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HomeMy WebLinkAboutFSD-033-21Clarington Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: Audit and Accountability Committee Date of Meeting: August 4, 2021 Report Number: FSD-033-21 Submitted By: Trevor Pinn, Director of Financial Services/Treasurer Reviewed By: Andrew C. Allison, CAO Resolution#: File Number: By-law Number: Report Subject: 2020 Financial Statements Recommendations: 1. That Report FSD-033-21 be received; 2. That the Consolidated Financial Statements for the Municipality of Clarington for the year ending December 31, 2020 be approved; 3. That the Financial Statements for the Board of Management for Historic Downtown Bowmanville Business Improvement Area for the year ending December 31, 2020 be approved; 4. That the Financial Statements for the Board of Management for the Newcastle Central Business District Improvement Area for the year ending December 31, 2020 be approved; 5. That the Financial Statements for the Board of Management for the Orono Central Business District Improvement Area for the year ending December 31, 2020 be approved; 6. That the Financial Statements for the Municipality of Clarington Trusts for the year ending December 31, 2020 be approved; and 7. That, Staff prepare the Annual Financial Report for the year ending December 31, 2020 for public consumption with information substantively as discussed in Report FSD-033-12 and that it be placed on the Municipality's website. Municipality of Clarington Report FSD-033-21 Report Overview Page 2 The Municipality is required to prepare financial statements in compliance with Public Sector Accounting Standards (PSAS) as established by the Public Sector Accounting Board (PSAB) annually. The Municipality continues to have a strong financial position and positive operating results, despite the impacts of COVID-19 during the 2020 fiscal period. The Municipality is also taking steps to increase the transparency and understandability of financial information through changes to the financial statements (including segmented budget information) and the first Annual Financial Report. 1. Background 1.1 Section 294.1 of the Municipal Act, 2001 requires that a municipality, for each fiscal year, prepare annual financial statements for the municipality in accordance with generally accepted accounting principles for local governments as recommended, from time to time, by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada. 1.2 The statements included in the attachments to this report have been prepared in accordance with the current Public Sector Accounting Standards (PSAS) that are in force. Municipality of Clarington Financial Services Staff continue to monitor changes to PSAS as they will become effective in the fiscal years 2022 through 2025. 1.3 The Consolidated Financial Statements for the Municipality of Clarington include the organizations, local boards and committees that are controlled by the Municipality and form the reporting entity under PSAS. These include: a. Board of Management for the Historic Downtown Bowmanville Business Improvement Area b. Board of Management for the Newcastle Central Business District Improvement Area c. Board of Management for the Orono Central Business District Improvement Area d. Clarington Public Library Board e. Clarington Museums and Archives Newcastle Arena Board g. Newcastle Community Hall Board Municipality of Clarington Page 3 Report FSD-033-21 h. Solina Hall Board Tyrone Community Hall Board Clarington Heritage Committee k. Bowmanville Santa Clause Parade Committee Orono Cemetery Board 1.4 Section 295 of the Act requires the Municipality to publish, within 60 days, the audited financial statements in a newspaper having general circulation within the municipality and a notice that the statements and notes would be available at no cost to the taxpayer upon request. The information may also be provided in a manner that the Treasurer considers appropriate. As in the past, these statements will be made available on the Municipality's website and copies may be obtained from Financial Services. 1.5 Starting this year, Financial Services have drafted an Annual Financial Report which provides the audited financial statements as well as financial discussion and analysis. This report is becoming a more common report from larger municipalities and is similar to reports seen by publicly traded companies. The numbers in a financial statement only provide a certain amount of information, to be usable to stakeholders' additional information may be beneficial. 2. Consolidated Financial Statements for the Municipality of Clarington Administrative 2.1 In 2020, we have added a letter from the CAO and the Treasurer stating management's responsibility for the statements. This is a requirement for PSAS and in the past was implied through a signature at the bottom of the financial statements. I feel that this new method is more in line with the intent of the PSAS standard and shows greater transparency on the fact that the financial statements are indeed the Municipality's and not the responsibility of the auditor. 2.2 The Independent Auditor's Report has been redesigned this year as a result of changes in Canadian Auditing Standards (CAS). The report indicates the auditor's opinion on whether or not the financial statements and the notes are in accordance with Canadian public sector accounting standards. The audit opinion is "clean" which indicates that we are materially compliant with applicable standards. Municipality of Clarington Page 4 Report FSD-033-21 Statement of Financial Position 2.3 The Statement of Financial Position is the public sector accounting equivalent of a balance sheet. The statement provides a snapshot, on December 31, 2020, of the assets, liabilities and accumulated surplus (an indicator of service capacity) specifically on that day. 2.4 Cash and cash equivalents consist of cash on hand, demand deposits and other investments that are available to be converted to cash within 90 days. During the year the Municipality saw an increase of approximately $23.3 million, much of this increase is a result of increased deferred revenue and obligatory reserves (development charges). The Statement of Cash Flows highlights the activities that increased or decreased the Municipality's cash during the year. 2.5 Investments have remained relatively stable between the 2019 and 2020 fiscal years. Investments are made in accordance with the Municipality's investment policy which follows the legal list of investments prescribed by the Province of Ontario. There has been a shift from guaranteed investment certificates (GICs) to bonds due to the relatively better return on investments that bonds had during the year. The Municipality also saw an increase of $2.1 million in the book value of its investment through ONE Investment as a result of recognition of realized gains and losses in the equity portfolio. 2.6 Accounts receivable represent funds owed to the Municipality, a decrease of $1.7 million in accounts receivable recognizes improved collection of amounts outstanding during the year. These amounts typically include work done on behalf of third parties which are billed back to the developer, grants which are earned and awaiting payment, rental fees collectible and other miscellaneous amounts. 2.7 Taxes receivable represent unpaid property taxes, net of any allowance for uncollectible taxes or anticipated appeals. Despite the COVID-19 pandemic the taxes receivable remained relatively consistent which indicates that the Municipality has been able to collect on these funds. 2.8 Land for resale consists of the historic cost of property that the Municipality has declared surplus and is actively marketing. The fair market value of the land may vary from the historic cost of the land and any loss or gain will be recognized on the disposition of the land. 2.9 Promissory note receivable and the investment in Elexicon Corporation relate to the Municipality's investment in the local electric company. The promissory note receivable is unchanged from 2019 and is an on -demand note. The investment in Elexicon Corporation is relatively consistent with 2019 indicating no impairment in the investment. Clarington reports its investment in Elexicon using a modified consolidation basis, this amount shown in the financial statements is not liquid and cannot easily be converted to Municipality of Clarington Page 5 Report FSD-033-21 cash. The financial results of Elexicon have been summarized in note 7 of the financial statements. 2.10 Liabilities represent financial obligations of the Municipality resulting from events and decisions which occurred on or before December 31, 2020. 2.11 Accounts payable and accrued liabilities represent short-term liabilities that are expected to be paid in the following fiscal year. They would consist of amounts owing to vendors for services rendered during 2020, accruals for unbilled amounts and other liabilities. Accounts payable and accrued liabilities increased by $3.2 million in 2020, primarily a result of the timing of payments due for major construction projects and the timing of the payment to the Region for development charges. 2.12 Employee future benefits includes the present value of the cost of providing employees with future benefit programs, these benefits are expensed as they are earned through the employees' service. The employee future benefits include sick leave accumulation plans for firefighters (2020 - $1,009,061), other employees (2020 - $21,196) as well as the cost to provide qualifying employees health, dental and life benefits to the age of 65. 2.13 Long-term liabilities represent the outstanding debenture obligations with the Region of Durham for capital asset investments. There are currently seven outstanding debts with maturities between 2021 and 2032, ranging in interest rates from 1.90 per cent to 5.12 per cent (maturing 2021). During the 2020 fiscal year, the Municipality did not take on any new long-term debt and repaid $2.3 million in debt principal. 2.14 Deferred revenue represents funds that have been received by the Municipality where the associated revenue has not yet been recognized. The main items included in deferred revenue — general are taxes paid for future years ($6,338,385), subdivision deposits held ($5,872,393), deposits held for other construction related projects ($925,037) and Community Services related deposits ($705,615). 2.15 Deferred revenue — obligatory funds represent funds received by the Municipality where there are legislative or contractual restrictions on the use of the funds. Provincial Infrastructure funds, Federal Gas Tax Funds, Parkland -cash -in -lieu, building permit revenue, and development charges represent the balance of these funds. 2.16 The vast majority of deferred revenue — obligatory funds, approximately $50.7 million, consists of development charges paid by developers towards the future capital cost of growth -related infrastructure costs and certain studies. In 2020, the Municipality collected $15.9 million from developers, earned investment income of $1.7 million and utilized $5.1 million. The Municipality approved its updated Development Charges Study in January 2021 which includes the growth -related capital needs for the years 2021 to 2031. Municipality of Clarington Page 6 Report FSD-033-21 2.17 The increase in liabilities is primarily the result of the increase in deferred revenue. These funds were collected in 2020 and form an obligation on the Municipality to utilize as allowed under appropriate legislation in future years. The increase in deferred revenue is related to the increase in cash also shown in the financial statements. 2.18 Non -financial assets primarily consist of tangible capital assets which are used in the active delivery of programs and services to stakeholders. The decrease of $3.4 million is reflective of the $21.6 million in amortization, representing the utilization of assets, being higher than the investment in tangible assets of $15.7 million. A prolonged period of excess amortization over investment could result in deterioration of the Municipality's infrastructure network. The decrease is also reflective of the fact that in 2019 the Municipality benefited from the contribution of $18.9 million in tangible assets, compared to $5.1 million in 2020. This is due to timing of the completion of subdivisions and their acceptance by the Municipality. 2.19 Prepaid expenses and inventory supplies, which are items already paid for but will be utilized in future years, have remained relatively stable and variations are mainly a result of timing differences. 2.20 A detailed breakdown of accumulated surplus is presented in Note 19 "Accumulated Surplus" of the Consolidated Financial Statements. The Municipality saw an increase of approximately $5.1 million which represents an increase in the future service ability of the Municipality. The term "accumulated surplus" does not mean and cannot be implied to mean that there are "cash or funds" available for spending. The vast majority of the value in accumulated surplus represents non -financial assets and reflects the Municipality's investment in the required infrastructure to deliver the programs and services that stakeholders expect. 2.21 Overall, the Municipality has a strong financial position with a positive financial asset to financial liability ratio of 1.8:1.0. The Municipality's reserves and reserve funds of $51.8 million is over five times the long-term liabilities of $9.5 million indicating that there are sufficient funds available to meet the long-term, and short term, liabilities of the Municipality. Statement of Operations 2.22 The Statement of Operations is the public sector accounting equivalent of an income statement in the private sector. The Statement of Operations provides a summary of revenue and expenses for the year with the annual surplus representing the difference between the cost of providing the Municipality's services and the revenues recognized during the year. Municipality of Clarington Page 7 Report FSD-033-21 2.23 In accordance with PSAS, the Municipality uses the accrual basis of accounting rather than the cash -basis. Revenue is recognized when it is earned and expenses are recognized when they are incurred, as opposed to when funds transfer. 2.24 The Statement of Operations, as required by PSAS, lists revenues based on like revenue streams (e.g. taxation, user fees, grants) and expenses based on functional segmentation. The functional segmentation for expenses follows the Province of Ontario's Financial Information Return (FIR) segmentation on service lines. 2.25 Information on the segments' expenses by accounting object (e.g. wages, materials, services) is included in Schedule 2. There are two pages of Schedule 2, one being specific for 2020 and the following page being the prior year's results. 2.26 New in 2020, the Municipality has added Schedule 3 which shows the budgeted breakdown by segment for each accounting object. It is hoped that this additional information provides users of the statement with more usable and relevant information. 2.27 Property taxation includes the Municipality's portion only, funds which are collected on behalf of the Region of Durham or the Province of Ontario (for education purposes) are not shown as part of the Statement of Operations; however there is note disclosure on the funds which have been collected and remitted on behalf of the other governments in the notes to the financial statements. Property taxation and user charges are in line with the 2020 budget; however they are below the 2019 actuals by approximately $3.3 million which is mainly due to the impacts of COVID-19 on the recreation and cultural services which were closed during the year. 2.28 The Safe Restart Program grant from the Province of Ontario has been recognized in 2020 as it was received and earned by the Municipality, this was not budgeted for in 2020 so there is a significant variance to budget. 2.29 Deferred revenue earned decreased year over year by $6.1 million primarily due to a decrease in capital infrastructure projects which were supported by obligatory reserve funds. 2.30 Investment income includes dividends from Elexicon which are not budgeted as they are discretionary and there is no guarantee of receipt. While the investment income is above budget, due to the Elexicon investments which are budgeted to go directly into reserve funds but are required to be recorded in the statement of operations for reporting purposes, overall investment income is down as a result of the market impacts of COVID-19. The interest rates earned on investments and bank accounts was dramatically decreased in 2020 and has resulted in a lower rate of return environment than what was seen in the preceding few years. As investments mature the interest rates are typically significantly lower resulting lower expected future income. Municipality of Clarington Page 8 Report FSD-033-21 2.31 Penalties and interest on taxes is below the 2019 actuals as a result of a decision in 2020 to provide two months relief from interest and penalties due to the COVID-19 pandemic. The relief was approximately $200,000 to $250,000 in lost revenue as it was provided to all outstanding balances. 2.32 Fines were approximately $203,000 lower in 2020 versus 2019 due to lower parking meter revenues and fines. In 2020, there was a conscious decision to permit free parking in the business improvement area for an extended period of time to mitigate COVID-19 impacts on local businesses. Municipal law enforcement also had a shift in focus due to the COVID-19 restrictions enforcement of emergency orders of the Province of Ontario. The closure of the Clarington Public Library also resulted in a reduction of fines of approximately $45,000 as services were restricted. 2.33 In 2020, the Municipality received tangible capital assets from developers in the amount of $5.1 million. This relates to subdivisions assumed by the Municipality and the related infrastructure such as roads, sidewalks, stormwater management and parks/trails. 2.34 In most areas of the Municipality expenses decreased in 2020 compared to 2019, this can be attributed in part to the COVID-19 pandemic. Areas such as protection to persons and property, transportation services and health services saw increases in expenses compared to 2019 resulting from operational changes due to COVID-19. The Municipality saw increased costs from COVID-19 through added cleaning, protective equipment, staff time for municipal law enforcement, and other items. Savings were also recognized through reduced staffing in certain areas, reduced travel costs for training and meetings as well as reductions in office supplies and utilities. 2.35 While the Municipality took steps to reduce expenses in 2020 due to COVID-19, there are fixed costs which cannot be reduced. Regular repairs and maintenance of buildings, including those closed to the public, must occur in order to ensure the integrity of the building and the systems within it. Amortization expense is a non -cash expense which allocates the capital cost of assets across the useful life of the asset, it is not impacted by COVID-19 and was recognized in 2020. 2.36 Overall, the expenses for the Municipality were below the 2020 budget and 2019 actuals. The savings contribute to the surplus recognized for the year, despite the fact that the Municipality did not recognize the revenue levels that were budgeted. During the year, the Municipality also received funding from the Province of Ontario and the Government of Canada's Safe Restart Program, these funds have been recognized as revenue in 2020. It should be noted that the surplus and budget shown on the statements are in accordance with PSAB and are shown on the same basis that the Municipality budgets annually (which uses a modified cash -basis). Statement of Change in Net Financial Assets Municipality of Clarington Page 9 Report FSD-033-21 2.37 The purpose of the Statement of Change in Net Financial Assets is to provide financial statement users additional information on the Municipality's financial activities during the year. 2.38 The statement, similarly to the statement of cash flows, starts with the annual surplus and backs out non -financial activities such as amortization, accounting gains/losses, and the purchase and sale of assets. 2.39 The main variance between the 2019 and 2020 relates to a significant difference in contributed assets during 2020. Contributed assets are those assets that are built by developers during subdivision build out and then assumed by the Municipality. Timing on development, completion and acceptance by the Municipality will impact the year over year variances in the contributed asset revenues. Statement of Cash Flows 2.40 The statement of cash flows explains how organization financed its activities and met its cash obligations. As is common with public sector entities, the Municipality uses the indirect method of cash flow statements, which takes the annual surplus/deficit and adjusts for non -cash transactions as well as the implied cash impact through changes in the statement of financial position. 2.41 The cash position of the Municipality increased during the year from $55.7 million in cash to $79.0 million. During the year operating activities contributed to an increase of $40.3 million, this includes the receipt of receivables as well as cash (development charges) that are restricted to be used in future years. 2.42 Capital activities represent the investment the Municipality has made in its tangible capital assets that are utilized in the delivery of services to stakeholders. The Municipality invested $15.7 million in cash outlays in 2020. 2.43 The Municipality maintained investment levels during 2020, maturing investments were reinvested resulting in fairly stable investment levels. Dividends from our investment in Elexicon were received during the year. 2.44 Financing activities during the year included a repayment of $2.3 million in the principal of long-term debt. There were no new issuances of long-term debt in 2020. 3. Financial Statements for the Board of Management for Historic Downtown Bowmanville Business Improvement Area 3.1 The major change in the Statement of Financial Position of the Bowmanville BIA is an increase of $40,248 in the cash and cash equivalents held by the BIA. This corresponds with the annual surplus of $42,101 during the year. Municipality of Clarington Page 10 Report FSD-033-21 3.2 The activities of the BIA were impacted by the emergency orders issued by the Province of Ontario due to COVID-19. This has resulted in a surplus in 2020 which the BIA will be able to utilize in the future when COVID-19 restrictions are lifted. 3.3 The fundraising revenue decreased significantly during the year as a result of the cancellation of the events normally held by the BIA. 3.4 The events and promotion expenses are lower than prior years as a result of the cancellation of the events during the year. There was a corresponding decrease in fundraising revenue which includes the vendor fees. The BIA did continue with other marketing and promotional activities to try and promote the BIA during the pandemic. 3.5 Salaries and wages increased slightly in 2020 as a result of an additional member as well as inflation. 3.6 There were no capital projects during the year as a result of COVID-19. 4. Financial Statements for the Board of Management for the Newcastle Central Business District Improvement Area 4.1 Cash and cash equivalents increased during the year as a result of collection of outstanding receivables, increase in unearned revenue and the annual surplus. 4.2 The BIA saw an increase in accumulated surplus of $14,724 which can be used to provide services to members in future years. 4.3 The BIAs revenue was approximately $39,700 lower than in 2019 which is mainly a result of decreased fundraising (due to COVID-19 restrictions) and a transfer from the Municipality of Clarington's reserve fund for the BIA ("west end money") which occurred in 2019. 4.4 Expenses are also lower by approximately $37,700 which is predominantly the events which were cancelled in 2020 due to COVID-19 and lower safety and decor expenses (which related to the purchase in 2019 of decorations funded by the "west end money") 4.5 The annual surplus of $14,724 increases the accumulated surplus to $32,977 which can be utilized in future years to provide services. 5. Financial Statements for the Orono Central Business District Improvement Area 5.1 The main change in the Orono BIA statement of financial position is a reduction of cash of approximately $13,300 which corresponds with the annual deficit of $13,400. Municipality of Clarington 11 Report FSD-033-21 Page 5.2 The BIA saw significant reduction of revenue, of approximately $31,700, between 2019 and 2020. This mainly is a result of donations/events which did not occur in 2020 due to COVID-19 and a project -specific grant from the Municipality of Clarington which did not occur in 2020. 5.3 The expenses were higher in 2020 as a result of landscaping and decor purchases during the year. 5.4 The annual deficit of $13,372 decreased the accumulated surplus of $36,494 to $23,122. The BIA still has an accumulated surplus which is sufficient to cover its liabilities. 6. Financial Statements for the Municipality of Clarington Trust Funds 6.1 The Trust Funds are not included in the Municipality of Clarington's consolidated financial statements. The financial reporting follows PSAB and includes all of the trust funds that the Municipality is responsible for. Most of the funds are related to cemetery trusts with an additional two bequests which are not cemetery related. 6.2 The trusts do not have any liabilities and consist predominantly of investments, which are primarily GICs. The due (to) from the Municipality of Clarington relates to expenses incurred at the cemetery or funds received by the Municipality which are due to be transferred to the trust fund. 6.3 During the year $57,395 in care and maintenance receipts were received with an additional $23,864 of interest earned on the trust fund investments. The cemetery trusts transferred to $63,576 to the cemeteries for care and maintenance of the cemeteries. 7. Draft Annual Financial Report 7.1 A growing trend in municipal finance is the preparation of annual financial reports which provide more information for stakeholders than simply the financial statements. These documents provide narrative information, charts and other information that is intended to show the greater picture of the activity of the municipality during the year. 7.2 The Municipality is working on the development of an annual financial report which provides additional information including financial discussion and analysis. Much of the information that is included in this report will be provided in a user-friendly manner, charts, pictures and graphs will provide additional forms of substantively the same information included here and within the financial statements. Municipality of Clarington 12 Report FSD-033-21 Page 7.3 The Annual Financial Report will be provided to Council during the summer, after ratification of the financial statements and final drafting of the report. 8. Concurrence Not Applicable. 9. Conclusion It is respectfully recommended that the financial statements for the Municipality and its components be approved as well as direction to Staff to finalize the Annual Financial Report. Staff Contact: Trevor Pinn, Director of Financial Services/Treasurer, 905-623-3379 ext. 2602 or tpinn@clarington.net Attachments: Attachment 1 — Draft Consolidated Financial Statements for the Municipality of Clarington for the year ending December 31, 2020 Attachment 2 — Draft Financial Statements for the Board of Management for Historic Downtown Bowmanville Business Improvement Area for the year ending December 31, 2020 Attachment 3 — Draft Financial Statements for the Board of Management for the Newcastle Central Business District Improvement Area for the year ending December 31, 2020 Attachment 4 — Draft Financial Statements for the Board of Management for the Orono Central Business District Improvement Area for the year ending December 31, 2020 Attachment 5 — Draft Financial Statements for the Municipality of Clarington Trusts for the year ending December 31, 2020 Interested Parties: The following interested parties will be notified of Council's decision: • TD Bank Ministry of Municipal Affairs and Housing If this information is required in an alternate format, please contact the Accessibility Co-ordinator at 905-623-3379 ext. 2131 Consolidated financial statements of The Corporation of the Municipality of Clarington December 31, 2020 The Corporation of the Municipality of Clarington December 31, 2020 Table of contents Management's Responsibility for the Consolidated Financial Statements ..................... 1 Independent auditor's report...................................................................................... 2-3 Consolidated statement of financial position................................................................... 4 Consolidated statement of operations............................................................................. 5 Consolidated statement of change in net financial assets ............................................... 6 Consolidated statement of cash flows............................................................................. 7 Notes to the consolidated financial statements........................................................ 8 - 28 Consolidated schedule of tangible capital assets — Schedule 1 ............................. 29 - 30 Consolidated schedule of segmented information — Actual - Schedule 2............... 31 - 32 Consolidated schedule of segmented information — Budget - Schedule 3 ............. 33 - 34 The Corporation of the Municipality of Clarington December 31, 2020 Management's Responsibility for the Consolidated Financial Statements The accompanying consolidated financial statements of the Corporation of the Municipality of Clarington are the responsibility of the Municipality's management and have been prepared in accordance with Canadian public sector accounting standards. The preparation of the financial statements necessarily involves the use of estimates based on management's judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. The Corporation maintains a system of internal controls designed to provide reasonable assurance that the financial information is relevant, reliable, and accurate, that transactions are properly authorized, and the Corporation's assets are properly accounted for and adequately safeguarded. The financial statements have been examined by BDO Canada LLP, Chartered Professional Accountants, the external auditors for the Corporation. The responsibility of the external auditor is to express an opinion on whether the financial statements are fairly presented, in all material respects, in accordance with Canadian public sector accounting standards. Council, through the Audit and Accountability Committee, is responsible for ensuring that management fulfills its responsibility for financial reporting and internal control. The Audit and Accountability Committee meets periodically with management, as well as the external auditors to satisfy itself that each party is properly discharging its responsibilities with respect to internal controls and financial reporting. The Audit and Accountability Committee meets with management and the external auditor to review the consolidated financial statements and discuss any significant financial reporting or internal control matters prior to their approval of the consolidated financial statements. Andrew Allison Trevor Pinn, CPA, CA Chief Administrative Officer Director of Financial Services / Treasurer August 3, 2021 August 3, 2021 Page 1 Independent Auditor's Report To the Members of Council of the Corporation of the Municipality of Clarington Opinion We have audited the consolidated financial statements of the Corporation of the Municipality of Clarington and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2020, and the consolidated statement of operations, the consolidated statement of change in net assets and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020, and its consolidated results of operations, its consolidated change in net financial assets, and its consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matters The consolidated financial statements of the Corporation of Municipality of Clarington for the year ended December 30, 2019 were audited by another auditor who expressed an unmodified opinion on those statements on September 10, 2020 on the same basis described above. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group's financial reporting process. Page 2 Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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 Group's internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants, Licensed Public Accountants Lindsay, Ontario [Date] Page 3 The Corporation of the Municipality of Clarington Consolidated Statement of Financial Position As at December 31, 2020 Financial assets Cash and cash equivalents Investments (Note 5) Accounts receivable (Note 2) Taxes receivable (Note 6) Inventories for resale Land for resale 2019 (Restated — 2020 Note 2) 79, 019, 522 69,280,598 9,090,098 8,538,141 30,206 221,349 55,684,429 69,279,397 10,742,310 8,633,327 27,657 424,898 Promissory notes receivable (Note 7) 8,321,000 8,321,000 Investment in Elexicon Corporation (Note 8) 18,580,998 18,563,427 Total financial assets 193,081,912 171,676,445 Liabilities Accounts payable and accrued liabilities 11,486,061 8,243,375 Employee future benefits liabilities (Note 9) 9,063,957 8,638,138 Debenture debt (Note 11) 9,545,557 11,879,590 Deferred revenue - general 14,447,534 16,039,513 Deferred revenue - obligatory reserve funds (Note 2, Note 13) 61,435,647 47,567,505 Total liabilities 105,978,756 92,368,121 Net financial assets Non -financial assets Tangible capital assets (Notes 19) (Schedule 1) Prepaid expenses 87.103.156 464,092,872 972,271 79.308.324 467,499,849 943,127 Inventory supplies 462,308 537,950 Total non -financial assets 465,527,451 468,980,926 Accumulated surplus (Note 20) 552,630,607 548,289,250 Contingencies (Note 15), contractual commitments (Note 16) and impact of Covid-19 (Note 24) See accompanying notes to the consolidated financial statements Page 4 The Corporation of the Municipality of Clarington Consolidated Statement of Operations For the year ended December 31, 2020 2019 (Restated — 2020 2020 Note 2) Budget Actual Actual Revenues (Note 21) Taxation and user charges Property taxation 64,000,247 64,336,736 61,553,425 Taxation from other governments 4,606,980 4,638,683 4,769,303 User charges 10,538,442 10,394,003 13,702,217 Grants Government of Canada 23,700 1,049,371 647,219 Province of Ontario 253,381 2,383,243 455,498 Other Deferred revenue earned 15,450,996 6,866,016 12,934,961 Investment income (Note 2) 932,680 2,183,593 2,725,189 Penalty and interest on taxes 1,250,000 1,269,120 1,417,469 Fines 426,500 368,411 571,782 Donations and contribution from others 5,023,633 2,120,311 2,743,224 Elexicon / Veridian Corporation Equity share of net income - 1,063,520 446,232 Contributed tangible capital assets 5,120,862 5,120,862 18,912,296 Other income - 6,272 25,290 Loss on disposal of tangible capital assets - (2,543,605) (475,792) Total revenues 107,627,421 99,256,536 120,428,313 Expenses General government 7,279,945 6,845,738 7,439,161 Protection to persons and property 20,139,322 19,604,062 18,854,337 Transportation services 34,558,863 33,682,585 32,412,918 Environmental services 3,016,539 3,470,674 4,413,890 Health services 390,294 429,164 383,447 Recreational and cultural services 28,199,724 24,522,968 26,259,737 Planning and development 5,523,095 6,359,988 6,559,536 Total expenses 99,107,782 94,915,179 96,323,026 Annual surplus 8,519,639 4,341,357 24,105,287 Accumulated surplus, beginning of year (Note 2) 549,716,079 548,289,250 524,183,963 Accumulated surplus, end of year 558,235,718 552,630,607 548,289,250 See accompanying notes to the consolidated financial statements Page 5 The Corporation of the Municipality of Clarington Consolidated Statement of Change in Net Financial Assets For the year ended December 31, 2020 2019 (Restated — 2020 2020 Note 2) Budget Actual Actual Annual surplus 8,519,639 4,341,357 24,105,287 Amortization of tangible capital assets 20,093,171 21,654,409 20,576,843 Acquisition of tangible capital assets (27,618,376) (20,831,588) (38,546,370) Net book value of tangible capital assets disposals/adjustments 2,584,155 576,437 (Increase) decrease in prepaid expenses (29,143) (163,041) (Increase) decrease in inventory supplies 75,642 74,427 Increase (decrease) in net financial assets 994,434 7,794,832 6,623,583 Net financial assets, beginning of year Net financial assets, end of year 80,735,153 81,729,587 79,308,324 87,103,156 See accompanying notes to the consolidated financial statements 72,684,741 79,308,324 Page 6 The Corporation of the Municipality of Clarington Consolidated Statement of Cash Flows For the year ended December 31, 2020 2019 (Restated — 2020 Note 2) Operating activities Annual surplus 4,341,357 24,831,954 Non cash items Amortization of tangible capital assets 21,654,409 20,576,843 Loss on disposal of tangible capital assets 2,543,605 475,792 Equity share of Elexicon Corporation net income (1,063,520) (446,232) Contributed tangible capital assets recorded in revenue (5,120,862) (18,912,296) Change in non -cash operating items Accounts receivable 1,652,212 (4,289,392) Taxes receivable 95,186 (449,522) Inventories for resale (2,549) 4,475 Inventory of land for resale 203,549 20 Accounts payable and accrued liabilities 3,242,686 114,832 Employee future benefits liabilities 425,819 (22,389) Deferred revenue - general (1,591,979) 1,264,016 Deferred revenue - obligatory reserve funds 13,868,142 (231,419) Prepaid expenses (29,143) (163,041) Inventory supplies 75,642 74,427 40,294,554 22,828,068 Capital activities Acquisition of tangible capital assets (net of contributed (15,710,726) (19,634,074) tangible capital assets) Proceeds on disposal of tangible capital assets 40,550 100,645 (15,670,176) (19,533,429) Investing activities Decrease (increase) in investments (1,201) 1,996,436 Dividends received from Veridian Corporation 1,045,949 941,900 1,044,748 2,938,336 Financing activities Repayment of debenture debt (2,334,033) (2,393,930) Proceeds of debenture issue - (2,334,033) (2,393,930) Net increase (decrease) of cash and cash equivalents 23,335,093 3,839,045 Cash and cash equivalents, beginning of year 55,684,429 51,845,384 Cash and cash equivalents, end of year 79,019,522 55,684,429 See accompanying notes to the consolidated financial statements Page 7 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 The Municipality of Clarington (the "Municipality") is a municipality in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statues such as the Municipal Act, the Municipal Affairs Act and related legislation. Significant accounting policies The consolidated financial statements of the Municipality are the representations of management prepared in accordance with Canadian Public Sector Accounting Standards ("PSAS"). Significant accounting policies adopted are as follows: (a) (i) Reporting entity These consolidated financial statements reflect financial assets, liabilities, operating revenues and expenses, and changes in investment in tangible capital assets of the Municipality of Clarington. The reporting entity is comprised of all organizations, local boards and committees controlled by the Municipality, including the following: - Board of Management for the Historic Downtown Bowmanville Business Improvement Area - Board of Management for the Newcastle Central Business District Improvement Area - Board of Management for the Orono Central Business District Improvement Area - Clarington Public Library Board - Newcastle Arena Board - Newcastle Community Hall Board - Solina Hall Board - Tyrone Community Hall Board - Clarington Heritage Committee - Bowmanville Santa Claus Parade Committee - Orono Cemetery Board* Clarington Museums and Archives All material inter -entity transactions and balances are eliminated on consolidation. * As of June 10, 2019, the Municipality assumed operations of the Orono Cemetery Board. As of the reporting date, the Municipality was working in conjunction with the Bereavement Authority of Ontario to complete the transfer of the license to the Municipality. (ii) Investment in Veridian Corporation / Elexicon Corporation On April 1, 2019, Veridian Corporation and Whitby Hydro Energy Corporation merged, forming Elexicon Corporation. As a previous shareholder of Veridian Corporation, the Municipality of Clarington, along with the City of Pickering, the Town of Ajax, and the City of Belleville now own 68% of Elexicon Corporation. The Town of Whitby owns the remaining 32% of Elexicon Corporation. The Municipality of Clarington holds a 9.248% share of ownership. For the 2020 fiscal year, the Municipality's investment in Elexicon Corporation and its subsidiaries is accounted for on a modified equity basis, consistent with generally accepted accounting principles as recommended by PSAS for investments in government business Page 8 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 1. Significant accounting policies (continued) (ii) Investment in Elexicon Corporation (continued) partnerships. Under the modified equity basis of accounting, the business partnership's accounting principles are not adjusted to conform to those of the Municipality and inter -organizational transactions and balances are not eliminated. The Municipality recognizes its equity interest in the annual income or loss of Elexicon Corporation in its "Consolidated Statement of Operations" with a corresponding increase or decrease in its investment asset account. Any dividends that the Municipality may receive from Elexicon Corporation and other capital transactions will be reflected as adjustments in the investment asset account. (iii) Accounting for region and school board transactions The taxation and other revenues, expenses, assets and liabilities with respect to the operations of the school boards and the Regional Municipality of Durham are not reflected in these financial statements. (iv) Accounting for phase-in/capping provisions Increases/decreases in property taxes levied as a result of the application of phase-in/capping legislation are not reflected in the Consolidated Statement of Operations but are reported on the Consolidated Statement of Financial Position. (v) Trust funds Trust funds and their related operations administered by the Municipality are not included in these consolidated financial statements but are reported separately on the "Trust Funds Statement of Operations" and "Trust Funds Statement of Financial Position". (b) Basis of accounting (i) Accrual basis of accounting Revenues and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues in the period in which transactions or events occurred that gave rise to the revenues; expenses are recognized in the period the goods and services are acquired and a liability is incurred or transfers are due. (ii) Cash and cash equivalents Cash and cash equivalents are comprised of cash on hand, demand deposits and bankers' acceptances, all of which are highly liquid, subject to insignificant risk of changes in value and have a short-term maturity of less than 90 days. (iii) Investments Portfolio investments are carried at cost, net of accumulated amortization on premiums and discounts. Premiums and discounts are amortized on a straight-line basis over the term to maturity. Interest income is recorded as it accrues. When the value of any portfolio investment is impaired, the carrying amount is adjusted to the estimated realizable amount and any adjustments are included in investment income in the period the impairment is recognized. Page 9 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 1. Significant accounting policies (continued) (b) Basis of accounting (continued) (iv) Non -financial assets Non -financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. The change in non -financial assets during the year, together with the excess of revenues over expenses, provides the Changes in Net Financial Assets for the year. (a) Tangible capital assets ("TCA") Tangible capital assets are recorded at cost, which includes all amounts that are directly attributable to acquisition, construction, development, or betterment of the asset. The cost, less residual value, of the tangible capital assets are amortized on a straight-line basis over their estimated useful lives as follows: Land improvements 20-75 years Buildings 5-75 years Vehicles 7-20 years Equipment 3-25 years Linear road and related 7-75 years Linear storm sewers 40-75 years Amortization The Municipality uses the straight-line method of amortization. For pooled assets and networks such as roads and storm sewers, one half of the annual amortization is charged in the year of acquisition or in-service date and in the year of disposal. For individual assets, if acquired (or in-service) in the first half of the year, the full year of the amortization is charged. If acquired (or in- service) in the second half of the year, one half of the annual amortization is charged. Similarly, in the year of disposal, if the asset is disposed of in the first half of the year, one half of the amortization is charged but if disposed of in the second half of the year the full annual amortization is charged. Assets under construction are not amortized until the asset is available for productive use, at which time they are capitalized. Contribution of tangible capital assets Tangible capital assets received as contributions are recorded at their fair value at the date received/assumed and that fair value is also recorded as revenue. (b) Intangible assets Intangible assets are not recognized in the consolidated financial statements. Page 10 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 1. Significant accounting policies (continued) (b) Basis of accounting (continued) (iv) Non -financial assets (continued) (c) Inventories Inventories held for consumption are recorded at the lower of cost or replacement cost. (v) Reserves and reserve funds Certain amounts, as approved by Council, are set aside in reserves and reserve funds for future operating and capital purposes. Transfers to and/or from reserves and reserve funds are an adjustment to the respective fund when approved. Reserves and reserve funds form part of the Municipality's accumulated surplus. (vi) Deferred revenues Deferred Revenues, which include advance payments for tickets, building permits and program registration fees; contributions from developers according to Section 37 of the Planning Act; and revenues set aside for specific purposes (obligatory reserve funds), represent fees which have been collected, but for which the related services have not yet been provided. Revenue is recognized when the related activity occurs or the service is performed. (vii) Employee future benefits The present value of the cost of providing employees with future benefits programs is expensed as employees earn these entitlements through service. The cost of the benefits earned by employees is actuarially determined using the projected benefit method prorated on service and management's best estimate of retirement ages of employees and expected health care and dental costs. Actuarial gains or losses are amortized on a straight-line basis over the expected average remaining service life of all employees covered. (viii) Contaminated sites Contaminated sites are the result of contamination being introduced in air, soil, water or sediment of a chemical, organic, or radioactive material or live organism that exceed an environmental standard. A liability for remediation of contaminated sites is recognized, net of any expected recoveries, when all of the following criteria are met: a) an environmental standard exists; b) contamination exceeds the environmental standard; c) the organization is directly responsible or accepts responsibility for the liability; d) future economic benefits will be given up; and e) a reasonable estimate of the liability can be made. Changes in this estimate are recorded in the Municipality's statement of operations. As of December 31, 2020, there was no liability recorded on the statement. Page 11 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 1. Significant accounting policies (continued) (b) Basis of accounting (continued) (ix) Revenue Recognition Taxation Property tax billings are prepared by the Municipality based on assessment rolls issued by the Municipal Property Assessment Corporation ("MPAC"). Tax rates are established annually by Council, incorporating amounts to be raised for local services and amounts the Municipality is required to collect on behalf of the Regional Municipality of Durham and the Province of Ontario in respect of education taxes. Taxes are recorded at estimated amounts when they meet the definition of an asset, have been authorized and the taxable event occurs. For property taxes, the taxable event is the period for which the tax is levied. As taxes recorded are initially based on management's best estimate of the taxes that will be received, it is possible that changes in future conditions, such as reassessments due to audits, appeals and court decisions, could result in a change in the amount of tax revenue recognized. Taxes receivable are recognized net of an allowance for anticipated uncollectable amounts. A normal part of the assessment process is the issuance of supplementary assessment rolls which provide updated information with respect to changes in property assessment. Once a supplementary roll is received, the Municipality determines the taxes applicable and renders supplementary tax billings. Assessments of the related property taxes are subject to appeal. Any supplementary billing adjustments made necessary by the determination of such changes will be recognized in the fiscal year they are determined, and the effect shared with the Region of Durham and school boards, as appropriate. Government transfers Government transfers are recognized as revenue in the financial statements when the transfer is authorized and any eligibility criteria are met, except to the extent that 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 statement of operations as the stipulation liabilities are settled. Government transfers and developer contributions -in -kind related to capital acquisitions are required to be recognized as revenue in the consolidated financial statements in the period in which the tangible capital assets are acquired. User fees and service charges User charges are recognized when the services are performed, or goods are delivered and there is reasonable assurance of collection. Other Other revenue is recorded when it is earned, and collection is reasonably assured. Page 12 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 1. Significant accounting policies (continued) (b) Basis of accounting (continued) Investment income Investment income earned on operating surplus funds and reserve funds (other than obligatory reserve funds) are recorded as revenue in the period earned. Investment income earned on obligatory reserve funds are recorded directly to each respective fund balance and forms part of the deferred revenue — obligatory reserve funds balance. (x) Inventory for resale Inventory for resale is valued at the lower of cost or net realizable value on an average cost basis. (xi) Use of estimates Since precise determination of many assets and liabilities is dependent upon future events, the preparation of periodic financial statements necessarily involves the use of estimates and approximations. These have been made using careful judgment. Actual results could differ from these estimates. 2. Prior period adjustment During the year, the Municipality identified a prior period adjustment related to accrued investment income that was recognized in error. The prior period adjustment impacts the year ended December 31, 2019 and prior years. As a result, the December 31, 2019 comparative figures have been restated from those previously reported as follows: Previously Reported Adjustments Restated Accounts receivable 12,329,020 1,586,710 10,742,310 Deferred revenue — obligatory reserve funds 47,727,387 159,882 47,567,505 Accumulated surplus, beginning of year 524,884,124 700,161 524,183,963 Investment income 3,451,856 726,667 2,725,189 3. Trust funds Trust funds administered by the Municipality amounting to $1,933,011 (2019 — $1,915,329) have not been included in the "Consolidated Statement of Financial Position" nor have their financial activities been included in the "Consolidated Statement of Operations". 4. Operations of school boards and The Regional Municipality of Durham Further to Note 1(a) (iii), requisitions were made by the Regional Municipality of Durham and School Boards requiring the Municipality of Clarington to collect property taxes and Page 13 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 4. Operations of school boards and The Regional Municipality of Durham (continued) payments in lieu of property taxes on their behalf. The amounts levied and remitted are summarized below: Regional School Municipality Boards of Durham $ $ 2020 Property taxes 33,327,860 93,206,600 Taxation from other governments 90,735 2,889,931 Total 33,418,595 96,096,531 2019 Property taxes 32,367,970 89,346,215 Taxation from other governments 93,770 2,979,181 Total 32,461,740 92,325,396 5. Investments Total investments of $69,280,598 (2019 - $69,279,397) reported on the Consolidated Statement of Financial Position at cost plus accrued interest, have a market value of $73,104,547 (2019 - $72,701,584) at the end of the year. The investments consist of investments pursuant to provisions of the Municipality's investment policy and comprise government bonds and guaranteed investment certificates (GICs) issued by various financial institutions. It is the Municipality's intention to hold these investments until maturity. 2020 Cost 2020 Market Value 2019 Cost 2019 Market Value GICs 38,838,412 40,174,373 51,895,933 54,705,469 Bonds 23,536,521 25,262,800 12,690,866 12,831,045 Pooled Funds Equity 2,588,679 3,492,447 500,000 1,199,929 Pooled Funds Bonds 4,316,986 4,174,927 4,192,598 3,965,141 Total 69,280,598 73,104,547 69,279,397 72,701,584 The Municipality holds investments with a maturity of less than 90 days, in a High Interest Savings Account. This value is reported within cash and cash equivalents, due to the highly liquid nature of these investments. Total investments, with a maturity of less than 90 days, have a value of $24,453,346 (2019 - $23,580,608) reported on the Consolidated Statement of Financial Position. Page 14 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 6. Taxes receivable The balance in taxes receivable, including penalties and interest, is comprised of the following: 2020 2019 Current year 6,830,452 6,992,835 Arrears previous years 2,457,689 2,390,492 9,288,141 9,383,327 Allowance for uncollectible taxes (750,000) (750,000) 8,538,141 8,633,327 7. Promissory notes receivable 2020 2019 Promissory note receivable from Veridian Corporation maturing December 31, 2019 or the closing date and bearing interest at the greater of 6% or the Ontario Energy Board deemed long- term debt rate on an annual basis to maturity, transferred on April 1,2019 to a promissory note receivable from Elexicon Corporation due on demand and bearing interest at the Ontario Energy Board deemed long-term debt rate on an annual basis to maturity (4.13% at Dec 31, 2020). 2,355,000 2,355,000 Promissory note receivable from Veridian Connection Inc. maturing November 1, 2039 and bearing interest at 4.47% from January 1, 2015 to December 31, 2019 and then the Ontario Energy Board deemed long-term debt rate for each successive five year period thereafter, transferred on April 1, 2019 to a promissory note receivable from Elexicon Energy Inc. maturing November 1, 2039 and bearing interest at the Ontario Energy Board deemed long-term debt rate on an annual 5,966,000 5,966,000 basis to maturity (4.13% at Dec 31, 2020). 8,321,000 8,321,000 Interest revenue earned from the notes receivable totalled $343,657 (2019 - $359,738). The Municipality has waived its right to demand repayment of any portion of the principal of the promissory notes payable before the date of January 1, 2022. Page 15 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 8. Investment in Veridian Corporation / Elexicon Corporation Veridian Corporation was a government business partnership which was jointly owned by the City of Pickering, Town of Ajax, Municipality of Clarington and the City of Belleville. The Municipality of Clarington owned 1,360 of the outstanding common shares of Veridian Corporation. This represented a 13.6% share of ownership. On April 1, 2019, Veridian Corporation and Whitby Hydro Energy Corporation merged, forming Elexicon Corporation. As a previous shareholder of Veridian Corporation, the Municipality of Clarington, along with the City of Pickering, the Town of Ajax, and the City of Belleville now own 68% of Elexicon Corporation. The Town of Whitby owns the remaining 32% of Elexicon Corporation. The Municipality of Clarington holds a 9.248% share of ownership. (a) Veridian Corporation The Municipality is accounting for this investment using a modified equity basis in these financial statements. The financial impact of the amalgamation to the Municipality of Clarington's investment and equity are reported below. The following table provides condensed supplementary financial information of Veridian Corporation and its subsidiaries for the year ended March 31, 2019: 2019 — as at March 31 Financial position Assets Current 65,333,000 Capital and intangibles 296,565,000 Other 147,000 Regulatory balances 7,231,000 Total assets and regulatory balances 369,276,000 Liabilities Current 155,284,000 Long-term debt 36,909,000 Other 36,569,000 Total liabilities 228,762,000 Shareholders' Equity Share capital 67,260,000 Contributed capital 25,000 Retained earnings 67,960,000 Regulatory balances 5,269,000 Total shareholders' equity and regulatory balances 140,514,000 Total liabilities, equity and regulatory balances 369,276,000 Page 16 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 8. Investment in Veridian Corporation / Elexicon Corporation (continued) (a) Veridian Corporation (continued) Financial activities Revenues 79,702,000 Other income 657,000 Expenses (84,348,000) Net movements in regulatory balances, net of tax 2,640,000 Net income (loss) for the year (1,349,000) (b) Elexicon Corporation The Municipality is accounting for this investment using a modified equity basis in these financial statements. The financial impact of the amalgamation to the Municipality of Clarington's investment and equity are reported below. The following table provides condensed supplementary financial information of the Elexicon Corporation and its subsidiaries for the 2020 fiscal year and the period of April 1 to December 31, 2019: 2019 —April 1 to 2020 December 31 Financial position Assets Current 98,525,000 84,933,000 Capital and intangibles 535,400,000 506,254,000 Other 162,000 256,000 Regulatory balances 26,912,000 15,145,000 Total assets and regulatory balances 660,999,000 606,588,000 Liabilities Current 88,743,000 89,180,000 Long-term debt 214,502,000 180,360,000 Other 110,913,000 89,641,000 Total liabilities 414,158,000 359,181,000 Shareholders' Equity Share capital 97,692,000 97,692,000 Contributed capital 25,000 25,000 Retained earnings 147,288,000 147,082,000 Regulatory balances 1,836,000 2,608,000 Total shareholders' equity and regulatory 246,841,000 247,407,000 balances Total liabilities, equity and regulatory balances 660,999,000 606,588,000 Page 17 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 8. Investment in Veridian Corporation / Elexicon Corporation (continued) (b) Elexicon Corporation (continued) Financial activities Revenues 553,366,000 364,204,000 Other income 6,482,000 1,227,000 Expenses (559,888,000) (367,302,000) Net movements in regulatory balances, net of 11,540,000 8,680,000 tax Net income for the year 11,500,000 6,809,000 (c) Municipality's equity is represented by: 2020 2019 Promissory notes receivable (Note 7) 8,321,000 8,321,000 Initial investment in shares of the Corporation 10,146,495 10,146,495 Accumulated net income 20,114,574 19,051,053 Net increase in value of investment 400,126 400,126 Accumulated dividends received (12,080,197) (11,034,247) Total equity 26,901,998 26,884,427 Municipality of Clarington's investment represented by: Investment in Corporation 18,580,998 18,563,427 Promissory notes receivable 8,321,000 8,321,000 26,901,998 26,884,427 (d) Contingencies and guarantees of Elexicon Corporation (the "Corporation") as disclosed in their financial statements are as follows: (i) Insurance claims The Corporation is a member of the Municipal Electric Association Reciprocal Insurance Exchange ("MEARIE"), which was created on January 1, 1987. A reciprocal insurance exchange may be defined as a group of persons formed for the purpose of exchanging reciprocal contracts of indemnity or inter -insurance with each other. MEARIE provides general liability insurance to member electric utilities. MEARIE also provides vehicle and property insurance to the Corporation. Insurance premiums charged to each member electric utility consist of a levy per $1,000 of service revenue subject to a credit or surcharge based on each electric utility's claims experience. The maximum coverage is $30,000,000 per occurrence for liability insurance, $21,000,000 for vehicle insurance, and $161,680,000 for property insurance; plus $10,000,000 excess coverage on top of the regular liability and vehicle coverage. Page 18 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 8. Investment in Veridian Corporation / Elexicon Corporation (continued) (ii) Contractual obligation - Hydro One Networks Inc. (continued) The Corporation's subsidiary, Elexicon Energy Inc. (EEI), is party to a connection and cost recovery agreement with Hydro One related to the construction by Hydro One of a transformer station designated to meet EEI's anticipated electricity load growth. Construction of the project was completed during 2007 and EEI connected to the transformer station during 2008. To the extent that the cost of the project is not recoverable from future transformation connection revenues, EEI is obligated to pay a capital contribution equal to the difference between these revenues and the construction costs allocated to EEI. The construction costs allocated to EEI for the project are $19,950,000. Hydro One has performed a true -up based on actual load at the end of the tenth anniversary of the in-service date and the Corporation has paid $2,135,000 (2019 — 637) to Hydro One and recognized the same as an intangible asset. The Corporation has also recorded a current liability and a corresponding intangible asset for $1,533,000 as at December 31, 2019, based on management's best estimate of the future transformation connection revenues shortfall. Hydro One is expected to perform another true -up based on actual load at the end of the fifteenth anniversary of the in-service date. (e) Lease commitments - Elexicon Corporation Future minimum lease payment obligations under operating leases are as follows: 1J �a 2021 363,000 2022 229,000 2023 179,000 2024 124,000 2025 95,000 Thereafter 115,000 1,105,000 9. Employee future benefits liabilities (a) Accumulated sick leave entitlement (i) Firefighters The Municipality provides two sick leave accumulation plans for firefighters. Plan A accumulates at the rate of one day per month of completed years of service to a maximum of 182 days. These employees may become entitled to a cash payment on retirement, early retirement, termination, or death, at the rate of 50% of the accumulated credit, to a maximum of one-half a year's salary. Plan B — accumulates at the rate of one day per month once the employees complete five years of service. The estimated liability at December 31, 2020 was $1,009,061 (2019 - $1,023,710). Page 19 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 9. Employee future benefits liabilities (continued) (a) Accumulated sick leave entitlement (continued) (ii) Other During the 1993 fiscal year, the Municipality negotiated an agreement with all employees (except firefighters) to terminate the sick leave benefit plan which had been in effect for many years. The Municipality agreed to pay to those employees covered by the plan and who had at least five -years' service with the Municipality a cash equivalent of 50% of sick leave days accumulated to July 1, 1993 to a maximum of 120 days of salary. Remuneration for the buying out of sick days identified will be available to the employee at any time up to the time that the employee either leaves the Corporation or retires, at the rate of remuneration in effect at July 31, 1993. The estimated liability at December 31, 2020 amounted to $21,196 (2019 - $18,298). (b) Post -employment benefits - other The Municipality makes available to qualifying employees who retire before the age of 65 (firefighters - age 60) the opportunity of continuing their coverage for benefits such as medical (extended health), dental, and life insurance benefits. Coverage ceases at age 65. Dependent upon the eligibility, the cost of this coverage may be a shared responsibility between the Municipality and the retired employees. An actuarial valuation was performed as at December 31, 2020 based on data as at the valuation date and plan provisions. The accrued benefit obligation and net benefit costs (i.e. the expense) for the 2020 fiscal year end was determined by this valuation. The significant actuarial assumptions employed for the valuation are as follows: (i) Discount rate will be 2.50% per annum. (ii) Future inflation rates will be 2.00%. (iii) Dental cost trend rates will be 3.00% in fiscal 2021 and remain stable at that level until 2024. (iv) Extended health care trend rates will be 5.37% in fiscal 2021 and remain stable at that level until 2024. (c) Information about the Municipality's employee future benefits liabilities is as follows: 2020 2019 Accrued benefit obligation Balance, beginning of year 9,898,089 7,321,218 Employer current service cost 541,249 414,861 Interest cost 252,516 236,833 Benefits paid (493,252) (626,106) Actuarial (gain) loss 516,357 2,551,283 Balance, end of year 10,714,959 9,898,089 Unamortized net actuarial gains (losses) (1,651,002) (1,259,951) Employee future benefits liabilities, end of year 9,063,957 8,638,138 Page 20 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 10. Pension agreements The Municipality makes contributions to the Ontario Municipal Employees Retirement Fund ("OMERS"). OMERS is a multi -employer defined benefit pension plan which provides pensions for employees of Ontario municipalities, local boards, public utilities, and school boards. The pension plan is financed by equal contributions from participating employers and employees, and by the investment earnings of the fund. The most recent actuarial valuation of the Plan was conducted at December 31, 2020. The results of this valuation disclosed total actuarial liabilities of $113,055 million with respect to benefits accrued for service with actuarial assets at that date of $109,844 million indicating an actuarial deficit of $3,211 million. Because OMERS is a multi -employer plan, any Plan surpluses or deficits are joint responsibility of Ontario municipal organizations and their employees. As a result, the Municipality does not recognize any share of the Plan surplus or deficit. The Municipality recognizes the expense related to this plan as contributions are made. The contribution rates and year's maximum pensionable earnings (YMPE) are outlined in the table below. NRA 65 up to NRA 65 over NRA 60 up to NRA 60 over Year YMPE YMPE YMPE YMPE YMPE 2020 $58,700 9.0% 14.6% 9.2% 15.8% 2019 $57,400 9.0% 14.6% 9.2% 15.8% The amount contributed to OMERS for 2020 was $3,308,521 (2019 - $3,323,567) for current services and is included as an expense on the statement of operations. 11. Debenture debt The debenture debt consists of several debentures that mature in the years 2021 to 2032. (a) At the end of the year, the outstanding principal amount of this liability is $9,545,557 (2019 - $11,879,590). Interest rate Regional By-law Maturity date Note (i) # 2020 2019 $ $ July 12, 2021 5.12 52-2006 103,099 201,115 August 21, 2022 4.60 to 4.75 07-2007 2,000,000 3,500,000 July 2, 2024 1.95 to 3.35 38-2014 611,000 755,000 July 2, 2029 1.95 to 3.80 38-2014 4,176,600 4,573,600 October 17, 2031 1.25 to 2.80 48-2016 750,000 811,000 April 13, 2032 1.70 to 3.30 56-2017 834,305 893,002 April 13, 2032 1.70 to 3.30 56-2017 1,070,553 1,145,873 9,545,557 11,879,590 Note (i) Interest rates gradually increase to the upper limits noted in the table. Page 21 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 11. Debenture debt (continued) (b) Of the municipal debt reported in (a) of this note, principal payments are payable from general municipal revenues follows: 2021 1,858,842 2022 1,775,923 2023 797,103 2024 818,737 2025 679,826 Thereafter 3,615,126 9,545,557 (c) 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. (d) Total interest expense related to the net long-term liabilities amounted to $354,362 (2019 - $445,785) and is reported on the Consolidated Statement of Operations. 12. Internal Loans As a means of funding various capital acquisitions, funds are borrowed from the Municipal Capital Reserve Fund. These funds are secured by promissory notes with interest rates ranging from 2.20% to 3.30% and payment terms of 15 years. The financing arrangements and ultimate repayment are approved by Council through the budget process. (a) The following is a summary of the individual loans: Major Parking Lot Rehabilitation 1,560,934 LED Street lighting Conversion 2,320,066 3,881,000 (b) Of the internal loans reported in (a) of this note, principal payments are as follows: a 2021 250,000 2022 257,000 2023 263,000 2024 271,000 2025 279,000 Thereafter 2,561,000 3,881,000 Page 22 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 13. Deferred revenue - obligatory reserve funds The continuity of "deferred revenue - obligatory reserve funds" of the Municipality is summarized as follows: 2020 2019 (Restated — Note 2) Balance, beginning of year 47,567,505 47,965,073 Contributions Contributions from developers 15,080,110 3,813,009 Investment income 1,195,007 1,327,825 Federal Gas Tax 2,791,328 5,534,417 Provincial infrastructure 1,882,464 1,916,537 20,948,909 12,591,788 Utilization: Transfers to operating 1,700,073 2,410,387 Acquisition of TCA - construction 5,380,694 10,578,969 7,080,767 12,989,356 Change in deferred revenue during the year 13,868,142 (397,568) Balance, end of year 61,435,647 47,567,505 Balance, end of year - analyzed as follows: Parkland cash -in -lieu 3,678,240 3,076,312 Federal gas tax 2,456,571 2,208,536 Building code act 2,780,177 2,521,357 Provincial infrastructure 2,505,444 1,437,002 Development charges (Note 14) 50,015,215 38,324,298 Total deferred revenue — obligatory reserve funds 61,435,647 47,567,505 14. Continuity of development charges reserve funds 2020 2019 (Restated — Note 2) Balance at the beginning of the year 38,324,298 40,461,730 Development charges collections 15,858,733 3,361,490 Investment income 923,855 1,239,331 Tangible capital assets acquisitions and construction (2,117,686) (4,427,799) Operating expenses (2,973,985) (2,310,454) Balance at the end of the year 50,015,215 38,324,298 Page 23 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 15. Contingencies Various legal actions and claims have been initiated by and against the Municipality, the outcomes of which cannot be determined at the time of reporting. Accordingly, no provision has been made in these consolidated financial statements for any liability which may result. Should any gain or loss occur as a result of the above legal actions the Municipality will account for the gain/loss when it is likely that such a gain/loss will occur, and the amount is measurable. 16. Contractual commitments During the year the Municipality had work done on several major projects with contract values totaling approximately $42,939,583 (2019 - $49,923,822). These contracts relate to the construction and expansion of certain permanent facilities. As at December 31, 2020, $7,740,569 (2019 - $5,313,275) relating to these contracts had not been expended. 17. Related party transactions and balances - Veridian Corporation / Elexicon Corporation 2020 2019 Transactions Dividends received 1,045,949 941,900 Interest earned on promissory notes 343,658 359,738 Property taxes 33,533 33,728 Energy and services purchases 628,746 764,974 Balances Promissory notes receivable 8,321,000 8,321,000 Accounts payable and accrued liabilities 86,139 57,426 18. Guarantees In the normal course of business, the Municipality enters into agreements which contain guarantees. The Municipality's primary guarantees are as follows: (a) The Municipality has provided indemnities under lease agreements for the use of various facilities or land. Under the terms of these agreements the Municipality agrees to indemnify the counterparties for various items including, but not limited to, all liabilities, losses, suits, and damages arising during, on or after the term of the agreement. The maximum amount of any potential future payment cannot be reasonably estimated. (b) The Municipality indemnifies employees and elected officials for various items including, but not limited to, all costs to settle suits or actions due to association with the Municipality, subject to certain restrictions. The Municipality has purchased liability insurance to mitigate the cost of any potential future suits or actions. The term of the indemnification is not explicitly defined but is limited to the period over which the indemnified party served as an employee or elected official of the Municipality. The maximum amount of any potential future payment cannot be reasonably estimated. (c) The Municipality has entered into agreements that may include indemnities in favour of third parties, such as purchase and sale agreements, confidentiality agreements, Page 24 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 18. Guarantees (continued) engagement letters with advisors and consultants, outsourcing agreements, leasing contracts, information technology agreements and service agreements. These indemnification agreements may require the Municipality to compensate counterparties for losses incurred by the counterparties as a result of breaches in representation and regulations or as a result of litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The terms of these reimbursements cannot be reasonably estimated. The nature of these indemnification agreements prevents the Municipality from making a reasonable estimate of the maximum exposure due to the difficulties in assessing the amount of liability which stems from the unpredictability of future events and the unlimited coverage offered to counterparties. Historically, the Municipality has not made any significant payments under such or similar indemnification agreements and therefore no amount has been accrued in these consolidated financial statements with respect to these agreements. 19. Tangible capital assets The continuity of the historical cost and accumulated amortization for various categories of tangible capital assets can be found in Schedule 1. Further information relating to tangible capital assets is as follows: (a) Contributed tangible capital assets The Municipality of Clarington records all tangible assets contributed by an external party at fair value on the earlier of the date received or of the transfer of risk and responsibility. Typical examples are roadways, parks, land, and storm sewers installed by a developer as part of a subdivision agreement. For subdivision assets, the recorded date is considered to be the date of acceptance with the exclusion of streetlights and storm sewers with the recorded date as the date of completion. In 2020, there were contributed assets of $5,120,862 (2019 - $18,912,296). (b) Works of Art and Historical Treasures The Municipality has one historical collection. The Municipality of Clarington Joint Public Library and Museum Board collection is currently insured for $350,000. Also included in historical treasures are the cenotaphs located in Bowmanville, Newcastle, Orono and Newtonville. Due to the rural history, there are several abandoned cemeteries located throughout the Municipality. The land is included in the Land asset account; however, all associated physical items are considered a historical treasure. This includes historical signs and cairns, or concrete structures built for old headstones. Page 25 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 20. Accumulated surplus Accumulated surplus is comprised of the following: Invested in tangible capital assets General surplus Capital surplus Inventory - surplus land Debenture debt to be recovered from future revenue Unfunded employee benefits and post -employment liabilities Reserves set aside for specific purposes by Council: Acquisition of capital assets Legal/consulting issues Election expenses Fire prevention Burketon park improvements Samuel Wilmot nature area Secondary plans Clarington Heritage Committee Board 2020 464,092,872 5,718,505 18,517,314 221,349 2019 (Restated - Note 2) 467,499,849 2,886,819 18,429,199 424,898 (9,545,557) (11,879,590) (2,799,829) (3,053,553) 4,238,932 3,788,124 1,524,135 1,173,485 222,338 147,338 284,552 304,552 7,569 7,569 1,592 492 133,054 - 7,051 6,981 Reserve funds set aside for specific purposes by Council: General municipal purposes 6,857,815 5,834,785 Rate stabilization 7,325,184 6,583,056 Strategic capital 9,964,744 10,345,340 Recreation programs and facilities 394,764 427,370 Debenture repayment 568,975 437,259 Industrial development 556,028 493,934 Other cultural 132,720 115,645 Acquisition of capital assets 8,171,365 7,581,917 Newcastle Waterfront study 44,603 689 Municipal capital works 3,550,192 4,133,761 Other capital - unspecified 970,237 948,827 Road contributions 3,379,286 3,744,966 Westside Bridge/Bowmanville Marsh (2,199) (2,199) Port Granby LLRW 306,129 180,689 Community Improvement Plan 137,941 122,497 Business Improvement Areas 161,766 158,984 Hampton Union Cemetery 113,642 99,966 Community Emergency Management 471,540 461,174 Equity in Elexicon / Veridian Corporation 26,901,998 26,884,427 Accumulated surplus 552,630,607 548,289,250 Page 26 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 21. Segmented information The Municipality provides a wide range of services to its residents. Distinguishable functional segments have been separately reported on Schedule 2. For each segment, revenues and expenses represent amounts that are directly attributable to each segment. Tax revenues are reported as part of general government. The nature of the segments and the activities they encompass are as follows: (a) General government General government is comprised of all departments that support the corporate governance, management, and program support for the Municipality. (b) Protection to persons and property Protection to persons and property is comprised of Emergency and Fire Services, Municipal Law Enforcement, Animal Services and Building inspection / enforcement services. Emergency and Fire Services includes responsibility for emergency management, fire prevention and public education, fire suppression, communication, and training. (c) Transportation services Transportation services includes services provided by the Engineering services and Operations departments. The primary responsibilities include the inspection, planning and maintenance of the roads, bridges, sidewalks, streetlights, roadsides, winter snow clearing, subdivision planning, traffic engineering, development, and municipal servicing reviews. Other services include fleet maintenance, parking, and school crossing guards. (d) Environmental services Environmental services includes stormwater management, erosion control and resale of waste diversion goods. (e) Health services Health services includes the maintenance and operation of the Municipality's active and abandoned cemeteries and crematorium, cemetery records management and the sale of cemetery plots, permits and headstones. (f) Recreation and cultural services Recreation and cultural services includes the administration, operation and maintenance of all recreational, aquatic, arena, community recreational facilities, parks and trails. Clarington Libraries, Museums and other external cultural agencies are also included in this segment. (g) Planning and development Planning and development includes the development of planning policies, urban design, development approvals, heritage preservation, real estate services and geomatics. This segment further includes business improvement areas and tourism activities. Page 27 The Corporation of the Municipality of Clarington Notes to the consolidated financial statements December 31, 2020 22. Budget amounts The budget figures reflected in these consolidated statements are those approved by Council on March 2, 2020. Budget figures have been translated to reflect Public Sector Accounting Board standards (PSAS). 23. Comparative figures Certain comparative figures have been reclassified to conform to the financial statement presentation adopted in the current year. 24. Impact of COVID-19 In 2020, the COVID-19 pandemic severely impacted many local economies around the globe. In many countries, including Canada, organizations and businesses were forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non -essential services have triggered significant disruptions to organizations worldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility and a significant weakening. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. The COVID-19 pandemic had significant impacts on the activities of the Municipality in 2020. In March of 2020, the Province of Ontario declared a state of emergency and ordered the closure of all recreation programs and facilities, outdoor amenities and parks, libraries, museums, and non -essential business. Throughout 2020, the Municipality maneuvered between various states of Iockdown, and took steps to mitigate lost revenues by focusing on expense reduction and facility closures. In support of the community, the Municipality approved interest and penalty relief, provided a property tax rebate program to assist residential taxpayers and offered community improvement plan grants to small businesses to assist with adapting their businesses to address public health measures for reopening purposes. The ultimate duration and magnitude of the impact the pandemic will have on the economy and the Municipality are not known at this time. These impacts potentially include an impact on the Municipality's ability to access and obtain capital financing, impairment of investments, reduction to operational cash flow as a result of the inability of the Municipality to fully recover on its customer accounts and potential future decreases in revenue or the profitability of the Municipality's ongoing operations. Page 28 The Corporation of the Municipality of Clarington Consolidated Schedule of Tangible Capital Assets — Schedule 1 For the year ended December 31, 2020 2020 General Infrastructure Land Linear Road Linear Storm Assets under Land Improvements Buildings Vehicles Equipment Land & Related Sewers Buildings Vehicles Equipment construction Total $ $ $ $ $ $ $ $ $ $ $ $ $ Cost Balance, beginning of year 70,247,117 39,544,967 107,436,329 9,653,798 14,090,194 6,007,350 405,641,185 96,087,711 2,360,968 13,944,053 62,506 15,492,887 780,569,065 Add: additions during the year 2,366,698 2,066,650 960,229 41,142 1,323,419 - 13,279,880 3,020,831 - 865,987 20,539 10,451,338 34,396,713 Less: disposals during the year (1) (252,227) (229,540) (376,086) (796,528) - (7,848,349) (493,681) (100,000) (234,817) (26,854) (13,565,125) (23,923,208) Balance, end transfers of year 72,613,814 41,359,390 108,167,018 9,318,854 14,617,085 6,007,350 411,072,716 98,614,861 2,260,968 14,575,223 56,191 12,379,100 791,042,570 Accumulated amortization Balance, beginning of year - 14,454,357 49,964,192 6,455,806 8,244,923 - 204,095,858 20,091,808 1,552,127 8,185,380 24,764 - 313,069,215 Add: amortization during the year - 1,226,193 3,178,263 541,889 1,304,689 - 12,749,153 1,679,094 84,784 884,515 5,829 - 21,654,409 Less: accumulated amortization - (240,868) (196,378) (376,086) (789,449) - (5,693,817) (122,202) (100,000) (234,816) (20,310) - (7,773,926) on disposals Balance, end of year - 15,439,682 52,946,077 6,621,609 8,760,163 - 211,151,194 21,648,700 1,536,911 8,835,079 10,283 - 326,949,698 Net book value of tangible capital assets 72,613,814 25,919,708 55,220,941 2,697,245 5,856,922 6,007,350 199,921,522 76,966,161 724,057 5,740,144 45,908 12,379,100 464,092,872 Page 29 The Corporation of the Municipality of Clarington Consolidated Schedule of Tangible Capital Assets — Schedule 1 For the year ended December 31, 2020 2019 General Infrastructure Land Linear Road Linear Storm Assets under Land Improvements Buildings Vehicles Equipment Land & Related Sewers Buildings Vehicles Equipment construction Total $ $ $ $ $ $ $ $ $ $ $ $ $ Cost Balance, beginning of year 70,601,885 33,653,769 106,281,872 9,802,323 13,703,408 3,042,876 390,397,170 90,583,363 2,360,968 11,417,048 32,525 15,149,858 747,027,065 Add: additions during the year - 6,297,135 1,635,615 - 1,113,209 2,964,474 17,680,939 5,526,988 - 2,949,328 35,654 11,186,297 49,389,639 Less: disposals during the year (354,768) (405,937) (481,158) (148,525) (726,424) - (2,436,924) (22,641) - (422,323) (5,672) (10,843,267) (15,847,639) Balance, end transfers of year 70,247,117 39,544,967 107,436,329 9,653,798 14,090,193 6,007,350 405,641,185 96,087,710 2,360,968 13,944,053 62,507 15,492,888 780,569,065 Accumulated amortization Balance, beginning of year - 13,744,636 47,131,979 6,040,673 7,703,205 - 194,244,714 18,816,611 1,467,342 7,746,863 24,284 - 296,920,307 Add: amortization during the year - 1,115,658 3,150,331 563,658 1,262,285 - 12,252,848 1,280,284 84,785 860,840 6,154 - 20,576,843 Less: accumulated amortization - (405,937) (318,119) (148,525) (720,567) - (2,401,704) (5,087) - (422,323) (5,672) - (4,427,934) on disposals Balance, end of year - 14,454,357 49,964,191 6,455,806 8,244,923 - 204,095,858 20,091,808 1,552,127 8,185,380 24,766 - 313,069,216 Net book value of tangible capital assets 70,247,117 25,090,610 57,472,138 3,197,992 5,845,270 6,007,350 201,545,327 75,995,902 808,841 5,758,673 37,741 15,492,888 467,499,849 Page 30 The Corporation of the Municipality of Clarington Consolidated Schedule of Segmented Information — Schedule 2 For the year ended December 31, 2020 2020 Protection Recreation General to persons Transportation Environmental Health and cultural Planning and Government and property services services services services development Total Operating revenue Grants 2,268,424 27,553 842,727 820 - 217,811 75,279 3,432,614 Tax revenues 3,093,412 16,830,418 25,315,567 1,410,256 38,462 17,667,145 4,620,159 68,975,419 Other revenues 5,825,259 2,746,091 7,085,023 (255,298) 390,702 4,271,314 1,664,550 21,727,641 Contributed tangible capital assets - - 439,268 2,314,896 - 2,366,698 - 5,120,862 Total operating revenue 11,187,095 19,604,062 33,682,585 3,470,674 429,164 24,522,968 6,359,988 99,256,536 Operating expenditures Salaries and wages 4,456,815 16,681,472 9,112,487 475,506 228,771 12,329,260 3,969,783 47,254,094 Operating materials and supplies 643,995 852,352 5,665,111 475,785 197,463 4,598,758 420,760 12,854,224 Contracted services 531,120 1,014,387 4,988,905 496,737 - 2,329,434 1,963,083 11,323,666 Rent and financial expenses 159,907 - - - - 102,285 3,499 265,691 External transfers to others - 6,250 - - - 1,078,868 - 1,085,118 Amortization expense 1,021,421 1,049,601 13,645,050 2,022,646 2,930 3,909,898 2,863 21,654,409 Interest on long-term liabilities 32,480 - 271,032 - - 174,465 - 477,977 Total operating expenditures 6,845,738 19,604,062 33,682,585 3,470,674 429,164 24,522,968 6,359,988 94,915,179 Annual surplus (deficit) 4,341,357 - - - - - - 4,341,357 Page 31 The Corporation of the Municipality of Clarington Consolidated Schedule of Segmented Information - Schedule 2 For the year ended December 31, 2020 2019 (Restated - Note 2) Protection Recreation General to persons Transportation Environmental Health and cultural Planning and Government and property services services services services development Total Operating revenue Grants 221,761 35,445 63,210 378,340 - 386,886 17,075 1,102,717 Tax revenues 22,391,028 14,934,057 9,154,656 - 6,607 15,753,979 4,082,401 66,322,728 Other revenues 5,830,842 3,884,835 14,028,584 121,022 376,840 7,388,389 2,460,060 34,090,572 Contributed tangible capital assets - - 9,166,467 7,015,346 - 2,730,483 - 18,912,296 Total operating revenue 28,443,631 18,854,337 32,412,917 7,514,708 383,447 26,259,737 6,559,536 120,428,313 Operating expenditures Salaries and wages 4,462,654 15,726,287 9,253,874 673,744 213,946 13,949,715 3,749,494 48,029,714 Operating materials and supplies 658,332 1,031,245 7,104,345 1,731,811 159,194 5,492,040 446,116 16,623,083 Contracted services 655,415 1,075,972 2,603,287 425,437 1,508 1,745,771 2,359,086 8,866,476 Rent and financial expenses 636,105 - - - 171 43,496 1,977 681,749 External transfers to others - 10,000 - - 5,647 948,808 - 964,455 Amortization expense 992,731 1,010,833 13,159,688 1,582,898 2,981 3,824,849 2,863 20,576,843 Interest on long-term liabilities 33,925 - 291,723 - - 255,058 - 580,706 Total operating expenditures 7,439,162 18,854,337 32,412,917 4,413,890 383,447 26,259,737 6,559,536 96,323,026 Annual surplus (deficit) 21,004,469 - - 3,100,818 - - - 24,105,287 Page 32 The Corporation of the Municipality of Clarington Consolidated Schedule of Segmented Information - Schedule 3 For the year ended December 31, 2020 2020 - Budget Protection Recreation General to persons Transportation Environmental Health and cultural Planning and Government and property services services services services development Total Operating revenue Grants - 22,000 118,900 - - 136,181 - 277,081 Tax revenues 8,494,617 18,037,990 21,067,237 - - 16,364,088 4,643,295 68,607,227 Other revenues 2,908,000 2,079,332 12,933,458 5,069,304 419,600 9,332,757 879,800 33,622,251 Contributed tangible capital assets - - 439,268 2,314,896 - 2,366,698 - 5,120,862 Total operating revenue 11,402,617 20,139,322 34,558,863 7,384,200 419,600 28,199,724 5,523,095 107,627,421 Operating expenditures Salaries and wages 4,666,423 16,863,735 9,981,905 487,838 268,358 15,016,932 4,099,722 51,384,913 Operating materials and supplies 1,066,047 1,361,502 5,183,476 427,574 119,494 5,725,069 698,760 14,581,922 Contracted services 296,600 943,982 5,720,794 490,786 - 2,322,995 717,511 10,492,668 Rent and financial expenses 205,000 - - - - 51,919 11,000 267,919 External transfers to others - 10,000 - 207,195 - 1,180,304 (6,761) 1,390,738 Amortization expense 1,013,395 960,103 13,525,271 1,403,146 2,442 3,728,041 2,863 20,635,261 Interest on long-term liabilities 32,480 - 147,417 - - 174,464 - 354,361 Total operating expenditures 7,279,945 20,139,322 34,558,863 3,016,539 390,294 28,199,724 5,523,095 99,107,782 Annual surplus (deficit) 4,122,672 - - 4,367,661 29,306 - - 8,519,639 Page 33 The Corporation of the Municipality of Clarington Consolidated Schedule of Segmented Information - Schedule 3 For the year ended December 31, 2020 2019 - Budget Protection Recreation General to persons Transportation Environmental Health and cultural Planning and Government and property services services services services development Total Operating revenue Grants - 22,000 195,000 - - 137,481 - 354,481 Tax revenues 21,787,127 17,030,609 7,877,260 - 31,670 14,854,721 4,384,355 65,965,742 Other revenues 2,691,000 1,860,332 15,089,955 108,500 322,350 8,781,158 849,000 29,702,295 Contributed tangible capital assets - - 9,166,467 7,015,346 - 2,730,483 - 18,912,296 Total operating revenue 24,478,127 18,912,941 32,328,682 7,123,846 354,020 26,503,843 5,233,355 114,934,814 Operating expenditures Salaries and wages 4,586,928 15,694,073 9,562,723 685,060 242,837 14,095,999 3,877,401 48,745,021 Operating materials and supplies 1,000,219 1,221,868 5,692,526 1,784,665 106,917 5,593,682 630,773 16,030,650 Contracted services 377,000 886,868 3,659,934 395,851 - 1,766,269 715,918 7,801,840 Rent and financial expenses 239,398 - - - 150 41,376 6,400 287,324 External transfers to others - 10,000 - 83,500 2,000 1,078,773 - 1,174,273 Amortization expense 1,039,051 1,100,132 13,256,697 1,384,165 2,116 3,672,686 2,863 20,457,710 Interest on long-term liabilities 33,925 - 156,802 - - 255,058 - 445,785 Total operating expenditures 7,276,521 18,912,941 32,328,682 4,333,241 354,020 26,503,843 5,233,355 94,942,603 Annual surplus (deficit) 17,201,606 - - 2,790,605 - - - 19,992,211 Page 34 If this information is required in an alternate format, please contact the Accessibility Coordinator at (905) 623-3379 ext. 2131. Financial statements of The Corporation of the Municipality of Clarington Board of Management for Historic Downtown Bowmanville Business Improvement Area December 31, 2020 The Corporation of the Municipality of Clarington Board of Management for the Historic Downtown Bowmanville Business District Improvement Area Notes to the financial statements December 31, 2020 Table of contents Independent Auditor's Report....................................................................................... 1-3 Statement of financial position........................................................................................ 4 Statementof operations................................................................................................. 5 Statement of change in net financial assets................................................................... 6 Statement of cash flows................................................................................. 7 Notes to the financial statements................................................................................. 8-9 Independent Auditor's Report To the Members of the Corporation of the Municipality of Clarington Board of Management for Historic Downtown Bowmanville Business Improvement Area, Members of Council, Inhabitants and Ratepayers of the Township of Scugog Qualified Opinion We have audited the accompanying financial statements of the Historic Downtown Bowmanville Business Improvement Area of the Corporation of the Municipality of Clarington (the Entity), which comprise the statement of financial position as at December 31, 2020, and the statements of operations, changes in net financial assets and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2020, and its results of operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Basis for Qualified Opinion The Entity derives revenue from fundraising activities the completeness of which is not susceptible to satisfactory audit verification. Accordingly, verification of these revenues was limited to the amounts recorded in the records of the Entity. Therefore, we were not able to determine whether any adjustments might be necessary to event and donation revenue, annual surplus, and cash flows from operations for the years ended December 31, 2020 and 2020, net financial assets as at December 31, 2020 and 2020, and accumulated surplus as at January 1 and December 31 for both the 2020 and 2020 years. Our audit opinion on the financial statements for the year ended December 31, 2020 was modified accordingly because of the possible effects of this limitation in scope. We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Other Matters The financial statements of the Historic Downtown Bowmanville Business Improvement Area of the Corporation of the Municipality of Clarington for the year ended December 31, 2019 were audited by another auditor who expressed a qualified opinion on those statements on September 10, 2020 on the same basis described above. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these 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. In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants, Licensed Public Accountants Lindsay, Ontario REPORT DATE, The Corporation of the Municipality of Clarington Board of Management for Historic Downtown Bowmanville Business Improvement Area Statement of Financial Position as at December 31, 2020 2020 2019 Financial assets Cash and cash equivalents 64,732 24,484 Accounts receivable - - HST receivable 5,529 8,250 Total financial assets 70,261 32,734 Liabilities Accounts payable 18 4,592 Total liabilities 18 4,592 Net financial assets 70,243 28,142 Accumulated surplus (deficit) 70,243 28,142 Impact of COVID-19 (Note 2) The accompanying notes are an integral part of these financial statements. Page 3 The Corporation of the Municipality of Clarington Board of Management for Historic Downtown Bowmanville Business Improvement Area Statement of Operations as at December 31, 2020 Budget 2020 2019 Revenues Taxation - Municipality of Clarington 167,439 167,439 174,200 Interest 666 816 Fundraising 1,570 61,797 Total revenues 167,439 169,675 236,813 Expenses Administration 11,000 3,481 1,876 Events and promotion 71,000 50,278 118,202 Salaries and wages 58,200 56,750 47,700 Streetscape 34,000 17,065 24,014 Capital works 16,300 - 32,269 Total expenses 190,500 127,574 224,061 Annual surplus (deficit) (23,061) 42,101 12,752 Accumulated surplus, beginning of year 28,142 28,142 15,390 Accumulated surplus (deficit), end of year 5,081 70,243 28,142 Impact of COVID-19 (Note 2) The accompanying notes are an integral part of these financial statements. Page 4 The Corporation of the Municipality of Clarington Board of Management for Historic Downtown Bowmanville Business Improvement Area Statement of Change in Net Financial Assets as at December 31, 2020 Annual surplus (deficit) Change in prepaid expenses Budget 2020 2019 (23,061) 42,101 12,752 Change in net financial assets (23,061) 42,101 12,752 Net financial assets, beginning of year 28,142 28,142 15,390 Net financial assets (liabilities), end of yea 5,081 70,243 28,142 The accompanying notes are an integral part of these financial statements. Page 5 The Corporation of the Municipality of Clarington Board of Management for Historic Downtown Bowmanville Business Improvement Area Statement of Cash Flows for the year ended December 31, 2020 2020 2019 Operating activities Annual surplus 42,101 12,752 Non cash items Amortization of tangible capital assets - - Changes in non -cash operating items Decrease (increase) in accounts receivable - 140 Decrease (increase) due from Government of Canada 2,721 (8,250) Increase (decrease) in accounts payable and accrued IiabilitiE (4,574) 4,567 40,248 9,209 Capital activity Acqusition of tangible capital assets - - Net increase in cash 40,248 9,209 Cash, beginning of year 24,484 15,275 Cash, end of year 64,732 24,484 The accompanying notes are an integral part of these financial statements. Page 6 The Corporation of the Municipality of Clarington Board of Management for the Historic Downtown Bowmanville Business District Improvement Area Notes to the financial statements December 31, 2020 The Corporation of the Municipality of Clarington Board of Management for Historic Downtown Bowmanville Business Improvement Area is a Municipal Local Board (the "Board") in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act and related legislation. 1. Significant accounting policies The financial statements of the Board are the representations of management prepared in accordance with Canadian public sector accounting standards ("PSAS"). The focus of the financial statements is on the financial position of the Board and the changes thereto. The Statement of Financial Position includes the assets and liabilities of the Board. Financial assets are those assets which could provide resources to discharge existing liabilities or finance future operations. Non -financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. Accumulated surplus represents the difference between assets and liabilities of the Board. This provides information about the Board's overall future revenue requirements and its ability to finance operations and meet its obligations. a) Revenue recognition Taxation revenue is recorded when earned and is based on a special assessment. Other revenues are recorded in the period in which transactions or events occurred that gave rise to the revenues. b) Use of estimates The preparation of financial statements in conformity with PSAS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates. c) Cash and cash equivalents Cash and cash equivalents are made up of cash held in financial institutions as well as temporary investments with maturities of 90 days or less. Page 7 The Corporation of the Municipality of Clarington Board of Management for the Historic Downtown Bowmanville Business District Improvement Area Notes to the financial statements December 31, 2020 2. Impact of COVID-19 In 2020, the COVID-19 pandemic severely impacted many local economies around the globe. In many countries, including Canada, organizations and businesses were forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, included travel bans, quarantines, social distancing, and closures of non -essential services have triggered significant disruptions to organizations worldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility and a significant weakening. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. The COVID-19 pandemic had significant impacts on the activities of the Bowmanville BIA. All in -person community events scheduled after March 13, 2020 had to be cancelled or modified to be a virtual offering. The Bowmanville BIA shifted its focus from community events to the marketing, decor and on-line promotion of the BIA area. Although the Bowmanville BIA cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Bowmanville BIA's results of future operations, financial position, and liquidity in the fiscal year 2021. Page 8 If this information is required in an alternate format, please contact the Accessibility Coordinator at (905) 623-3379 ext. 2131 Financial statements of The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area December 31, 2020 The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area Notes to the financial statements December 31, 2020 Table of contents Independent Auditor's Report....................................................................................... 1-2 Statement of financial position........................................................................................ 3 Statement of operations ................. ................................................................................ 4 Statement of change in net financial assets................................................................... 5 Statement of cash flows.................................................................................. 6 Notes to the financial statements............................................................................ 7-8 Independent Auditor's Report To the Members of the Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area, Members of Council, Inhabitants and Ratepayers of the Township of Scugog Qualified Opinion We have audited the accompanying financial statements of the Newcastle Central Business District Improvement Area of the Corporation of the Municipality of Clarington (the Entity), which comprise the statement of financial position as at December 31, 2020, and the statements of operations, changes in net financial assets and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2020, and its results of operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Basis for Qualified Opinion The Entity derives revenue from fundraising activities the completeness of which is not susceptible to satisfactory audit verification. Accordingly, verification of these revenues was limited to the amounts recorded in the records of the Entity. Therefore, we were not able to determine whether any adjustments might be necessary to event and donation revenue, annual surplus, and cash flows from operations for the years ended December 31, 2019 and 2020, net financial assets as at December 31, 2019 and 2020, and accumulated surplus as at January 1 and December 31 for both the 2019 and 2020 years. The predecessor auditor's opinion on the financial statements for the year ended December 31, 2019 was modified accordingly because of the possible effects of this limitation in scope. We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Other Matters The financial statements of the Newcastle Central Business District Improvement Area of the Corporation of the Municipality of Clarington for the year ended December 31, 2019 were audited by another auditor who expressed a qualified opinion on those statements on September 10, 2020 on the same basis described above. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these 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. In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants, Licensed Public Accountants Lindsay, Ontario REPORT DATE, The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area Statement of financial position as at December 31, 2020 2020 2019 Financial assets Cash 33,775 13,034 Accounts receivable 1,202 7,781 Total financial assets 34,977 20,815 Liabilities Accounts payable - 2,562 Deferred revenue 2,000 - Totalliabilities 2,000 2,562 Net financial assets (liabilities) 32,977 18,253 Accumulated surplus (deficit) 32,977 18,253 The accompanying notes are an integral part of these financial statements. Page 3 The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area Statement of operations year ended December 31, 2020 2020 2019 Budget Actual Actual Revenues Taxation - Municipality of Clarington 40,000 40,000 35,000 Grant - Municipality of Clarington 2,000 Grant - Government of Canada 5,000 Fundraising 1,202 28,738 Transfer from Municipality of Clarington 10,000 Miscellaneous 200 Total revenues 40,000 41,202 80,938 Expenses Administration 2,000 1,461 1,407 Advertising 10,000 10,768 10,810 Events 5,000 1,434 28,736 Downtown safety and decor 23,000 12,815 17,242 Total expenses 40,000 26,478 58,195 Annual surplus (deficit) - 14,724 22,743 Accumulated surplus, beginning of year 18,253 18,253 (4,490) Accumulated surplus, end of year 18,253 32,977 18,253 The accompanying notes are an integral part of these financial statements. Page 4 The Corporation of the Municipality of Clarington Board of Management for Newcastle Central Business District Improvement Area Statement of change in net financial assets as at December 31, 2020 Budget 2020 2019 Annual surplus (deficit) - 14,724 22,743 Change in net financial assets - 14,724 22,743 Net financial assets, beginning of year 18,253 18,253 (4,490) Net financial assets (liabilities), end of year 18,253 32,977 18,253 The accompanying notes are an inegral part of these financial statements. Page 5 The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area Statement of cash flows for the year ended December 31, 2020 Operating activities Annual surplus Non cash items Amortization of tangible capital assets Changes in non -cash operating items 2020 2019 14,724 22,743 Decrease (increase) in accounts receivable 6,579 (7,281) Increase (decrease) in accounts payable and accrued liabilities (2,562) (2,484) Increase (decrease) in deferred revenue 2,000 - 20,741 12,978 Capital activity Acqusition of tangible capital assets - - Net increase in cash 20,741 12,978 Cash, beginning of year 13,034 56 Cash, end of year 33,775 13,034 The accompanying notes are an integral part of these financial statements. Page 6 The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area Notes to the financial statements December 31, 2020 Table of contents Independent Auditor's Report..................................................................................................1-2 Statement of financial position................................................................................................... 3 Statementof operations............................................................................................................. 4 Statement of change in net financial assets........................................................................... 5 Statement of cash flows.................................................................................. 6 Notes to the financial statements............................................................................................7-8 The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area Notes to the financial statements December 31, 2020 The Corporation of the Municipality of CIarington Board of Management forth e Newcastle Central Business District Improvement Area is a Municipal Local Board in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act and related legislation. 1. Significant accounting policies The financial statements of the Board are the representations of management prepared in accordance with Canadian public sector accounting standards ("PSAS"). The focus of the financial statements is on the financial position of the Board and the changes thereto. The Statement of Financial Position includes the assets and liabilities of the Board. Financial assets are those assets which could provide resources to discharge existing liabilities orfinance future operations. Non -financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the currentyear and are not intended forsale in the ordinary course of operations. Accumulated surplus represents the difference between assets and liabilities of the Board. This provides information aboutthe Board's overall future revenue requirements and its ability to finance operations and meet its obligations. a) Revenue recognition Taxation revenue is recorded when earned and is based on a special assessment. Other revenues are recorded in the period in which transactions or events occurred that gave rise to the revenues. b) Use of estimates The preparation of financial statements in conformitywith Canadian generally accepted accounting principles requires managementto make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differfrom those estimates. 2. Impact of COVID-19 In 2020, the COVID-19 pandemic severely impacted many local economies around the globe. In many countries, including Canada, organizations and businesses were forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, included travel bans, Page 7 The Corporation of the Municipality of Clarington Board of Management for the Newcastle Central Business District Improvement Area Notes to the financial statements December 31, 2020 2. Impact of COVID-19 (con't) quarantines, social distancing, and closures of non -essential services have triggered sign ificant disruptions toorgan izationsworldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility and a sign ificantweaken ing. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. The COVID-19 pandemic had significant impacts on the activities of the Newcastle BIA. All in -person community events schedu I ed after March 13, 2020 had to be cancelled or modified to be a virtual offering. The Newcastle BIA shifted its focus from community events to the marketing, decor and on-line promotion of the BIA area. Although the Newcastle BIA cannotestimate the length or gravity of the impact of the COVID-19 outbreak at thistime, if the pandemic continues, itmay have material adverse effecton the Newcastle BIA's results of future operations, financial position, and liquidity in the fiscal year 2021. Page 8 If this information is required in an alternate format, please contact the Accessibility Coordinatorat (905) 623-3379 ext. 2131. Financial statements of The Corporation of the Municipality of Clarington Board of Management for the Orono Central Business District Improvement Area December 31, 2020 The Corporation of the Municipality of Clarington Board of Management for the Orono Central Business District Improvement Area December 31, 2020 Table of contents Independent Auditor's Report..................................................................................................1-2 Statement of financial position................................................................................................... 3 Statementof operations............................................................................................................. 4 Statement of change in netfinancial assets........................................................................... 5 Statement of cash flows................................................................................. 6 Notes to the financial statements............................................................................................7-8 Independent Auditor's Report To the Members of the Corporation of the Municipality of Clarington Board of Management for Orono Central Business Distric Improvement Area, Members of Council, Inhabitants and Ratepayers of the Township of Scugog Qualified Opinion We have audited the accompanying financial statements of the Orono Central Business District Improvement Area of the Corporation of the Municipality of Clarington (the Entity), which comprise the statement of financial position as at December 31, 2020, and the statements of operations, changes in net financial assets and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2020, and its results of operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Basis for Qualified Opinion The Entity derives revenue from fundraising activities the completeness of which is not susceptible to satisfactory audit verification. Accordingly, verification of these revenues was limited to the amounts recorded in the records of the Entity. Therefore, we were not able to determine whether any adjustments might be necessary to event and donation revenue, annual surplus, and cash flows from operations for the years ended December 31, 2020 and 2020, net financial assets as at December 31, 2020 and 2020, and accumulated surplus as at January 1 and December 31 for both the 2020 and 2020 years. The predecessor auditor's opinion on the financial statements for the year ended December 31, 2019 was modified accordingly because of the possible effects of this limitation in scope. We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Other Matters The financial statements of the Orono Central Business District Improvement Area of the Corporation of the Municipality of Clarington for the year ended December 31, 2019 were audited by another auditor who expressed a qualified opinion on those statements on September 10, 2020 on the same basis described above. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these 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. In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants, Licensed Public Accountants Lindsay, Ontario REPORT DATE, The Corporation of the Municipality of Clarington Board of Management for the Orono Central Business District Improvement Area Statement of Financial Position as at December 31, 2020 2020 2019 Financial assets Cash and cash equivalents Accounts and liabilities 23,202 - 36,501 401 Total financial assets 23,202 36,902 Liabilities Accounts payable 80 408 Total liabilities 80 408 Net financial assets 23,122 36,494 Accumulated surplus (deficit) 23,122 36,494 The accompanying notes are an integral part of these financial statements. Page 3 The Corporation of the Municipality of Claringtoi Board of Management for the Orono Central Business District Improvement Area Statement of Operations year ended December 31, 2020 Budget 2020 2019 Revenues Taxation - Municipality of Clarington (Note 1) 6,000 6,000 6,000 Grants - Municipality of Clarington 22,141 - 22,141 Grants - Other - 10,830 - Donations/fundraising/miscellaneous 17,500 769 21,158 Total revenues 45,641 17,599 49,299 Expenses Advertising and promotion 18,100 5,440 17,789 Landscaping 25,640 24,569 3,856 Miscellaneous 1,547 962 6,912 Total expenses 45,287 30,971 28,557 Annual surplus (deficit) 354 (13,372) 20,742 Accumulated surplus, beginning of year 36,494 36,494 15,752 Accumulated surplus, end of year 36,848 23,122 36,494 The accompanying notes are an integral part of these financial statements. Page 4 The Corporation of the Municipality of Clarington Board of Management for Orono Central Business District Improvement Area Statement of Change in Net Financial Assets as at December 31, 2020 Budget 2020 2019 Annual surplus (deficit) 354 (13,372) 20,742 Net financial assets, beginning of year 36,494 36,494 15,752 Net financial assets (liabilities), end of year 36,848 23,122 36,494 The accompanying notes are an integral part of these financial statements. Page 5 The Corporation of the Municipality of Clarington Board of Management for the Orono Central Business District Improvement Area Statement of Cash Flows year ended December 31, 2020 2020 2019 Operating activities Annual surplus (13,372) 20,742 Non cash items Amortization of tangible capital assets - - Changes in non -cash operating items Decrease (increase) in accounts receivable 401 199 Increase (decrease) in accounts payable and accrued liabilities (328) 105 (13,299) 21,046 Capital activity Acqusition of tangible capital assets - - Net increase in cash (13,299) 21,046 Cash, beginning of year 36,501 15,455 Cash, end of year 23,202 36,501 The accompanying notes are an integral part of these financial statements. Page 6 The Corporation of the Municipality of Clarington Board of Management for the Orono Central Business District Improvement Area December 31, 2020 The Corporation of the Municipality of CIarington Board of Management forth Orono Central Business District Improvement Area is a Municipal Local Board in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act and related legislation. 1. Significant accounting policies The financial statements of the Board are the representations of management prepared in accordance with Canadian public sector accounting standards ("PSAS"). The focus of the financial statements is on the financial position of the Board and the changes thereto. The Statement of Financial Position includes the assets and liabilities of the Board. Financial assets are those assets which could provide resources to discharge existing liabilities orfinance future operations. Non -financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. Accumulated surplus represents the difference between assets and liabilities of the Board. This provides information aboutthe Board's overall future revenue requirements and its ability to finance operations and meet its obligations. a) Revenue recognition Taxation revenue is recorded when earned and is based on a special assessment. Other revenues are recorded in the period in which transactions or events occurred that gave rise to the revenues. b) Use of estimates The preparation of financial statements in conformitywith PSAS requires managementto make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differfrom those esti mates. 2. Impact of COVID-19 In 2020, the COVID-19 pandemic severely impacted many local economies around the globe. In many countries, including Canada, organizations and businesses were forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, included travel bans, Page 7 The Corporation of the Municipality of Clarington Board of Management for the Orono Central Business District Improvement Area Notes to the financial statements December 31, 2020 2. Impact of COVID-19 (con't) quarantines, social distancing, and closures of non -essential services have triggered sign ificantdisruptions to organizations worldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility and a significant weakening. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. The COVID-19 pandemic had significant impacts on the activities of the Orono BIA. All in -person communityevents scheduled after March 13, 2020 had to be cancelled or modified to be a virtual offering. The Orono BIA shifted its focus from community events to the marketing, decor and on-line promotion of the BIA area. Although the Orono BIA cannotestimate the length orgravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effecton the Orono BIA's results of future operations, financial position, and liquidity in the fiscal year 2021. Page 8 If this information is required in an alternate format, please contact the Accessibility Co-Ordinator at (905) 623-3379 ext. 2131 Financial statements of The Corporation of the Municipality of Clarington Trust Funds December 31, 2020 The Corporation of the Municipality of Clarington Trust Funds December 31, 2020 Table of contents Independent Auditor's Report....................................................................................... 1-2 Statement of financial position........................................................................................ 3 Statement of operations................................................................................................. 4 Notes to the financial statements................................................................................. 5-6 Independent Auditor's Report To the Members of Council of the Corportation of the Municipality of Clarington Opinion We have audited the financial statements of the Corportation of the Municipality of Clarington Trust Funds (the Entity), which comprise the statement of financial position as at December 31, 2020, and the statement of operations and accumulated surplus for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2020, and its operations for the year then ended in accordance with Canadian public sector accounting standards. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matters The consolidated financial statements of the Entity for the year ended December 30, 2019 were audited by another auditor who expressed an unmodified opinion on those statements on September 10, 2020 on the same basis described above. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these 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. In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity's financial reporting process. Page 1 Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants, Licensed Public Accountants Lindsay, Ontario [Date] Page 2 The Corporation of the Municipality of Clarington Trust Funds Statement of financial position as at December 31, 2020 Investments Cash (Note 3) Interest revenue receivable Due (to) from Municipality of Clarington Net Financial Assets and Accumulated Surplus Advent Cemetery - 918 22 (22) 918 Bondhead Cemetery - 196,661 4,373 4,844 205,878 Bowmanville Cemetery - 1,201,723 4,504 (14,169) 1,192,058 Hampton Cemetery - 45,394 122 2,994 48,510 Lovekin Cemetery - 10,000 6 (44) 9,962 Orono Cemetery 1,440 282,705 2,864 (23,758) 263,251 St. George's Cemetery - 45,861 116 (539) 45,438 Trulls Cemetery - 1,774 42 (16) 1,800 Vanderveer Legacy Trust - 1,000 - (24) 976 1,440 1,786,036 12,049 (30,734) 1,768,791 Estate of Irene Rinch/Newcastle Community Hall - 5,228 658 6,551 12,437 Montague Trust - 133,537 8,548 9,698 151,783 Total - 2020 1,440 1,924,801 21,255 (14,485) 1,933,011 Total - 2019 237,493 1,674,976 35,558 (32,699) 1,915,328 Impact of COVID-19 (Note 5) The accompanying notes are an integral part of these financial statements. Page 3 The Corporation of the Municipality of Clarington Trust Funds Statement of operations and accumulated surplus as at December 31, 2020 Revenues Care and Balance maintenance Less: Excess (shortfall) Accumulated beginning of receipts Interest Contribution Investments of revenues over surplus, end year (Note 4) earned Total to cemeteries in Capital expenses of year Advent Cemetery 913 - 23 23 24 - (1) 912 Bondhead Cemetery 191,356 11,957 3,251 15,208 3,915 - 11,293 202,649 Bowmanville Cemetery 1,182,078 39,807 20,330 60,137 50,309 - 9,828 1,191,906 Hampton Cemetery 44,795 3,217 492 3,709 (485) - 4,194 48,989 Lovekin Cemetery 9,843 - 182 182 429 - (247) 9,596 Orono Cemetery 275,583 1,894 (3,920) (2,026) 7,287 - (9,313) 266,270 St. George's Cemetery 46,248 520 945 1,465 2,008 - (543) 45,705 Trulls Cemetery 1,827 - 45 45 46 - (1) 1,826 Vanderveer Legacy Trust 983 - 18 18 43 - (25) 938 1,753,607 57,395 21,366 78,761 63,576 - 15,185 1,768,791 Estate of Irene Rinch 150,314 - 94 94 - - 94 150,408 Montague Trust 114 - 2,404 2,404 - - 2,404 13,812 Total - 2020 1,915,328 57,395 23,864 81,259 63,576 - 17,683 1,933, 011 Total - 2019 1,832,849 63,288 32,733 96,021 13,542 - 82,479 1,915,328 The accompanying notes are an integral part of these financial statements Page 4 The Corporation of the Municipality of Clarington Trust Funds Notes to the financial statements December 31, 2020 The Corporation of the Municipality of Clarington Trust Funds consist of various trust funds administered by the Municipality of Clarington. The funds include holdings related to the care and maintenance of cemeteries and funds bequest to the Newcastle Community Hall. Significant accounting policies The financial statements of the Corporation of Municipality of Clarington Trust Funds are the representations of management prepared in accordance with Canadian public sector accounting standards and reflect the following policies: Basis of accounting Revenues are recorded in the period in which the transactions or events occurred that gave rise to the revenue. Expenditures are recorded in the period the goods and services are acquired and a liability is incurred. Refunds are reported in the period issued. Investments Investments are recorded at cost which approximates fair value. Use of estimates The preparation of the financial statements in conformity with Canadian public sector accounting standards, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenditures during the year. Actual results could differ from these estimates. 2. Statement of cash flows A statement of cash flows has not been included in these financial statements as the information is readily determinable from the financial statements presented. 3. Investments The total investments held by the trust funds of $1,924,802 (2019 — $1,674,976) reported on the Statement of Financial Position at cost have a fair value of $1,944,406 (2019 - $1,710,860) at the end of the year. The investments consist of holdings pursuant to the provisions of the Municipality's investment policy and comprise government bonds and guaranteed investment certificates (GICs) issued by various financial institutions. It is the Municipality's intention to hold these investments until maturity. Page 5 The Corporation of the Municipality of Clarington Trust Funds Notes to the financial statements December 31, 2020 4. Care and maintenance funds The Care and Maintenance Funds administered by the Municipality are funded by the sale of cemetery plots. These funds are invested and the interest earned is used to perform care and maintenance to the Municipality's cemeteries. The operations and investments of the Funds are undertaken by the Municipality in accordance with the regulations of the Cemeteries Act. 5. Impact of COVID-19 In 2020, the COVID-19 pandemic severely impacted many local economies around the globe. In many countries, including Canada, organizations and businesses were forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non -essential services have triggered significant disruptions to organizations worldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility and a significant weakening. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. The main impact on the Trusts stemming from the COVID-19 pandemic were lower levels of interest earned on investments. The ultimate duration and magnitude of the impact the pandemic will have on the economy and the Trusts are not known at this time. These impacts potentially include a further impairment of investments and a reduction to the transfers to the Municipality for the operational maintenance of the cemeteries. Page 6