. 18. Contractual Obligations The Town committed contractual obligations on major capital projects of approximately $12,914 during 2016, which have various contract completion dates. Effective January 1, 2002, the Town entered into an agreement with the Town of Newmarket with respect to the provision of Fire and Emergency services. Under the Agreement, the Town of Newmarket assumed responsibility for the combined Central York Fire Services. The cost of these services is shared between the two municipalities on the basis of a pre-defined cost sharing formula. The Town's share of costs for the year was $9,631 (2015 - $9,281). 19. Subsequent Events Subsequent to year end, the Town sold three of its properties that it had listed for sale as of December 31, 2016 and disclosed in note 5. The first noted property was sold on February 23, 2017 for a sale price of $1,350. The other two properties were sold on March 1, 2017 for sale prices of $681 and $570, respectively. 20. Segment Information The Town is a diversified municipal government institution that provides a wide range of services to its citizens. Distinguishable functional segments have been separately disclosed in the Consolidated Schedule of Segment Disclosure. The nature of the segments and the activities they encompass are as follows: Taxation Revenue The Town's primary source of funding for its operations is achieved through property taxes levied against property owners. Governance & Corporate Support This functional segment includes The Mayor's office and Council, CAO Office, Legislative Services, Legal, Communication, Information Technology and Financial Services, and all other support services. Fire & Emergency Services Central York Fire Services provides fire and emergency services to the residents of Aurora and Newmarket. The cost the Town paid for these services is described in Note 18. 17DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 63 of 68 The Corporation of the Town of Aurora Notes to the Consolidated Financial Statements December 31, 2016 (Dollar amounts presented in '000's) 20. Segment Information (continued) Building, Bylaw & Licensing Services The Town issues a variety of licenses and permits. This segment ensures an acceptable quality of building construction and maintenance of properties through enforcement of construction codes, building standards and by-laws for the protection of occupants. It enforces all zoning by-laws and the processing of building permit applications. Roads & Related Services This segment represents the reconstruction, repair, maintenance works and winter control services provided to the Town's roads, sidewalks, street lighting, walkways and bridges. Environmental Services This segment represents the water/sewer services and waste management services provided by the Public Works Department. Community Programs & Events This segment represents the services that the Parks & Recreation Services Department provided through community programs and special events. Parks & Facilities This segment maintains numerous recreation facilities, as well as indoor community space for booking and community use. It also maintains parks and playgrounds, open spaces and a vast trail system. Public Library Services This segment of library services covers the Library Board and The Town's library expenses. The funding from the Town to the Library Board is eliminated before the segment amount is determined. Planning & Development This functional segment manages the Town's urban development through the development application process. It also oversees community economic development, environmental concerns, heritage matters, local neighbourhoods, and the Town's Official Plan. 21. Comparative Amounts Certain comparative figures in these consolidated financial statements have been reclassified to conform to the presentation adopted for the current year. 22. Tangible Capital Assets Under Construction Tangible capital assets under construction and other capital work in progress by the Town having a value of $20,774 (2015 - $27,742) have not been amortized. Amortization of these assets will commence when these noted assets are put into service. This value excludes any developer constructed assets which have yet to be assumed. 18DRAFT - SUBJECT TO CHANGEAttachment #1 Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 64 of 68 The Corporation of the Town of AuroraNotes to the Consolidated Financial StatementsDecember 31, 2016(Dollar amounts presented in '000's)23. Tangible Capital Assets 2016GeneralInfrastructureTotalLandBuildingsVehiclesComputerand otherFacilitiesRoadsUndergroundand OtherNetworksBridges andOtherStructuresAssets UnderConstructionCost Balance, beginning of year $ 109,647$ 81,455$ 8,696$ 6,537$ 21,522$ 88,573$ 227,666$ 20,478$ 27,742$ 592,316Add: Additions during the year1,615 2,780 1,244 1,192 275 28 259 - 13,947 21,340Add: Donations and transfers108 18,348 - - 368 5,546 6,148 1,028(20,915)10,631Less: Disposals during the year-(190)(318)(416)(28)(213)(275)(648)-(2,088)Balance, end of year111,370102,3939,6227,31322,13793,934233,79820,85820,774622,199Accumulated amortization Balance, beginning of year-32,1924,6884,0828,96632,63961,43613,571-157,574Add: Amortization during the year- 3,084 706 677 708 3,182 4,535 942 - 13,834Less: Amortization on disposals-(67)(311)(415)(28)(142)(231)(619)-(1,813)Balance, end of year-35,2095,0834,3449,64635,67965,74013,894-169,595Net book value of tangible capital assets$ 111,370$ 67,184$ 4,539$ 2,969$ 12,491$ 58,255$ 168,058$ 6,964$ 20,774$ 452,60419DRAFT - SUBJECT TO CHANGEAttachment #1Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 65 of 68 The Corporation of the Town of AuroraNotes to the Consolidated Financial StatementsDecember 31, 2016(Dollar amounts presented in '000's)23. Tangible Capital Assets (continued)2015GeneralInfrastructureTotalLandBuildingsVehiclesComputerand otherFacilitiesRoadsUndergroundand OtherNetworks Bridges andOtherStructuresAssets UnderConstructionCostBalance, beginning of year$ 99,153$ 73,524$ 8,866$ 6,363$ 21,418$ 81,756$ 214,911$ 18,205$ 18,540$ 542,736Add: Additions during the year10,489 965 299 718 100 1,718 2,963 498 17,636 35,386Add: Donations and transfers5 7,003 - 12 4 5,102 10,073 1,797 (8,200) 15,796Less: Disposals during the year- (37) (469) (556) - (3) (281) (22) (234) (1,602)Balance, end of year109,64781,4558,6966,53721,52288,573227,66620,47827,742592,316Accumulated amortization Balance, beginning of year-29,8754,2763,9958,19729,90257,89712,867-147,009Add: Amortization during the year- 2,354 667 643 769 2,740 3,761 725 - 11,659Less: Amortization on disposals- (37) (255) (556) - (3) (222) (22) - (1,094)Balance, end of year-32,1924,6884,0828,96632,63961,43613,570-157,574Net book value of tangible capital assets$ 109,647$ 49,263$ 4,008$ 2,455$ 12,556$ 55,934$ 166,230$ 6,908$ 27,742$ 434,74220DRAFT - SUBJECT TO CHANGEAttachment #1Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 66 of 68 The Corporation of the Town of AuroraConsolidated Schedule of Segmented DisclosureSchedule 1December 31, 2016(Dollar amounts presented in '000's)2016TaxationRevenueGovernance &CorporateSupportFire &EmergencyServicesBylaw &LicensingServicesRoads &RelatedServicesEnvironmentalServicesCommunityPrograms &EventsParks &FacilitiesPublic LibraryServicesPlanning &DevelopmentConsolidatedRevenueTaxation$ 40,071 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 40,071User fees- 623 1,783 51 3,498 24,768 6,161 13,339 369 2,174 52,766Grants- - - - 2,215 244 279 - 58 - 2,796Gain on disposal of land listed for sale- 5,726-------- 5,726Loss on disposal of tangible capital assets-(239)--- -----(239)Assumed infrastructure assets- 10,632-------- 10,632Other- 3,940- 4,500(72)98644011824905 10,841Total Revenue40,07120,6821,7834,5515,64125,9986,88013,4574513,079122,593ExpensesSalaries, wages and benefits- 5,958- 2,922 2,9271,444 3,230 5,600 2,823 1,739 26,643Amortization- 3,789216- 3,4075,252-708462- 13,834Materials and supplies-354544 1,222830172 2,468769 5,180Contracted services- 3,139 9,243316 1,551 17,112 1,098 1,80223886 34,585Interest on long-term liabilities----- --268--268Others-89-3--8825-272477Total Expenses-13,3299,4643,2859,10724,6384,58810,8713,5992,10680,987Annual Surplus (Deficit)$ 40,071$ 7,353$(7,681)$ 1,266$(3,466)$ 1,360$ 2,292$ 2,586$(3,148)$ 973$ 41,60621DRAFT - SUBJECT TO CHANGEAttachment #1Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 67 of 68 The Corporation of the Town of AuroraConsolidated Schedule of Segmented DisclosureSchedule 1December 31, 2016(Dollar amounts presented in '000's)2015 TaxationRevenueGovernance &CorporateSupportFire &EmergencyServicesBylaw &LicensingServicesRoads &RelatedServicesEnvironmentalServicesCommunityPrograms &EventsParks &FacilitiesPublic LibraryServicesPlanning &DevelopmentConsolidatedRevenueTaxation$ 38,115 $- $- $- $- $- $- $- $- $- $ 38,115User fees-528-65 1,542 18,572 4,607 17,842358 3,093 46,607Grants---- 1,7655632653651- 2,680Gain on disposal of land listed for sale- 3,385-------- 3,385Loss on disposal of tangible capital assets-(461)--------(461)Assumed infrastructure assets- 15,796-------- 15,796Other- 4,322681 4,84087873236450118914 13,250Total Revenue38,11523,5706814,9054,18519,8675,23618,3794274,007119,372ExpensesSalaries, wages and benefits- 5,691- 2,834 2,583 1,656 2,939 5,412 2,827 1,791 25,733Amortization- 3,027193- 2,912 4,314-769444- 11,659Materials and supplies-434130 1,064753136 2,38413012 4,944Contracted services- 2,807 9,314282 1,822 14,755 1,025 2,324210120 32,659Interest on long-term liabilities-------163--163Other-47--18-811139921379Total Expenses-12,0069,5083,1468,39921,4784,18111,1653,7101,94475,537Annual Surplus (Deficit)$ 38,115$ 11,564$ (8,827)$ 1,759$ (4,214)$ (1,611)$ 1,055$ 7,214$ (3,283)$ 2,063$ 43,83522DRAFT - SUBJECT TO CHANGEAttachment #1Audit Committee Meeting Agenda Tuesday, June 27, 2017 Item R1 Page 68 of 68