2024 CONSOLIDATED FINANCIAL STATEMENTS (Staff Report)

2024 CONSOLIDATED FINANCIAL STATEMENTS

RECOMMENDATION: THAT Council accept and approve the 2024 Consolidated Financial Statements.

PURPOSE: To present the draft 2024 Consolidated Financial Statements and auditor’s report prepared by MNP LLP relating to the audit of the Town of View Royal’s Consolidated Financial Statements for the year ended December 31, 2024.

TIME CRITICAL: The Community Charter requires that the financial statements be prepared by the financial officer and presented to Council for acceptance, and that they subsequently be submitted to the Inspector of Municipalities by May 15 of each year.

EXECUTIVE SUMMARY: Prior to May 15 each year, in accordance with the Community Charter, financial statements must be prepared and submitted for Council acceptance. Attached to this report are the Town’s draft 2024 Consolidated Financial Statements with notes and supporting schedules accompanied by the Management’s Responsibility for Financial Reporting statement and draft Independent Auditor’s Report, and the Town of View Royal 2024 Audit findings Report to Mayor and Council, December 31, 2024. The Auditor’s Report concludes that the Consolidated Financial Statements present fairly, in all material respects, the consolidated financial position of the Town of View Royal as at December 31, 2024. The 2024 Consolidated Financial Statements reflect Council’s commitment towards fiscal sustainability and further analysis indicates that the Town’s overall fiscal health is satisfactory. The auditors confirm independence from the Town of View Royal and that they have had access to Council without interference from management.

A delay in accepting the 2024 Consolidated Financial Statements may risk delaying approval of or access to funding, to the extent the funding provider requires audited financial statements from the prior year.

BACKGROUND:

Annually, the Town’s Financial Officer must prepare annual financial statements for Council acceptance prior to May 15 in accordance with Section 167 and 169 of the Community Charter. The financial statements must be audited, and the results of that audit presented to Council. The auditor's role is to express an opinion as to whether the financial statements present fairly, in all material respects in accordance with the Canadian public sector accounting standards. The Consolidated Financial Statements have been prepared in accordance with public sector accounting standards and Staff recommend that they be accepted and approved by Council. The auditors have issued an unmodified audit opinion (a "clean" audit opinion) and have identified no errors or internal control deficiencies. Financial statements are an important tool for ensuring transparency and accountability in the use of taxpayer funds to deliver community services.

DISCUSSION:

Revenues and Expenditures:

Overall, revenues exceeded budget by approximately $1.4M while authorized expenditures were underspent by approximately $2.1M.

The positive $1.4M revenue variance was due to primarily to the following:

In terms of expenditures, there was a total positive variance of approximately $2.1M. Federal RCMP Contracted Services was under-budget by approximately $700K and RCMP Building related costs, billed by City of Langford were under-budget by approximately $200K. The remaining underspending occurred throughout various Town departments, amounting to slightly less than 5% (or $1.1M of $23.5M). The Town budgets for strategic projects in advance and the unspent funds from carried-forward projects contribute to the variance.

Accumulated Surplus:

Note 10 of the consolidated financial statements details the Town’s accumulated surplus, which is made up of four main components:

1. The net equity (value) in tangible capital assets
2. Reserve Funds that represent cash balances that can be spent by Council on expenditures related to the reserve’s purpose
3. Appropriated surplus which are less restrictive in their use than Reserve Funds, and
4. Unrestricted accumulated surplus

Net equity in tangible capital assets increased approximately $1.5M which indicates that for 2024 assets were replaced at a rate quicker than they depreciated.

Reserve Fund values increased $1.7M from 2023 to 2024. In addition to planned reserve contributions the Town received $504K in Cash in Lieu of Parking from Canadian Tire and contributed an additional $454K to the Police Operating Reserve fund representing less than budgeted actual RCMP expenditures.

In terms of appropriated surplus, overall, there was a slight increase in these funds with the net 2023 to 2024 decrease in Casino Reserve and Community Works Fund being offset by an increase in Local Government Climate Action and Local Government Housing Initiative funding from the Province.

Unrestricted accumulated surplus grew from $7M to $8.4M, attributed to the positive revenue and expenditure variances in 2024, with $175K planned to be used in 2025 to off-set taxation funding.

SUSTAINABILITY/CLIMATE CHANGE IMPACTS:

The recommendation in this report has no significant direct impact to View Royal’s sustainability or climate change.

FINANCIAL IMPLICATIONS:

There are no additional financial implications other than those described in the attachments of this report.

ALTERNATIVES:

CONCLUSION:

The Community Charter (Section 167) requires the Town of View Royal to prepare and submit to the Inspector of Municipalities its audited consolidated financial statements for the preceding year by May 15 of each year. The consolidated financial statements must be presented to Council for its acceptance prior to submission to the inspector.

ATTACHMENTS:

Attachment 1: DRAFT 2024 Town of View Royal Consolidated Financial Statements, December 31, 2024 Attachment 2: Town of View Royal 2024 Audit Findings Report to the Mayor and Council, December 31, 2024