1. Presentation to Mayor and Council For the year ended December 31, 2012
City of Duncan
Presentation to Mayor and Council
For the year ended December 31, 2012
Presented by: Cory Vanderhorst, CA
Date: May 21, 2013

2. Topics Financial statement highlights Draft audit report
Audit findings report
Auditor independence
Financial analysis

3. Financial Statement Highlights
Statement of Financial Position
Cash and investments $13,960,387
Total financial assets $15,252,188
Long-term debt $1,571,449
Total liabilities $6,075,559
Net financial assets $9,176,629
Tangible capital assets $22,091,705
Accumulated surplus $31,371,441

4. Financial Statement Highlights
Statement of Operations
Total revenue $11,295,806
Increase from PY & Budget
Total expenses $6,958,331
Decrease from PY & Budget
Annual surplus $4,337,475
Revenue increased due to:
Explanation
Expenses increased due to:

5. Financial Statement Highlights

6. Financial Statement Highlights

7. Financial Statement Highlights
Statement of Change in Net Debt
Purchases of capital assets $3,247,654
Donated capital assets $341,312
Net change in net debt/
net financial assets $1,897,411
Revenue increased due to:
Explanation
Expenses increased due to:

8. Financial Statement Highlights
Statement of Cash Flows
Provided by Operations $5,245,552
Provided/used by Capital $(3,214,154)
Provided/used by Financing $(158,898)
Net cash inflow/outflow $1,872,500
Revenue increased due to:
Explanation
Expenses increased due to:

9. Financial Statement Highlights
Composition of accumulated surplus
Invested in Capital Assets $20,445,988
Reserves $6,092,689
Operating fund (unappropriated) $4,570,451
Operating fund (appropriated) $262,313
Total accumulated surplus $31,371,441

10. Audit findings report Auditor responsibilities:
Examining controls in place to ensure accurate reporting of financial results
Sampling transactions throughout the year to form an audit opinion
Auditors do NOT look at every transaction to form the audit opinion

11. Audit findings report Engagement status
Audit is complete and we have signed the audit report; an unqualified opinion is provided
Materiality used in the audit was $150,000
There were no limitations placed on the performance of our audit

12. Audit findings report Engagement status (cont’d) We did not find:
Irregularities materially impacting the statements
Evidence of conflicts of interest, unusual related party transactions, or illegal or questionable payments

13. Audit findings report During the audit we discussed matters with:
Tom Ireland
Peter de Verteuil
Marisa Paitson
We would like to formally acknowledge the excellent cooperation and assistance from management and staff

14. Audit findings report Areas of audit emphasis
Financial Statement Presentation and Disclosure
Contingencies, Lawsuits and Commitments
Fraud and error

15. Auditor Independence
We confirm that MNP LLP is independent with respect to the City of Duncan within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accounts of British Columbia as of May 21, 2013

16. Financial Analysis
Sustainability – the degree to which a government can maintain its existing financial obligations both in respect of its service commitments to the public and financial commitments to creditors, employees, etc. without increasing the debt or tax burden on the local economy.

17. Financial Analysis Sustainability
Assets to liabilities: illustrates the extent the government has financed its operations with debt.
Assets to liabilities ratio is greater than 1 and increased to 6.16 from prior year of Healthy indicator that City has more assets than debt.

18. Financial Analysis Sustainability
Financial assets to liabilities: a ratio greater than 1 means financial resources are available to finance future operations. A ratio less than 1 means future revenues are required to pay for past transactions.
Financial assets to liabilities has increased to 2.51 from 2.11 in prior year and is also greater than 1. This suggests healthy sustainability and financial resources are available to finance future operations.

19. Financial Analysis Sustainability
Net debt to total annual revenue: Provides a measure of future revenue required to pay for past events.
Net financial asset position has increased by $2 million from last year and no significant increases in debt being carried by the City.

20. Financial Analysis Overall conclusion on sustainability
We can conclude that financial sustainability of the City is healthy and has shown to be trending in a positive direction.

21. Financial Analysis Flexibility
The degree to which a government can change its debt or tax burden on the local economy to meet existing financial obligations.

22. Financial Analysis Flexibility
Public debt charges to revenues: Illustrates the extent to which past borrowing decisions put a constraint on the government’s ability to meet financial and service commitments in the current year.
Public debt charges (i.e., interest) compared to revenue has decreased slightly from 0.69% in prior year to 0.61%, reflecting the increase in revenue this year in proportion to the decrease in debt. This ratio is still very low.

23. Financial Analysis Flexibility
Net book value of capital assets to cost of capital assets: Reports the extent to which estimated useful lives of capital assets are available to provide services.
Carrying value (or depreciated value) of capital assets has increased slightly to 51% of the original cost from the 48%. This means that there is still significant value in older assets and reflects that future costs of capital are remaining steady.

24. Financial Analysis Flexibility
Own source revenues to taxable assessment: Reports relationship between user fees and tax base.
Own-source revenues to taxable assessment has increased from 89% to 99%. With minor change in the tax base, this ratio has increased slightly, indicating that the City does not have a great deal of flexibility (on the other hand, given the assumptions involved in this calculation, it does not necessarily mean that the City has no flexibility in tax rates).

25. Financial Analysis Overall conclusion on flexibility
We can conclude that flexibility indicators of the City has been trending in a positive direction.

26. Financial Analysis Vulnerability
The degree to which a government is dependent on sources of funding outside its control.
The ratio of government transfers to total revenues increased to 27% in 2012 from 20% in In 2010, the ratio was 10%. The percentage is increasing over the last 3 years. This means that the City has been increasing vulnerability to the fiscal decisions of other levels of government.

27. Financial Analysis Overall conclusion on vulnerability
We can conclude that vulnerability and dependence on other funding sources has been increasing.

28. Conclusion
Thank you
We would like to take this opportunity to answer any questions you have regarding the matters presented
Presenter: Cory Vanderhorst, CA