HomeMy WebLinkAboutFND-001-11CLBTlI~°'t0Il REPORT
FINANCE DEPARTMENT
Meeting: GENERAL PURPOSE AND ADMINISTRATION
Date: JAN 10, 2011 Resolution#: ~PA~'bl9-// By-law#:
Report: FND-001-11 File#:
Subject: 2010 Accrual Based Budget for PSAB per Ont Reg 284109
RECOMMENDATIONS:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
THAT Report FND-001-11 be received; and
2. THAT Report FND-001-11 be adopted by resolution in accordance with
provisions of Ontario Regulation 284/09 of the Municipal Act, 2001.
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Submitted by: ~ Reviewed by: -`'
Nancy Tay} r, .B ., C. Franklin Wu,
Director of Finance/ Chief Administrative Officer
Treasurer
NT/hjl
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T (905)623-3379
REPORT NO.: FND-001-11 PAGE 2
BACKGROUND:
1.0 In June 2006, the Public Sector Accounting Board (PSAB) of the Canadian
Institute of Chartered Accountants (CICA) approved revisions to Section PS 3150
of the Public Sector Accounting Handbook for the accounting of tangible capital
assets (TCA) for local governments. Section 294.1 of the Municipal Act, 2001,
requires that municipalities prepare financial statements in accordance with
PSAB.
1.1 Effective for the 2009 financial statements, local governments were required to
record an inventory of all tangible capital assets as assets in their financial
statements and amortize the cost of the asset over its useful life.
1.2 The Municipality's 2009 PSAB compliant financial statements were approved by
Council on September 20, 2010, with the Auditor's Report dated August 30,
2010.
ADDITIONAL REPORTING REQUIREMENTS FOR MUNICIPAL BUDGETS:
2.0 Municipal budgets are prepared on a cash basis rather than an accrual basis.
The purpose of the budget is to determine the amount of taxation required from
the tax base to provide municipal services. The budgets do not include items like
amortization of fixed assets because this is not a cash requirement and if
included, would increase the tax levy.
2.1 However, the PSAB Handbook requires that budget numbers in the financial
statements should be presented in the financial statements on the same basis as
the actual results, for comparability purposes. As a result, the Province passed
Ontario Regulation 284/09 to provide direction on expenses to be excluded from
the tax based budget and reporting requirements so Council is aware of which
expenses are not included in the tax based budget.
2.2 Transitional reporting requirements are included for the 2010 year and directions
for the 2011 and subsequent years. For 2010, this report is required 60 days
after receiving its audited statements for 2009. Due to the timing of receipt of the
audited statements and election timing, this report is now being brought forward.
For 2011, the reporting will be done in conjunction with the budget process.
IMPACT OF EXCLUDED EXPENSES FOR THE 2010 APPROVED BUDGET:
3.0 Accrual based expenses that were excluded from the 2010 tax based budget
include amortization and post-employment benefits. Other items to transfer to a
PSAB based budget include tangible capital asset acquisitions, and accounting
treatment of debt principal payments.
REPORT NO.: FND-001-11 PAGE 3
3.1 There is no financial impact of these PSAB additions or reductions since the tax
based budget approves necessary funds to provide municipal services for 2010.
3.2 However, the estimated change to the accumulated surplus at the end of 2010
resulting from the above items is as follows:
PSAB Additions to the 2010 Budaet
Tangible Capital Asset Amortization $15,015,180
Post Employment Benefit Estimate $ 498 gg7
Accrued Interest Expense 431 558
Total PSAB Additions $15.945.725
PSAB Reductions to the 2010 Budaet
TCA Acquisitions ($14,591,282)
Debt Principal Payments ($ 2,813.121
Total PSAB Reductions ($17.404.403)
(Increase)Decrease in Accumulated Surplus ~$ 1,458.678
CONCLUSION AND RECOMMENDATION:
4.0 The regulation requires that the Council adopt a report containing information
pertaining to excluded expenses as identified above. This report satisfies the
requirement of Ontario Regulation 284/09.