Doc 9 OPL 2006 Audit Report Oct 15-07
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Doc 9 OPL 2006 Audit Report Oct 15-07

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9 COMMUNICATION AND COUNSEL Subject: Ottawa Public Library 2006 Audit Report Prepared by: Brenda Gorton FSU Account Manager, Ottawa Public Library Community & Protective Services Financial Support Unit Prepared for: Ottawa Public Library Board Meeting of: October 15, 2007 Date: October 1, 2007 Reference 1. City of Ottawa Audit – Schedule 4 – Ottawa Public Library Board – Appendix A 2. Ottawa Public Library Board Financial Statements – Appendix B Background As approved by the Board at its meeting on November 20, 2006, the Library has been consolidated into the overall city audit and no longer completes a separate Library audit. It is acceptable for a library board to supply its financial information in a consolidated audited financial statement as noted in Municipal Act, 2001, s. 296 (11), provided that the financial information on the library board is provided in a separate schedule or appendix of the consolidated municipal financial statement. Attached in Appendix A is a copy of the Ottawa Public Library schedule that was included in the 2006 City of Ottawa financial statements, forming part of the Consolidated Statements of the City. This schedule has been approved by the Province and upon receiving a copy of this schedule the Province has released the 2007 Ottawa library grant. Following the change in the audit process, the Library Financial Services Unit agreed to continue to prepare the library statements as in ...

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9

COMMUNICATION AND COUNSEL


Subject: Ottawa Public Library 2006 Audit Report

Prepared by: Brenda Gorton
FSU Account Manager, Ottawa Public Library
Community & Protective Services Financial Support Unit

Prepared for: Ottawa Public Library Board

Meeting of: October 15, 2007

Date: October 1, 2007


Reference

1. City of Ottawa Audit – Schedule 4 – Ottawa Public Library Board – Appendix A
2. Ottawa Public Library Board Financial Statements – Appendix B

Background
As approved by the Board at its meeting on November 20, 2006, the Library has been
consolidated into the overall city audit and no longer completes a separate Library audit. It is
acceptable for a library board to supply its financial information in a consolidated audited
financial statement as noted in Municipal Act, 2001, s. 296 (11), provided that the financial
information on the library board is provided in a separate schedule or appendix of the
consolidated municipal financial statement.
Attached in Appendix A is a copy of the Ottawa Public Library schedule that was included in the
2006 City of Ottawa financial statements, forming part of the Consolidated Statements of the
City. This schedule has been approved by the Province and upon receiving a copy of this
schedule the Province has released the 2007 Ottawa library grant.

Following the change in the audit process, the Library Financial Services Unit agreed to continue
to prepare the library statements as in the past for internal Board reporting which would include
the details of revenues, expenditures and reserves. These are unaudited statements and are
used to provide the year end financial information for the Library schedule in the city’s audited
financial statements. The library financial statements are attached in Appendix B to provide more
detailed, supplemental information to the Board, supporting the Library schedule in the City of
Ottawa audited financial statements.
Doc. 9 OPL 2006 Audit Report October 15, 2007 Page 1 of 1 The City of Ottawa Schedule 4



CONDENSED SUPPLEMENTARY INFORMATION
OTTAWA PUBLIC LIBRARY BOARD
[dollars in thousands]




The Ottawa Public Library Board is consolidated with the City of Ottawa. The following table provides
condensed supplementary information for the Ottawa Public Library Board.
2006 2005
$ $

Financial Position
Financial assets 1,823 2,667
Non-financial assets — 207
Financial liabilities (9,590) (6,497)
Net liabilities (7,767) (3,623)

Operating fund — —
Capital fund 507 (2,118)
Reserve Fund 210 —
Fund balance 717 (2,118)
Amounts to be recovered in future years (8,484) (1,505)
Municipal position (7,767) (3,623)

Financial activities
Revenues
City of Ottawa 28,218 27,345
Province of Ontario – Ministry of Culture 1,508 1,408
Other 2,459 3,796
32,185 32,549

Operating expenditures (31,115) (31,574)
Capital expenditures (5,214) (7,619)
New debt issued 6,520 —
Obligations to be funded in future years 459 171
(29,350) (39,022)
Change in fund balance for the year 2,835 (6,473)
Fund balance beginning of the year (2,118) 4,355
Fund balance, end of year 717 (2,118)

Financial Statements

Ottawa Public Library Board
December 31, 2006 Ottawa Public Library Board


STATEMENT OF FINANCIAL POSITION


As at December 31




2006 2005
$ $

FINANCIAL ASSETS
Cash 6,845 7,210
Accounts receivable 3,126 48,830
Due from City of Ottawa [note 2] 1,813,277 2,610,755
Total financial assets 1,823,248 2,666,795

LIABILITIES
Accounts payable and accrued liabilities 1,106,168 4,590,160
Deferred donations/grants - 401,550
Employee future benefits payable [notes 3 and 4] 1,853,000 1,505,000
Net Long Term Debt 6,520,000 -
Accrued interest on debt 110,512 -
Total liabilities 9,589,680 6,496,710
Commitments [note5]

Net financial assets (7,766,432) (3,829,915)

Non-financial assets - -
Prepaid expenses - 207,023
Net assets (7,766,432) (3,622,892)

Fund position
Operating fund [schedule 1] - -
Capital fund [schedule 2] 507,514 (2,117,892)
Reserve fund [schedule 3] 209,566 -
717,080
Amounts to be recovered [note 4] (8,483,512) (1,505,000)
Total fund position (7,766,432) (3,622,892)

See accompanying notes
Ottawa Public Library Board


STATEMENT OF FINANCIAL ACTIVITIES


For the year ended December 31



2006 2005
$ $

REVENUES
Grants:
City of Ottawa 28,218,036 27,345,211
Province of Ontario 1,508,085 1,408,435
Federal 30,471 119,539
Development charges 28,000 1,236,151
Fines and user charges 1,689,441 1,560,595
Interest income 4,000 96,000
Rental income 470,640 526,729
Other 236,153 256,735
Total revenues 32,184,826 32,549,395

EXPENDITURES

Operating
Salaries, wages and benefits 25,181,303 26,133,377
Library materials 4,516,118 4,315,118
Purchased services 1,023,398 773,540
Materials and supply 280,612 351,584
Debt service costs 113,382 —
Total operating 31,114,813 31,573,619

CAPITAL
Information technology 561,201 675,640
Building and renovations 2,205,389 4,813,804
Library materials 847,944 1,587,070
Furniture and equipment 862,410 138,059
Other 736,609 404,914
Total capital 5,213,553 7,619,487
Total expenditures 36,328,366 39,193,106
Excess of revenues over expenditures (expenditures over revenues) (4,143,540) (6,643,711)

FINANCING
Employee future benefits 348,000 171,000
New Debt Issued 6,520,000 -
Accrued interest on long-term liabilities 110,512
(Decrease) increase in amounts to be recovered 6,978,512 171,000

Change in the fund balance for the year 2,834,972 (6,472,711)
Fund balance, beginning of year (2,117,892) 4,354,819
Fund balance, end of year 717,080 (2,117,892)

See accompanying notes Ottawa Public Library Board


STATEMENT OF CHANGES IN FINANCIAL POSITION


For the year ended December 31, 2004




2006 2005
$ $

OPERATING ACTIVITIES
Excess of revenue over expenditures
(expenditures over revenue) (4,143,540) (6,643,711)
Decrease (increase) in:
Accounts receivable 45,703 89,460
Prepaid expenses 207,023 78,820
Due from the City of Ottawa 797,478 2,959,376
Long-term receivable — —
Increase (decrease) in:
Accounts payable and accrued liabilities (3,483,992) 3,332,473
Deferred donations/grants (401,550) 9,731
Employee future benefits payable 348,000 171,000
Interest on long-term debt 110,512 ---
Cash provided from (used in) operating activities (6,520,365) (2,851)

FINANCING ACTIVITIES
Repayment of long-term debt —
Cash used in financing activities —

Increase (decrease) in cash for the year (6,520,365) (2,851)
Cash, beginning of year 7,210 10,061
Cash, end of year (6,513,155) 7,210

See accompanying notes
1. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements of the Ottawa Public Library Board [the “Board”] are the representation
of management prepared in accordance with accounting principles generally accepted for the
public sector as prescribed by the Public Sector Accounting Board [PSAB] of the Canadian
Institute of Chartered Accountants [CICA].

Basis of presentation

These financial statements reflect the assets, liabilities and operations of the operating fund,
capital fund and reserve fund. All interfund assets and liabilities and sources of financing and
expenditures have been eliminated.

The assets, liabilities and results of operations of trust funds administered by the Board are not
included in the accompanying financial statements [note 6]. They are presented separately to the
Board with the annual year-end operating report.

Basis of accounting

Revenues and expenditures are reported on the accrual basis of accounting. The accrual basis of
accounting recognizes revenues, as they are earned and measurable; expenditures are recognized
as they are incurred and measurable as a result of the receipt of goods or services and the creation
of a legal obligation to pay.

Measurement uncertainty

The preparation of financial statements in conformity with Canadian generally accepted
accounting principles requires management to make estimates and assumptions on such areas as
employee future benefits. These estimates and assumptions are based on the Board’s best
information and judgment and may differ significantly based on actual results.

Capital assets

The historical cost and accumulated depreciation for capital assets are not recorded for Board
reporting purposes. Capital assets are reported as an expenditure on the Statement of Financial
Activities in the year of acquisition.
Reserve funds

Reserve funds comprise funds set aside for specific purposes by the Board and Council to
accumulate monies for future capital projects.

Employee benefit plans

The Board has adopted the following policies with respect to employee benefit plans:

[a] The cost of post-employment benefits are recognized over the period earned; costs include
projected future income payments, health care continuation costs and fees paid to independent
administrators of these plans, calculated on a present value basis;

[b] The cost of pensions and other retirement benefits are actuarially determined using the
projected benefits method prorated on service and management’s best estimate of retirement
ages of employees, salary escalation, expected health care costs and plan investment
performance; and

[c] The contributions to a multi-employer, defined benefit pension plan are expensed when
contributions are due.

Fines and user charges

Given the uncertainty of collection regarding fines and user charges, the Board recognizes
revenue generated from these activities on a cash basis.

2. DUE FROM CITY OF OTTAWA

The City holds the cash balances and administers the cash disbursements and accounting functions
on behalf of the Ottawa Public Library Board. In 2006, the library funds earned interest at a rate
of 3.5% per annum on cash held by the City.
3. EMPLOYEE BENEFITS AND PENSION AGREEMENTS

The Board provides certain benefits including retirement and other employment benefits to most
of its employees.

[a] Employee benefits

Employee benefit liabilities of the Board as at December 31 are as follows:

$ $

Post-retirement benefits 939,000 878,000
Post-employment benefits 914,000 627,000
Vacation leave — ---
1,853,000 1,505,000

The defined benefit plans relating to post-retirement and post-employment provide a variety of
benefits to retirees, active and long-term disabled employees, including income, medical, dental,
life insurance, Workers’ Compensation and sick leave gratuity benefits.
The continuity for post-retirement and post-employment benefits for 2006 is as follows:

Post-retirement Post-employment Total
$ $ $

Balance, beginning of year 878,000 627,000 1,505,000
Experience (gain) loss (21,000) (46,000) (67,000)
Current service costs/cost of new claims 70,000 363,000 433,000
Interest cost 40,000 35,000 75,000
Benefits paid (28,000) (65,000) (93,000)
Balance, end of year 939,000 914,000 1,853,000

Due to the complexities in valuating the plans, actuarial valuations are conducted on a periodic
basis. The liabilities reported in these financial statements are based on a valuation as of
December 31, 2006. The significant actuarial assumptions adopted in measuring the Board’s
accrued benefit obligations for post-retirement and post-employment benefits for 2006 are as
follows:

Discount rate 4.5%
Inflation rate 3%
Health care inflation rate 10% initially grading down to 5% in and after 2015

[b] Pension agreements

Ontario Municipal Employees Retirement Fund

The Board makes contributions to the Ontario Municipal Employees Retirement System
[“OMERS”], which is a multi-employer pension plan, on behalf of most of its employees. The
plan is a defined benefit plan, which specifies the amount of the retirement benefit to be received
by the employees based on length of service and rates of pay. The Library’s contribution to the
OMERS plan for 2006 was $1,299,543 for current service and is included as an expenditure on
the Statement of Financial Activities.

4. AMOUNTS TO BE RECOVERED
2006 2005
$ $
Net Long Term Debt* 6,520,000 -
Accrued Interest on Debt 110,512 -
Employee future benefits 1,853,000 1,505,000
8,483,512

*Greenboro District Library capital funding