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STANDING COMMITTEE ON FINANCE AND AUDITAGENDA

May 11, 2020, 2:30 p.m.

Council Chambers of City Hall

1100 Patricia Boulevard, Prince George, BCPages

A. COMMENCEMENT

B. ADOPTION OF THE AGENDA

RECOMMENDATION:That the agenda for the May 11, 2020 Standing Committee on Finance and Audit meeting,BE ADOPTED.

C. ADOPTION OF MINUTES

C.1 Minutes of the Finance and Audit Committee Meeting held April 20, 2020 1

RECOMMENDATION:That the minutes of the Standing Committee on Finance and Audit meeting heldApril 20, 2020, BE ADOPTED.

D. REPORTS

D.1 2019 Financial Statements and Audit 4

RECOMMENDATION:That the Standing Committee on Finance and Audit:

RECEIVES FOR INFORMATION the presentation from KPMG LLP withrespect to the 2019 Financial Statements; and

1.

APPROVES the 2019 Financial Statements as attached to the reportdated May 1, 2020 from the Director of Finance titled “2019 FinancialStatements and Audit”.

2.

D.2 Prince George Public Library Financial Statements, Year Ended December 31, 2019 107

RECOMMENDATION:That the Standing Committee on Finance and Audit RECEIVES FOR INFORMATIONthe presentation regarding the 2019 Financial Statements for the Prince GeorgePublic Library.

D.3 Tourism Prince George Society Financial Statements, Year Ended December 31,2019

140

RECOMMENDATION:That the Standing Committee on Finance and Audit RECEIVES FOR INFORMATIONthe presentation regarding the 2019 Financial Statements for the Tourism PrinceGeorge Society.

D.4 Standing Committee on Finance and Audit - Work Plan Year 2020 153

RECOMMENDATION:That the Standing Committee on Finance and Audit RECEIVES FOR INFORMATIONthe 2020 Work Plan as attached to the meeting agenda.

E. ADJOURNMENT

RECOMMENDATION:That there being no further business, the meeting of the Standing Committee on Financeand Audit BE ADJOURNED.

Document Number: 544163

STANDING COMMITTEE ON FINANCE AND AUDIT Minutes of the Standing Committee on Finance and Audit meeting held in Council Chambers at City Hall, 1100 Patricia Boulevard, Prince George, BC on Monday, April 20, 2020 at 12:00 p.m.

PRESENT: Councillor Garth Frizzell, Chair; Mayor Lyn Hall; Councillor Cori Ramsay; and Councillor Frank Everitt <via telephone>

IN ATTENDANCE: Councillor Krause; Councillor McConnachie; Councillor Sampson; Councillor Scott; Councillor Skakun; Ms. Kathleen Soltis, City Manager; Mr. Kris Dalio, Director of Finance; Mr. Walter Babicz, General Manager of Administrative Services; and Ms. Leslie Kellett, Legislative Coordinator.

A. COMMENCEMENT Councillor Frizzell called the Standing Committee on Finance and Audit meeting to order at 12:00 p.m.

B. ADOPTION OF AGENDA

Moved by Mayor Hall, seconded by Councillor Ramsay, that the agenda for the April 20, 2020 Standing Committee on Finance and Audit meeting, BE ADOPTED.

Carried Unanimously

C. ADOPTION OF MINUTES

C.1 Minutes of the Finance and Audit Committee Meeting held March 23, 2020

Moved by Councillor Ramsay, seconded by Mayor Hall, that the minutes of the meeting held March 23, 2020 for the Standing Committee on Finance and Audit, BE ADOPTED.

Carried Unanimously

D. REPORTS

D.1 Financial Update and Response to COVID-19 Pandemic Impacts K. Dalio, Director of Finance, provided an overview of the subject report including information on the financial impact of the COVID-19 pandemic on the City’s loss of revenue and expense savings. Discussion commenced regarding line items reported on the “Loss of Revenue” table within the subject report. K. Dalio, Director of Finance, and K. Soltis, City Manager, responded to questions of the committee.

Moved by Mayor Hall, seconded by Councillor Ramsay, that the Standing Committee on Finance and Audit REFERS to Administration for a report back to Council regarding the revenue and expense impacts to close the Four Seasons Leisure Pool for the remainder of 2020.

Carried Unanimously

Discussion commenced regarding the deadline for the City to remit the taxes collected on behalf of other organizations including the Hospital, School District, Regional District, Municipal Finance Authority and BC Assessment. K. Dalio, Director of Finance, responded to questions of Council. Councillor Skakun exited Council Chambers at 12:44 p.m. and returned at 12:45 p.m. Discussion commenced regarding the elimination of the Council cost of living salary increase of 1.75% to fall in line with Administration’s recommendation to eliminate the exempt staff cost of living salary increase of 1.75% for 2020.

Moved by Mayor Hall, seconded by Councillor Ramsay, that the Standing Committee on Finance and Audit RECOMMENDS to Council that Council APPROVES the elimination of the Council cost of living salary increase of 1.75%, effective May 1, 2020.

Carried Unanimously Discussion commenced regarding the partial reallocation of various fund expenses, including Council Contingency, Council Travel Fund, Collective Council Budget and the Economic Development Travel Budget to the development of a community grant program stream related to the COVID-19 pandemic.

Page 1 of 153

Minutes of the Standing Committee on Finance and Audit – April 20, 2020 Page 2


K. Dalio, Director of Finance, and K. Soltis, City Manager, responded to questions of the committee.

Moved by Mayor Hall, seconded by Councillor Everitt, that the Standing Committee on Finance and Audit REFERS to Administration for a report to Council regarding opportunities for the reallocation of funding from Council Contingency, Council Travel, Collective Council Budget and Economic Development Travel Budget towards the development of community grant programming while ensuring future funding for those source funds is not hindered.

Carried Unanimously

Moved by Mayor Hall, seconded by Councillor Ramsay, that the Standing Committee on Finance and Audit RECOMMENDS to Council that Council APPROVES the capital project deferrals shown on Appendix “A” attached to the report from the Director of Finance to the Standing Committee on Finance and Audit dated April 16, 2020, titled “Financial Update and Response to COVID-19 Pandemic Impacts” and that the 2020 – 2024 Capital Plan BE AMENDED accordingly.

Carried Unanimously

Mayor Hall exited Council Chambers at 1:20 p.m. and returned at 1:21 p.m.

Moved by Mayor Hall, seconded by Councillor Ramsay, that the Standing Committee on Finance and Audit RECOMMENDS to Council that Council APPROVES the proposed funding source changes for certain capital projects as set out in Appendix “B” attached to the report from the Director of Finance to the Standing Committee on Finance and Audit dated April 16, 2020, titled “Financial Update and Response to COVID-19 Pandemic Impacts”, and that the applicable Capital Plans BE AMENDED accordingly.

Carried Unanimously

Councillor Skakun exited Council Chambers at 1:32 p.m. and returned at 1:35 p.m. Discussion commenced regarding a reduction in the 2020 tax levy from 3.44% to 2.22% as proposed in the subject report.

Moved by Councillor Ramsay, seconded by Mayor Hall, that the Standing Committee on Finance and Audit RECOMMENDS to Council that Council: 1. APPROVES the short-term loans identified in the report from the Director of Finance to the

Standing Committee on Finance and Audit dated April 16, 2020, titled “Financial Update and Response to COVID-19 Pandemic Impacts”, be paid in full using the Capital Expenditure Reserve and the General Infrastructure Reinvestment Fund Reserve as the funding sources; and

2. DIRECTS Administration to reflect these changes in the proposed 2020-2024 Financial Plan Bylaw, which would result in a 2020 tax levy decrease from 3.44% to less than 2.00%, for Council’s consideration at the May 11, 2020 regular Council meeting.

Moved by Councillor Ramsay, seconded by Mayor Hall, to AMEND the motion in item #2 by changing the words “2020 tax levy decrease from 3.44% to less than 2.00%” to “2020 tax levy decrease from 3.44% to less than 2.00%, and a second option for a 2020 tax levy decrease from 3.44% to less than 1.00%”.

Carried Unanimously Main motion, as amended.

Carried Unanimously Discussion commenced regarding the rescheduling of the 2nd penalty date for the late remittance of property taxes from the 2nd Friday of September to October 1 for all tax rate classes.

Moved by Councillor Ramsay, seconded by Mayor Hall, that the Standing Committee on Finance and Audit RECOMMENDS to Council that Council DIRECTS Administration to return a bylaw for Council’s consideration to extend the second penalty of 5% for late payment of property taxes date from the second Friday in September to October 1, for all property tax rate classifications.

Carried Unanimously

Page 2 of 153

Minutes of the Standing Committee on Finance and Audit – April 20, 2020 Page 3


Moved by Councillor Ramsay, seconded by Mayor Hall, that the Standing Committee on Finance and Audit RECOMMENDS to Council that Council DIRECTS Administration to return a bylaw to amend the City of Prince George Comprehensive Fees and Charges Bylaw No. 7557, 2004, to eliminate the 10% penalty on late Sewer, water and Solid Waste utility payments for the period of July 1 to December 31, 2020, for Council’s consideration at the May 11, 2020 regular Council meeting.

Carried Unanimously

D.2

Standing Committee on Finance and Audit - Work Plan Year 2020

Moved by Mayor Hall, seconded by Councillor Ramsay, that the Standing Committee on Finance and Audit RECEIVES FOR INFORMATION the 2020 Workplan as attached to the April 20, 2020 meeting agenda.

Carried Unanimously

E. ADJOURNMENT The meeting of the Standing Committee on Finance and Audit adjourned at 2:21 p.m.

___________________________________ Councillor Garth Frizzell, Chair

___________________________________ Certified Correct

Page 3 of 153

DATE: May 6, 2020

TO: STANDING COMMITTEE ON FINANCE AND AUDIT

NAME AND TITLE: Kris Dalio, Director of Finance

SUBJECT: 2019 Financial Statements and Audit

ATTACHMENT(S): 2019 Financial Statements

KPMG Presentation for the City of Prince George’s 2019 Financial

Statements

KPMG Audit Findings Report for the Year Ended December 31, 2019

KPMG Management Letter

RECOMMENDATION(S):

That the Standing Committee on Finance and Audit:

1. RECEIVE FOR INFORMATION the presentation from KPMG LLP with respect to the 2019

Financial Statements; and

2. APPROVE the 2019 Financial Statements as attached to the report dated May 1, 2020

from the Director of Finance titled “2019 Financial Statements and Audit”.

PURPOSE:

The purpose of this report is to present information related to the 2019 Year End Audit and results of

that audit and to obtain approval of the 2019 Financial Statements by the Finance and Audit

Committee before the May 15th statutory deadline. Committee members are encouraged to discuss

and comment on any of the items included in the recommendations.

BACKGROUND: The 2019 year-end audit commenced with interim fieldwork in late 2019 and continued with audit

work and the final review until the date of this report. This timeframe reflects the considerable effort

that is required in order to complete the financial statements. I’d like to recognize the expertise and

efforts of Terri Johnson and Fyfe Halvorson in their role of coordinating the input and assistance of

numerous City staff across all departments.

The financial statements contain the City’s consolidated financial statements and notes to those

statements which represent the overall financial position as of December 31, 2019. The

supplementary information provides results by fund for segment disclosure, as well as details of

tangible capital assets, balances in reserves and trust funds and debt liability.

Page 4 of 153

Management is responsible for decisions relating to the form and content of these statements and

for the treatment and reporting of transactions. The City consults with and receives guidance from

its auditors with respect to the treatment and presentation of the financial information.

I would like to acknowledge the commitment of the KPMG staff in the completion of the audit and

especially Micaela Roque and Corey Naphtali for their advice and expertise. Together, we feel the

City and KPMG have presented financial statements that are more concise and transparent. In

future years, we can expect further refinement as we move towards the goal of transitioning the

remainder of our supplementary information into the accompanying notes to the financial

statements.

STRATEGIC PRIORITIES: The City’s Financial Statements and Audit support Council’s Priorities of “Sustainable Fiscal

Management” and “Organizational Excellence”.

FINANCIAL CONSIDERATIONS: 2019 Management Letter and Audit Findings Report

A management letter from the auditor results from observations made during the course of the audit

and discloses certain matters that came to the auditors’ attention that they believe warrant the

Committee’s consideration. The audit uncovered no material errors or omissions and the auditors

were satisfied that appropriate controls and systems are in place to produce accurate and timely

financial information. KPMG LLP has issued a management letter, however, for 2019 for one item

regarding some revenues that were deferred incorrectly. KPMG has also issued an Audit Findings

Report, attached to this report, which summarizes their areas of audit focus, adjustments and other

observations.

2019 Audit Results Presentation

The City’s financial statements are produced in accordance with the accounting standards, as set by

the Public Sector Accounting Board. The consolidated statements include the Prince George Public

Library and Tourism Prince George. Our audit firm of KPMG LLP has audited the statements and

prepared an opinion of these statements in presentation form to present to the Committee.

2019 Financial Statements

The Community Charter (section 167) requires that the municipality submit its audited financial

statements and financial information to the Ministry of Municipal Affairs and Housing before May

15th each year. Council has delegated the authority to approve the financial statements to the

Standing Committee on Finance and Audit and they have been presented to the Committee for

approval.

SUMMARY AND CONCLUSION: The 2019 Audit Results’ opinion presentation and the 2019 Financial Statements have been prepared

for review and approval by the Committee. Upon their approval by the Committee, the financial

statements will be submitted to the Ministry of Municipal Affairs and Housing.

RESPECTFULLY SUBMITTED:

Kris Dalio, Director of Finance

Page 5 of 153

APPROVED:

Kathleen Soltis, City Manager

Meeting Date: 2020/05/11

Page 6 of 153

City of Prince GeorgeConsolidated Financial Statements

For the Year Ended December 31, 2019

Page 7 of 153

CITY OF PRINCE GEORGEDecember 31, 2019

CONTENTSPAGE

Reports

Management's Responsibility Statement................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1

Independent Auditors' Report................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2

Statements

Consolidated Statement of Financial Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................5

Consolidated Statement of Operations................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................6

Consolidated Statement of Change in Net Debt................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................7

Consolidated Statement of Cash Flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................8

Notes

Notes to the Financial Statements................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................9

Schedules

Supplementary Financial Information................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................25

Segment Disclosure - 2019................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................26

Segment Disclosure - 2018................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................28

Reserve Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................30

Tangible Capital Assets - 2019................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................32

Tangible Capital Assets - 2018................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................34

Financial Position - Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................36

Operations - Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................36

Debt................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................37

Page 8 of 153

FINANCIAL SERVICES Finance Department

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Page 9 of 153

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Page 12 of 153

CITY OF PRINCE GEORGEConsolidated Statement of Financial Position

as at December 31(in thousands of dollars) 2019 2018

FINANCIAL ASSETS

Cash and Cash Equivalents (Note 2) $ 96,466 $ 96,709

Receivables (Note 3) 22,363 22,997

Investments (Note 4) 4,896 -

Property Held for Resale 773 -

Deposits - Municipal Finance Authority (Note 5) 2,064 1,995

126,562 121,701

LIABILITIES

Accounts Payable and Accrued Liabilities (Note 6) 39,693 45,722

Deferred Revenues (Note 7) 10,434 11,429

Deferred Development Cost Charges (Note 8) 5,190 4,773

Reserves - Municipal Finance Authority (Note 5) 2,064 1,995

Debt (Schedule 5) 86,912 85,105

144,293 149,024

NET DEBT (17,731) (27,323)

NON-FINANCIAL ASSETS

Prepaid Expenses 2,469 1,669

Inventories 1,077 994

Tangible Capital Assets (Note 9) 730,493 699,054

734,039 701,717

ACCUMULATED SURPLUS (Note 10) $ 716,308 $ 674,394

Commitments and Contingencies (Note 13)

_________________________K. Dalio, Director of Finance

To be read in conjunction with the Notes to the Consolidated Financial Statements

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CITY OF PRINCE GEORGEConsolidated Statement of Operations

for the year ended December 31(in thousands of dollars)

2019Original

Budget Bylaw(Note 1(a)(v))

2019Actual

2018Actual

REVENUES

Taxation and Grants in Lieu, net $ 116,192 $ 117,580 $ 111,086

Sales of Services, User Rates and Rentals 51,006 53,500 54,311

Investment Income and Actuarial Earnings 3,005 5,230 4,566

Development Cost Charges Contributions 327 586 2,295

Contributions from Other Governments and Agencies 15,562 20,853 14,663

Other Revenue 4,940 9,571 9,011

Gain on Disposal of Tangible Capital Assets - 3,470 1,098

Contribution of Tangible Capital Assets - 6,240 6,085

191,032 217,030 203,115

EXPENSES

General Government 24,084 23,483 22,095

District Energy 967 1,058 1,057

Protective Services 51,702 53,026 52,179

Transportation Services 37,807 40,371 38,593

Water and Sewer 16,708 18,379 17,640

Sanitation and Waste Removal 2,680 3,124 2,964

Public Health and Welfare 541 579 616

Planning and Environmental Development 2,361 2,469 2,335

Parks, Recreation and Cultural Services 23,410 27,003 26,017

Other Controlled Entities 3,683 5,624 5,634

163,943 175,116 169,130

ANNUAL SURPLUS (Note 12) 27,089 41,914 33,985

ACCUMULATED SURPLUS, Beginning of Year 674,394 674,394 640,409

ACCUMULATED SURPLUS, End of Year (Note 10) $ 701,483 $ 716,308 $ 674,394


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CITY OF PRINCE GEORGEConsolidated Statement of Change in Net Debt


2019Original

Budget Bylaw(Note 1 (a)(v))

2019Actual

2018Actual

Annual Surplus $ 27,089 $ 41,914 $ 33,985

Amortization of Tangible Capital Assets 23,360 25,955 24,920

Proceeds on Disposal of Tangible Capital Assets - 4,260 2,757

Change in Inventories and Prepaid Expenses - (883) (708)

Transfer of Property Held for Resale - 773 -

Gain on Disposal of Tangible Capital Assets - (3,470) (1,098)

50,449 68,549 59,856

Acquisition of Tangible Capital Assets

Acquisition of Tangible Capital Assets (30,214) (52,717) (59,438)

Contribution of Tangible Capital Assets - (6,240) (6,085)

(30,214) (58,957) (65,523)

Decrease in Net Debt 20,235 9,592 (5,667)

Net Debt, Beginning of Year - (27,323) (21,656)

Net Debt, End of Year $ 20,235 $ (17,731) $ (27,323)


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CITY OF PRINCE GEORGEConsolidated Statement of Cash Flows

for the year ended December 31(in thousands of dollars) 2019 2018

NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES:

Operating

Annual Surplus $ 41,914 $ 33,985

Non-cash Charges to Operations

Amortization 25,955 24,920

Gain on Disposal of Tangible Capital Assets (3,470) (1,098)

Contribution of Tangible Capital Assets (6,240) (6,085)

Actuarial Earnings on Long-term Debt (2,804) (2,704)

55,355 49,018

Decrease in Receivables 3,445 647

Increase in Prepaid Expenses (800) (568)

Increase in Inventories (83) (140)

(Decrease) Increase in Accounts Payable and Accrued Liabilities (6,028) 10,448

(Decrease) Increase in Deferred Revenues (995) 287

Increase (Decrease) in Deferred Development Cost Charges 417 (1,350)

51,311 58,342

Capital

Acquisition of Tangible Capital Assets (52,717) (59,438)

Proceeds on Disposal of Tangible Capital Assets 4,260 2,757

(48,457) (56,681)

Investing

(Increase) Decrease in Investments (4,896) 53,567

Financing

Debt Proceeds 10,688 5,363

Repayment of Debt (8,889) (7,803)

1,799 (2,440)

(Decrease) Increase in Cash and Cash Equivalents (243) 52,788

Cash and Cash Equivalents, Beginning of Year 96,709 43,921

Cash and Cash Equivalents, End of Year (Note 2) $ 96,466 $ 96,709


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CITY OF PRINCE GEORGENotes to the Financial Statements

For the year ended December 31, 2019

General

The Notes to the Consolidated Financial Statements are an integral part of these statements. They explain the significantaccounting and reporting policies and the principles that form the basis for these financial statements. The Notes alsoprovide important supplementary information and explanations which cannot be conveniently integrated into theConsolidated Financial Statements.

1. Significant Accounting Policies

a) Basis of Presentation

The Consolidated Financial Statements of the City of Prince George (the "City") are prepared by managementin accordance with Canadian Public Sector Accounting Standards. The Consolidated Financial Statementsreflect the combined results and activities of the reporting entity which comprises all organizations that areaccountable for the administration of their financial affairs and resources to the Council and are controlled orowned by the City. The Controlled entities are Prince George Public Library and Tourism Prince GeorgeSociety. The City's general classification of funds and the purpose of those funds are shown below:

i) Operating Funds

These Funds include the General, District Energy, Water, and Sewer operations of the City. Operating Fundsare used to record the costs associated with providing City services.

ii) Capital Funds

These Funds include General, District Energy, Water, Sewer, and Land Capital Funds. These Funds track theacquisition costs of various capital assets and the funding of these assets including related debt.

iii) Reserve Funds

Under the Community Charter of British Columbia, City Council may by bylaw establish special Reserve Fundsfor specific purposes. Money in a Reserve Fund and interest earned thereon must be used only for thepurpose for which the Fund was established. If the amount in a Reserve Fund is greater than required, CityCouncil may, by bylaw, transfer all or part of the balance to another Reserve Fund.

iv) Trust Funds

These Funds have been created to hold cash assets that must be used for specific purposes and/orbeneficiaries and according to certain agreements. In accordance with Canadian Public Sector AccountingStandards, Trust Funds administered by the City are not to be included in the City's Consolidated FinancialStatements. These Trust Funds are presented in Schedule 4.

v) Original Budget Bylaw

The original budget bylaw, stated in the Consolidated Statements of Operations and Changes in Net Debt,represents the budget bylaw adopted in May 2019. Any budget amendments subsequently adopted by Councilhave not been included.

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1. Significant Accounting Policies, continued

b) Basis of Accounting

The City follows the accrual method of accounting for revenues and expenses. Revenues are recognized inthe year in which they are earned and measurable. Expenses are recognized as they are incurred andmeasurable as a result of receipt of goods and services and/or the creation of a legal obligation to pay.

c) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid money market investments that are readilyconvertible to known amounts of cash and that are subject to an insignificant risk of change in value. Theseshort-term investments generally have a maturity of three months or less at acquisition and are held for thepurpose of meeting short-term cash commitments rather than for investing.

d) Investments

Investments are recorded at cost, adjusted for amortization of premiums or discounts. Provisions for lossesare recorded when they are considered to be other than temporary.

e) Property Held for Resale

Property held for resale are those expected to be sold within one year. They are valued at the lower of cost orexpected net realizable value. Cost includes amounts for improvements to prepare the property for sale.

f) Deferred Revenues

Deferred revenues includes grants, contributions and other amounts received from third parties pursuant tolegislation, regulation and agreement which may only be used in certain programs or in the completion ofspecific work. In addition, certain user charges and fees are collected for which the related services have yetto be performed. Revenue is recognized in the period when the related expenses are incurred or servicesperformed.

g) Financial Instruments

The City's financial instruments consist of cash and cash equivalents, receivables, investments, deposits andreserves with the Municipal Finance Authority, accounts payable and accrued liabilities and debt. Unlessotherwise noted, it is management's opinion that the City is not exposed to significant interest, currency orcredit risks arising from these financial instruments. The fair value of these financial instrumentsapproximate their carrying values, unless otherwise noted.

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h) Non-Financial Assets

Non-financial assets are not available to discharge existing liabilities and are held for use in the provision ofservices. They have useful lives extending beyond the current year and are not intended for sale in theordinary course of operations. The change in non-financial assets during the year, together with the annualsurplus, provides the Change in Net Debt for the year.

i) Tangible Capital Assets

Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to theacquisition, construction, development, or betterment of the asset, excluding interest costs.

Assets under construction are not amortized until the asset is available for productive use.

Tangible capital assets received as contributions are recorded at their fair value at the date of receipt, andthat fair value is also recorded as revenue.

The cost, less residual value, of tangible capital assets (except for Tourism Prince George Society's tangiblecapital assets) are amortized on a straight-line basis over their estimated useful lives as follows:

Land Not amortized

Building & Improvements 15 - 35 years

Vehicles, Machinery, & Equipment 3 - 20 years

Other 5 - 20 years

Infrastructure

Roads 17 - 100 years

Parks 10 - 75 years

Water 10 - 80 years

Sanitary Sewer 12 - 140 years

Storm Drainage 25 - 140 years

Energy & Communication 35 - 40 years

Tourism Prince George Society uses the following methods and rates to amortize its assets:

Vehicles, Machinery, & Equipment 20 - 55% Declining Balance

Leasehold Improvements 4 years Straight-Line

j) Works of Arts and Culture

Works of art and cultural and historical assets are not recognized as assets in the financial statements.

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k) Capital Leases

Leases that, from the point of view of the lessee, transfer substantially all the benefits and risks incident toownership of the property to the City are considered capital leases. These are accounted for as an asset andan obligation. Capital lease obligations are recorded at the present value of the minimum lease paymentsexcluding executor costs, ie. insurance, maintenance costs, etc. The discount rate used to determine thepresent value of the lease payments is the lower of the City's rate for incremental borrowing or the interestrate implicit in the lease.

l) Inventories

Inventories consist of supplies, repair parts and materials consumed in operations and capital projects.Inventory is recorded at cost which is determined on a weighted average basis.

m) Debt

Debt is recorded net of repayments and actuarial earnings. Principal debt repayment is recorded in operatingfunds in the year that it is repaid.

n) Revenue Recognition

Taxation revenues are recognized when levied in May of each year as this is when taxation revenues areauthorized and the taxable event occurs. Taxation revenue is initially measured at realizable value. At yearend, the City evaluates the ultimate collectability of taxation receivables and adjusts any valuation allowance.Interest and operating grants are recognized as earned.

Government transfers without stipulations are recognized as revenues in the period in which the transfer isauthorized, any eligibility criteria have been met, and reasonable estimates of the amounts can be made.Government transfers with stipulations are recognized as revenue in the period the transfer is authorized andall eligibility criteria have been met, except when and to the extent that the transfer gives rise to an obligationthat meets the definition of a liability. Any such liability is reduced, and an equivalent amount of revenue isrecognized as the liability is settled. Grants in lieu of taxes are recorded on an accrual basis when it ispossible to reasonably estimate the amounts receivable.

o) Expenses

Expenses are generally recognized as they are incurred and when the goods and services are received and/ora legal obligation to pay is established.

p) Accumulated Surplus

Accumulated surplus is the amount by which all financial and non-financial assets exceed all liabilities andindicates the net economic resources available to provide future services. Accumulated surplus isrepresented by various fund balances and equity in capital assets.

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q) Post-Employment Benefits

The City accrues expenses for post-employment benefits when they exist as specified in the collectiveagreements such as a one month retirement allowance and sick gratuity for International Association of FireFighters (IAFF). The City accrues a percentage of compensated absences (sick leave) as obligated forCanadian Union of Public Employees (CUPE) employees as the employees render services necessary to earnfuture benefits. City employees retiring do not receive any retirement allowance that either vests or accruesover the period of employment. CUPE sick benefits are vested at 25% and are also accrued. Managementsick benefits do not accrue and are not vested. The City recognizes an expense for all other compensatedabsences (sick leave) and benefits as incurred.

The City and its employees make contributions to the Municipal Pension Plan. As this plan is a multi-employerplan, contributions are expensed as incurred.

r) Contaminated Sites

Contaminated sites are defined as the result of contamination being introduced in air, soil, water or sedimentof a chemical, organic, or radioactive material or live organism that exceeds an environmental standard. Aliability for remediation of contaminated sites is recognized, net of any expected recoveries, when all of thefollowing criteria are met:

(i) an environmental standard exists,(ii) contamination exceeds the environmental standard,(iii) the organization is directly responsible or accepts responsibility for the liability,(iv) future economic benefits will be given up, and(v) a reasonable estimate of the liability can be made.

s) Use of Estimates

The preparation of consolidated financial statements in conformity with Canadian Public Sector AccountingStandards requires management to make estimates and assumptions that affect the reported amounts ofassets and liabilities, and disclosure of contingent assets and liabilities, at the date of the consolidatedfinancial statements and the reported amount of revenues and expenses during the period. Items requiringestimates include the collectability of accounts receivable, accrued liabilities, useful lives of tangible capitalassets, rates for amortization, employee benefits, existence of contaminated sites and impairment ofinvestments and tangible capital assets.

Estimates are based on the best information available at the time of preparation of the consolidated financialstatements and are reviewed annually to reflect new information as it becomes available. Measurementuncertainty exists in these consolidated financial statements. Actual results could differ from theseestimates.

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2. Cash and Cash Equivalents

2019

(000's)

2018

(000's)

Cash $ 12,149 $ 6,607

Cash Equivalents 83,107 89,183

95,256 95,790

Other Controlled Entities Cash 1,210 919

$ 96,466 $ 96,709

3. Receivables

2019

(000's)

2018

(000's)

General Operating Fund

Property Taxes $ 5,319 $ 5,445

Federal Government 1,999 1,607

Provincial Government 2,495 4,589

Regional District of Fraser-Fort George 506 349

NDIT Grant Recipient Program 4,266 1,454

Accounts Receivable 3,005 3,708

Refuse Rates 423 425

18,013 17,577

Water Operating Fund

Water Utility Rates 2,072 2,090

Sewer Operating Fund

Sewer Utility Rates 1,396 1,368

General Capital Fund

Provincial Government 568 812

Miscellaneous - 800

568 1,612

Other Controlled Entities

Prince George Public Library 22 19

Tourism Prince George Society 292 331

314 350

Total $ 22,363 $ 22,997

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4. Investments

2019

(000's)

2018

(000's)

MFA Bond Funds $ 4,896 $ -

The annual weighted average rate of return for 2019 was 2.47% per annum (2018 - 2.16%). The rate of return iscalculated on the Money Market Fund (cash equivalents), Pooled High Interest Savings Accounts (cash equivalents)and MFA Bond Fund.

5. Municipal Finance Authority Debt Reserve Fund

The City issues its debt instruments through the Municipal Finance Authority ("MFA"). As a condition of theborrowing, the City is obligated to lodge security by means of demand notes and interest bearing cash depositsbased on the amount of the borrowing. The deposits are included in the City's financial statements as MFA cashdeposits. If the debt is repaid without default, the deposits are refunded to the City. The notes as disclosed in note13(e), which are contingent in nature, are held by the MFA to act as security against the possibility of debtrepayment default and are not recorded in the financial statements. Upon the maturity of a debt issue, the demandnotes are released and deposits refunded to the City.

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6. Accounts Payable and Accrued Liabilities

2019

(000's)

2018

(000's)


Federal Government $ 8,879 $ 14,059

Provincial Government 2,833 2,984

Regional District of Fraser-Fort George 244 249

Trade Accounts Payables 16,445 17,450

Payroll Statutory Liabilities 2,711 2,532

Vacation, Sick Leave, and Firefighters Gratuities 7,227 7,074

Accrued Interest on Capital Lease 257 304

Accrued Interest on Debt 636 632

39,232 45,284

District Energy Operating Fund


Water Operating Fund


Sewer Operating Fund


General Capital Fund


Trade Accounts Payable 16 108

21 115




321 211

Total $ 39,693 $ 45,722

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7. Deferred Revenues

The City records deferred revenue for funds received in advance on services not yet rendered and is recognized intorevenue during the period when service is provided. The City also records deferred revenue when a contractspecifies how the resources are to be used and therefore funds received in advance are deferred until the periodwhen the requirement is met. Because these funds are restricted in nature they are shown as a liability.

2019

(000's)

2018

(000's)

Operating Funds

Taxes $ 7,385 $ 6,877

Fees and charges

General 2,562 3,022

Water 24 52

Sewer 45 84

Capital Funds

Fees and Charges 3 3

Contributions Received for Land 221 384

Grants

Gaming Revenue - 569

Other 136 362

10,376 11,353




58 76

Total $ 10,434 $ 11,429

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8. Deferred Development Cost Charges (DCC)

The City collects DCCs to pay for a proportionate share of infrastructure related to new growth. In accordance withthe Community Charter of British Columbia, these funds must be deposited into a separate reserve fund. When therelated costs are incurred, the DCCs are recognized as revenue. Because these funds are restricted in nature theyare shown as a liability.

2019

(000's)

2018

(000's)

Deferred DCC by Type

Roads $ 1,037 $ 1,138

Drainage 411 380

Parkland 368 267

Sewer 2,394 2,222

Water 980 766

$ 5,190 $ 4,773

Deferred DCC

Balance, Beginning of Year $ 4,773 $ 6,123

Investment Income 128 209

DCCs Levied in the Year 875 736

1,003 945

Transfers to General Capital (442) (2,172)

Transfers to Water Capital (3) (20)

Transfers to General Asset Maintenance (117) (103)

Transfers to Water Asset Maintenance (24) -

(586) (2,295)

Balance, End of Year $ 5,190 $ 4,773

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9. Tangible Capital Assets

2019

(000's)

2018

(000's)

Land $ 101,214 $ 102,590

Buildings & Improvements 65,461 69,591

Vehicles, Machinery & Equipment 22,152 20,667

Other 532 803

Infrastructure

Roads 165,709 163,049

Parks 21,497 20,186

Water 101,026 96,706

Sanitary Sewer 78,251 70,985

Storm Drainage 56,011 55,226

Energy & Communication 48,360 50,678

Assets Under Construction 70,280 48,573

$ 730,493 $ 699,054

For additional information, see the Schedule of Tangible Capital Assets (Schedule 3).

Assets contributed to the City totaled $6,240,000 (2018 - $6,085,000) and were capitalized at their fair value atthe time of receipt.

10. Accumulated Surplus

2019

(000's)

2018

(000's)

Operating - Surplus $ 2,675 $ 4,168

Reserves 65,395 54,823

Investment in Tangible Capital Assets 648,238 615,403

$ 716,308 $ 674,394

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11. Contractual Rights

a) Fortis BC

The City entered into an agreement with Fortis BC (formerly Terasen Gas Inc.) that has resulted in thecreation of the Fortis BC Reserve Fund.

Capital Lease - under the terms of the agreement, the City has entered into a 35 year capital lease with FortisBC commencing November 1, 2004, for the natural gas distribution system within the municipality'sboundary. The City has prepaid $58,596,000 of the capital lease obligation and has financed theprepayment through debenture debt. The remaining obligation of $3,000,000 which is included in long-termdebt, will be paid with annual lease payments of $273,108 including interest of 5.460% per annum.

Operating Lease - the City has also entered into a 17 year operating lease with Fortis BC commencingNovember 1, 2004, whereby the City leases back to Fortis BC the operations of the gas distribution system.Under the operating lease, Fortis BC is required to make annual lease payments to the City calculated by aformula specified in the agreement. At the end of the 17 year term, Fortis BC has the option of making atermination payment to the City equal to the unamortized portion of the City's $58,596,000 prepaymentwhich is estimated to be $29,389,000 or negotiate a new 18 year operating lease with a continuation of theannual lease payments which existed under the previous 17 year operating lease. All debt payments to Fortiswill cease at the end of the 17 year term. Projected income is listed below:

(000's)

2020 $ 4,292

2021 2,118

$ 6,410

b) Regional District of Fraser-Fort George

The City entered into a contract with the Regional District of Fraser-Fort George to provide personnel andfacility space for the purposes of operating the Fire Operations Communication Centre portion of thecentralized fire dispatch service. The term of the contract commenced on January 1, 2018 and terminatesDecember 31, 2022. The annual fees to be received by the City for the provision of fire dispatch servicesduring the remaining term of the agreement is as follows:

(000's)

2020 $ 1,570

2021 1,586

2022 1,605

$ 4,761

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12. Budgeted Surplus

The planned surplus of $27,089,000, reflected in the Original Budget Bylaw Column on the Consolidated Statementof Operations was approved by Council in May 2019 upon finalization of the 2019 Annual Budget Bylaw. Theapproved annual budget bylaw has been adjusted for presentation in these financial statements to conform withCanadian Public Sector Accounting Standards. These adjustments included removing the purchase of tangiblecapital assets, debt servicing and deferred revenue and including amortization expense.

13. Commitments and Contingencies

a) The City is jointly and severally liable, as a member of the Regional District of Fraser-Fort George for any actuarialearnings deficiencies, and capital debt issued through the Regional District.

b) The City and its employees contribute to the Municipal Pension Plan (a jointly trusteed pension plan). The boardof trustees, representing plan members and employers, is responsible for administering the plan, includinginvestment of assets and administration of benefits. The plan is a multi-employer defined benefit pension plan.Basic pension benefits are based on a formula. As at December 31, 2018, the plan has about 205,000 activemembers and approximately 101,000 retired members. Active members include approximately 40,000contributors from local government.

Every three years, an actuarial valuation is performed to assess the financial position of the plan and adequacy ofplan funding. The actuary determines an appropriate combined employer and member contribution rate to fundthe plan. The actuary's calculated contribution rate is based on the entry-age normal cost method, whichproduces the long-term rate of member and employer contributions sufficient to provide benefits for averagefuture entrants to the plan. This rate may be adjusted for the amortization of any actuarial funding surplus andwill be adjusted for the amortization of any unfunded actuarial liability.

The most recent valuation for the Municipal Pension Plan as at December 31, 2018 indicated a $2,866 millionfunding surplus for basic pension benefits on a going concern basis.

The City paid $5,713,000 (2018 - $5,492,000) for employer contributions while employees contributed$4,743,000 (2018 - $4,526,000) to the plan in fiscal 2019.

The Prince George Public Library paid $191,692 (2018 - $188,869) for employer contributions while employeescontributed $169,521 (2018 - $168,695) to the plan in fiscal 2019.

The next valuation will be as at December 31, 2021, with results available in 2022.

Employers participating in the Plan record their pension expense as the amount of employer contributions madeduring the fiscal year (defined contribution pension plan accounting). This is because the plan records accruedliabilities and accrued assets for the plan in aggregate, resulting in no consistent and reliable basis for allocatingthe obligation, assets and cost to the individual employers participating in the plan.

c) The City has been named as a defendant in various legal actions. No reserve or liability has been recordedregarding any of these legal actions or possible claims because the amount of the loss, if any, is undeterminable.Settlement, if any, made with respect to these actions would be accounted for as a charge to expenditures in theperiod in which it is likely that a future event will confirm the existence of a liability and the amount can bereasonably estimated.

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13. Commitments and Contingencies, continued

d) The City is committed to a third party under an agreement for the supply and operation of an off-street parkingfacility. The City's annual payment in respect of this commitment is $183,208 for a period of 30 yearscommencing August 1, 1997.

e) The City has issued a Demand Note to the Municipal Finance Authority (the "Authority") in the amount of$3,968,000 (2018 - $3,924,000). This Demand Note together with the cash deposit, as disclosed in Note 5,comprise an amount equal to one-half of the average annual installment of principal and interest for repaymentof debenture debt issued by the Authority on behalf of the City, and is a requirement of the Authority.

14. Expenses by Object

2019

(000's)

2018

(000's)

Labour and Benefits $ 70,587 $ 67,693

Materials and Supplies 6,002 6,379

City Fleet Expense 3,641 3,240

Contracted Services 19,274 19,643

Electricity and Natural Gas 4,940 5,071

RCMP Contract 22,841 21,887

Professional Services and Insurance 3,319 3,001

Grants 1,937 1,567

Miscellaneous 6,260 5,730

Debt Interest and Fiscal Services 5,136 4,769

Amortization 25,955 24,920

Other Controlled Entities 5,224 5,230

$ 175,116 $ 169,130

15. Segmented Information

The City is a government institution that provides a wide range of services to its citizens, including police, fire,recreation and culture, transportation and public transit, development planning, sanitation, water and sewer. Formanagement reporting purposes the City's operations and activities are organized and reported by fund. Funds werecreated for the purpose of recording specific activities to attain certain objectives in accordance with specialregulations, restrictions or limitations. City services are provided by departments and their activities are reported bythese funds and are disclosed in the segmented information.

The accounting policies used in these segments are consistent with those followed in the preparation of theConsolidated Financial Statements as disclosed in Note 1. For additional information see the Schedule of SegmentDisclosure (Schedule 1).

For each reported segment, revenues and expenses represent both amounts that are directly attributable to thesegment and amounts that are allocated on a reasonable basis. The General Revenue Fund reports on municipalservices that are funded primarily by taxation such as property and business tax revenues. Certain division anddepartments that have separately disclosed in the segmented information along with the services they provide areas follows:

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15. Segmented Information, continued

Protective Services

Protective Services includes Police Protection, Fire Protection, Emergency Measures and Bylaw Enforcement. PoliceProtection is provided to the City by the Royal Canadian Mounted Police (RCMP) through a police services contractwith the Province of British Columbia (BC). Together the RCMP and the municipal employees at the detachment arecommitted to optimizing public safety through the community policing concept. Fire Protection includes firesuppression and protection, first responder medical services and emergency rescue, and fire dispatch within the Cityand Regional District. Emergency Measures provides a comprehensive emergency plan for coordinating response toemergencies and disasters. Bylaw Enforcement provides animal and parking control and other enforcement asrequired to support the bylaws in place within the community for the purpose of health, safety and security.

Community Services

Community Services provides public services that support recreation, sport and leisure activities in the aquatic andarena facilities, convention, entertainment, meeting, events and sport activities in the CN Centre and Prince GeorgeConference and Civic Centre, the development of partnerships for health and social solutions at the community leveland the provision of civic facilities for the community.

Transportation Services

This segment includes the provision of Street Maintenance which includes pavement repair, line painting, streetcleaning, dust control, sidewalk maintenance, traffic sign and street light installation and maintenance. Transitservices are provided in partnership with BC Transit; parking lots and parkades provide for off-street parking fordowntown businesses; fleet vehicles service the organization's operational requirements; storm drainage controlsdrainage through open and piped systems; and snow and ice control provides snow removal and salt and sandingapplications to the road network.

Planning and Environmental Development

Planning includes both short and long-term development planning and application processing and permits as well asinspections, planning for neighbourhoods, parks, open spaces and pathways, and infrastructure planning andmanagement. Environmental Development includes services and planning related to community forest, wildfirehazards, air quality, climate change, natural environment, ecosystem and habitat protection.

Sanitation and Waste Removal

This segment provides residential and (limited) commercial solid waste collection service and annual spring clean-up operations.

Public Health and Welfare

This segment provides for the Memorial Park Cemetery service and maintenance of the grounds.

Administration

The Administration of the City is captured under this section which includes Council, Office of the City Manager,Legislative Services, External Relations, Human Resources, Finance, Service Centre, Risk and Procurement and ITServices.

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15. Segmented Information, continued

District Energy

This segment provides energy for space heating and domestic water heating to buildings located within a servicearea. The infrastructure and operations are funded through a combination of user fees and contributions fromGeneral Operating Fund.

Water Services

Water Services provides potable water to the community which includes the pumping, treatment and distributionsystem and the wells and reservoirs. The infrastructure and operations are funded through a combination of userfees, grants, and special levies.

Sewer Services

Sewer Services provides for the collection and treatment of sewage which includes operation of the lift stations andwastewater treatment centre. The infrastructure and operations are funded through a combination of user fees,grants, and special levies.

Asset Maintenance

This segment provides the investment in asset maintenance funded through transfers from reserves, DCCs, leviesand fees. The costs represent amounts incurred for capital asset maintenance that do not meet the capitalizationthreshold as established for financial reporting purposes.

Reserves and Other Funds

Reserve funds have been created to hold financial assets for specific future requirements. Reserve funds aregenerally used for tangible capital asset acquisition and reinvestment.


Other controlled entities include the Prince George Public Library and Tourism Prince George Society.

16. Comparative Figures

Certain 2018 figures have been reclassified to conform to the 2019 financial statement presentation.

17. Subsequent Event

Subsequent to December 31, 2019, the COVID-19 outbreak was declared a pandemic by the World HealthOrganization. This situation presents uncertainty over the City’s future cash flows, and may have a significantimpact on the City’s future operations. Potential impacts on the City’s business could include future decreases inrevenue, impairment of investments or reduction in investment income, and delays in completing capital projectwork. As the situation is dynamic and the ultimate duration and magnitude of the impact on the economy are notknown, an estimate of the financial effect on the City is not practicable at this time.

24

Page 32 of 153

SUPPLEMENTARY FINANCIAL INFORMATION

Page 33 of 153

City of Prince GeorgeSchedule 1 - Segment Disclosure - 2019



ProtectiveServices

CommunityServices

TransportationServices

Planning &EnvironmentDevelopment

Sanitation &Waste

Removal

REVENUES

Taxation and Grants in Lieu, net $ - $ - $ - $ - $ -

Sales of Services, User Rates and Rentals 2,214 7,715 4,319 17 4,577

Investment Income and Actuarial Earnings - - 14 - -

Development Cost Charges Contributions - - - - -

Contributions from Other Governments and Agencies (449) 769 - 184 -

Other Revenue 765 588 997 2,877 120

Gain on Disposal of Tangible Capital Assets - - - - -

Asset Contributions - - - - -

2,530 9,072 5,330 3,078 4,697

EXPENSES

Labour and Benefits 24,660 12,124 9,078 2,097 1,105

Goods and Services 25,224 8,390 16,499 313 1,643

Interest 946 123 856 - -

Amortization 2,028 3,959 10,724 - 306

Prince George Public Library - - - - -

Tourism Prince George Society - - - - -

52,858 24,596 37,157 2,410 3,054

NET SURPLUS (DEFICIT) BEFORE TRANSFERS (50,328) (15,524) (31,827) 668 1,643

Transfers (1,345) (1,817) 2,685 (270) (1,986)

ANNUAL SURPLUS (DEFICIT) $ (51,673) $ (17,341) $ (29,142) $ 398 $ (343)

26

Page 34 of 153



Public Health& Welfare Administration

DistrictEnergy Water Sewer

AssetMaintenance

Reserves &Other Funds

OtherControlled

EntitiesConsolidated

2019

$ - $ 115,868 $ - $ 22 $ 425 $ - $ - $ 1,265 $ 117,580

510 5,014 206 16,053 12,789 5 - 81 53,500

- 2,983 1 329 143 - 1,748 12 5,230

- - - 3 - 117 466 - 586

- 18,951 - 10 - 168 807 413 20,853

- 2,586 - 304 229 226 715 164 9,571

- - - (34) - - 3,508 (4) 3,470

- - - 878 766 - 4,596 - 6,240

510 145,402 207 17,565 14,352 516 11,840 1,931 217,030

390 10,889 56 2,779 2,680 4,729 - - 70,587

120 5,660 272 1,925 1,534 6,634 - - 68,214

9 2,592 33 469 108 - - - 5,136

49 3,346 607 2,327 2,209 - - 400 25,955

- - - - - - - 3,686 3,686

- - - - - - - 1,538 1,538

568 22,487 968 7,500 6,531 11,363 - 5,624 175,116

(58) 122,915 (761) 10,065 7,821 (10,847) 11,840 (3,693) 41,914

(81) (29,510) 610 (8,264) (5,435) 10,847 34,566 - -

$ (139) $ 93,405 $ (151) $ 1,801 $ 2,386 $ - $ 46,406 $ (3,693) $ 41,914

Asset Maintenance

Expenses by Fund

General $ 6,925

District Energy 90

Water 2,397

Sewer 1,951

$ 11,363

27

Page 35 of 153




ProtectiveServices

CommunityServices

TransportationServices

Planning &EnvironmentDevelopment

Sanitation &Waste

Removal

REVENUES

Taxation and Grants in Lieu, net $ - $ - $ - $ - $ -

Sales of Services, User Rates and Rentals 2,238 7,907 4,107 17 4,555

Investment Income and Actuarial Earnings - - 9 - -

Development Cost Charges Contributions - - - - -

Contributions from Other Governments and Agencies 1,275 1,149 - - -

Other Revenue 686 309 986 2,718 83

Gain (Loss) on Disposal of Tangible Capital Assets - - - - -

Asset Contributions - - - - -

4,199 9,365 5,102 2,735 4,638

EXPENSES

Labour and Benefits 24,458 11,776 8,603 2,002 1,026

Goods and Services 24,650 8,208 15,510 255 1,447

Interest 931 (254) 980 - -

Amortization 2,003 3,633 10,366 - 387

Prince George Public Library - - - - -

Tourism Prince George Society - - - - -

52,042 23,363 35,459 2,257 2,860

NET SURPLUS (DEFICIT) BEFORE TRANSFERS (47,843) (13,998) (30,357) 478 1,778

Transfers (1,422) (1,566) 2,247 (160) (2,160)

ANNUAL SURPLUS (DEFICIT) $ (49,265) $ (15,564) $ (28,110) $ 318 $ (382)

28

Page 36 of 153



Public Health& Welfare Administration

DistrictEnergy Water Sewer

AssetMaintenance

Reserves &Other Funds

OtherControlled

EntitiesConsolidated

2018

$ - $ 109,549 $ - $ 22 $ 271 $ - $ - $ 1,244 $ 111,086

590 5,357 924 16,045 12,489 - - 82 54,311

- 2,850 (1) 292 116 - 1,295 5 4,566

- - - 20 - 103 2,172 - 2,295

- 7,613 - - - 108 3,970 548 14,663

47 2,106 - 284 149 182 1,289 172 9,011

- - - (101) - - 1,201 (2) 1,098

- - - 1,281 898 - 3,906 - 6,085

637 127,475 923 17,843 13,923 393 13,833 2,049 203,115

399 10,178 66 2,627 2,775 3,783 - - 67,693

154 5,240 303 2,181 1,593 6,976 - - 66,517

11 2,478 41 484 98 - - - 4,769

49 3,290 601 2,133 2,055 - - 403 24,920

- - - - - - - 3,657 3,657

- - - - - - - 1,574 1,574

613 21,186 1,011 7,425 6,521 10,759 - 5,634 169,130

24 106,289 (88) 10,418 7,402 (10,366) 13,833 (3,585) 33,985

(400) (15,036) 4 (3,085) (4,800) 10,366 16,012 - -

$ (376) $ 91,253 $ (84) $ 7,333 $ 2,602 $ - $ 29,845 $ (3,585) $ 33,985

Asset Maintenance

Expenses by Fund

General $ 7,019

District Energy 45

Water 2,317

Sewer 1,378

$ 10,759

29

Page 37 of 153

City of Prince GeorgeSchedule 2 - Reserve Funds

for the year ended December 31, 2019(in thousands of dollars)

GeneralCapital

(a)

WaterCapital

SewerCapital

Downtown Off-Street Parking

Computers&

Equipment(b)

Reserve Funds

Equity, Beginning of Year $ 19,226 $ 12,931 $ 6,637 $ 2,618 $ 3,055

Investment Income 496 342 193 76 78

Third Party Contributions - - - - -

Other revenue 2,471 - - - -

2,967 342 193 76 78

Transfers from (to)

General Operating Fund 6,486 - - 1,137 522

General Capital (13,888) (3) (9) (1,987) (804)

Water Operating Fund - 6,464 - - -

Water Capital - (9,506) - - -

Sewer Operating Fund - - 5,085 - -

Sewer Capital - - (4,334) - -

Land Capital - 128 128 - -

Other Reserves 2,915 - - - 1,156

(4,487) (2,917) 870 (850) 874

Equity, End of Year $ 17,706 $ 10,356 $ 7,700 $ 1,844 $ 4,007

30

Page 38 of 153

City of Prince GeorgeSchedule 2 - Reserve Funds

LandDevelopment

NorthernCapital &Planning

SnowControl

RoadRehabilitation

OtherStatutory &Regulated

(c)

Total2019

$ - $ - $ - $ 399 $ 9,957 $ 54,823

9 132 20 53 349 1,748

- - - - - -

- - - - 78 2,549

9 132 20 53 427 4,297

- 8,135 (20) 5,642 7,143 29,045

- (570) - (5,502) (1,345) (24,108)

- - - - - 6,464

- - - - - (9,506)

- - - - - 5,085

- - - - - (4,334)

4,049 - - - (676) 3,629

(4,057) - - - (14) -

(8) 7,565 (20) 140 5,108 6,275

$ 1 $ 7,697 $ - $ 592 $ 15,492 $ 65,395

(a) Endowment FundCapital Expenditure ReserveGeneral Infrastructure Reinvestment Reserve

(b) Mobile Equipment ReserveComputer Equipment Reserve

(c) Storm Drainage ReserveDebt Reduction ReserveSouthwest Sector Recreation ReservesParkland Acquisition ReserveFortis BC ReserveExtension - Ospika / Marleau ReserveEVP Crown Land Forestry ReserveSolid Waste ReserveCommunity Works Fund ReserveClimate Action Revenue Incentive Program ReserveMajor Events ReserveMiscellaneous ReservePerforming Arts Reserve

31

Page 39 of 153

City of Prince GeorgeSchedule 3 - Tangible Capital Assets - 2019


AssetsUnder

Construction LandBuildings &

Improvements

Vehicles,Machinery &

Equip Other

Cost

Opening costs, $ 48,573 $ 102,970 $ 216,575 $ 51,614 $ 1,327

Additions during the year 38,873 79 615 3,235 202

Transfers to tangible capital assets (17,166) 6 - 2,394 -

Property held for resale - (773) (707) - -

Disposals - (1,068) - (1,442) (229)

Closing costs 70,280 101,214 216,483 55,801 1,300

Accumulated Amortization

Opening accumulated amortization - - 146,760 30,947 748

Amortization - - 4,969 4,080 247

Amortization on property held forresale - - (707) - -

Disposals - - - (1,378) (227)

Closing accumulated amortization - - 151,022 33,649 768

Net Book Value of Tangible CapitalAssets $ 70,280 $ 101,214 $ 65,461 $ 22,152 $ 532

32

Page 40 of 153


Infrastructure

Roads Parks WaterSanitarySewer

StormDrainage Energy & Comm

Total2019

$ 318,417 $ 35,334 $ 152,697 $ 122,927 $ 74,738 $ 80,582 $ 1,205,754

9,591 910 2,035 1,833 1,529 55 58,957

887 1,589 4,648 7,642 - - -

- - - - - - (1,480)

(437) - (73) - - - (3,249)

328,458 37,833 159,307 132,402 76,267 80,637 1,259,982

155,368 15,148 55,991 51,942 19,512 29,904 506,320

7,818 1,188 2,327 2,209 744 2,373 25,955

- - - - - - (707)

(437) - (37) - - - (2,079)

162,749 16,336 58,281 54,151 20,256 32,277 529,489

$ 165,709 $ 21,497 $ 101,026 $ 78,251 $ 56,011 $ 48,360 $ 730,493

33

Page 41 of 153



AssetsUnder

Construction LandBuildings &

Improvements

Vehicles,Machinery &

Equip Other

Cost

Opening costs $ 37,127 $ 102,273 $ 216,841 $ 48,128 $ 1,684

Additions during the year 33,333 1,190 899 5,524 191

Transfers to tangible capital assets (21,887) (183) 3,933 799 -

Disposals - (690) (5,417) (2,837) (229)

Closing costs 48,573 102,590 216,256 51,614 1,646

Accumulated Amortization

Opening accumulated amortization - - 146,983 29,385 809

Amortization - - 5,030 3,847 263

Disposals - - (5,348) (2,285) (229)

Closing accumulated amortization - - 146,665 30,947 843

Net Book Value of Tangible CapitalAssets $ 48,573 $ 102,590 $ 69,591 $ 20,667 $ 803

34

Page 42 of 153


Infrastructure

Roads Parks WaterSanitarySewer

StormDrainage Energy & Comm

Total2018

$ 301,719 $ 26,733 $ 144,278 $ 120,089 $ 71,012 $ 80,451 $ 1,150,335

12,528 3,002 2,971 2,431 3,324 131 65,524

5,256 5,599 5,674 407 402 - -

(1,086) - (226) - - - (10,485)

318,417 35,334 152,697 122,927 74,738 80,582 1,205,374

148,515 14,326 53,983 49,887 18,800 27,537 490,225

7,691 822 2,133 2,055 712 2,367 24,920

(838) - (125) - - - (8,825)

155,368 15,148 55,991 51,942 19,512 29,904 506,320

$ 163,049 $ 20,186 $ 96,706 $ 70,985 $ 55,226 $ 50,678 $ 699,054

35

Page 43 of 153

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Page 44 of 153

City of Prince GeorgeSchedule 4 - Statement of Financial Position - Trust Funds

as at December 31(in thousands of dollars) 2019 2018

ASSETS

Cash and Cash Equivalents $ 2,527 $ 2,561

Investments 114 -

2,641 2,561

ACCUMULATED SURPLUS

Winter Games 100 97

Cemetery Care 2,507 2,430

Discovery Place 34 34

$ 2,641 $ 2,561

Statement of Operations - Trust Funds


WinterGames

CemeteryCare

DiscoveryPlace

2019Total

2018Total

Trust Funds

Accumulated Surplus - Beginning of Year $ 97 $ 2,430 $ 34 $ 2,561 $ 2,475

Investment Income and Actuarial Earnings 3 63 - 66 47

Third Party Contributions - 77 - 77 87

Transfers to/from

General Operations - 63 - 63 48

3 77 - 80 86

Accumulated Surplus - End of Year $ 100 $ 2,507 $ 34 $ 2,641 $ 2,561

NOTE:

As described in Note 1.a.iv of the Notes to the Consolidated Financial Statements, Trust Funds are not included in theCity of Prince George Consolidated Financial Statements.

36

Page 45 of 153

City of Prince GeorgeSchedule 5 - Debt

as at December 31

(in thousands of dollars)

PrincipalPrincipalPrincipalPrincipal

Bylaw Issue Date of Date of OutstandingOutstandingOutstandingOutstandingSI/LA No. Issue Purpose Maturity Rate December 31December 31December 31December 31

General Capital Fund DebtGeneral Capital Fund DebtGeneral Capital Fund DebtGeneral Capital Fund Debt

7489/7361A 81 Apr 22/04 Snow Disposal Apr 22/24 2.85 17171717$ $ $ $

0000/7601 85 Oct 25/04 Fortis BC Lease In/Out Dec 02/21 5.00 6,9866,9866,9866,986

0000/7601A 87 Oct 25/04 Fortis BC Lease In/Out Oct 31/21 1.75 3,1743,1743,1743,174

0112/7361 93 Apr 06/05 Snow Disposal Apr 06/25 5.10 354354354354

0112/7486 93 Apr 06/05 Road Rehabilitation Apr 06/25 5.10 724724724724

0112/7506 93 Apr 06/05 City Yard Apr 06/25 5.10 164164164164

2005/7361 95 Oct 13/05 Snow Disposal Oct 13/25 4.77 161161161161

2005/7486 95 Oct 13/05 Exhibition Grounds Oct 13/25 4.77 350350350350

2005/7598 95 Oct 13/05 Exhibition Grounds Oct 13/25 4.77 45454545

2006/7486 97 Apr 19/06 Road Rehabilitation Apr 19/26 1.75 461461461461

2006/7748/1 99 Oct 19/06 Exhibition Grounds Oct 19/26 1.75 37373737

2007/7505G 101 Aug 01/07 RCMP New Facility Aug 01/27 2.25 1,3941,3941,3941,394

2516/7970 105 Apr 21/09 Cameron Street Bridge Jun 03/29 2.25 1,4921,4921,4921,492

2516/8011 105 Apr 21/09 Cemetery Redevelopment Jun 03/29 2.25 78787878

2592/7970 110 Apr 08/10 Cameron Street Bridge Apr 08/30 4.50 2,2252,2252,2252,225

2697/8284 118 Apr 11/12 River Rd. Reconstruction Apr 11/32 3.40 2,8482,8482,8482,848

2477/7505 121 Apr 04/12 RCMP New Facility Apr 04/32 2.90 7,1917,1917,1917,191

2760/8011 121 Apr 04/12 RCMP New Facility Apr 04/32 2.90 968968968968

2760/8011 129 Jul 31/14 RCMP New Facility Jul 31/34 2.00 7,5007,5007,5007,500

2948/8329 133 Oct 02/15 18th Ave Admin Bldg Oct 02/35 2.75 11,76111,76111,76111,761

2948/8316 133 Oct 02/15 RCMP New Facility Oct 02/35 2.75 2,5532,5532,5532,553

3044/8674 142 Oct 04/17 Foreman Road Landslide Oct 04/37 3.15 924924924924

3072/8748 145 Apr 23/18 Kin 3 Arena Floor Apr 23/38 3.15 958958958958

3136/8846 149 Oct 09/19 Nechako Riverside Park Oct 09/39 2.24 630630630630

52,99552,99552,99552,995

nil /9028 � Jul 12/19 Willow Cale Haggith Repair Jul 04/24 (b) 5,8955,8955,8955,895

nil /9029 � Jul 12/19 Winnipeg Sinkhole Jul 04/24 (b) 1,5381,5381,5381,538

7,4337,4337,4337,433

Capital Lease � Concert Realty Services Ltd (Westel) 9.50 2,9192,9192,9192,919

Capital Lease � Fortis BC 5.46 511511511511

Equipment Loans � Municipal Finance Authority (b) 6,3706,3706,3706,370

Total General Capital Fund DebtTotal General Capital Fund DebtTotal General Capital Fund DebtTotal General Capital Fund Debt 70,22870,22870,22870,228$ $ $ $

General Operating Fund DebtGeneral Operating Fund DebtGeneral Operating Fund DebtGeneral Operating Fund Debt

3100/8758 146 Sep 19/18 PG Pulpmill Road Erosion Sep 19/38 3.20 391391391391

Downtown Incentives � Northern Development Initiative Trust 2029 0.00 4,2664,2664,2664,266

Total General Operating Fund DebtTotal General Operating Fund DebtTotal General Operating Fund DebtTotal General Operating Fund Debt 4,6574,6574,6574,657$ $ $ $

(a) Future payments do not include actuarial amounts.

(b) The rate of interest on the short�term liabilities under agreement and the equipment loans varied

from 2.44% to 2.81% (2018 � 1.94% to 2.79%).

37

Page 46 of 153


FUTURE PAYMENTS (a)

(Including Principal and Interest)

Principal

OutstandingDec. 31, 2018 2020 2021 2022 2023 2024

20$ 3$ 3$ 3$ 3$ 2$

10,232 3,757 3,757 � � �

4,670 1,242 1,242 � � �

408 72 71 69 68 66

835 147 144 141 138 135

190 33 33 32 31 31

184 35 35 35 35 35

402 77 77 77 77 77

51 10 10 10 10 10

517 53 53 53 53 53

41 4 4 4 4 4

1,539 158 158 158 158 158

1,612 140 140 140 140 140

84 7 7 7 7 7

2,384 271 271 271 271 271

3,013 262 262 262 262 262

7,607 612 612 612 612 612

1,024 82 82 82 82 82

8,000 648 638 628 618 608

2,670 189 189 189 189 189

12,303 869 869 869 869 869

963 69 69 69 69 69

995 68 68 68 68 68

� 38 38 38 38 38

59,744 8,846 8,832 3,817 3,802 3,786

� 1,440 1,407 1,376 1,345 661

� 376 367 359 351 172

�� 1,8161,8161,8161,816 1,7741,7741,7741,774 1,7351,7351,7351,735 1,6961,6961,6961,696 833833833833

3,200 585 585 585 585 585

746 273 273 � � �

7,621 1,290 1,246 907 858 739

71,311$ 12,810$ 12,710$ 7,044$ 6,941$ 5,943$

406 28 28 28 28 28

1,454 493 493 495 485 445

1,860$ 521$ 521$ 523$ 513$ 473$

38

Page 47 of 153


as at December 31




District Energy Capital Fund DebtDistrict Energy Capital Fund DebtDistrict Energy Capital Fund DebtDistrict Energy Capital Fund Debt

7746/2638 125 May 30/13 District Energy System May 30/23 2.00 1,4001,4001,4001,400$ $ $ $

Total District Energy Capital Fund DebtTotal District Energy Capital Fund DebtTotal District Energy Capital Fund DebtTotal District Energy Capital Fund Debt 1,4001,4001,4001,400$ $ $ $

Water Capital Fund DebtWater Capital Fund DebtWater Capital Fund DebtWater Capital Fund Debt

7425/7037 79 Jun 03/03 Water System Jun 03/23 2.25 262262262262

7425/7212 79 Jun 03/03 Water System Jun 03/23 2.25 62626262

7489/7212 81 Apr 22/04 Water System Apr 22/24 2.85 18181818

7489/7361 81 Apr 22/04 Water System�Hart Nech Apr 22/24 2.85 52525252

0112/7361 93 Apr 06/05 Hart Nechako Supply Apr 06/25 5.10 354354354354

2005/7361A 95 Oct 13/05 Hart Nechako Supply Oct 13/25 4.77 1,3771,3771,3771,377

2005/7598A 95 Oct 25/05 Hart Nechako Supply Oct 25/25 4.77 535535535535

2006/7598 97 Apr 19/06 Hart Nechako Supply Apr 19/26 1.75 69696969

2006/7748 97 Apr 19/06 Hart Nechako Supply Apr 19/26 1.75 1,7371,7371,7371,737

2006/7361 99 Oct 19/06 Cranbrook Hill Reservoir Oct 19/26 1.75 510510510510

2006/7748 99 Oct 19/06 Cranbrook Hill Reservoir Oct 19/26 1.75 9999

2007/7361W 101 Aug 01/07 Foothills Blvd Main Aug 01/27 2.25 412412412412

2007/7486W 101 Aug 01/07 Foothills Blvd Main Aug 01/27 2.25 554554554554

2008/7924 104 Nov 20/08 PW805 to Ferry Nov 20/28 2.90 359359359359

2697/8287 118 Apr 11/12 Simon Fraser Bridge Pipe Apr 11/32 3.40 558558558558

Total Water Capital Fund DebtTotal Water Capital Fund DebtTotal Water Capital Fund DebtTotal Water Capital Fund Debt 6,8686,8686,8686,868$ $ $ $


39

Page 48 of 153


FUTURE PAYMENTS (a)


Principal

OutstandingDec. 31, 2018 2020 2021 2022 2023 2024

1,800$ 426$ 418$ 410$ 202$ �$

1,800$ 426$ 418$ 410$ 202$ �$

320 49 49 49 38 �

75 11 11 11 9 �

21 3 3 3 3 2

61 9 9 9 9 7

409 72 71 69 68 66

1,581 304 304 304 304 304

613 118 118 118 118 118

77 8 8 8 8 8

1,949 201 201 201 201 201

572 59 59 59 59 59

10 1 1 1 1 1

455 47 47 47 47 47

612 63 63 63 63 63

391 41 41 41 41 41

590 51 51 51 51 51

7,736$ 1,037$ 1,036$ 1,034$ 1,020$ 968$

40

Page 49 of 153


as at December 31




Sewer Capital Fund DebtSewer Capital Fund DebtSewer Capital Fund DebtSewer Capital Fund Debt

7425/7036 79 Jun 03/03 Sanitary Sewer Jun 03/23 2.25 271271271271$ $ $ $

7425/7089 79 Jun 03/03 Sanitary Sewer Jun 03/23 2.25 192192192192




7489/7211 81 Apr 22/04 Sanitary Sewer Apr 22/24 2.85 62626262

2006/7361/1 99 Oct 19/06 Blackburn Treatment Plant Oct 19/26 1.75 35353535

2007/7361S 101 Aug 01/07 Blackburn Treatment Plant Aug 01/27 2.25 117117117117

2975/8515 137 Apr 19/16 Sanitary Sewer Apr 19/36 2.60 1,3441,3441,3441,344

3136/8722 149 Oct 09/19 Sanitary Sewer Oct 09/39 2.24 1,5841,5841,5841,584

Total Sewer Capital Fund DebtTotal Sewer Capital Fund DebtTotal Sewer Capital Fund DebtTotal Sewer Capital Fund Debt 3,7593,7593,7593,759$ $ $ $

Other Controlled EntitiesOther Controlled EntitiesOther Controlled EntitiesOther Controlled Entities

Capital Lease � Konica Minolta 6.00 ��

Total Other Controlled Entities DebtTotal Other Controlled Entities DebtTotal Other Controlled Entities DebtTotal Other Controlled Entities Debt ��$ $ $ $

TOTAL DEBTTOTAL DEBTTOTAL DEBTTOTAL DEBT 86,91286,91286,91286,912$ $ $ $


41

Page 50 of 153


FUTURE PAYMENTS (a)


Principal

OutstandingDec. 31, 2018 2020 2021 2022 2023 2024

330$ 50$ 50$ 50$ 39$ �$

234 35 35 35 28 �

62 9 9 9 7 �

91 14 14 14 11 �

35 5 5 5 4 �

73 11 11 11 11 8

40 4 4 4 4 4

130 13 13 13 13 13

1,400 93 93 93 93 93

� 94 94 94 94 94

2,395$ 328$ 328$ 328$ 304$ 212$

3 � � � � �

3$ 3$ �$ �$ �$ �$

85,105$ 15,125$ 15,013$ 9,339$ 8,980$ 7,596$

42

Page 51 of 153

Financial statement presentation to Council - April 25, 2017—

kpmg.ca

City of Prince George

December 31, 2019—May 11, 2020

Page 52 of 153

Agenda

• Auditors’ Report• Consolidated Financial statements• Surplus and reserves• Questions

Page 53 of 153

• Independent Auditors’ Report• Clean auditors’ report to be issued in respect of the consolidated

financial statements in accordance with Canadian public sectoraccounting standards

Auditors’ Report

Page 54 of 153

City of Prince George – December 31, 2019

2019 2018


Receivables $ 22,363 $ 22,997

Investments $ 4,896 $ -

Property Held for Resale $ 773 $ -

Deposits - MFA $ 2,064 $ 1,995

Total Financial Assets $ 126,562 $ 121,701

Consolidated Statement of Financial Position – Financial Assets (in thousands)

Page 55 of 153

City of Prince George – December 31, 2019Consolidated Statement of Financial Position – Financial Liabilities (in thousands)

2019 2018

Accounts Payable and Accrued Liabilities $ 39,693 $ 45,722

Deferred Revenue $ 10,434 $ 11,429

Deferred Development Cost Charges $ 5,190 $ 4,773

Reserves - MFA $ 2,064 $ 1,995

Debt $ 86,912 $ 85,105

Total Financial Liabilities $ 144,293 $ 149,024

Net Debt $ (17,731) $ (27,323)

Page 56 of 153

City of Prince George – December 31, 2019

2019 2018

Prepaid Expenses $ 2,469 $ 1,669

Inventories $ 1,077 $ 994

Tangible Capital Assets $ 730,493 $ 699,054

Total Non-Financial Assets $ 734,039 $ 701,717

Consolidated Statement of Financial Position – Non-Financial Assets (in thousands)

Page 57 of 153

City of Prince George – December 31, 2019Consolidated Statement of Operations (in thousands)

Budget 2019 Actual 2019 Actual 2018

Revenues $ 191,032 $ 217,030 $ 203,115

Expenses $ 163,943 $ 175,116 $ 169,130

Annual Surplus $ 27,089 $ 41,914 $ 33,985

Page 58 of 153

Revenue – Year ended December 31, 2019

-

50,000

100,000

150,000

200,000

250,000

2019 2018 2017 2016

Revenues by Category

Net taxation and grants in lieu, net Sale of services, user rates, and rentals

Investment income Contributions from other governments and agencies

Development cost charges contributions Other revenue

Gain (loss) on disposal of TCA Contributions on TCA

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Revenue by Category - 2019

Net taxation and grants in lieu, net Sale of services, user rates, and rentals

Investment income Development cost charges contributions

Contributions from other governments and agencies Other revenue

Gain (loss) on disposal of TCA Contributions on TCA

Revenue by Category - 2019

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Expenses by Function - 2016 to 2019

-

10,000

20,000

30,000

40,000

50,000

60,000

2019 2018 2017 2016

Expenses by Function

District energy Protective services Transporation services

Water and sewer Sanitation and waste removal Public health and welfare

Planning and environmental development Parks, recreation and cultural services Other controlled entities

General government

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Expenses by Function - 2019Expenses by Function - 2019

General government District energy Protective services

Transporation services Water and sewer Sanitation and waste removal

Public health and welfare Planning and environmental development Parks, recreation and cultural services

Other controlled entities

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Expenses by Object- 2016 to 2019

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2019 2018 2017 2016

Expenses by Object

Materials and supplies City fleet expense Contracted services

Electricity and natural gas RCMP contract Professional services and insurance

Grants Miscellaneous Debt interest and fiscal services

Amortization Other controlled entities Labour and benefits

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Expenses by Object- 2019 Expenses by Object - 2019

Labour and benefits Materials and supplies City fleet expense

Contracted services Electricity and natural gas RCMP contract

Professional services and insurance Grants Miscellaneous

Debt interest and fiscal services Amortization Other controlled entities

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City of Prince George – December 31, 2019Consolidated Statement of Change in Net Debt (in thousands)


Opening Net Debt $ - $ (27,323) $ (21,656)

Annual Surplus $ 27,089 $ 41,914 $ 33,985

Net Change in Non-financial Assets $ (6,854) $ (32,322) $ (39,652)

Closing Net Debt $ 20,235 $ (17,731) $ (27,323)

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Accumulated surplus - Year ended December 31, 2019

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2019 2018

Accumulated Surplus

Operating - residual balance

Reserves

Investment in tangible capital assets

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City of Prince George – December 31, 2019Reserve Breakdown (in thousands)

2019 2018 Change

General Capital $ 17,706 $ 19,226 $ (1,520)

Water Capital $ 10,356 $ 12,931 $ (2,575)

Sewer Capital $ 7,700 $ 6,637 $ 1,063

Downtown Off-Street Parking $ 1,844 $ 2,618 $ (774)

Computers and Equipment $ 4,007 $ 3,055 $ 952

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City of Prince George – December 31, 2019Reserve Breakdown (in thousands)

2019 2018 Change

Land Development $ 1 $ - $ 1

Northern Capital & Planning $ 7,697 $ - $ 7,697

Snow Control $ - $ - $ -

Road Rehabilitation $ 592 $ 399 $ 193

Other Statutory & Regulated $ 15,492 $ 9,957 $ 5,535

Total Reserves $ 65,395 $ 54,823 $ 10,572

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• Significant accounting policies (note 1)• Cash and cash equivalents (note 2)• Receivables (note 3)• Investments (note 4)• Municipal finance authority debt reserve fund (note 5)• Accounts payable and accrued liabilities (note 6)• Deferred revenues (note 7)• Deferred development cost charges (note 8)• Tangible capital assets (note 9)• Accumulated surplus (note 10)• Contractual rights (note 11)• Budgeted surplus (note 12)• Commitments and contingencies (note 13)• Expenses by object (note 14)• Segmented information (note 15)• Comparative figures (note 16)• Subsequent event (note 17)

Notes to the consolidated financial statements

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Questions on the consolidated financial statements?

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© 2017 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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kpmg

City of Prince George Audit Findings Report for the year ended December 31, 2019

May 11, 2020 kpmg.ca/audit

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Table of contents Executive summary 1

Areas of audit focus 4

Audit risks 6

Adjustments and differences 7

Significant accounting policies and practices 8

Control and other observations 9

Current developments 10

Appendices 14

Appendix 1: Audit quality and risk management 15

Appendix 2: KPMG’s audit approach and methodology 16

Appendix 3: Required communications 17

Appendix 4: Lean in Audit™ 18

Appendix 5: PS 3280 Asset retirement obligations 19

The contacts at KPMG in connection with this report are:

Corey Naphtali Engagement Partner Tel: (250) 614-4067 [email protected] Micaela Roque Senior Manager Tel: (250) 614-4070 [email protected]

This Audit Findings Report should not be used for any other purpose or by anyone other than the Finance and Audit Committee. KPMG shall have no responsibility or liability for loss or damages or claims, if any, to or by any third party as this Audit Findings Report has not been prepared for, and is not intended for, and should not be used by, any third party or for any other purpose.

At KPMG, we are passionate about earning your trust. We take deep personal accountability, individually and as a team, to deliver

exceptional service and value in all our dealings with you.

At the end of the day, we measure our success from the only perspective that matters – yours.

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KPMG Audit Findings Report | 1

Executive summary The purpose of this Audit Findings Report is to assist you, as a member of the Finance and Audit Committee (“Finance and Audit”), in your review of the results of our audit of the consolidated financial statements of the City of Prince George (the “City”) as at and for the year ended December 31, 2019. We appreciate the assistance of management and staff in conducting our audit. We hope this audit findings report is of assistance to you for the purpose above and we look forward to discussing our findings and answering your questions.

Finalizing the audit

As of the date of this report, we have completed the audit of the consolidated financial statements, with the exception of certain remaining procedures. These include: ― Obtaining the signed management representation letter; ― Obtaining legal confirmations ― Completing our discussions with Finance and Audit ― Obtaining evidence of the Finance and Audit’s acceptance of the financial statements; and ― Completion of subsequent event review procedures to the date of the auditors’ report

Areas of audit focus

Our audit of the City is risk-focused. We have not identified any significant risks. However, as part of our audit, we identified areas of audit focus which include: ― Tangible capital assets ― Revenues and deferred revenue ― Expenses, including payroll ― Group audit ― Subsequent event See page 4 to 5 for further details.

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Executive summary Significant accounting policies and practices

PS 3430 Restructuring Transactions is effective for the City’s 2019 fiscal year. There were no financial reporting impacts on the consolidated financial statements from the adoption of the new accounting standard. There have been no other initial selections of, or changes to, significant accounting policies and practices to bring to your attention. The presentation and disclosure of the consolidated financial statements are, in all material respects, in accordance with Canadian public sector accounting standards.

Adjustments and differences

Adjustments and differences identified during the audit have been categorized as “Corrected Adjustments” or “Uncorrected Differences”. These include disclosure adjustments and differences. We identified 3 uncorrected differences including prior year items and 4 corrected adjustments during our audit. All adjustments and differences are included in the management representation letter. See page 7 for further details.

Independence

We confirm that we are independent of the City from January 1, 2019 to the date of this report and have extensive quality control and conflict checking processes in place. We provide complete transparency on all services and follow the City’s approved protocols.

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Executive summary Control observations

We did not identify any control deficiencies that were determined to be significant deficiencies in internal control over financial reporting (ICOFR).

See page 9 for further details.

Current developments

See pages 10 to 13 for the current developments update.

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Areas of audit focus Area of focus Background Our response and significant findings

Tangible capital assets

Tangible capital assets are a significant asset for the City. The assets owned by the City are complex and may require estimation.

We have completed our planned audit procedures and have detected two corrected audit adjustments and no significant control deficiencies.

Revenue and deferred revenue

The City’s revenue is largely dependent on Council-approved bylaws and budget for projects.

We have completed our planned audit procedures and have detected one corrected and one uncorrected audit adjustments and no significant control deficiencies.

Expenses, including payroll

The City’s expenses are closely monitored against Council-approved budgets

We have completed our planned audit procedures and have detected no differences and no significant control deficiencies.

Group audit The City consolidates Tourism PG and the PG Public Library into their financial statements. These entities are not significant components although we review the consolidation process.

We have completed our planned audit procedures and have detected no differences and no significant control deficiencies.

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Areas of audit focus Area of focus Background Our response and significant findings

Subsequent event Subsequent to December 31, 2019, the COVID-19 outbreak was declared a pandemic by the World Health Organization and has had a significant financial market and social dislocating impact. As such enhanced subsequent events procedures were warranted.

There are two types of subsequent events, with the accounting treatment dependent on the categorization as follows: — Events that provide future evidence of conditions that existed at the financial

statement date. For these conditions, the financial statements should be adjusted for measurable impact to the assets, liabilities, revenues and expenditures.

— Events that are indicative of conditions that rose subsequent to the financial statement date. For these conditions, disclosures, at a minimum, should include a description of the event and an estimate of the financial impact, when practicable or a statement that an estimate cannot be made.

The City has disclosed in its consolidated financial statements, as a subsequent event note, the pandemic declared by the World Health Organization.

Resources for management, Finance and Audit and City Council

COVID‐19 Alerts (Live Link) Please visit our COVID-19 website for resources regarding the topics below. This site is being updated daily based on information being released by Federal, Provincial and Municipal news releases. — Business continuity guide — Immediate actions to take — Medium to long-term actions — Tax considerations and a summary of Federal and Provincial programs — Legal considerations — Financial reporting and audit considerations — Global perspectives

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Audit risks

Professional requirements Why is it significant? Fraud risk from management override of controls. This is a presumed fraud risk. We did not identify any

specific additional risks of management override relating to this audit.

Our response and significant findings

Our audit methodology incorporates the required procedures in professional standards to address this risk. These procedures include: Testing of journal entries and other adjustments; Performing a retrospective review of significant estimates; and Evaluating the business rationale of significant unusual transactions.

There were no significant issues noted in our testing.

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KPMG Audit Planning Report | 7

Adjustments and differences

Adjustments and differences identified during the audit have been categorized as “corrected adjustments” or “uncorrected differences”. These include disclosure adjustments and differences.

Uncorrected differences Comments Amount

Debt reserve fund KPMG noted that the debt reserve fund liability does not meet the criteria of a liability according to the Canadian public sector accounting standards therefore liabilities are overstated.

$2,064,196

Prince George Public Library investments KPMG noted that certain investments held by the Prince George Public Library were misclassified between cash and cash equivalents and investments in the current year and prior year (2018 - $203,880).

$208,835

Accounts payable KPMG noted certain accounts payable amounts which were incorrectly classified as deferred revenue.

$215,261

Management has not corrected the differences above and have asserted that they are not material to the consolidated financial statements. We concur with management’s representation and therefore the difference has no effect on our auditors’ report.

Corrected adjustments Comments Amount

Deferred revenue KPMG noted that certain deferred revenues did not meet the criteria for deferral and should be recognized as revenue.

$669,073

Tangible capital assets KPMG noted that a prior year gain on the sale of assets had been corrected in the current year and adjusted to annual surplus as opposed to accumulated surplus. The prior year annual surplus remains uncorrected.

$357,542

Property held for resale KPMG noted certain properties held for resale which were incorrectly classified as tangible capital assets.

$773,349

Long-term debt KPMG noted that the City had netted certain long-term debt amounts with accounts receivable even though there was no legal right to offset these amounts.

$4,266,000

Management has corrected all the items above in preparing the consolidated financial statements as at and for the year ended December 31, 2019.

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Significant accounting policies and practices The following items relate to the qualitative aspects of accounting practices of the City:

Significant accounting policies

− There were no changes to the critical or significant accounting policies and practices.

− There were no significant accounting policies in controversial or emerging areas.

− There were no issues noted with the timing of the City’s transactions in relation to the period in which they are recorded.

− There were no issues noted with the extent to which the consolidated financial statements are affected by a significant unusual transaction and extent of disclosure of such transactions.

− There were no issues noted with the extent to which the consolidated financial statements are affected by non-recurring amounts recognized during the period and extent of disclosure of such transitions.

Significant accounting estimates

− There were no issues noted with management’s identification of accounting estimates.

− There were no issues noted with management’s process for making accounting estimates.

− There were no indicators of possible management bias.

− There were no significant factors affecting the City’s asset and liability carrying values.

Significant disclosures

− There were no issues noted with the judgments made in the consolidated financial statement disclosures.

− There were no issues noted with the overall neutrality, consistency, and clarity of the disclosures in the consolidated financial statements.

− There were no significant potential effects on the consolidated financial statements of significant risks, exposures and uncertainties.

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Control and other observations As your auditors, we are required to obtain an understanding of internal control over financial reporting (“ICFR”) relevant to the preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances for the purpose of expressing an opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on internal control. Accordingly, we do not express an opinion on the effectiveness of internal control.

Our understanding of ICFR was for the limited purpose described above and was not designed to identify all control deficiencies that might be significant deficiencies and therefore, there can be no assurance that all significant deficiencies and other control deficiencies have been identified. Our awareness of control deficiencies varies with each

audit and is influenced by the nature, timing, and extent of audit procedures performed, as well as other factors.

In accordance with professional standards, we are required to communicate to the Board any control deficiencies that we identified during the audit and have determined to be material weaknesses or significant deficiencies in internal control over financial reporting. Significant Deficiencies No significant deficiencies have come to our attention.

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Current developments

Public Sector Accounting Standards

Standard Summary and implications Asset Retirement Obligations

– A new standard has been approved that is effective for fiscal years beginning on or after April 1, 2021. – The new standard addresses the recognition, measurement, presentation and disclosure of legal obligations

associated with retirement of tangible capital assets in productive use. Retirement costs will be recognized as an integral cost of owning and operating tangible capital assets. PSAB currently contains no specific guidance in this area.

– The ARO standard will require the public sector entity to record a liability related to future costs of any legal obligations to be incurred upon retirement of any controlled tangible capital assets (“TCA”). The amount of the initial liability will be added to the historical cost of the asset and amortized over its useful life.

– As a result of the new standard, the public sector entity will have to: • consider how the additional liability will impact net debt, as a new liability will be recognized with no

corresponding increase in a financial asset; • carefully review legal agreements, senior government directives and legislation in relation to all controlled TCA

to determine if any legal obligations exist with respect to asset retirements; • begin considering the potential effects on the organization as soon as possible to coordinate with resources

outside the finance department to identify AROs and obtain information to estimate the value of potential AROs to avoid unexpected issues.

https://www.youtube.com/watch?v=GjujoD8C_1s

Revenue – A new standard has been approved that is effective for fiscal years beginning on or after April 1, 2022. – The new standard establishes a single framework to categorize revenues to enhance the consistency of revenue

recognition and its measurement. – The standard notes that in the case of revenues arising from an exchange, a public sector entity must ensure the

recognition of revenue aligns with the satisfaction of related performance obligations. – The standard notes that unilateral revenues arise when no performance obligations are present, and recognition

occurs when there is authority to record the revenue and an event has happened that gives the public sector entity the right to the revenue.

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https://www.youtube.com/watch?v=GjujoD8C_1s


Standard Summary and implications

Financial Instruments and Foreign Currency Translation

– New accounting standards, PS3450 Financial Instruments, PS2601 Foreign Currency Translation, PS1201 Financial Statement Presentation and PS3041 Portfolio Investments have been approved by PSAB and are effective for years commencing on or after April 1, 2021.

– Equity instruments quoted in an active market and free-standing derivatives are to be carried at fair value. All other financial instruments, including bonds, can be carried at cost or fair value depending on the public sector entity’s choice and this choice must be made on initial recognition of the financial instrument and is irrevocable.

– Hedge accounting is not permitted. – A new statement, the Statement of Remeasurement Gains and Losses, will be included in the financial

statements. Unrealized gains and losses incurred on fair value accounted financial instruments will be presented in this statement. Realized gains and losses will continue to be presented in the statement of operations.

– Based on stakeholder feedback received, PSAB is considering certain scope amendments to PS 3450 Financial Instruments. The proposed amendments include the accounting treatment of bond repurchases, scope exclusions for certain activities by the federal government, and improvements to the transitional provisions. An initial exposure draft was issued for comment by PSAB in May 2019. PSAB is currently deliberating on the comments received and may approve a revised exposure draft for comment in December 2019.

Employee Future Benefit Obligations

– PSAB has initiated a review of sections PS3250 Retirement Benefits and PS3255 Post-Employment Benefits, Compensated Absences and Termination Benefits. Given the complexity of issues involved and potential implications of any changes that may arise from this review, the project will be undertaken in phases. Phase I will address specific issues related to measurement of employment benefits. Phase II will address accounting for plans with risk sharing features, multi-employer defined benefit plans and sick leave benefits.

– Three Invitations to Comment were issued and have closed. The first Invitation to Comment sought guidance on whether the deferral provisions in existing public sector standards remain appropriate and justified and the appropriateness of accounting for various components of changes in the value of the accrued benefit obligation and plan assets. The second Invitation to Comment sought guidance on the present value measurement of accrued benefit obligations. A third Invitation to Comment sought guidance on non-traditional pension plans. PSAB is currently deliberating on the comments received from the three Invitations to Comment.

– The ultimate objective of this project is to issue a new employment benefits section to replace existing guidance.

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Public Private Partnerships (“P3”)

– PSAB has proposed new requirements for the recognition, measurement and classification of infrastructure procured through a public private partnership. An exposure draft has been approved by PSAB and will be issued in November 2019, with comments due by February 29, 2020.

– The exposure draft proposes that recognition of infrastructure by the public sector entity would occur when it controls the purpose and use of the infrastructure, when it controls access and the price, if any, charged for use, and it controls any significant interest accumulated in the infrastructure when the P3 ends.

– The exposure draft proposes that the public sector entity recognize a liability when it needs to pay cash or non-cash consideration to the private sector partner for the infrastructure.

– The infrastructure would be valued at cost, with a liability of the same amount if one exists. Cost would be measured by discounting the expected cash flows by a discount rate that reflects the time value of money and risks specific to the project.

Concepts Underlying Financial Performance

– PSAB is in the process of reviewing the conceptual framework that provides the core concepts and objectives underlying Canadian public sector accounting standards.

– A Statement of Concepts (“SOC”) and Statement of Principles (“SOP”) were issued for comment in May 2018 and has closed. PSAB is in the process of developing two exposure drafts for comment.

– The SOC proposes a revised, ten chapter conceptual framework intended to replace PS 1000 Financial Statement Concepts and PS 1100 Financial Statement Objectives. The revised conceptual framework would be defined and elaborate on the characteristics of public sector entities and their financial reporting objectives. Additional information would be provided about financial statement objectives, qualitative characteristics and elements. General recognition and measurement criteria, and presentation concepts would be introduced.

– The SOP includes principles intended to replace PS 1201 Financial Statement Presentation. The SOP proposes: • Removal of the net debt indicator, except for on the statement of net debt where it would be calculated

exclusive of financial assets and liabilities that are externally restricted and/or not available to settle the liabilities or financial assets.

• Changes to common terminology used in the financial statements, including re-naming accumulated surplus (deficit) to net assets (liabilities).

• Restructuring the statement of financial position to present non-financial assets before liabilities. • Removal of the statement of remeasurement gains (losses) with the information instead included on a new

statement called the statement of changes in net assets (liabilities). This new statement would present the changes in each component of net assets (liabilities).

• A new provision whereby an entity can use an amended budget in certain circumstances. – Inclusion of disclosures related to risks and uncertainties that could affect the entity’s financial position.

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International Strategy – PSAB is in the process of reviewing its current approach towards International Public Sector Accounting Standards. This project may result in changes to the role PSAB plays in setting standards in Canada.

– Consultation papers were released for comment in May 2018 and March 2019, and have closed. The consultation papers described the decision-making criteria PSAB expects to consider in evaluating the international strategy that best serves the public sector. It also introduced four proposed international strategies.

– PSAB is expected to make a final decision about its international strategy at its March 2020 meeting. Purchased Intangibles – In October 2019, PSAB approved a proposal to allow public sector entities to recognize intangibles purchased

through an exchange transaction. The proposal does not include guidance on how to account for intangibles. Instead, the definition of an asset, the general recognition criteria and the GAAP hierarchy is expected to provide guidance on how to account for intangibles. The accounting for intangibles may be addressed through future PSAB projects.

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Appendices

Appendix 1: Audit quality and risk management

Appendix 2: KPMG’s audit approach and methodology

Appendix 3: Required communications

Appendix 4: Lean in Audit™

Appendix 5: PS 3280 Asset retirement obligations

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Appendix 1: Audit quality and risk management

KPMG maintains a system of quality control designed to reflect our drive and determination to deliver independent, unbiased advice and opinions, and also meet the requirements of Canadian professional standards. Quality control is fundamental to our business and is the responsibility of every partner and employee. The following diagram summarises the six key elements of our quality control systems. Visit our Audit Quality Resources page for more information including access to our most recent Audit Quality and Transparency Report.

We conduct regular reviews of engagements and partners. Review teams are independent and the work of every audit partner is reviewed at least once every three years.

We have policies and guidance to ensure that work performed by engagement personnel meets applicable professional standards, regulatory requirements and the firm’s standards of quality. We do not offer services that would impair our independence.

All KPMG partners and staff are required to act with integrity and objectivity and comply with applicable laws, regulations and professional standards at all times.

The processes we employ to help retain and develop people include:

− Assignment based on skills and experience

− Rotation of partners − Performance evaluation − Development and training − Appropriate supervision and

coaching

We have policies and procedures for deciding whether to accept or continue a client relationship or to perform a specific engagement for that client.

Existing audit relationships are reviewed annually and evaluated to identify instances where we should discontinue our professional association with the client.

Other controls include:

− Before the firm issues its audit report, Engagement Quality Control

− Reviewer reviews the appropriateness of key elements client audits

− Technical department and specialist resources provide real-time support to audit teams in the field

Independence, integrity, ethics and objectivity

Personnel management

Acceptance & continuance of

clients / engagements

Engagement performance

standards

Other risk management

quality controls

Independent monitoring

KPMG Audit quality

and risk management

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https://home.kpmg.com/ca/en/home/services/audit/audit-quality-resources.html

https://home.kpmg/ca/en/home/services/audit/audit-quality-resources.html


Appendix 2: KPMG’s audit approach and methodology

In future years, we will expand our use of technology in our audit through our new smart audit platform, KPMG Clara.

Deep industry insights

Bringing intelligence and clarity to complex issues, regulations and standards

Issue identification Continuous updates on audit progress, risks and findings before issues become events

Analysis of complete populations Powerful analysis to quickly screen, sort and filter 100% of your journal entries based on high-risk attributes

Data-driven risk assessment Automated identification of transactions with unexpected or unusual account combinations – helping focus on higher risk transactions and outliers

Reporting Interactive reporting of unusual patterns and trends with the ability to drill down to individual transactions

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Appendix 3: Required communications

In accordance with professional standards, there are a number of communications that are required during the course of and upon completion of our audit. These include:

Auditors’ report Management representation letter

The conclusion of our audit is set out in our draft auditors’ report attached to the draft consolidated financial statements.

In accordance with professional standards, copies of the management representation letter are provided to Finance and Audit. The management representation letter is attached to this appendix.

Independence Audit findings report

In accordance with professional standards, we have confirmed our independence.

Represented by this report.

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CITY OF PRINCE GEORGE1100 PATRICIA BOULEVARD

PRINCE GEORGE, BC V2L 3V9

KPMG LLP 177 Victoria Street, Suite 400Prince George, BC V2L 5R8Canada

May 11, 2020

Ladies and Gentlemen:

We are writing at your request to confirm our understanding that your audit was for the purpose ofexpressing an opinion on the consolidated financial statements (hereinafter referred to as "financialstatements") of City of Prince George ("the Entity") as at and for the period ended December 31, 2019.

GENERAL:

We confirm that the representations we make in this letter are in accordance with the definitions as set out inAttachment I to this letter.

We also confirm that, to the best of our knowledge and belief, having made such inquiries as we considerednecessary for the purpose of appropriately informing ourselves:

RESPONSIBILITIES:

1) We have fulfilled our responsibilities, as set out in the terms of the engagement letter dated October11, 2018, including for:

a) the preparation and fair presentation of the financial statements and believe that these financialstatements have been prepared and present fairly in accordance with the relevant financialreporting framework.

b) providing you with all information of which we are aware that is relevant to the preparation of thefinancial statements ("relevant information"), such as financial records, documentation and othermatters, including:

the names of all related parties and information regarding all relationships and transactions withrelated parties;

the complete minutes of meetings, or summaries of actions of recent meetings for whichminutes have not yet been prepared, of shareholders, board of directors and committees of theboard of directors that may affect the financial statements. All significant actions are included insummaries.

c) providing you with unrestricted access to such relevant information.

d) providing you with complete responses to all enquiries made by you during the engagement.

e) providing you with additional information that you may request from us for the purpose of theengagement.

f) providing you with unrestricted access to persons within the Entity from whom you determined itnecessary to obtain audit evidence.

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g) such internal control as we determined is necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error. We alsoacknowledge and understand that we are responsible for the design, implementation andmaintenance of internal control to prevent and detect fraud.

h) ensuring that all transactions have been recorded in the accounting records and are reflected inthe financial statements.

i) ensuring that internal auditors providing direct assistance to you, if any, were instructed to followyour instructions and that we, and others within the entity, did not intervene in the work the internalauditors performed for you.

INTERNAL CONTROL OVER FINANCIAL REPORTING:

2) We have communicated to you all deficiencies in the design and implementation or maintenance ofinternal control over financial reporting of which we are aware.

FRAUD & NON-COMPLIANCE WITH LAWS AND REGULATIONS:

3) We have disclosed to you:

a) the results of our assessment of the risk that the financial statements may be materially misstatedas a result of fraud.

b) all information in relation to fraud or suspected fraud that we are aware of that involves:

management;

employees who have significant roles in internal control over financial reporting; or

others

where such fraud or suspected fraud could have a material effect on the financial statements.

c) all information in relation to allegations of fraud, or suspected fraud, affecting the financialstatements, communicated by employees, former employees, analysts, regulators, or others.

d) all known instances of non-compliance or suspected non-compliance with laws and regulations,including all aspects of contractual agreements, whose effects should be considered whenpreparing financial statements.

e) all known actual or possible litigation and claims whose effects should be considered whenpreparing the financial statements.

SUBSEQUENT EVENTS:

4) All events subsequent to the date of the financial statements and for which the relevant financialreporting framework requires adjustment or disclosure in the financial statements have been adjustedor disclosed.

RELATED PARTIES:

5) We have disclosed to you the identity of the Entity’s related parties.

6) We have disclosed to you all the related party relationships and transactions/balances of which we areaware.

7) All related party relationships and transactions/balances have been appropriately accounted for anddisclosed in accordance with the relevant financial reporting framework.

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ESTIMATES:

8) Measurement methods and significant assumptions used by us in making accounting estimates,including those measured at fair value, are reasonable.

GOING CONCERN:

9) We have provided you with all information relevant to the use of the going concern assumption in thefinancial statements.

COMPARATIVE INFORMATION:

10) In respect of the restatement related to deferred revenue and tangible capital assets made to correct amaterial misstatement in the comparative information as described in note 17 to the audited financialstatements, we reaffirm that the written representations we previously provided to you, in respect ofthe prior period financial statements presented as comparative information, remain appropriate.

OTHER INFORMATION:

11) We confirm that the final version of annual report will be provided to you when available, and prior toissuance by the Entity, to enable you to complete your audit procedures in accordance withprofessional standards.

MISSTATEMENTS:

12) The effects of the uncorrected misstatements described in Attachment II are immaterial, bothindividually and in the aggregate, to the financial statements as a whole.

13) We approve the corrected misstatements identified by you during the audit described in Attachment II.

NON-SEC REGISTRANTS OR NON-REPORTING ISSUERS:

14) We confirm that the Entity is not a Canadian reporting issuer (as defined under any applicableCanadian securities act) and is not a United States Securities and Exchange Commission (“SEC”)Issuer (as defined by the Sarbanes-Oxley Act of 2002).

15) We also confirm that the financial statements of the Entity will not be included in the group financialstatements of a Canadian reporting issuer audited by KPMG or an SEC Issuer audited by anymember of the KPMG organization.

ASSETS & LIABILITIES - GENERAL:

16) The City has satisfactory title to all owned assets.

17) We have no knowledge of any liens or encumbrances on assets and/or assets that have been pledgedor assigned as security for liabilities, performance of contracts, etc., not disclosed in the financialstatements.

18) We have no knowledge of any plans or intentions that may materially affect the carrying value ofclassification of assets and liabilities.

19) We have no knowledge of material unrecorded assets or liabilities or contingent assets or liabilities(such as claims related to patent infringements, unfulfilled contracts, etc., whose values depend onfulfillment of conditions regarded as uncertain or receivables sold or discounted, endorsements orguarantees, additional taxes for prior years, repurchase agreements, sales subject to renegotiation orprice re-determination, etc.)

Page 93 of 153

20) We have no knowledge of shortages that have been discovered and not disclosed to you (such asshortage in inventory, cash, negotiable instruments, etc.).

21) The City has complied with all aspects of contractual agreements that would have a material effect onthe financial statements in the event of non-compliance including violations or default of the covenantsin the Entity's debt agreements.

22) Receivables reported in the financial statements represent valid claims against customers and otherdebtors for sales or other charges arising on or before the balance sheet date, and do not includeamounts relating to goods shipped on consignment or approval. Receivables have been appropriatelyreduced to their net realizable value.

23) For financial statement purposes, taxation and user fee revenues are recognized in accordance withthe provisions of the Community Charter. The City is required to act as the agent for the collection ofcertain taxes and fees imposed by other authorities. Collections for other authorities are excludedfrom the City's taxation revenue.

24) We confirm that the revenue unearned in the current period is reported on the Statement of FinancialPosition as deferred revenue or deposits.

25) The City has evaluated all owned properties under the PS 3260 - Liability for contaminated sitesstandard.

26) We have no knowledge of material liabilities resulting from the evaluation of owned properties underPS 3260 - Liability for contaminated sites.

27) The City has evaluated all transactions and relationship involving variable interest entities (and/orspecial purpose entities) to determine that the accounting for such transactions is in accordance withthe relevant reporting framework. The evaluation did not result in the identification of variable interestentities.

28) We confirm that post-employment benefits, if any, for City employees have been fully accrued for inthe consolidated financial statements.

29) We confirm that the final version of the annual report will be provided to you when available, and priorto the issuance by the City, to enable you to complete your audit procedures in accordance withprofessional standards.

30) We confirm that we have provided to you all the information we are aware of regarding the impact ofCOVID-19 and believe the disclosure in the financial statements is appropriate.

Yours very truly,

By: Mrs. Kathleen Soltis, City Manager

By: Mr. Kris Dalio, Director of Finance

Page 94 of 153

Attachment I – Definitions

MATERIALITY

Certain representations in this letter are described as being limited to matters that are material.Misstatements, including omissions, are considered to be material if they, individually or in the aggregate,could reasonably be expected to influence the economic decisions of users taken on the basis of thefinancial statements. Judgments about materiality are made in light of surrounding circumstances, and areaffected by the size or nature of a misstatement, or a combination of both.

FRAUD & ERROR

Fraudulent financial reporting involves intentional misstatements including omissions of amounts ordisclosures in financial statements to deceive financial statement users.

Misappropriation of assets involves the theft of an entity’s assets. It is often accompanied by false ormisleading records or documents in order to conceal the fact that the assets are missing or have beenpledged without proper authorization.

An error is an unintentional misstatement in financial statements, including the omission of an amount or adisclosure.

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City of Prince George G5Year End: December 31, 2019 Preparer Preparer Preparer Reviewer

Uncorrected Differences MCR 4/8/2020

Date: 1/1/2019 To 12/31/2019 Reviewer Reviewer Post signoff Post signoff

Number Date Name Account No Reference Debit Credit Recurrence Misstatement

SUAM 1 12/31/2019 TCA 1600 451,867.40

SUAM 1 12/31/2019 Reserves - Municipal Finance Authority 2200 2,064,196.36

SUAM 1 12/31/2019 Accumulated Surplus 3000 1,544,900.05

SUAM 1 12/31/2019 Other Revenue 4000 46,559.10

SUAM 1 12/31/2019 District energy expense 5100 1,200.00

SUAM 1 12/31/2019 General government expense 5200 2,000.00

SUAM 1 12/31/2019 Parks recreation and cultural services expense 5300 481.61

SUAM 1 12/31/2019 Protective services expense 5400 873.10

SUAM 1 12/31/2019 Transportation services expense 5500 13,970.00

SUAM 1 12/31/2019 Water and sewer expense 5600 2,345.10

To correct the debt reserve fund

liability as it does not meet the definition of a liability as per the public sector

standards.

SUAM 2 12/31/2019 M.F.A Intermediate Funds 1070 175,070.00

SUAM 2 12/31/2019 M.F.A Bond Funds 1071 33,765.00

SUAM 2 12/31/2019 LI Library - Investments LI.1031 208,835.00

To reclassify prior year

investments held by the Prince George Public Library for financial statement purposes

from cash and cash equivalents to investments.

SUAM 3 12/31/2019 Deferred Revenue 2000 215,261.00

SUAM 3 12/31/2019 Accounts payable 2100 215,261.00

To properly classify accounts

payable that were under deferred revenue financial caption

2,488,292.36 2,488,292.36

Net Income (Loss) (310,982.98 )

Page 1

Page 96 of 153

City of Prince George G3Year End: December 31, 2019 Preparer Preparer Preparer Reviewer

Corrected Misstatements MCR 4/8/2020

Date: 1/1/2019 To 12/31/2019 Reviewer Reviewer Post signoff Post signoff


SAM 1 12/31/2019 Deferred Revenue 2000 669,073.39

SAM 1 12/31/2019 Accumulated Surplus 3000 669,073.39

To recognize deferred revenue that

does not meet the criteria for deferral

SAM 2 12/31/2019 Accumulated Surplus 3000 357,542.08

SAM 2 12/31/2019 Gain/Loss on TCA 4400 357,542.08

To reclass PY gain on sale of land

to accumulated surplus.

SAM 3 12/31/2019 TCA 1600 773,348.75

SAM 3 12/31/2019 Property held for resale 1700 773,348.75

To adjust property for resale to

its own

financial caption

SAM 4 12/31/2019 Accounts receivable 1200 4,266,000.00

SAM 4 12/31/2019 Long term debt 2500 4,266,000.00

To reclassify presentation of

Northern Development Initiative Trust debt and corresponding receivable from grant

recipients.

6,065,964.22 6,065,964.22


Page 1

Page 97 of 153

City of Prince George G8Year End: December 31, 2019 Preparer Preparer Preparer ReviewerUncorrected Prior Period Adjustments MCR 4/8/2020Date: 1/1/2018 To 12/31/2018 Reviewer Reviewer Post signoff Post signoff


PY SUAM 12/31/2018 Land 1500 357,542.08PY SUAM 12/31/2018 Gain/Loss on TCA 4400 357,542.08

To recognize prior year error inland sale.

PY SUAM 12/31/2018 M.F.A Intermediate Funds 1070 171,145.00PY SUAM 12/31/2018 M.F.A Bond Funds 1071 32,735.00PY SUAM 12/31/2018 LI Library - Investments LI.1031 203,880.00

To reclassify prior yearinvestments held by the Prince George Public Library for financial statement purposesfrom cash and cash equivalents to investments.

561,422.08 561,422.08


Page 1

Page 98 of 153


Appendix 4: Lean in Audit™

An innovative approach leading to enhanced value and quality

How it works

Our innovative audit approach, Lean in AuditTM, further improves audit value and productivity to help deliver real insight to you. Lean in AuditTM is process oriented, directly engaging organizational stakeholders and employing hands-on tools, such as walkthroughs and flowcharts of actual financial processes. By embedding Lean techniques into our core audit delivery process, our teams are able to enhance their understanding of the business processes and control environment within your organization – allowing us to provide real insight on your processes and actionable quality and productivity improvement observations. Any insights gathered through the course of the audit will be available to both our audit team and management. For example, the audit team may identify control gaps and potential process improvement areas, while management has the opportunity to apply such insights to streamline processes, inform business decisions, improve compliance, lower costs, increase productivity, strengthen customer service and satisfaction and drive overall performance.

Lean in AuditTM employs four key Lean techniques:

Lean training

Provide basic Lean training and equip our audit teams with a new Lean mindset to improve quality, value and productivity.

Process mapping workshop

Perform an interactive workshop with your team to map selected financial process providing end-to-end transparency and understanding of the process.

Insight reporting

Quick and pragmatic insight report including PACE matrix with prioritized opportunities to realize benefit.

Kaizen event

Perform an interactive workshop to find the root cause of the problem and empower your team to find a solution.

Page 99 of 153

Appendix 5: PS 3280 Asset retirement obligations

In August 2018, PSAB issued the new standard PS3280 on asset retirement obligations. This section addresses the reporting of legal obligations associated with the retirement of certain tangible capital assets and solid waste landfill sites by public sector entities.

Whether you are a university, college, school district, health institution or government entity (federal, provincial, municipal or Indigenous) this accounting standard will have implications for your organization if you report under the Public Sector Accounting Standards.

Key matters public sector entities need to consider

– The scope of retirement obligations included in the standard.

– The criteria for recognition of a retirement obligation.

– When it’s appropriate (and how) to measure a retirement obligation.

– Developing a comprehensive plan to assess all in-scope assets.

– Addressing Board/Council and Stakeholder information needs through implementation.

– Developing a consistent level of documentation to support the auditability of PS3280 implementation.

An overview

– PS3280 will apply to fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted.

– Asset retirement activities are defined to include all activities related to an asset retirement obligation. These may include but are not limited to:

– decommissioning or dismantling a tangible capital asset that was acquired, constructed or developed;

– decontamination created by the normal use of the tangible capital asset;

– post-retirement activities such as monitoring;

– constructing other tangible capital assets in order to perform post-retirement activities.

– In addition to asset retirement obligations associated with tangible capital assets that are in productive use and those that are no longer in productive use, PS3280 includes in scope legal obligations, and solid waste landfill closure and post-closure liabilities.

Preparing for Asset Retirement Obligations

Are you ready to implement PSAB Standard PS3280 Asset Retirement Obligations?

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© 2020 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 25932 The KPMG name and logo are registered trademarks or trademarks of KPMG International. kpmg.ca

– With the introduction of PS3280 PSAB has withdrawn existing Section PS3270, solid waste landfill closure and post-closure liability.

– Under PS3280, obligations for the closure and post-closure care of solid waste landfill sites are recognized earlier than presently under PS3270, as the accounting treatment changes from incremental recognition of liability based on usage to recognition on acquisition, construction, development or normal use. This will result in an earlier increase in net debt. The recognized cost of assets would increase because asset retirement costs associated with tangible capital assets in productive use would be added to its carrying amount rather than expensed (as currently done under PS3270).

– While PS3280 includes in scope expected contamination related to a tangible capital asset controlled by the public sector entity, PS3260 contaminated sites addresses unexpected contamination related to the tangible capital asset.

– Some examples of asset retirement obligations which fall under scope of proposed PS3280 include:

– buildings with asbestos;

– end of lease provisions (from a lessee perspective);

– fuel storage tank removal;

– removal of radiologically contaminated medical equipment;

– wastewater or sewage treatment facilities;

– Firewater holding tanks;

– Septic beds;

– closure and post-closure obligations associated with landfills.

– Under PS3280, an asset retirement obligation should be recognized when, as at the financial reporting date, ALL of the following criteria are met:

– there is a legal obligation to incur retirement costs in relation to a tangible capital asset.

– the past transaction or event giving rise to the liability has occurred;

– it is expected that future economic benefits will be given up;

– a reasonable estimate of the amount can be made.

– Public sector entities will be required to capitalize asset retirement obligations associated with fully amortized tangible capital assets, except in the following instances:

– asset retirement obligations associated with unrecognized tangible capital assets should be expensed;

– asset retirement obligations associated with tangible capital assets no longer in productive use should be expensed.

– The estimate of a liability should include costs directly attributable to asset retirement activities.

Getting a start on PS3280

– Public sector entities should start considering which asset retirement obligations may fall under scope of the proposed PS3280.

– Review active and inactive tangible capital assets to identify those with retirement obligations. Consider solid waste landfills and contaminated sites which may meet the PS3280 recognition criteria.

– Reconcile this inventory with the complete tangible capital assets listing and the site inventory for contaminated sites.

– Engage functions outside of finance (particularly public works and engineering).

– Consider implications of transitional options.

– Identify opportunities to collaborate with peer entities on assets identified as in scope for PS3280, and benchmarks for measurement of retirement obligations.

Contact Us

C.J. James

Asifa Hirji

Bailey Church BC Public Sector Audit Leader

BC ARO Implementation Lead

National Public Sector Accounting Advisory Leader

T: 604-527-3635 T: 604-777-3921 T: 613-212-3698 E: [email protected] E: [email protected] E: [email protected]

Page 101 of 153

kpmg.ca/audit

KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative (“KPMG International”).

KPMG member firms around the world have 174,000 professionals, in 155 countries.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

© 2019 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Page 102 of 153

https://home.kpmg.com/ca/en/home/services/audit.html

https://www.instagram.com/kpmgcanada/

https://www.instagram.com/kpmgcanada/

https://www.youtube.com/user/KPMGCanada

https://www.youtube.com/user/KPMGCanada

https://twitter.com/kpmg_canada

https://twitter.com/kpmg_canada

https://www.linkedin.com/company/kpmg-canada/

https://www.linkedin.com/company/kpmg-canada/

KPMG EnterpriseTM

177 Victoria Street, Suite 400Prince George BC V2L 5R8CanadaTel 250-563-7151Fax 250-563-5693

Mr. Kris DalioCity of Prince George1100 Patricia BoulevardPrince George, BCV2L 3V9

May 11, 2020

Dear Sir:

In planning and performing our audit of the consolidated financial statements of City of Prince George ("the Entity") for the period ended December 31, 2019, we obtained an understanding of internal control over financial reporting (ICFR) relevant to the Entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances for the purpose of expressing an opinion on the financial statements, but not for the purpose of expressing an opinion on ICFR. Accordingly, we do not express an opinion on the effectiveness of the Entity’s ICFR.

Our consideration of ICFR was for the limited purpose described above and was not designed to identify all control deficiencies that might be significant deficiencies and therefore, there can be no assurance that all significant deficiencies and other control deficiencies have been identified. As a result, any matters reported below are limited to those deficiencies in ICFR that we identified during the audit.

Our awareness of control deficiencies varies with each audit and is influenced by the nature, timing, and extent of audit procedures performed, as well as other factors.

IDENTIFICATION

Refer to the Appendix A for the definitions of various control deficiencies.

OTHER CONTROL DEFICIENCIES

We identified certain control deficiencies that we determined to be other control deficiencies in ICFR that have not been communicated to management by other parties and that, in our professional judgment, are of sufficient importance to merit management's attention, refer to Appendix B.

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independentmember firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG Canada provides services to KPMG LLP.

Page 103 of 153

City of Prince George

October 11, 2018

USE OF LETTER

This letter is for the use of management and those charged with governance in carryingout and discharging their responsibilities and should not be used for any other purposeor anyone other than management and those changed with governance. KPMG shallhave no responsibility or liability for loss or damages or claims, if any, to or by any thirdparty as this letter has not been prepared for, and is not intended for, and should not beused by, any third party or for any other purpose.

Yours very truly,

KPMG LLP

2

Page 104 of 153

Appendix A

Terminology Definition

DEFICIENCY IN INTERNALCONTROL

A deficiency in internal control exists when the design or operation of acontrol does not allow management or employees, in the normal courseof performing their assigned functions, to prevent or detectmisstatements on a timely basis. A deficiency in design exists when (a) acontrol necessary to meet the control objective is missing; or (b) anexisting control is not properly designed so that, even if the controloperates as designed, the control objective would not be met. Adeficiency in operation exists when a properly designed control does notoperate as designed or the person performing the control does notpossess the necessary authority or competence to perform the controleffectively.

SIGNIFICANT DEFICIENCY ININTERNAL CONTROL

A significant deficiency in internal control is a deficiency or combination ofdeficiencies in internal control that, in the auditor’s professional judgment,is of sufficient importance to merit the attention of those charged withgovernance.

3Page 105 of 153

Appendix B

Other Control Deficiencies

DESCRIPTION POTENTIAL EFFECT

Deferred revenue: As part of our audit we havenoted instances in which revenue has beendeferred incorrectly.

Incorrectly recognizing revenue can misstate theannual surplus and accumulated surpus of the Citypotentially impacting decisions made by financialstatement users. We recommend that when the Cityenters into a significant contract or grant for revenueduring the year that the stipulations contained withinthe agrement be summarized and tracked by theCity to ensure that revenue is recognizedappropriately and that funding is used forappropriate purposes. We also recommend aregular review of deferred revenue balances that areaccumulating over time and not being recognized orutilized to ensure that the criteria for deferral hasbeen met.

4Page 106 of 153

Financial Statements of

And Independent Auditors' Report thereon

Year ended December 31, 2019

Page 107 of 153

PRINCE GEORGE PUBLIC LIBRARYTable of Contents

Page

Management Responsibility Statement

Independent Auditors' Report

Statement of Financial Position 1

Statement of Operations and Accumulated Surplus 2

Statement of Changes in Net Financial Assets 3

Statement of Cash Flows 4

Notes to Financial Statements 5 - 16

Page 108 of 153

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The accompanying financial statements of the Prince George Public Library (the "Library") are the

responsibility of the Library's management and have been prepared in compliance with legislation,

and in accordance with generally accepted accounting principles established by the Public Sector

Accounting Board of the Chartered Professional Accountants of Canada. A summary of the

significant accounting policies are described in Note 1 to the financial statements. The preparation of

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 Library’s management maintains a system of internal controls designed to provide reasonable

assurance that assets are safeguarded, transactions are properly authorized and recorded in

compliance with legislative and regulatory requirements, and reliable financial information is available

on a timely basis for preparation of the financial statements. These systems are monitored and

evaluated by management.

The Library's Board meets with management and the external auditors to review the financial

statements and discuss any significant financial reporting or internal control matters prior to their

approval of the financial statements.

The financial statements have been audited by KPMG LLP, independent external auditors appointed

by the Library. The accompanying Independent Auditors’ Report outlines their responsibilities, the

scope of their examination and their opinion on the Library’s financial statements.

Mike Gagel, Chair of Library Board Paul Burry, Library Director

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KPMG LLP

177 Victoria Street, Suite 400

Prince George BC V2L 5R8

Canada

Tel 250-563-7151

Fax 250-563-5693

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Prince George Public Library

Opinion

We have audited the financial statements of Prince George Public Library (the Library),which comprise:

the statement of financial position as at December 31, 2019

the statement of operations and accumulated surplus for the year then ended

the statement of changes in net financial assets for the year then ended

the statement of cash flows for the year then ended

and notes to the financial statements, including a summary of significant

accounting policies

(Hereinafter referred to as the “financial statements'').

In our opinion, the accompanying financial statements present fairly, in all materialrespects, the financial position of the Library as at December 31, 2019 and its results ofoperations and its cash flows for the year then ended in accordance with Canadian publicsector accounting standards

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditingstandards. Our responsibilities under those standards are further described in the''Auditors' Responsibilities for the Audit of the Financial Statements'' section of ourauditors' report.

We are independent of the Library in accordance with the ethical requirements that arerelevant to our audit of the financial statements in Canada and we have fulfilled our otherresponsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

Responsibilities of Management and Those Charged WithGovernance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financialstatements in accordance with Canadian public sector accounting standards, and for suchinternal control as management determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud orerror.

KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG network of independentmember firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entityKPMG Canada provides services to KPMG LLP.

Page 110 of 153

In preparing the financial statements, management is responsible for assessing theLibrary's ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Library or to cease operations, or has norealistic alternative but to do so.

Those charged with Governance are responsible for overseeing the Library'sfinancial reporting process.

Auditors' Responsibilities for the Audit of the FinancialStatements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud orerror, and to issue an auditors' report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with Canadian generally accepted auditing standardswill 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 theeconomic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditingstandards, we exercise professional judgment and maintain professional skepticismthroughout 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 ishigher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internalcontrol.

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 Library's

internal control.

Evaluate the appropriateness of accounting policies used and the

reasonableness of accounting estimates and related disclosures made by

management.

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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 Library's ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to draw attention

in our auditors' 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

auditors' report. However, future events or conditions may cause the

Library's 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

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

Prince George, Canada

April 22, 2020

Page 112 of 153

Statement of Financial Position

December 31, 2019, with comparative information for 2018

2019 2018

Financial assets:Cash and cash equivalents (note 2) $ 439,131 $ 297,924Investments (note 3) 208,835 203,880Accounts receivable (note 4) 22,171 19,065

670,137 520,869

Financial liabilities:Accounts payable and accrued liabilities (note 5) 171,718 121,458Deferred revenue (note 6) 10,466 24,214Due to related party (note 7) 212,049 178,194Capital lease obligation - 2,687

394,233 326,553

Net financial assets 275,904 194,316

Non-Financial Assets:Tangible capital assets (note 8) 1,119,493 1,232,769Prepaid expenses 48,947 16,493

1,168,440 1,249,262Subsequent event (note 11)

Accumulated surplus (note 10) $ 1,444,344 $ 1,443,578

See accompanying notes to financial statements.

On behalf of the Library:

1

Page 113 of 153

Statement of Operations and Accumulated Surplus

Year ended December 31, 2019, with comparative information for 2018

2019Budget

2019Actual

2018Actual

(note 11)

Revenue:Municipal funding (note 7) $ 3,683,399 $ 3,683,401 $ 4,033,310Provincial funding 215,000 215,293 215,309Internally generated revenue (note 9) 98,400 108,113 110,864Fundraising - 114,078 98,968

3,996,799 4,120,885 4,458,451

General expenses:Acquisitions, circulation and office supplies 25,010 16,033 18,847Amortization - 355,182 350,789Fundraising - 60,722 66,393General and administrative 181,750 159,734 237,858Information technology 101,200 106,524 94,947Loss on disposal of tangible capital assets - 4,337 913Materials 275,000 278,207 278,252Rent (note 7) 74,091 75,440 486,337Repairs and maintenance 112,550 106,223 105,384Salaries and benefits 2,987,148 2,957,717 2,854,252

3,756,749 4,120,119 4,493,972

Annual surplus (deficit) 240,050 766 (35,521)

Accumulated surplus, beginning of year 1,443,578 1,443,578 1,479,099

Accumulated surplus, end of year $ 1,683,628 $ 1,444,344 $ 1,443,578


2

Page 114 of 153

Statement of Changes In Net Financial Assets


BudgetTotal2019

Total2018

Annual surplus (deficit) $ 240,050 $ 766 $ (35,521)

Acquisition of tangible capital assets (240,050) (246,243) (302,333)Amortization of tangible capital assets - 355,182 350,789Loss on sale of tangible capital assets - 4,337 913

- 114,042 13,848

Change in prepaid expenses - (32,454) 16,700

Change in net financial assets - 81,588 30,548

Net financial assets, beginning of year 194,316 194,316 163,768

Net financial assets, end of year $ 194,316 $ 275,904 $ 194,316


3

Page 115 of 153

Statement of Cash Flows


2019 2018

Cash provided by (used in):

Operating activities:Annual surplus (deficit) $ 766 $ (35,521)Items not involving cash:

Amortization 355,182 350,789Loss on disposal of property, plant and equipment 4,337 913

360,285 316,181

Changes in non-cash operating working capital:Prepaid expenses (32,454) 16,700Accounts receivable (3,106) 8,172Accounts payable and accrued liabilities 50,260 (17,084)Deferred revenue (13,748) (18,302)Due (to) from related party 33,855 (109,601)

395,092 196,066

Financing activities:Repayment of capital lease obligation (2,687) (2,047)

Investing activities:Purchase of property, plant and equipment (246,243) (302,333)Increase in investments (4,955) (3,763)

(251,198) (306,096)

Increase (decrease) in cash and cash equivalents 141,207 (112,077)

Cash and cash equivalents, beginning of year 297,924 410,001

Cash and cash equivalents, end of year $ 439,131 $ 297,924


4

Page 116 of 153

Notes to Financial Statements


Nature of operations:

Prince George Public Library (the "Library") was established under the Library Act of British

Columbia. Its principal activity is the operation of the public library serving residents of the City of

Prince George and surrounding areas. The Library is a registered charity and is exempted from

income tax.

1. Significant accounting policies:

These financial statements are prepared by management in accordance with Canadian public

sector accounting standards. The Library’s significant accounting policies are as follows:

(a) Reporting entity:

The financial statements include the combination of all the assets, liabilities, revenues,

expenses and changes in net financial assets of the Library. The Library does not control

any external entities and accordingly, no entities have been consolidated with the financial

statements. Inter-fund transactions have been eliminated.

(b) Basis of accounting:

The Library follows the accrual method of accounting for revenues and expenses.

Revenues are normally recognized in the year in which they are earned and measurable.

Expenses are recognized as they are incurred and measurable as a result of receipt of

goods and services and/or the creation of a legal obligation to pay.

(c) Revenue recognition:

Receipts that are restricted by legislation or by agreement with external parties are deferred

and reported as deferred revenue. When qualifying expenses are incurred, deferred

revenues are brought into revenue in equal amounts.

Fines are recorded when received as a result of the difficulty in determining collectability.

5

Page 117 of 153

Notes to Financial Statements (continued)


1. Significant accounting policies (continued):

(d) Government transfers:

Government transfer are recognized in the financial statements as revenue in the period in

which events giving rise to the transfer occur, providing the transfers are authorized, any

eligibility criteria have been met, and reasonable estimates of the amounts can be made

Government transfers with stipulations are recognized as revenue when authorized and

eligibility criteria have been met, except to the extent the transfer gives rise to an obligation

that meets the definition of a liability.

(e) Investments:

Investments are recorded at cost plus accrued income. Investment income is reported as

revenue in the period earned. When there has been a loss in value that is other than a

temporary decline in value, the respective investment is written down to recognize the loss.

(f) 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.

(i) Tangible capital assets:

Tangible capital assets are recorded at cost which includes amounts that are directlyattributable to acquisition, construction, development or betterment of the assets. Thecost, less residual value, of the tangible capital assets are amortized on a straight-linebasis over their estimated useful lives as follows:

Asset Rate

Building improvements 15 yearsComputer infrastructure 3 - 10 yearsEquipment 5 - 15 yearsFurniture 15 - 20 yearsLibrary collection 5 yearsOther 20 yearsVehicles 5 years

6

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1. Significant accounting policies (continued):

(f) Non-financial assets (continued):

(i) Tangible capital assets (continued):

Amortization is charged in the year of acquisition and in the year of disposal. Assetsunder construction are not amortized until the asset is available for productive use.

When a tangible capital asset no longer contributes to the Library's ability to provideservices, its carrying amount is written down to its residual value.

(ii) Contributions of tangible capital assets

Tangible capital assets received as contributions are recorded at their fair value at thedate of receipt and also are recorded as revenue.

(iii) Leased tangible capital assets

Leases which transfer substantially all of the benefits and risks incidental to ownershipof property are accounted for as leased tangible capital assets. All other leases areaccounted as operating leases and the related payments are charged to expenses asincurred.

(iv) Works of art and cultural and historic assets

Works of art and cultural and historic assets are not recorded as assets in thesefinancial statements.

(g) Use of estimates:

The preparation of the financial statements in conformity with Canadian generally accepted

accounting principles 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. Items subject to such estimates and assumptions include the

carrying amount of accounts receivable, amortization periods for tangible capital assets and

the carrying amount of accrued liabilities.

7

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2. Cash and cash equivalents:

The Library considers deposits in banks, certificates of deposit and short-term investments with

original maturities of three months or less at the date acquisition as cash and cash equivalents.

The major components of cash and cash equivalents are as follows:

2019 2018

Cash on hand $ 376,833 $ 236,784MFA money market fund 62,298 61,140

$ 439,131 $ 297,924

3. Investments:

2019 2018

MFA intermediate fund $ 175,070 $ 171,145MFA bond fund 33,765 32,735

$ 208,835 $ 203,880

4. Accounts receivable:

2019 2018

Trade receivables $ 10,884 $ 1,922Sales taxes receivable 8,287 8,143Donations 3,000 9,000

$ 22,171 $ 19,065

8

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5. Accounts payable and accrued liabilities:

2019 2018

Accounts payable - trade $ 64,342 $ 30,402Payroll wages and benefits 107,376 91,056

$ 171,718 $ 121,458

6. Deferred revenue:

Deferred revenue, reported on the statement of financial position, is comprised of the unspent

portion of restricted grants and donations as follows:

2019 2018

Law matters $ 14 $ 3Books for babies 6,407 6,407Friends project 18 58Knowledge garden 955 15,580Local history 292 138Raise a reader 247 117Success by six - 100Children's programs 814 142Teen programs 1,525 1,500Other 194 169

$ 10,466 $ 24,214

9

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7. Due to related party:

The City of Prince George (the "City") is a related party to the Prince George Public Library as

the Library operates under the City's By-Law No. 801, dated June 20, 1955. During the course of

the year, the Library conducted the following transactions with the City:

2019 2018

Operating grant received $ 3,683,401 $ 4,033,310Rent expense (75,440) (486,337)

During the year, the Library and the City entered into an agreement whereas the Library was to

use the City's Bob Harkins Library facility free of charge and the operating grant they received

from the City would be reduced by the equivalent amount. The rent paid and received free of

charge for facilities has been recorded at the carrying amount as management is not able to

determine the fair value of these transactions.

The City also provides payroll processing for the Library at no charge. The amount due to the

City of Prince George of $212,049 (2018 - $178,194) relates to payroll expenses paid by the City

as well as utility and rent expenses. The balances due to related parties are unsecured, non-

interest bearing with no specific terms of repayment.

10

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8. Tangible capital assets:

2019Building

Improvements Furniture EquipmentComputer

InfrastructureLibrary

Collection Vehicle Other Total

Cost

Balance, beginning of year $ 318,733 $ 745,187 $ 258,627 $ 571,652 $ 1,132,535 $ 35,363 $ 194,166 $ 3,256,263Additions - - 19,068 24,968 188,407 - 13,800 246,243Disposals - (9,525) (25,162) (19,493) (226,117) - (2,416) (282,713)

Balance, end of year 318,733 735,662 252,533 577,127 1,094,825 35,363 205,550 3,219,793

Accumulated amortization

Balance, beginning of year 94,354 442,199 231,762 503,275 574,734 3,536 173,634 2,023,494Amortization 11,941 35,111 19,370 34,732 227,630 7,073 19,325 355,182Disposals - (9,525) (25,162) (17,080) (225,104) - (1,505) (278,376)

Balance, end of year 106,295 467,785 225,970 520,927 577,260 10,609 191,454 2,100,300

Net book value, end of year $ 212,438 $ 267,877 $ 26,563 $ 56,200 $ 517,565 $ 24,754 $ 14,096 $ 1,119,493

11 Page 123 of 153



8. Tangible capital assets (continued):

2018Building

Improvements Furniture EquipmentComputer

InfrastructureLibrary

Collection Vehicle Other Total

Cost

Balance, beginning of year $ 318,733 $ 734,608 $ 256,874 $ 534,084 $ 1,170,959 $ - $ 194,166 $ 3,209,424Additions - 28,759 2,676 44,822 190,713 35,363 - 302,333Disposals - (18,180) (923) (7,254) (229,137) - - (255,494)

Balance, end of year 318,733 745,187 258,627 571,652 1,132,535 35,363 194,166 3,256,263

Accumulated amortization

Balance, beginning of year 82,413 424,987 219,251 474,134 589,808 - 136,694 1,927,287Amortization 11,941 34,429 13,434 36,395 214,114 3,536 36,940 350,789Disposals - (17,217) (923) (7,254) (229,188) - - (254,582)

Balance, end of year 94,354 442,199 231,762 503,275 574,734 3,536 173,634 2,023,494

Net book value, end of year $ 224,379 $ 302,988 $ 26,865 $ 68,377 $ 557,801 $ 31,827 $ 20,532 $ 1,232,769

12

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9. Internally generated revenue:

Revenue was generated from from the following internal services:

2019 2018

Late charges $ 53,255 $ 54,280Interest 8,441 4,714Lost and damaged materials 26,649 28,702Photocopier 7,833 8,893Miscellaneous 11,935 14,275

$ 108,113 $ 110,864

10. Accumulated surplus:

Accumulated surplus is made up of the following:

2019 2018

Investment in tangible capital assets $ 1,119,493 $ 1,232,769Appropriated surplus 165,102 138,143Unrestricted surplus 159,749 72,666

$ 1,444,344 $ 1,443,578

13

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10. Accumulated surplus (continued):

Appropriated surplus is made up of the following:

2019 2018

Administration $ 5,462 $ 4,551Equity literacy 9,868 8,524Reading without rules 987 -Skate for literacy 500 -Summer reading - 265Van fund 17,842 22,681BOD collections fund 2,857 5,605BOD current campaign fund 26,065 6,835BOD greatest need fund 6,102 10,595BOD programs fund 697 626BOD spaces fund 90,051 73,895BOD special events fund 4,671 4,566

$ 165,102 $ 138,143

11. Subsequent event:

Subsequent to December 31, 2019, the COVID-19 outbreak was declared a pandemic by the

World Health Organization and has had a significant financial, market and social dislocating

impact.

At the time of approval of these financial statements, the Library has experienced the following

indicators of financial implications and undertaken the following activities in relation to the

COVID-19 pandemic.

•Experienced temporary declines in internally generated revenue

•Temporary closure of the physical Library facilities to the public based on public health

recommendations

•Modifying work and public spaces to facilitate social distancing

At this time these factors present uncertainty over future cash flows, may cause significant

changes to the assets or liabilities and may have a significant impact on future operations. An

estimate of the financial effect is not practicable at this time.

14

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12. Budget data:

The budget data presented in these financial statements is based upon the 2019 operating

budget approved by the Library Board. Amortization was not contemplated on development of

the budget and, as such, has not be included.

13. Legacy fund:

The Library has previously entered into an agreement with the Prince George Community

Foundation (the "Foundation") whereby funds will be transferred to the Foundation to be held

and invested in a Prince George Library Legacy Fund (a "Fund"), with the purpose of the Fund

being to enhance the ability of the Library to deliver quality library services. The Library has a

balance at December 31, 2019 of $63,508 (2018 - $62,571) in the Fund.

14. Municipal pension plan:

The Library and its employees contribute to the Municipal Pension Plan (a jointly trusteed

pension plan). The board of trustees, representing plan members and employers, is responsible

for administering the plan, including investment of assets and administration of benefits. The

plan is a multi-employer defined benefit pension plan. Basic pension benefits are based on a

formula. As at December 31, 2018, the plan has about 205,000 active members and

approximately 101,000 retired members. Active members include approximately 40,000

contributors from local governments.

Every three years, an actuarial valuation is performed to assess the financial position of the plan

and adequacy of plan funding. The actuary determines an appropriate combined employer and

member contribution rate to fund the plan. The actuary’s calculated contribution rate is based on

the entry-age normal cost method, which produces the long-term rate of member and employer

contributions sufficient to provide benefits for average future entrants to the plan. This rate may

be adjusted for the amortization of any actuarial funding surplus and will be adjusted for the

amortization of any unfunded actuarial liability.

The most recent valuation for the Municipal Pension Plan as at December 31, 2018, indicated a

$2,866 million funding surplus for basic pension benefits on a going concern basis.

The Library paid $191,693 (2018 - $188,869) for employer contributions to the plan in fiscal

2019.

15

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14. Municipal pension plan (continued):

The next valuation will be as at December 31, 2021, with results available in 2022. Employers

participating in the plan record their pension expense as the amount of employer contributions

made during the fiscal year (defined contribution pension plan accounting). This is because the

plan records accrued liabilities and accrued assets for the plan in aggregate, resulting in no

consistent and reliable basis for allocating the obligation, assets and cost to individual employers

participating in the plan.

15. Economic dependence:

Approximately 89% (2018 - 93%) of the Library's revenues are derived from contributions from

the City of Prince George. Should this funding be cancelled or not renewed, management is of

the opinion that the continued viability of operations would not be assured.

16

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Prince George Public Library Financial Statement Presentation

May 11, 2020

Page 129 of 153

2© 2017 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Agenda

• Audit Report• Financial statement review• Financial statement notes• Questions

Page 130 of 153


Audit Report

• Independent Auditors’ Report • Clean auditors’ report to be issued in respect of the financial

statements in accordance with Canadian public sector accounting standards

Page 131 of 153


Prince George Public Library– December 31, 2019

2019 2018


Investments $ 208,835 $ 203,880

Receivables $ 22,171 $ 19,065

Total Financial Assets $ 670,137 $ 520,869

Statement of Financial Position – Financial Assets

Page 132 of 153


Prince George Public Library– December 31, 2019Statement of Financial Position – Financial Liabilities

2019 2018

Accounts Payable and Accrued Liabilities $ 171,718 $ 121,458

Deferred Revenue $ 10,466 $ 24,214

Due to Related Party $ 212,049 $ 178,194

Capital Lease Obligation $ - $ 2,687

Total Financial Liabilities $ 394,233 $ 326,553

Net Financial Assets $ 275,904 $ 194,316

Page 133 of 153


Prince George Public Library– December 31, 2019

2019 2018

Tangible Capital Assets $ 1,119,493 $ 1,232,769

Prepaid Expenses $ 48,947 $ 16,493

Total Non-Financial Assets $ 1,168,440 $ 1,249,262

Statement of Financial Position – Non-Financial Assets

Page 134 of 153


Prince George Public Library– December 31, 2019Statement of Operations


Revenues $ 3,996,799 $ 4,120,885 $ 4,458,451

Expenses $ 3,756,749 $ 4,120,119 $ 4,493,972

Surplus (Deficit) $ 240,050 $ 766 $ (35,521)

Page 135 of 153


Prince George Public Library– December 31, 2019Accumulated Surplus

2019 2018 Change

Investment in Tangible Capital Assets $ 1,119,493 $ 1,232,769 $ (113,276)

Appropriated Surplus $ 165,102 $ 138,143 $ 26,959

Unrestricted Surplus $ 159,749 $ 72,666 $ 87,083

Accumulated Surplus $ 1,444,344 $ 1,443,578 $ 766

Page 136 of 153


Key Notes of the Financial Statements

• Significant accounting policies and practices are disclosed in Note 1 to the financial statements

• Subsequent event

Page 137 of 153


Questions on the financial statements?

Page 138 of 153

kpmg.ca

© 2017 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Page 139 of 153

Tourism Prince George SocietyFinancial Statements

December 31, 2019

Page 140 of 153

Tourism Prince George SocietyContents


Page

Independent Auditor's Report

Financial Statements

Statement of Financial Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1

Statement of Operations................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2

Statement of Changes in Net Assets................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3

Statement of Cash Flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................4

Notes to the Financial Statements................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................5

Schedules

Schedule 1 - Schedule of Expenses................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................9

Page 141 of 153

Independent Auditor's Report

To the Members of Tourism Prince George Society:

Opinion

We have audited the financial statements of Tourism Prince George Society (the "Society"), which comprise the statement of financialposition as at December 31, 2019, and the statements of operations, changes in net assets and cash flows for the year then ended, andnotes 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 Society as atDecember 31, 2019, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accountingstandards for not-for-profit organizations.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standardsare further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independentof the Society in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and wehave fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter

The financial statements of the Society for the year ended December 31, 2018 were audited by Deloitte LLP of Prince George, BC,Canada. Deloitte LLP expressed an unmodified opinion on those statements on March 13, 2019 .

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian accountingstandards for not-for-profit organizations, and for such internal control as management determines is necessary to enable thepreparation 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 Society’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 eitherintends to liquidate the Society or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Society’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 materialmisstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standardswill 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 ofthese financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintainprofessional 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 Society’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by management.

299 Victoria Street, Suite 500, Prince George, British Columbia, V2L 5B8, Phone: (250) 564-1111

Page 142 of 153

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

Society’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 Society 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 andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Prince George, British Columbia

March 10, 2020 Chartered Professional Accountants

Page 143 of 153

of 153

Tourism Prince George SocietyStatement of Operations


2019 2018

Revenue Hotel room tax grant 1,264,761 1,243,546City of Prince George - Service agreement 327,000 327,000Province of British Columbia 66,092 68,492Advertising 51,566 60,158Partnership programs 61,509 63,882Merchandise sales 29,541 21,801Federal government 18,244 3,356Sales commission 2,638 1,901

1,821,351 1,790,136

General and administrative expenses (Schedule 1) 1,701,227 1,626,956

Excess of revenue over expenses before other income 120,124 163,180

Other income (expense)Miscellaneous 3,088 (58)Loss on disposal of tangible capital assets - (1,110)

3,088 (1,168)

Excess of revenue over expenses 123,212 162,012

The accompanying notes are an integral part of these financial statements

2Page 145 of 153

Tourism Prince George SocietyStatement of Changes in Net Assets


Invested intangible

capital andintangible

assets

Internallyrestricted

Unrestricted 2019 2018

Net assets, beginning of year, 103,944 300,129 370,985 775,058 613,046

Excess of revenue over expenses - - 123,212 123,212 162,012

Interfund transfers - 52,876 (52,876) - -

Amortization of tangible capital assets (31,421) - 31,421 - -

Intangible assets additions funded byoperations

67,922 - (67,922) - -

Amortization of intangible assets (13,613) - 13,613 - -

Net assets, end of year 126,832 353,005 418,433 898,270 775,058


3Page 146 of 153

Tourism Prince George SocietyStatement of Cash Flows


2019 2018

Cash provided by (used for) the following activitiesOperating

Excess of revenue over expenses 123,212 162,012Amortization - tangible capital assets 31,421 38,936Amortization - intangible assets 13,613 13,613Loss on disposal of tangible capital assets - 1,110

168,246 215,671Changes in working capital accounts

Accounts receivable 38,991 (35,881)Inventory (5,290) 8,187Prepaid expenses and deposits (45,302) 15,821Accounts payable and accruals 37,174 (52,649)Government remittance payable 21,948 2,259Deferred contributions (3,346) (15,535)

212,421 137,873

InvestingPurchase of tangible capital assets funded by operations - (22,335)Purchase of intangible assets funded by operations (67,922) -Purchase of restricted investments (52,876) (48,154)

(120,798) (70,489)

Increase in unrestricted cash resources 91,623 67,384Unrestricted cash resources, beginning of year 116,929 49,545

Unrestricted cash resources, end of year 208,552 116,929


4Page 147 of 153

Tourism Prince George SocietyNotes to the Financial Statements


1. Incorporation and nature of the organization

The purpose of the Tourism Prince George Society (the “Society”) is to promote and market tourism in the Prince Georgearea. The Society evaluates, develops, and implements marketing programs on behalf of various industry stakeholders. TheSociety is also responsible for visitor services activities within the Prince George area. The Society is incorporated underthe Society Act (British Columbia) and is a non-profit organization pursuant to Section 149(1)(l) of the Income Tax Act.

2. Significant accounting policies

The financial statements of the Society have been prepared in accordance with Canadian accounting standards for not-for-profit organizations and include the following significant policies:

Restricted investments

Restricted investments are stated at fair value and consist of short-term guaranteed investment certificates (“GIC’s”). Indetermining fair values, adjustments have not been made for transaction costs. The difference between the fair value andcost of investments at the beginning and end of each year is reflected under internally restricted in the statement ofchanges in net assets.

Inventory

Inventory is valued at the lower of cost and net realizable value, with cost determined on a first-in, first-out basis. Netrealizable value is the estimated selling price less the estimated costs necessary to make the sale.

Tangible capital assets

The Society has established a threshold for each class of assets to determine what amount is to be capitalized. Tangiblecapital assets are recorded at cost which includes all amounts that are directly attributable to the acquisition, construction,development or betterment of the asset. Amortization is determined at the following annual rates:

Method RateAutomotive declining balance 30 %Computer equipment declining balance 55 %Furniture and fixtures declining balance 20 %Leasehold improvements straight-line 4 years

Impairment of tangible capital assets

When a tangible capital asset no longer has any long-term service potential to the organization, the excess of its netcarrying amount over any residual value should be recognized as an expense in the statement of operations. A write-downshould not be reversed

Intangible assets

Separately acquired intangible assets are recorded at cost which includes all amounts that are directly attributable to thepurchase and preparation of the asset for its intended use. Amortization is recognized straight-line over the asset’s usefullife. The useful life of the website is estimated to be 4 years.

Impairment of intangible assets

When an intangible asset no longer has any long-term service potential to the organization, the excess of its net carryingamount over any residual value should be recognized as an expense in the statement of operations. A write-down shouldnot be reversed.

Revenue recognition

Unrestricted sources of income are recognized as revenue when received or receivable if the amount to be received can bereasonably estimated or collection is reasonably assured. Contributions restricted internally or by donors for specificpurposes are deferred to the extent that they are unexpended at the year-end. When expenditures are made in subsequentyears, related deferred contributions are amortized and recorded as revenue in the statement of operations.

5Page 148 of 153



2. Significant accounting policies (Continued from previous page)

Measurement uncertainty (use of estimates)

The preparation of financial statements in conformity with Canadian accounting standards for not-for-profit organizationsrequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenuesand expenses during the reporting period.

By their nature, these judgments are subject to measurement uncertainty, and the effect on the financial statements ofchanges in such estimates and assumptions in future years could be material. These estimates and assumptions arereviewed periodically and, as adjustments become necessary they are reported in excess of revenues over expenses in theyears in which they become known.

Financial instruments

Restricted investments are recorded at fair value on initial recognition and are subsequently measured at fair value. Allother financial instruments are subsequently recorded at cost or amortized cost, unless management has elected to carrythe instruments at fair value.

Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are expensed asincurred. All other financial instruments are adjusted by transaction costs, which are amortized using the effective interestrate method.

Financial assets are assessed for impairment on an annual basis at the end of the fiscal year if there are indicators ofimpairment. If there is an indicator of impairment, the Society determines if there is a significant adverse change in theexpected amount or timing of future cash flows from the financial asset. If there is a significant adverse change in theexpected cash flows, the carrying value of the financial asset is reduced to the highest of the present value of the expectedcash flows, the amount that could be realized from selling the financial asset or the amount the Society expects to realize byexercising its right to any collateral. If events and circumstances reverse in a future year, an impairment loss will bereversed to the extent of the improvement, not exceeding the initial carrying value.

3. Restricted investments

Restricted investments at December 31, 2019 consisted of one guaranteed investment certificate that matures December16, 2020 and two guaranteed investment certificates that mature on December 20 and 23, 2020 held at a rate of 1.5%(1.0% in 2018) and valued at fair value. This investment is internally restricted by the Board of Directors.

4. Tangible capital assets

2019 2018Accumulated Net book Net book

Cost amortization value value

Automotive 43,522 41,389 2,133 3,047Computer equipment 59,995 50,887 9,108 22,541Furniture and fixtures 174,688 133,872 40,816 51,020Leasehold improvements 33,735 33,735 - 6,869

311,940 259,883 52,057 83,477

6Page 149 of 153



5. Intangible assets

2019 2018

Website 6,856 20,468Brand development 67,922 -

74,778 20,468

Amortization of $13,613 (2018 – $13,613) related to intangible asset, is included in current year earnings.The branddevelopment intangible asset was in process at year end and has not been amortized as it was not available for use at thedate of these financial statements.

6. Deferred contributions

Deferred contributions consist of unspent contributions externally restricted for the production of Visitors tourism guide for2020. Recognition of these amounts as revenue is deferred to periods when the specified expenditures are made. Changesin the deferred contribution balance are as follows:

2019 2018

Balance, beginning of year 51,691 67,226Amount received during the year 48,345 51,691Less: Amount recognized as revenue during the year (51,691) (67,226)

Balance, end of year 48,345 51,691

7. Internally restricted

The Society’s Board of Directors internally restricted these funds to be used for capital investment and businessdevelopment purposes. These internally restricted amounts are not available for other purposes without approval of theBoard of Directors. The investment is maintained in a separate investment account, and is shown as restricted investmentin the statement of financial position.

During the year, the Directors resolved to transfer $50,000 from the unrestricted fund to the restricted fund.

8. Commitments

The Society has entered into an operating lease commitment for office equipment which expires March 27, 2020.

The Society has entered into an agreement for the lease of their premises including repairs and maintenance and use ofsigns expiring December 31, 2019. The agreement also provides for the payment of additional rent based on a certainpercentage of the operating expenses of the lessor. The Society is currently on a month to month agreement until a newlease negotiation become finalized.

The minimum lease and office equipment lease payments in the next year is:

2020 890

9. Economic dependence

The Society is dependent upon the provision of operations funding from the City of Prince George and the allocation of thehotel room tax grants from the City of Prince George as they are the Society’s primary sources of revenue. The loss of thisrelationship would have a significant impact on the Society’s operations.

7Page 150 of 153



10. Financial instruments

Financial assets

The Society’s financial assets consist of cash, restricted investments and accounts receivable. All of these financial assetsexcept restricted investments are measured at amortized cost. Restricted investments are measured at fair value.

Credit risk

The Society has a long history of dealing with its diverse client base and does not believe it is exposed to an unusual levelof credit risk with respect to its accounts receivable.

Interest rate risk

The Society is exposed to interest rate risk on its fixed rate financial instruments due to changes in fair value and changesin interest cash flows. The maturity date of the fixed rate guaranteed investment certificates included in restrictedinvestments is annual but within one month of year end. Interest income is not a material source of revenue for the Society.The exposure to interest rate risk is therefore minimal.

Liquidity risk

The Society’s objective is to have sufficient liquidity to meet its liabilities when due. The Society monitors its cash balancesand cash flows generated from operations to meets its requirements. As at December 31, 2019, the most significantfinancial liabilities are accounts payable and accrued liabilities.

Market risk

The Society’s revenue is derived from government grants, which are subject to approval from funding agencies. Decrease infunding received would have a negative impact upon revenue and affect the Society’s ability to operate.

8Page 151 of 153

Tourism Prince George SocietySchedule 1 –Schedule of Expenses

For the year ended Deecember 31, 2019

2019 2018

Operating

Amortization – tangible capital assets 31,421 38,936

Amortization – intangible assets 13,613 13,613

Bank charges and interest 4,886 4,612

Board expenses 48,981 8,838

Insurance 6,217 6,068

Internet and computer services 8,722 9,008

Merchandise purchases 10,644 20,397

Office expenses 18,291 22,798

Professional fees 18,860 21,081

Rent 47,933 47,933

Repairs and maintenance 81,237 57,543

Telephone 13,777 14,913

Vehicle expenses 6,763 7,288

Visitor service program 16,780 —

328,125 273,028

Salaries

Training and professional development 18,046 13,657

Wages and benefits 663,541 650,460

681,587 664,117

Marketing

Advertising 448,837 395,727

Business and community development 45,149 85,177

Marketing memberships 4,310 7,747

Print, video, and photo 73,895 84,904

Tradeshow, sales and meetings 112,744 113,205

Website 6,580 3,051

691,515 689,811

1,701,227 1,626,956

9

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May 5, 2020

Standing Committee on Finance and Audit Work Plan Year 2020

Month

Date Agenda Item Description

February 24th Review 2020 Audit Plan – KPMG LLP representatives to attend

March 23rd Tax rate setting background information and options

Report on Year 2019 investment results

Report on Reserve Funds

April 20th Financial Update and Response to COVID-19 Impacts

May 11th Presentation by KPMG LLP of City of Prince George 2019 Financial Statements

Presentation of Other Controlled Entities 2019 Financial Statements (Public Library and Tourism PG)

June 15th Progress and Financial Report on Significant Capital Projects July 27th Financial Strategy on Civic Facilities

August 17th Placeholder for potential agenda items

August 31st Report on 2021 Recommended Permissive Tax Exemptions

November 23rd Progress and Financial Report on Significant Capital Projects

December 7th Report on 2021 - 2023 Operating Budget Guidelines

Draft Year 2021 Capital Expenditure Plan

Draft 2021 Committee Work Plan

Update on Asset Retirement Obligations (AROs)

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