80 City of Chilliwack CITY OF CHILLIWACK NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2022 City of Chilliwack Notes to Consolidated Financial Statements Year Ended December 31, 2022 General: The Municipality was reincorporated as a City in 1999 by way of Letters Patent under the Municipal Act, now the Local Government Act, a statute of the Province of British Columbia. Its principal activities include the provision of local government services to the residents of the incorporated area. These services include administrative, protective, transportation, recreational, water, sewer and fiscal services. 1 Significant accounting policies: (a) Basis of presentation: It is the City of Chilliwack's (the "City") policy to follow accounting principles generally accepted for British Columbia local governments and to apply such principles consistently. These consolidated financial statements include the operations of the General, Water, Sewer and Reserve Funds and the City's wholly owned subsidiaries, Chilliwack Economic Partners Corporation ("CEPCO") and Tourism Chilliwack Inc. ("Tourism"). These consolidated statements have been prepared using standards issued by the CPA Canada Public Sector Accounting Handbook. All material interfund and intercompany accounts and transactions have been eliminated. (b) Portfolio investments: Portfolio investments are carried at amortized cost. If it is determined that there is a permanent impairment in the value of an investment, it is written down to net realizable value. (c) Property under development: Property under development is recorded at the lower of cost or net realizable value and includes direct costs attributable to the project plus any capitalized interest if incurred. The properties are tangible capital assets under development. (d) Tangible capital assets: Tangible capital assets are recorded on the basis of cost less accumulated amortization. Cost includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost is amortized on a straight line basis over their estimated useful lives as follows: Asset Useful Life - Years Land n/a Land improvements 0-40 Buildings 40-50 Equipment 4-20 Vehicles 7-25 Engineering structures 10-100 Annual amortization is charged in the year of acquisition. Assets under construction are not amortized until the asset is available for productive use. Infrastructure related tangible capital assets that are contributed from developers as part of a development project, are recorded at fair market value at the date of contribution and recorded in revenue as developer contributions. Works of art and cultural and historic assets are not recorded as assets in these financial statements. (e) Inventories: Inventories of supplies are valued at the lower of cost and net realizable value, on a weighted average basis. (f) Revenue recognition: Revenues from municipal taxation, grants in lieu of taxes and utility charges are recognized when the levies are billed or billable to the property owner. Revenue from sales of services is recognized when the services are provided. Government grants are recognized when they are approved by senior governments and the conditions required to earn the grants have been completed. Development cost charges are recognized as revenue in the period the funds are expended on an eligible development project. Development cost charges collected, but not yet expended, are reported as an unearned revenue. CITY OF CHILLIWACK NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2022 City of Chilliwack Notes to Consolidated Financial Statements Year Ended December 31, 2022 (g) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and reported amounts of revenues and expenses as at the date of the financial statements. Areas that contain estimates include assumptions used in estimating provisions for accrued liabilities, landfill post-closure liability, contingent liabilities, estimated useful lives of tangible capital assets and the value of assets contributed to the City. Actual results could differ from these estimates. (h) Contaminated sites: A liability for contaminated sites is recognized when a site is not in productive use and the following criteria are met: (i) An environmental standard exists; (ii) Contamination exceeds the environmental standard; (iii) The City is directly responsible or accepts responsibility; (iv) It is expected that future economic benefits will be given up; and (v) A reasonable estimate of the amount can be made. The liability is recognized as management's estimate of the cost of post-remediation including operation, maintenance and monitoring that are an integral part of the remediation strategy for a contaminated site. 2 Restricted assets: The City has restrictions on the portfolio investments and cash available for operational use as follows: 2022 2021 Cash 68,269,879 $ 37,961,090 $ Portfolio Investments 141,693,710 173,906,156 209,963,589 211,867,246 Less restricted for: Statutory Reserve Funds 22,960,547 24,884,663 Restricted Revenue 43,028,607 40,231,368 65,989,154 65,116,031 Funds available for operational use 143,974,435 $ $ 146,751,215 The investment portfolio includes bonds of chartered banks, the Government of Canada and provincial governments; deposits and notes of chartered banks, credit unions, the Government of Canada and provincial governments; and deposits in the Municipal Finance Authority short term investment pools. 3 Accounts receivable: 2022 2021 Taxes 4,372,988 $ 3,918,939 $ Province of British Columbia 3,182,916 2,755,770 Government of Canada 1,458,580 1,191,246 Regional and local governments 343,305 119,520 Trade receivables 4,670,817 4,653,722 Accrued interest 1,630,375 895,529 Water trade receivables 3,418,063 3,628,026 Sewer trade receivables 4,290,963 4,391,672 Development cost charges 1,440,277 1,744,392 24,808,284 $ 23,298,816 $ Annual Report 2022 81
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